When you see lists of the most important personal characteristics in a CEO (or senior executive), the most common criteria is impeccable integrity. Integrity is more important than past performance and/or future vision, and it is easy to understand why.

Trust is a huge factor in granting responsibility and fiduciary obligation. Most CEOs have little direct daily oversight and must be trusted to set the tone of integrity for all others in the company. The consequences of dishonesty can destroy a brand reputation, and eventually, the entire enterprise.

What is integrity? 

Integrity is far more complex than the dictionary definition of “adherence to ethical and moral principles.”

Each time I find myself losing trust in someone, I ask myself, “are the symptoms an indication of incompetence or a lack of integrity?” The actual outcome might be the same, but in my mind, a flaw of integrity is a more unforgivable sin. And rightfully it should be, because integrity issues result in problems continually being repeated and lack of a learning curve. Integrity, or lack thereof, is an embedded issue that is extremely hard to change.

My “integrity ladder” rates this trait in executives from fatal to marginal.

Stealing or direct lying for personal gain: This is a no-brainer—there is no reason to spend a large amount of time trying to figure out how to fix this issue even in the most talented individuals. Regretfully, there are organizations that value the individual’s results more than this moral principle; however, it eventually catches up with them.

When Justice Department investigators create sentencing guidelines, they often rate ‘tone at the top’ highly, which is the executive tolerance to dishonesty in return for profit. Not only should you avoid promoting this behavior, but you should also get rid of these individuals quickly before they teach others to act the same way.

Misleading for personal gain by intentional omission: This fully falls in the integrity “fatal” category. It is not a direct lie, but its purpose is the same outcome—intentional deception for self-benefit. Get rid of this type of executive before they contaminate subordinates.

Manipulation and politics for personal gain: This is sometimes called ‘unfair office politics,’ which are neither trustworthy nor straight-forward behavior. It manifests itself in many forms and techniques, but when does it cross the “integrity flaw” line? Judgement is challenging and depends on its malicious nature. Back-stabbing, setting colleagues up for failure, and false rumor propagation are all poisonous traits in a business culture. This type of behavior can quickly be deemed acceptable and be viewed by others as “fair game.”

Less deceitful forms of manipulation for enterprise gain or career advancement are common and blur the line between acceptable behavior and integrity.

The politics of schmoozing or saying what superiors want to hear is frequently seen as a virtue in client relationships, sales, and in attempts to gain favoritism. In fact, its total absence is often seen as a flaw. However, I would advise caution here because its nature of being a shade of grey area can allow trust deterioration to creep in over time.

This behavior is a slippery slope, but to some degree, it is an unavoidable societal characteristic with groups. Good leadership can define and articulate the boundary between acceptable and unacceptable behaviors.

Let’s take three examples:

In a private company, one of the inside directors convinces two of his peer directors to push his new self-serving idea at a board meeting. His plan is to have them get in front of the issue and watch body language to know if he should commit. An integrity issue or just good company politics?

After receiving a call from the U.S. Justice Department that his company is under investigation for a potential Foreign Corruption Practice Act (FCPA) violation, the CEO has a routine update call with the chairman. In the call, he briefs on last month’s financial results and some miscellaneous personnel issue without mentioning the DOJ FCPA issue. The CEO figures that there is no rush, and he wants to know more before disclosing. An integrity issue or just a wise delay?

A CEO who is failing in his job role runs into one of his subordinates and asks, “How am I doing?” The subordinate responds, “You are doing absolutely great in my book, but you have some enemies.”  An integrity issue or good company politics?

If I asked 100 people to vote on whether each were an integrity issue or not, I would get neither 100% nor 0% on any of them. As you can see, integrity is a shade of grey.

So, here is the main point: marginal-level integrity issues can be a group norm and may lead to worse behavior. It happens slowly with office politics, and then moves to malicious manipulation and omission to mislead. Finally, it results in stealing and lying. When you foster an environment tolerant of manipulation, you are liable to inadvertently sort layers of management advancement by those who are most successful in manipulating and misleading you.

As long as employees produce results, permitting marginal integrity starts to move into a more advanced toleration. Most crooks don’t get caught on their first robbery. Murderers often start their behaviors with bullying and verbal abuse before turning physical.

So, draw your unacceptable integrity line low on my ladder, and nip it in the bud before it escalates. Leaders set the rules of the family.

© 2017 Robert Uhler and THE UHLER GROUP. All rights reserved.