The Importance of Integrity
Do you show leadership or financial cancer?
In 1979, I learned an important lesson about the importance of integrity. At that time, my first business was failing. Many of our account receivables were out past 90 days, I owed money to our distributors and back taxes, and I was in danger of not being able to pay my employees.
Still, I was trying to hold on.
Rather than be honest with myself, I kept making excuses. And as rich dad said, “Excuses are simply lies you tell yourself.”
At this time, I sat down with rich dad and he looked over my books. After some tense silence, rich dad looked up, shook his head, and said, "Your company has financial cancer, and I'm afraid it's terminal. You boys have mismanaged what could have grown into a rich and powerful company.”
He went on to say, “You and the three clowns you call partners have mismanaged your business. You don't know what you're doing, you're incompetent. And worst of all, you don't have the guts to admit it. You guys are pretending to be businesspeople but when I look at your financials, you boys are either crooks or clowns. I hope you're clowns, but if you don't make some changes, you clowns will become crooks.”
It was a hard truth to hear, but thankfully I listened to my rich dad, liquidated my business, paid my employees and back taxes, and started over with nothing in my pocket. I wasn’t rich in terms of money, but I had gained a wealth of knowledge and retained my integrity, which is one of the most important things a person can have.
The Age of Integrity
One of the many lessons I learned from my failure was that it's not the lack of money that kills a business. It's more the lack of business experience and lack of personal integrity.
Around that time, I started learning from Dr. Buckminster Fuller, who was considered one of the smartest men of our age.
Dr. Fuller taught that we were entering the age of integrity. Integrity simply means whole or complete. That means that your thoughts, your words, and your actions need to be the same. If you will do that, the future is yours.
If you don’t, you can cause incredible damage in our increasingly connected world.
The power of integrity
This last week, the power of integrity was on display in a negative and massive way when Greg Smith, an executive at Goldman Sachs quit through an Op Ed in The New York Times.
According to Smith, “To put the problem in the simplest terms, the interests of the client continue to be sidelined in the way the firm operates and thinks about making money. Goldman Sachs is one of the world’s largest and most important investment banks and it is too integral to global finance to continue to act this way. The firm has veered so far from the place I joined right out of college that I can no longer in good conscience say that I identify with what it stands for.”
Central to what the firm used to stand for was “teamwork, integrity, a spirit of humility, and always doing right by our clients,” the “secret sauce” according to Smith that allowed the firm to enjoy success for over 143 years.
Living out of integrity
Among 14 values listed on Goldman Sachs website are two important ones:
OUR CLIENTS’ INTERESTS ALWAYS COME FIRST.
INTEGRITY AND HONESTY ARE AT THE HEART OF OUR BUSINESS.
Goldman has a problem today because a high level leader is questioning their integrity. They say one thing but do another. They live out of integrity.
As Smith writes,
How did we get here? The firm changed the way it thought about leadership. Leadership used to be about ideas, setting an example and doing the right thing. Today, if you make enough money for the firm (and are not currently an ax murderer) you will be promoted into a position of influence.
What are three quick ways to become a leader? a) Execute on the firm’s “axes,” which is Goldman-speak for persuading your clients to invest in the stocks or other products that we are trying to get rid of because they are not seen as having a lot of potential profit. b) “Hunt Elephants.” In English: get your clients — some of whom are sophisticated, and some of whom aren’t — to trade whatever will bring the biggest profit to Goldman. Call me old-fashioned, but I don’t like selling my clients a product that is wrong for them. c) Find yourself sitting in a seat where your job is to trade any illiquid, opaque product with a three-letter acronym.
Those actions couldn’t be more opposite than Goldman’s stated values.
How’s your integrity?
As I said, integrity is one of the most important things you can have and control. Each day, you make a decision whether you’ll walk in integrity or not. And in the Age of Integrity, our actions affect others in untold ways.
For instance, Goldman was a major contributor to the financial crisis because they pawned off toxic assets to clients, causing massive financial damage. Their lack of integrity cost investors billions if not trillions of dollars.
Conversely, Greg Smith’s open letter last week caused Goldman Sachs to lose $2.5 billion in market value.
Only time will tell how truthful Smith’s letter was, but I’m inclined to believe an individual who puts his reputation on the line over a firm that settles antitrust lawsuits with the SEC to the tune of $550 million and has a host of other public integrity issues.
But one thing remains true, the Smith/Goldman debacle shows that integrity is massively important in today’s world of business.
While your integrity or lack thereof may not cost people billions of dollars, it is still massively important to your success and the success of others.
A lack of integrity results in broken relationships, lost deals, and a bleak future. A life of integrity results in a multitude of friendships, new opportunities, and a bright future.
So, how’s your integrity?
For more information about building your leadership, integrity and success, see our free, financial education resources here.