Amongst the myriad of imposing challenges currently weighing upon American society and abroad, the most pressing leadership issue of today is the need for a genuine practice of integrity instilled in corporate and organizational cultures. This essay will discuss how the lack of honesty and transparency in business and other sectors of life have reaped disastrous results for those who fail to practice them. The discussion begins with a quote from The McKinsey Quarterly about the quandary corporate leaders face when attempting to balance the need for a company’s long-term health and reputation against short-term profits and personal gratification or gain.

In an interview with Daniel Yankelovich, The McKinsey Quarterly staff writers Mendoca and Miller (2007) commented, “As more and more executives come to recognize that a company’s reputation is an important strategic asset, many are understandably confused as they ponder the numerous social and political issues that now stand alongside simple profit as a measure of long-term corporate health.” (p. 1). Unfortunately, leaders in some of the largest and most well-known organizations have not been able to withstand the temptation to place profits or personal gain ahead of long-term corporate health and reputation. In fact, recent events in the (a) corporate, (c) financial, and (d) political sectors of the United States serve as prime examples of how the lack of honesty and transparency has led to termination and loss for all stakeholders including the individual, the organization, its employees and the community at large. Included in such examples are:

1. The accounting debacle that brought down such large corporations as (a) Enron (aided by Arthur Anderson), (b) Adelphia, (c) Tyco, and (d) WorldCom each of which was forced to reorganize or close for filing false financial reports in order to maximize the value of their respective stocks. (Wygal, 2004, p. 1).

2. The collapse of once mighty investment banks like Lehman Brothers, Merrill Lynch and Washington Mutual as well as America’s largest mortgage company, Countrywide Mortgage, due to the ill-conceived subprime mortgage lending scheme. This crisis has led to the disintegration of the United States’ housing market and subsequently to a steep decline in the global financial markets. (Duncan, 2008, p. 1).

3. The exploits of Illinois governor Rob Blagojevich who has allegedly attempted to sell the Senate seat of President-elect Barak Obama to the highest bidder and has now been impeached by the Illinois state legislature. (Bone, J., 2008, p. 1).

In all the above cases top level executives either hid the truth or used positions of authority for ill-gotten gain. Their unethical actions resulted in a short-term thrill ride with an ultimate end that left stakeholders and shareholders worse off than when they started. In contrast, in a Business Week article published in April of 2002, Wee points out that sticking to a high ethical standard allowed corporate giant Johnson & Johnson to weather short-term public relation nightmares tied to its tainted Tylenol product and continue doing business for the long-term. (p. 2). All these examples illustrate that the most pressing need for today’s leader is to learn how to set aside the intense pressure for short-term gains and instant gratification in order to instill high ethical standards that will ensure sustained growth and long-term corporate health and profitability. This is so because potential clients remain loyal to companies they trust.

Trust is a major key for sustained growth. If customers trust a company to consistently offer superior products and services on the up and up and at an affordable price, they will repeatedly frequent that establishment. On the other hand, if an operation seems seedy and underhanded, regular and potential customers alike will flee and take their business elsewhere.

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Source by Eric Coggins