Keeping Conscience Front and Center

Keeping Conscience Front and Center

I just read a phrase that’s hard to forget – “subprime leadership.” Bill George, former Medtronic CEO, is a role model for character in leadership, and just published a book entitled Seven Lessons for Leading in a Crisis. Fortune, in reviewing the book on August 31^st, 2009, sums the book up by saying that the financial crisis wasn’t caused by subprime mortgages – it was caused by subprime leadership. Leaders silenced voices of dissent and likely silenced twinges of their own conscience. Many leaders in financial institutions surely recognized that the system was unsustainable, and many across the economy knew they were investing in risky instruments they didn’t understand.

Many leaders failed to keep conscience front and center in the past few years. But some did. A colleague, Karl Kuhnert, recently sent a Business Week article by Vivek Wadhwa. Wadhwa had just heard Michael Beer of Harvard, who was discussing his recent book, High Commitment, High Performance. Beer believes the data proves that companies that take ethics seriously, that keep their purpose – and their conscience – front and center, came through the crisis largely unscathed. In the large, failing banks, no one could speak truth to power, and higher purpose took a backseat to short term profit. They lacked a higher purpose, lacked clear strategy, and mismanaged risk. In companies like Charles Schwab and US Bancorp, though, maniacal focus on customer service, honesty and transparency – keeping values in the forefront – kept these companies out of investment strategies that destroyed so many.

Karl Kuhnert’s model of leadership levels, based on Robert Kegan’s theory of adult development, would predict that individuals at levels four and five would not need constant reminders of their values – they, in a sense, are their values – but for the rest of us struggling as adults to move from level three to level four, constant reminders are critical.

A research study from Harvard may help us understand why. In this study, reported in the February, 2008, Harvard Business Review, researchers gave subjects ten math problems, and paid 50 cents for each correct answer. Researchers had found that control groups averaged about four correct answers in the allotted time. In the experimental group, researchers asked subjects to score their own answer sheets and then shredded the sheets without looking at them, and asked the subjects to report the number they got correct. Subjects inflated their scores by about 50% - the average reported correct was six. The most interesting part of the study for me was this – asking people to contemplate their own standards of honesty (by recalling the Ten Commandments or signing an honor code) eliminated cheating completely.

Amazing - and something every leader should remember every day.

See How Character is a Key to Success for more on our views on leadership and character.