2005 Lyceum Speaker Series: Integrity

October 18, 2005
Integrity Built on Willingness to Choose Long-Term Investment
by Kate McCann

If someone offered to give you a $25 Amazon.com gift card today or a $35 gift card in three days, which would you choose? A recent neuro-economics study examined the reactions of college students when asked this question. A scan that recorded the participants’ brain activity determined that most students had a strong reaction to the instant gratification of the $25 dollars, rather than patience for the longer-term investment.

At the Oct. 12 Lyceum Speaker Series, Sarah Teslik, CEO of the Certified Financial Planner Board of Standards, explained that the test subjects’ preference for immediate rewards is simply human nature, but it is also responsible for some of the shortcomings in business.

“Human nature dictates that virtually everyone will act in the perceived short term interest,” she said. “We know it’s wired.”

The dark side of human nature is the tendency for people to act inappropriately and compromise their ethics. In business this could translate to embezzling funds from an employer, and the problem generally starts small. “The most typical way that baby embezzlers transition to adult embezzlers is to overstate a taxi receipt,” Teslik said.

When an employee takes a taxi on the company dollar he must report the expenditure by turning in the receipt. Generally, the tip is left blank. Therefore, the employee faces a dilemma--either write in the correct, honest amount or fudge a little and pocket $2. While this failing of integrity seems small, it could be the gateway to more serious crimes.

“What’s interesting about integrity is not the big picture stuff,” Teslik said. What is interesting is the little stuff. “Given what we know, how do we get people to act with integrity?”

In a hypothetical situation, Teslik asked students how they, as CEOs, would ensure integrity in a 40,000-employee company. One solution is to lead by example. Teslik said that engendering a feeling of ownership for the company will instill a protective instinct in employees, which will hold them accountable for their actions. They may even encourage others to act with integrity. After all, she explained, self-proprietors don’t steal from themselves.

In today’s society where the CEO is the superstar, Teslik advised that supportive branches need to be steered away from developing a dangerous “us verses them” mindset. In order for employees to feel that sense of ownership, those in leadership positions must allow those responsible for great things to take credit where credit is due.

The best bet for ensuring integrity within a company is to align people’s interests. While it’s obvious to offer incentives, Teslik said, almost no companies do this well.

On a practical level, Teslik believes it takes an individual three years to build a reputation for integrity. When a previous employee came to her asking how he could “get” integrity, she answered honestly. “The first time you stop yourself from knifing someone who deserves it, it’s hard and you’re miserable,” Teslik said. “But it gets easier after awhile because you feel the reward. Then you’re known as a straight-shooter and people start saying, ‘I believe him, he tells the truth.’ If you can get there, it’s self-enforcing.”

In conclusion, Teslik reminded students that an accountant’s job is not to be a stringent enforcer, effective counter or keen observer. “Your real job is to get the best out of others,” she said. The methods of ensuring integrity in the workplace comes back to human nature and encouraging employees, peers and co-workers to go for the $35 gift card to reap the real rewards.