Two Most Important Leadership Attributes - Honesty & Ethics

There have been times in my career when I’ve been very disappointed in the leadership of my employers.  I was sometimes at the point of quitting because of the leader being caught in unethical and / or dishonest acts and the resulting negative impact on the culture and morale of employees. What upset me more was when those types of leaders were allowed to continue without reprisal by the stockholders or the Board of Directors. What really torqued me up was when it became public and the leadership ignored criticism and efforts to repair the damage.

I admit that I am less than perfect.  Believe me, I have had many experiences and opportunities to shroud the truth and look the other way (do the wrong thing). I am not talking about good or bad judgment and having the ability to make good decisions about what should be done. No, I am talking about knowing right from wrong and what is unethical or dishonest.  One thing I learned in my early childhood was to be honest and do the right thing (be ethical), rules that I have tried to live by throughout my life. I believe these to be the two most important attributes of a leader - honesty and ethics!

The big heist
My mother and father raised me along with my four siblings in the upper half of the lower peninsula of Michigan. My mother owned a restaurant and my father was in partnership with my grandfather owning and operating a hardwood timber business. I had a wonderful childhood and had no reason to do what I am about to tell you. 

It was mid-summer and my closest friend and I often would wander down to the river to fish or spend time in our favorite hangout, which was a small island that was accessible from shore by walking across large stones. One day we decided that we needed to build a hideout on the island. We needed a knife, twine or rope to cut and tie the saplings together. At the time we were both about ten years old and thought the best place to get what we needed was the local Five & Dime Store. These stores had just about everything you could imagine and every time I would go with my mother or father I would leave wanting something. So now you are probably starting to get a sense of what happened next. My friend and I had no money so we decided to steal the items we needed. We roamed around the store nonchalantly slipping things into or pockets.  After all, the store had so many items that it couldn’t possibly miss a few items.

As we were leaving, the store manager stopped us and asked what we had in our pockets. Yep, we were caught red handed!!! We both confessed and the store manager who knew my father called him to give him the news. Unbeknown to me, my father, who was friends with the police chief and the store manager, told the store manager to call the police chief to come and take us to the station. We were shaking in our boots. Sometime later, my father arrived at the station and in front of the police chief asked me if had stolen the items. I confessed and came clean.  It was then that I learned the value of telling the truth because I knew the consequences of not telling the truth would have been devastating. The big heist caper has stuck with me all my life. It turned out to be a great lesson in honesty

Do the right thing
It was a stressful time. The bumps in the road seemed to be getting larger and more frequent. We had just moved back to the States from Europe, I had taken a new executive position and were getting settled when the company decided to form a joint venture (JV) with an offshore partner (reference my article entitled, “Joint Ventures – Why?”. After many months of planning and legal documentation, the company finally got underway. 

As the business was being organized, a fourteen-member Executive Management Committee was established with an equal number of participants from each partner. You might ask, why so many members? This was the era of “shadow management”. Call it what you will, but the offshore partner required one of its own employees “shadow” the United States company key management employee. One reason was to be trained and to learn how U.S. companies functioned and the other was to be an information conduit to homeland headquarters. 

One of the published benefits of the JV was the “Power of Two” - two brands with two independent distribution channels. The other was the potential to differentiate products and cross-brand them to gain greater market share. The Executive Management Committee met on several occasions and finally agreed and approved the cross branding strategy. Several months later the JV was nearly ready to introduce the new product offerings to each of the independent distribution organizations. 

It was now well into the third year of the JV and an elaborate meeting had been planned to launch, demonstrate and introduce the new products. We assembled all the new and cross-branded products unique to each of the distribution channels and invited the decision makers (dealer owners) to back-to-back rollout meetings. As head of sales and marketing, my team and I lead the meetings and they were a huge success. By the end of the last meeting, which was for the offshore partner’s brand products, we had written orders to fill a years production! 

Now comes the part of this true story that is not so pleasant. It was the last day of the meeting and we had just finished a celebration dinner. I had returned to my hotel room feeling good and was about to turn in for the night when my phone rang. When I answered the phone it was my boss, Ralph (JV Chairman of the Board) telling me that I needed to advise the dealers that we were cancelling all their orders and that we would not be introducing the cross-branded products as promised. I was shocked! “What are you talking about?  We just finished a very successful meeting. I’ve made promises to the dealers on behalf of the JV and taken orders for hundreds of products and now you’re telling me to call the dealers and tell them its all off. There is no way can I do that.” Ralph replied by saying that I had to because the JV offshore partner now claimed they never agreed to cross brand their products. Keeping my emotions in tact, I replied that this was totally unethical and I would not compromise my integrity. I hung up and went to bed. 

I never called the dealers to renege on my promises. Instead, I telephoned them announcing my resignation and explained why I was leaving the JV. In return, I received a stack of letters from the dealers (owners, sales managers, etc.) thanking me for doing the right thing!

I will not venture into the reasons why the offshore partner decided against the cross branding of some of their products only to say that regardless, it was handled in the wrong way. They didn’t do the right thing! If you want to learn more about the outcome and what ultimately happened to the JV, write me or call me and as Paul Harvey would say “And now for the rest of the story, page 2!”

Lessons Learned
As I stated in my opening comments, honesty and ethics are the two most important qualities of a leader. My father was a kind-hearted man, however, he was tough on his children and people that worked for him if they were not honest. Not only did I learn the importance of being honest, but more importantly, taking responsibility for my actions. 

Ethics are an equally important quality of a leader. I learned the hard way that doing the right thing pays dividends in the long term. When I resigned, I had no idea about what I would do next; I only knew that I could not work with unethical people or in an organization that tolerated unethical activities. Your reputation follows you wherever you go! So do the right thing!

Thanks to Howard Putnam’s Leadership eSeries, Part 14 for the inspiration for this article.
www.howardputnam.com