Ben W. Heineman, former general counsel of GE has agreed to discuss his book High Performance with High Integrity with us.
When Ben Heineman describes his early career as a Rhodes Scholar who studied British race relations for his dissertation, and his initial interest in social change, it is easy to forget that his is the man who was general counsel of the world’s largest company, and the man who both Jack Walsh and Jeff Immelt went to for advice.
But, he explains as a confirmed capitalist he realised that while individuals, pressure groups and ultimately governments can all create changes in society, because the major forces for change are economic, it is businesses that are often best placed to facilitate social change.
Business in society
Regardless of whether a business is the size of GE, which employed three times the population of Oxford, or a family concern, it doesn’t simply exist to make money.
All businesses have a role to play in society however society also needs to take a broad view of the role of business. Too often businesses regardless of their size are seen as the enemy.
But, we all need businesses large and small to provide employment, and the goods and services we consume everyday.
Holding business to account
As long as these goods and services are available society places few demands on the business world. It is only when things go wrong that society starts to demand explanations of corporate leaders and those people are brought to account.
It is true that recent years have seen a string of high profile corporate governance scandals around the world which have left the ordinary person in the street shocked, but I ask; should we be surprised that these things happen?
No says Ben, perhaps not, power corrupts at all levels and in all environments. It is important that those in power are called to account every so often.
So is ‘High Performance with High Integrity’ about corporate power?
‘High Performance with High Integrity’ requires corporate power to be exercised responsibly. Most business people acknowledge that as the world changes business also has to change. But I wanted to share my experience of how at GE we tried to achieve ‘High Performance with High Integrity’.
High Performance with High Integrity is written with a focus on the practical, by a man who is definitely a doer, and I get the impression that he is not someone who settles for second best.
Three foundations of responsible business
There are three foundations, he explains of responsible business:
- a tenacious adherence on the part of the corporation to the spirit and the letter of the formal rules, financial and legal
- the adoption of voluntary global standards that bind the company and its employees to act in its enlightened self-interest, and
- living the core values of honesty, candor, fairness, reliability and trustworthiness—values that its employees embody, which infuse the creation and delivery of products and services, and which guide internal and external relationships
Legislation, I agree, is not invented by politicians, but created to reflect the changing views of society and bring everyone to that standard. Voluntarism simply doesn’t work. Corporations are like electricity, they chose the route of least resistance.
So if choosing the right way isn’t always the easy way, how does someone know what the right way is?
By looking to the company values; the rules that say regardless of the cost or consequences this is how we as people in this business behave.
But corporate values are often just something nice to put on the website?
Unfortunately that is true. That is because leaders focus on promoting the words in the value statement, rather than what those words actually mean. When people operate to values, they can start to make decisions for themselves, which frightens a lot of managers, because they see it as a loss of control. What is important is that people know the parameters within which they can make decisions and when they need to ask for help.
Should working to the company values could mean losing business?
Yes. If winning a contract means corrupting the corporate values then that contract is better lost.
So is achieving ‘High Performance with High Integrity’ about changing the way in which management power as well as corporate power is exercised?
Not only that, ‘High Performance with High Integrity’ also requires employees to change the way in which they view their role within a business. For a long time business management has relied upon employees accepting the control of managers. High Integrity requires every person involved in a business to monitor the way the business performs against its stated values.
This also needs a robust HR function that is capable of not only living the values but also helping other people to live them. A training programme may have to be created, recruitment processes changed, performance management measures amended and reward schemes re-focused.
The consequences of non adherence need to be as well communicated as the values themselves and those consequences need to be applied across all levels of the business.
High Performance with High Integrity’ sounds like it is going to involve a huge cultural change?
The economic pressures are there from consumers and investors.
Financial markets will still want quarterly results, but investors are increasingly concerned that companies do not cut corners or make the figures look right.
Both consumers and investors are looking for the long term. Rome wasn’t built in a day, but if a company as big as GE can do it, and I am not suggesting that we got it right all of the time, but the majority of the time we were in the right ball park, then any business can do it.
Surely such a cultural shift requires the level of investment that only a large company can afford?
‘High Performance with High Integrity’ is not achieved by spending money.
Managers simply need to create a workforce that applies a set of values to the way it behaves.
In many ways it is easier for the smaller employer to achieve ‘High Performance with High Integrity’.
The top team often has day to day contact with the people on the shop floor.
That makes it easier to build trust and demonstrate that they are not just promoting values, but living them as well.’
High Performance with High Integrity’ sounds great, but aren’t there some industries that are very traditional or countries with ingrained cultures that make achieving a ‘High Performance with High Integrity’ culture virtually impossible?
I understand what you are thinking about; there are some industries that have such a strong command and control management culture that creating ‘High Performance with High Integrity’ will be more challenging, but those are often the industries with industrial relations issues.
Everyone involved in a business has to ask themselves what they need to do to be successful in the future and work together to achieve that.
In some parts of the world authority figures of all kinds are viewed with suspicion?
Yes. As an employer you need to be sensitive to this, and ensure that the people you place in positions of authority have credibility, and are seen to live the values.
So what about the many parts of the world where corruption is part of daily business life?
Integrity isn’t geographically selective. If it isn’t right at home it isn’t right anywhere else.
Your employees have to realise that they have chosen to work in your company and that doing so means adhering to those company values.
Some companies do have a ‘do whatever you need to do’ approach?
That is the exact opposite of the High Performance with High Integrity approach to business.
Remember the key is having values.
Values for corporate management
Perhaps it is the practical experience that is this books foundation but Ben Heineman has created an easy to read handbook that crystallizes the commercial reasoning behind ‘High Performance with High Integrity’ and explains how to make it happen.
The concept of using corporate values as a management tool is not new.
Many companies attempted it during the nineties without much success, partially because the focus was external on the impact of corporate values on customer relations rather that than the effect they can have on the relationship between employer and employee.