Integrity in Business: Definition and Issues

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Integrity in Business: Definition and Issues
Elwin Poortman, Analyst, Netherlands

The concepts of integrity, morality and ethics might seem similar, but not they're not the same. Jensen (2009) explains the 3 concepts as follows:
  • INTEGRITY: A state or condition of being whole, complete, unbroken, unimpaired, sound or in perfect condition.
  • ETHICS: In a given group, ethics is agreed upon standards of what is desirable and undesirable, of right and wrong conduct, of what is considered by that group as good and bad behaviour of a person or entity that is a member of the group, and may include defined bases for discipline, including exclusion.
  • MORALITY: In a given society, in a given era of that society, morality is the generally-accepted standards of what is desirable and undesirable; of right and wrong conduct, and what is considered by that society as good or bad behaviour of a person, group or entity.
The author states that integrity is defined as ‘our model to honouring our word’. It is purely a positive proposition which has nothing to do with ‘good vs bad’. On the contrary, morality and ethics are normative concepts that relate to desirable vs undesirable behaviour and therefore deal with matters of good & bad or right & wrong. Integrity can be achieved and maintained in two ways:
- By keeping your word
- As soon as one knows that one cannot keep its word, all parties involved need to be informed.

Out-of-integrity behaviour harms workability and therefore limits the performance of a person, group or entity. This is why integrity is of great importance for business and organizations. It means that entities need to ensure that they honour their word, both internally (i.e. between members/workers) and externally (i.e. involved stakeholders). This includes being transparent and honourable, meaning that nothing is hidden; no deception; no untruths; no violation of rights, duties and values. The author states that integrity is the first step in materializing trust which is a concept upon which our global financial system heavily relies. This immediately stresses why entities should acknowledge the importance of integrity.

In today's world, integrity is still often misinterpreted. The main misconceptions and issues causing this are:
  • INTEGRITY IS A VIRTUE: This results in integrity being easily sacrificed when an entity must do so to succeed. In reality, integrity should be seen as a necessary condition for performance that is vital in order to succeed.
  • UNAWARENESS OF CONSEQUENCES OF BEING-OUT-OF-INTEGRITY: People focus on the reason (i.e. the rationalization for not keeping their word) that result in being-out-of-integrity. However, people tend to underestimate or even ignore the consequences for their out-of-integrity behaviour.
  • INTEGRITY IS ONLY ABOUT KEEPING ONE’S WORD: This excludes admitting that one sometimes cannot keep his word, which is inevitable. Therefore integrity also includes being honest in times when one cannot keep his word.
  • PERCEPTION THAT NOT-KEEPING-YOUR-WORD IS A THREAT: This leads to the short term gain of hiding, which is out-of-integrity behaviour. Since it is inevitable that keeping your word is impossible in some cases, it is important to perceive not-keeping-your-word as a challengethat simply has to be dealt with rather than a threat that needs to be avoided.
  • NOT DOING A COST/BENEFIT ANALYSIS ON GIVING ONE’S WORD: This causes irresponsible behaviour in which one underestimates what it will take to keep their word.
  • DOING A COST/BENEFIT ANALYSIS ON HONOURING ONE’S WORD: Treating integrity as a matter of cost/benefit analysis guarantees that one will not be a person of integrity since it implies that one only honours its word when the costs exceed the benefits.
Source: Jensen, M.C. “Integrity: Without It Nothing Works” 2009 Harvard Research Papers No. 10-042


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