Integrity Matters
February 15, 2006
Profitability linked to integrity and
trust
Question: (E-220)
Dear Jim:
You consistently tie profitability with integrity and
trust. Why?
Response:
Relationships, built upon honoring commitments, are
what sustain the long-term success of the enlightened
free enterprise system.
Enlightened free enterprise demands legitimate, not excessive,
profits, simultaneously valuing community, the source
of integrity and trust.
When trust breaks down, faceless buyers and sellers demand
detailed contracts and more costly inspections. When
breaches of trust are deep, legislation is demanded.
Free markets must operate with integrity, a culture
of compliance, or face increasing government oversight.
Whatever precipitates the need for recalling faulty automobiles
or restating corporate financials, uncertainty precedes
loss of trust. The Wall Street Journal reported Dec.
27 that medical-device maker Guidant Corp. fell short
of analysts' fourth-quarter profit expectations amid
the company's continued struggle to overcome concern
about its warnings about malfunctions in its cardiac
electrical devices.
Guidant's corporate leadership illustrates failed integrity.
Its leaders misled customers, some of whom died, and
the company is paying a high price for its self-serving
greed.
Thinking only about short-term profits is a mistake.
The old maxim applies: "Cheat
me once, shame on you. Cheat me twice, shame on me." Many consumers recognize
when they are being violated. Though not vengeful, those who have suffered marketplace
mistreatment have long memories and will likely never give the same greedy individuals
a chance to prey on them again.
Five attitudes need to be addressed to sustain enlightened
free enterprise.
First, legitimate profit is constructive. Second, workers
deserve appropriate compensation. Third, suppliers must
be able to earn appropriate returns. Four, families and
villages are cornerstones of culture and are worth sustaining.
Five, success in the enlightened free enterprise system
is about how people treat one another: socially, politically
and economically. Restoring trust demands, at least sometimes,
sacrificing incredible for reasonable profits while maintaining
genuine concern for all stakeholders, demonstrating customer
loyalty and social sensitivity. Integrity and trust build
long-term profitability.
