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What if “integrity capital” will make you more money?

Integrity Capital

Most managers would probably snarl or hiss at you if you used the term “integrity capital,” but it might have some validity.

Basically: we’ve got some research that companies who act with more empathy can make more money. Good! There are also some ideas that more compassionate workplaces make more money. Also good!

So “integrity capital” — i.e. the idea of acting ethically/behaving with integrity — could maybe also be tied to real revenue increases? Let’s try this theory out.

Integrity capital and Northwestern research

Here’s some research on integrity capital from the good people at Northwestern University, including this part:

“But if there is no cost to claiming things about your culture that aren’t true, then does it create any value for the company?” Sapienza asks. “We found that the answer is yes.” Companies for which the employees did evince a strong culture of integrity were associated with stronger economic performance: a higher Tobin’s q ratio, better profits, and lower levels of unionization. “Maybe a higher level of trust is a good substitute for unionized labor relations, or maybe it is the other way around: management of firms with fewer unions is perceived as more ethical,” Sapienza says. “All these results indicate that there is some tangible, measurable economic value associated with  ‘good’ corporate values. It’s more than a feel-good result.”

“It’s more than a feel-good result.”

So what stands in the way of integrity capital?

Unfortunately, quite a bit. A quick list would be:




 

Basically, many companies are ethical mine fields. The goal is “get more,” and oftentimes people are given shady incentives to find ways to get more. It’s hard to slot integrity capital into that equation — at most places.

So could we arrive at a place where integrity capital was normative?

Short of changing many definitions around “success,” probably not. Just think on this for a second: one of the great “promises” of digital was that we’d see increased collaboration on platforms. That has happened to some extent, which is good. But by and large — albeit decreasing — the world is still run by old-school guys who frame up everything in terms of “competition” or “eating the other dude’s lunch.”

In workplaces molded by men like that. there’s no hope for integrity capital.

If we had better managers, shifted business models, and more kids who came of age in a connected, collaborative world becoming leaders, then yes — so in 20 years, you might see a concept like “integrity capital” as more normative. It’ll take a bit to arrive there, though.

For the next decade or so, I’d still expect a manager to snarl at you if you dropped the mic with “We need more integrity capital!” in a meeting.

Ted Bauer

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