3 Ways to Build “Integrity Capital”

Consumer insights on building integrity capital

The Corporate Executive Board (CEB) [http://www.executiveboard.com/] just completed a study of 130 companies to measure the level of integrity within their corporate cultures.

Their findings were completely consistent with those proposed by The Integrity Chain in “Consumer Insights on Integrity” (http://wp.me/pYHt6-2C).

The findings of the CEB study suggest that “integrity capital” is a new currency that companies need to use to their advantage as economic conditions deteriorate.

The survey found that companies scoring the highest in integrity outperformed those scoring the lowest by more than 16 percentage points with regards to shareholder returns.

The top quartile of companies averages a 10-year total return of 8.8% while the bottom quartile averaged a loss of 7.4%.

An emphasis on corporate integrity will make money over the long-term, while a lack of corporate integrity will cost you money.

In addition to better financial performance, ethical companies benefit from a better brand reputation, greater consumer loyalty and higher employee retention rates.  I have written several times about the positive correlation between employee engagement and customer satisfaction (http://wp.me/pYHt6-e6).

Here’s what the CEB suggests companies do to build their integrity capital:

1) Merchandise the virtue of openness throughout the company. Name and celebrate employees and managers who quickly identify business problems and implement early interventions. Leading by example will improve compliance.  Build trust.

2) Diagnose and intervene in cultural “risk zones.” Identify places in your company where employees are less willing to report problems and misconduct. Target these areas and employees with increased communication, training and support resources that will help them understand how reporting minimizes risk to themselves and the company.

3) Adapt messages to cultural context. Translate vague corporate values into specific expected actions that are sensitive to local cultures – especially when operating globally and in emerging markets.

If you’re serious about integrity in your firm, reward people who do the right thing and fire the people who do not.  Make examples of them both.

How much “integrity capital” does your firm have — with its employees?  With its customers?

About Insights From Analytics

Integrated marketing professional who generates insights from analytics to increase revenue. Daily blog now resides at www.insightsfromanalytics.com/blog.
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