Photo credit: Adam Vogler | Business Journals

Warren Buffett on ethics and integrity

Article originally published in the Philadelphia Business Journal on July 12, 2021.

I have written extensively about the importance of a leader’s ethics and integrity. Without these two critical traits, there is little to no trust among employees and between employees and their bosses. This is a terrible environment in which to work. How do CEOs communicate the importance of these traits? They do it through their tone at the top and the organizational culture they nurture.

If a leader lacks ethics and integrity, someday they may appear on the front pages of The Wall Street Journal and The New York Times reporting on actions which damage their reputation and that of the company.

In an October 1998 speech to University of Florida MBA students, highly regarded investor Warren Buffett, chairman and CEO of Berkshire Hathaway, said, “In determining whether you succeed, there is more to it than intellect and energy. …There are three things in hiring people [that you] should look for: integrity, intelligence, and energy. If the person doesn’t have the first … the latter two will kill [you]. … Wise advice from the “Oracle of Omaha,” as Buffett is respectfully known.

Photo credit: Adam Vogler | Business Journals

So, how do you determine the ethics and integrity of the people you hire? Monster.com, a job listing and search website, suggests asking some of the following questions:

  • What do you believe comprises [an] ethical workplace?
  • Have you worked for a company that had a code of conduct, and did you have positive or negative experiences there?
  • Have you taken a course or had any training in business ethics?
  • How does being an ethical individual differ from being an ethical corporation?
  • Would you ever lie for me?
  • Tell me about a time that you were challenged ethically.
  • Did you see the ethics material on our website? Which of our corporate values made an impression on you?
  • I see you’ve worked with people from different cultures. What ethics and values did you find you had in common, and where did you differ?
  • When you’ve had ethical issues arise at work, whom did you consult?
  • The higher the position you are hiring for, the deeper the due diligence you must do, including background and reference checks from individuals not suggested by the candidate to uncover anything that might disqualify them from employment.

I recall speaking to a class of MBA students about the importance of adhering to U.S. anti-trust laws, which prohibit price-fixing and other anticompetitive activities, and the Foreign Corrupt Practices Act, which prohibits facilitating payments to government officials for the purpose of obtaining or retaining business or to obtain permits to conduct business.

A student in the MBA class raised his hand and asked, “Doesn’t that place U.S. companies operating outside the U.S. at a disadvantage versus competing companies from Europe or Asia? If I don’t make the facilitating payment, I won’t meet my objectives.” My immediate thought was, don’t hire this individual.

Those who price-fix or violate the Foreign Corrupt Practices Act are weak business leaders. They don’t know how to effectively compete in a robust competitive market. I have no respect for them.

In his departure comments from the U.S. State Department, Rex Tillerson, former chairman and CEO of Exxon Mobil and former secretary of state under President Donald Trump, said, “Never lose sight of your most valuable asset, the most valuable asset that you possess – your personal integrity.”

Tillerson continued, “Only you can relinquish [your integrity] or allow it to be compromised. Once you’ve done so, it is very, very hard to regain it. So guard it as the most precious thing you possess.”

All leaders should remember Tillerson’s comments. It should guide the tone we set at the top and the culture we nurture within our organizations.

Stan Silverman is founder and CEO of Silverman Leadership and author of “Be Different! The Key to Business and Career Success.” He is also a speaker, advisor and widely read nationally syndicated columnist on leadership, entrepreneurship and corporate governance. He can be reached atStan@SilvermanLeadership.com.

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