Integrity management in organizations centers on accountability and trust. Beyond the duty to formally establish, educate, and enforce a culture of integrity among their employees, companies leveraging integrity management mitigate the risk of breaches, which are separate yet complementary to compliance management.
Integrity Management
There is an increasing need for companies to have a strong integrity management program due to the rise in financial, operational, and reputational risk involved in employee breaches of integrity. In fact, these breaches currently cost companies hundreds of billions of dollars annually.
Breaches of integrity weaken competitive advantage regardless of how strong a company’s products or services may be. This is due to the divide created within an organization with each incident that occurs. The damage can be severe to an organization, its employees, and external stakeholders.
The core objective of integrity management is about strengthening a company’s culture, competitiveness, viability, and longevity. Integrity management requires clearly defined processes, policies, and procedures for risk analysis and mitigation. Integrity management targets the alignment of decisions and actions with a company’s values and principles.
What is integrity?
While the definition of integrity can vary across organizations, regions, and individuals, the fundamental values of integrity are honesty, accountability, trust, loyalty, fairness, transparency, and respect. Integrity encompasses the consistency of actions, values, principles, methodology, and measures applied, as well as the expectations and results.
“At Mercedes-Benz, integrity means doing the right thing. That means: We follow internal and external rules, act in accordance with our corporate principles and in doing so, also listen to our inner compass. This forms the basis of our actions. That is why our code of conduct has the claim “Doing the right thing” as its heading.” Beate Wesoly, Head of Integrity Program, Mercedes-Benz Group AG
Integrity Breaches
Typical breaches of integrity occurring in organizations include but are not limited to bullying, aggression, violence, price discrimination, sexual intimidation, fraud, and bribery. While breaches of integrity cannot be entirely prevented, taking measures at an organizational level enables management to limit the damage to a company and its environment.
Organizational Responsibility
Organizations are responsible for establishing a workplace environment with a low risk of integrity breaches, including a duty to formally establish, educate, and enforce their values and culture. There are moral, legal, and economic drivers for not tolerating dishonorable conduct and encouraging honorable conduct. Companies are subject to statutes and case law to ensure their own integrity and that of their employees.
Ideally, protecting a company’s reputation, establishing sustainable business relationships built on trust, and avoiding liability through responsible corporate governance need to work in unison rather than independently.
It is imperative for organizations to both formally and informally encourage employees to act with integrity on a consistent basis. Most critically, management must consistently set the right example, especially in challenging business transactions. Employees should feel comfortable discussing questions of integrity and there needs to be a safe reporting system in place. Training sessions are critical to ensure awareness among employees. When it comes to well established corporate responsibility, integrity and compliance are mutually dependent.
Integrity management plays a primary role in the creation and maintenance of trust within an organization, as well as with its external relationships, including clients and partners. Therefore, it is of utmost importance that a company’s values and principles are firmly anchored in its corporate goals and business strategy.
Some of the benefits that come with strong integrity management include better client relationships, improved business performance, a positive organizational culture, reduced compliance and governance risk, easier recruitment and retention of top talent, and stronger relationships with stakeholders. Establishing and maintaining a strong integrity management program should be a top priority for every organization.
