Cash or Character?
Not too long ago, I was asked to give a talk about organizational culture and why it matters. Before I walked up to the podium, one of the attendees cornered me. He wanted me to know his strongly-held position. In an emphatic tone, he nearly shouted:
“Skip, cash matters, not culture, not character, not creativity! Cash is the only thing you can spend.”
How fortunate that my slides started with financials so I could demonstrate the power of culture change. But, what I wish I had was the book that crossed my desk a few weeks ago: Return on Character: The Real Reasons Leaders and Their Companies Win. In the most comprehensive study of its kind, Fred Kiel reveals the research that proves that good character wins. We discussed his findings at length and I know many organizational leaders will want to study the results.
Tell us just briefly about your study and its methodology. Where did you get the idea, how many CEO’s were involved, etc.?
In 2005 I and my co-author, Doug Lennick, published a book entitled Moral Intelligence in which we claimed that highly principled leaders obtained better long-term business results than leaders who were not so principled. The book has done very well, but shortly after it was published we received some pushback. One person said, “Fred, I know you like all of this soft stuff. But let me give you a little lesson in economics. The business model is what creates value. If a business is profitable and makes a lot of money, all that culture stuff will come along with it. And if it doesn’t, that’s not a big deal as long as management stays legal. What you talk about is just icing on the cake. It’s nice but not necessary. And, besides you don’t have any hard data to back up your claim.”
This really got to me. He was right about me not having any data to back up our claim that character matters – and that became the call to action for our study.
Over the next seven years we signed up 121 CEOs and their senior teams to participate. Eighty-four completed the study, so we have complete data sets on these 84 CEOs, their senior teams, and their organizations. Over 8,500 randomly selected employees completed our surveys about these CEOs and their teams. We have nearly one million separate data points in our research base. This is the largest study of this kind to date.
4 Universal Character Habits
How do you define character in the Return on Character (ROC) matrix?
We scoured the cultural anthropology research and discovered that humans all over the world share many common practices and beliefs. Parents all over the world teach their children to tell the truth, keep promises, own up to mistakes, forgive others, and to care for people – at least in their tribe. We added to this understanding the recent findings from the neurosciences and genetics to come up with our definition of character as it applies to leaders.
The ROC Matrix shows the four universal principles and the character habits that are aligned with these principles.
Lincoln said, “Character is the tree. Reputation is its shadow.” Likewise, the habits we all have for how we treat other people is our character reputation. That’s what we measured in our research – a leader’s reputation for how he or she treats people.
Probing the Leader’s Childhood
In several places in the book, you delve into the CEO’s childhood and upbringing. Why? What did you find? Why is the CEO’s life story so important?
If you took the resumes and employment histories of high character CEOs and compared them to low character CEOs, you’d be hard pressed to see much difference. Both groups are competitive, driven to succeed, rational, high energy, and often wicked smart – they know how to command a room and nail an interview.
Where we started to see significant differences was when we surveyed their employees and asked about their behaviors around the 4 universal character habits – integrity, responsibility, forgiveness and compassion. So that begs the question – how did each group come by their different postures around these habits? Where did they get their beliefs about how the world worked and how to succeed in that world?
Turns out the clues are in their childhoods and upbringing.