My company was struggling financially, and my division was geographically undesirable. My boss shared with me that my stores were up for sale. The company filed for bankruptcy. Soon after, I got a phone call I will never forget- one that shaped the rest of my life.
My phone rang, and the gentleman on the other end of the line informed me that he had provided a letter of intent to buy my division. He said he was impressed with my operation and asked if I would consider coming to work for him.
We got to know one another on a trip to Houston where we both testified at a federal bankruptcy proceeding. My role was to verify the nature of the operations and assets. He, under oath, swore he would operate the stores as a division and not sell them for real estate.
We completed the transaction and integration, and I took on a new role as category manager. One by one I saw the stores sold for real estate. I thought, "Houston, we have a problem."
Later the buyer's son-the company President-approached me after a marketing meeting. He asked me to overstate our sales to one of our vendors, one of the largest consumer packaged goods companies in the world. We received discounts based on sales, and he wanted to maximize the discount.
I marched into the CFO's office to let him know I had been asked to commit fraud and said, "No thanks." A couple months later I found another position and moved on.
But I learned a lot about values while working for a thief. It was the kind of place where decisions were made in the shadows. There wasn't a lot of transparency. There was a chain of command, and you didn't cross it. This is the formula used by people who have something to hide.
Many years later, I found out that both the father and son were indicted on tax fraud charges. If you can't do the time, don't do the crime.
To run a principled company based on honor and integrity, you have to flip the script. Here's how:
1. Be radically transparent.
The best leaders are open books. Not all want to share financial information and I am never the one to implore them to do it. That is a highly personal decision each entrepreneur needs to make for him or herself. But the more your employees know about your business and the numbers, the better decisions they will make. And the more information you share, the more they will trust you. One of my clients actually explained their profit and loss statement to their employees using Monopoly money. Another client is an ESOP (employee stock ownership plan) that holds quarterly small-group meetings in which the CFO answers questions about the company's financial statements.
2. Be accountable.
Leaders accept their flaws and admit their mistakes. The most unseemly thing about recent misconduct allegations involving so many executives is that no one knew about them. One thing most well-run companies do is conduct 360s where employees can share feedback with managers. Listening is a critical skill for any leader.
3. Constantly reinforce your values.
Famously, Malcolm Gladwell made popular the notion that you need to do something for 10,000 hours to be an expert (I have paid my dues). It may take 10,000 hours of reinforcement for a values-based culture to take hold. There are ways leaders can methodically reinforce values. For example, one of our smaller manufacturing clients begins every meeting with a safety tip, just to reinforce that employee safety is the number-one concern.
4. Convert values into behaviors.
Values can be misconstrued as little more than words on a page. To make sure your values stick, convert them into actual behaviors you expect. For example, one of your values may be integrity. To spell out the behavior, such as "we never lie to clients even when the truth is painful", or "we tell the customer in advance when their shipment will be late", is just good business.
The number one thing I learned working for a thief: your word is your bond. It's a slippery slope when you are dishonest with yourself and others. I am so grateful that the vast majority of people I have worked with do the right thing. Your integrity needs to be absolute.