Honesty: Still the Best Policy

Posted by Greg Bustin (February 1, 2005)

Excerpted from the book, Take Charge! How Leaders Profit From Change, by Greg Bustin.

Great leaders who succeed in times of change share nine characteristics that you can take to heart and apply daily. These nine characteristics are so fundamental, so timeless they should be obvious. But just because they’re obvious doesn’t mean they’re easy to adhere to - especially on a consistent basis.

Last year, we examined the importance of decisiveness. As the trial of WorldCom’s Bernie Ebbers gets underway and Martha Stewart begins her 30-day countdown from her prison release, it’s an appropriate time to tackle the imperative of honesty.

In our brand-conscious society, leaders are an extension of their organization’s image. This is especially true in changing times. There are more opportunities - some might say pitfalls - for tough decision-making when things are in flux and uncertain. Nevertheless, you are expected to do your best and, of equal importance, do right by your organization’s stakeholders all the time.

But get ready for what you’re up against. Nearly two-thirds of Americans hold the top leaders personally responsible for restoring trust and confidence in American business, one study found, while another identified unethical behavior as the highest threats to a company’s reputation.

The lack of integrity being demonstrated over the last few years by so-called leaders has been truly frightening. Poor ethical judgment will do what even a shaky economy cannot: Topple the mighty.

As a guiding principle, honesty tops the list of attributes of all great leaders.

In times of change - good and bad - there’s usually a lot of uncertainty. Will I lose my job? Is the company relocating? Is the plant closing? Can you do the job? Will this lawsuit kill the company? Can you meet the deadline? Is this new job a real opportunity or is it a way to transition me out of the organization? Is the entire organization behind me on this new initiative?

People want to know the score so they can make their own decisions. They need the unvarnished truth. They may not like what they’re told, but they need to hear the truth and it’s your responsibility to give it to them. Failure to do so can have two unfavorable consequences, both of which are worse than what you may consider the short-term pain of being honest. First, you’re simply delaying the inevitable because sooner or later, the truth will emerge. Second, when it does, your credibility will be shot to pieces for not shooting straight in the first place.

Whether the promise is little or big makes no difference to the person on the receiving end if you don’t deliver. When you tell the truth and honor your commitments, you earn someone’s trust. But when you don’t do what you say you’re going to do, you lose it. Few guidelines are as black and white as this one: Always tell the truth.

The absence of truth is also a lie.

That’s what brought down Don Carty, chief executive of AMR Corporation, parent of American Airlines. The world’s largest airline, of course, had been hit hard by the double whammy of the recession that began in April 2001 and the events of September 11, 2001. Air travel evaporated, and soon, so did the company’s cash. By the spring of 2003, its business was in a tailspin, hemorrhaging money at a rate of $10 million each day. Carty wanted desperately to keep American out of bankruptcy. He was making progress, having negotiated $1.62 billion in wage concessions from the company’s three labor unions. But because American delayed a filing with the Securities & Exchange Commission regarding executive-retention packages worth millions of dollars for 45 executives until the union negotiations were completed, the company breached the uneasy trust between management and labor that Carty had spent years trying to repair. American issued a statement saying labor leaders had been informed of the retention package but did not tell their members. Labor leaders went ballistic, since it turned out this statement was not true. When American later retracted its statement, the gap of credibility widened even further. Carty then issued an apology saying, “it was not my intent to mislead anyone.” He acknowledged, “my mistake was failing to explicitly describe these retention benefits, and because of that, many employees felt they were kept in the dark.” The apology rang hollow. Carty’s credibility was gone. And within six days of these developments, so was he.

Understand that this attribute is different from being decisive: it’s all about being honest and ethical. Organizations built on anything but the truth will eventually develop divisions within the leadership structure, and this division will become their fatal weakness.

When New York Yankees owner George Steinbrenner made a statement about a player’s future that contradicted what manager Joe Torre had told the player, Torre was furious. It’s one thing to have an owner micro-managing the day-to-day running of a team. But what upset Torre even more than the interference was the appearance that Torre was not telling the truth to his player. Torre’s credibility was threatened. He responded immediately and publicly by explaining the series of events and setting the record straight, rightly believing it more important to maintain his credibility than angering his boss and risking dismissal.

If you’d like one more reason to tell the truth, consider the instant availability of information. The Internet has made it easier than ever to expose lies, misrepresentations and half-truths, and the news media’s insatiable hunger for controversy will expose fraud, deceit and self-dealing in a very public and humiliating way. Don’t think for a minute you can evade or cover up the truth because you can’t.

Allen Questrom has built a deserved reputation as a turnaround wizard. In 2003, he found himself at the mid-point of a five-year plan to restore stature and sustainable profitability to 100-year-old J.C Penney. “I cannot emphasize enough the importance of remembering your core values,” Questrom says. “Credibility is key. You have a responsibility to your people and your clients. When companies go bad, they go bad because of the leaders. Business today comes down to our customers asking, ‘Can we believe what you say?’ Credibility and trust are key.”

More than 200 years ago, founding father Thomas Paine said, “Character is easier kept than recovered.”

So always tell the truth, no matter how painful it may seem at the time.

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