Published: August 7, 2008
Book Review by Rachel Schwartz
High Performance with High Integrity
by Ben W. Heineman Jr.
(Harvard Business Press, $18, pp. 198)
Capitalism, Ben Heineman writes in High Performance with High Integrity, “faces a fundamental problem of integrity. At the very heart of high performance lie fundamental forces that, if left unconstrained, cause corporate corruption.” Corporate demand to compete and win in the market creates perverse employee incentives that can lead to corners cut, extra-legal activity, questionable decision-making, and a slew of other, very imaginable, misbehaviors. Add to this the personal incentives employees have, given an opportunity, to pad their own pockets, show favoritism, and discriminate against minority or unliked groups -- none of which are necessarily the product of corporate pressure and high performance expectations.
Heineman attempts to show that corporate corruption and scandal is preventable if the CEO is willing to get elbows deep into the business of fusing high performance with high integrity. High performance with high integrity – a phrase Heineman repeats continuously from the front cover until the last sentence – is the only way to keep misconduct to a minimum. And when improprieties do occur, making integrity an integral aspect of crisis management can assist senior leadership in handling the situation fairly, legally, and with the least amount of damage to the company’s reputation.
Drawing from his nearly 20 years of experience at GE’s senior management level, the majority spent as General Counsel, Heineman demonstrates why the CEO must own the task of building/maintaining a corporate culture that, in practice, makes decisions with integrity. The book’s second objective, showing how the CEO can accomplish the fusion, is frequently less clear. The basis for both arguments rests on various GE-specific examples -- from scandals that grabbed media attention, to the constant headache of ethical sourcing, to the balancing act of effectively competing in emerging markets without exposing the business to scandal-prone situations.
Heineman’s emerging market challenge makes the most fascinating reading in the book and illustrates why and how the CEO must fuse integrity into business decisions. Forging ahead into emerging markets presents multiple opportunities for intentional and unintentional indiscretion on the part of the local corporate actors involved. Heineman argues for the necessity of clear company policy that employees deviate from at their risk. But more than this, senior leadership must evaluate the feasibility of competing, with integrity, when deciding whether to move into the emerging space. This means asking such questions, paraphrasing, as “Will employees be able to meet necessary targets without bribing officials, out-sourcing to local businesses with (by western standards) questionable employee practices, violating cultural norms?” These questions, Heineman insists, need to be answered thoughtfully at the highest level. Otherwise, employees in ethics-challenged emerging markets are placed in the dangerous position of choosing between performance expectations and integrity.
Companies, like individuals, must operate under the law; within this framework they bring their products and services to market, both global and domestic. Conducting business with integrity isn’t an excuse for poor performance and tentative, timid strategy. As Heineman quips, “it is whether you win or lose and it is how you play the game.” Most of this book’s ideas are little more than common sense. But it is a common sense that might seem too costly during tight financial times or expendable when inconvenient. Heineman candidly admits that incorporating integrity into business decision-making isn’t free. Then again, neither is the alternative.
Rachel Schwartz is coordinator of benchmarking services at the Ethics Resource Center.