Being Honest Isn't Just Not Stealing

Studies routinely find that more than 99% of executives have integrity and don't cheat, at least no more than the minor sorts of ways an average person might sometimes. Why should they be different from everyone else? With the rates of criminal behavior causing jails to fill it should be no surprise that a few flagrant cases occur even though organizations do a lot to hire honest people and maintain systems to keep them that way. Most executives are at least as honorable as average people, are happy to comply and don't want to risk their jobs.

You could well argue executives should meet a higher standard because of the responsibilities they're given. You'd be right, and many strive to do just that when it comes to theft, fraud and cheating. But there's an even higher standard meant by the word "honest." One of my former bosses used to call it "intellectual honesty." He meant being honest with yourself about facts and judgments... and seeking feedback.

The most common flaw in CEOs comes from the power they wield. Not so much that they'll wield it badly, but that people will fear to tell them the truth and the CEO won't actively seek it. Hiding or even just omitting awkward facts, actually burying bad news or shading the truth about what's happening hampers CEOs enormously. No one can make reasonable judgments or effective strategic decisions based on inaccurate understanding of what's going on.

Facts are actually difficult to get. In most situations managers have to judge based on incomplete evidence. That means even a shred of truth missed can produce far-reaching damage. As a result we see obviously dumb ideas being pushed into action by organizations all the time. In retail, for just one example, Saks just announced they were dropping the idea of selling to a younger customer. Why would they announce their intention in the first place only to reverse themselves later? There's pressure to talk to stock analysts about new ideas to boost sales (and share prices), but common sense should tell CEOs to test, to see if current customers will swing toward a new product line before you dive in. If Saks did, clearly it wasn't sufficiently in depth for an idea that on the surface looks unlikely to work easily.

Why don't more people tell CEOs what could go wrong? Often it's because the CEO doesn't encourage the right kind of honesty. That in itself is dishonest - believing that somehow you don't need the help.