The CFO'S Perspective

Integrity in Finance – Why Establishing Trust Matters

“If you have integrity, nothing else matters. If you don’t have integrity, nothing else matters.”
- Alan K. Simpson

integrity-in-finance

Integrity in finance should be the foundation of a lasting bond between a business and its clients. Everyone wants to believe the promises that a company makes to them with respect to safeguarding their interests. But how many organizations can follow through on those promises? 

In an ideal world, we would have absolute trust in our financial institutions, advisors, and government regulators. Unfortunately, history and public sentiment tell us a different story. Sure, ethics and integrity still exist in finance. And those organizations are the ones that will consistently find success. 

What is Integrity?

Although we often hear the word used in professional and personal contexts, its meaning can be tough to sum up. Integrity can be defined as a continuous display of principled beliefs and values. It’s aligning your personal or business conduct with what you know to be right and ethical, regardless of the circumstances. 

It’s obvious that considerate, empathetic, honest, and kind people are the ones you want to work with. That’s why these are highly sought-after traits. If your leaders and organization as a whole act with integrity, it will have a profound impact on your results. 

Why Consumers Lack Trust

Every leader and organization is going to profess to be “pro-integrity.” But walking the talk is another matter entirely. When a business or its leadership promises to value its consumers, employees, or investors and takes actions that undermine those very entities, it’s no wonder there is a crisis of trust. 

According to the 2020 Edelman Trust Barometer, an annual trust and credibility survey, financial services and banks were the least trusted industries. This is a common theme with this survey, as respondents have become familiar with scandals that continue to occur and attribute them to a culture driven by conflicts of interest, outsized remuneration, and corruption. 

Businesses and financial leaders have been operating without integrity for over half a century. In recent years, we’ve seen the largest Ponzi scheme in history uncovered, fake account scandals by a major U.S. bank, and extreme corporate bailouts by the U.S. government. 

Instead of accepting the responsibilities enlisted to them with integrity and humility, it’s clear that these organizations and some of their leaders behaved deceptively. They did what was in their best interests instead of those they were hired to serve. 

Integrity in Finance

Whether you’re a bank, a mutual fund, or a financial leader, your success depends on having a strong moral compass as a foundation. Some of the benefits of exhibiting integrity in finance include:

  • Establishes Trust - There is a definitive link between integrity and trust. People want to work for and work with leaders and companies that they trust. Character includes integrity and signals to employees, shareholders, and consumers whether a leader or organization is friend or foe. 
  • Grows Your Reputation - People are paying attention not only to what you say but also to what you do. The challenge with reputation is that who you really are may vary greatly from what you show others. But the two can only be at odds for so long. True integrity can be painful at times. In the end, however, it will always lead to a more positive long-term reputation. 
  • Expands Your Opportunities - When businesses and their leaders make the right choices without regard for short-term gain, the upside is just around the corner. If you are a business, you will have happier and more satisfied employees as well as increased productivity. Consumers are also known to reward and spend more with businesses they consider “ethical.”

The convictions of a leader or organization of integrity determine what they do or say at any given time. According to an understanding of what is right and wrong, the parties will direct their conduct intentionally. Here is how to have integrity in finance:

  • Be Honest - Integrity includes the quality of being honest, but you can be honest and not demonstrate integrity. To get it right, you must have an inner commitment to live and communicate the truth without deception. 
  • Remain Humble - Integrity doesn’t mean you are better than anyone else. Show respect for others by being open with communication and following up on your commitments. Ask for frequent feedback from others so you can figure out what you’re doing well and what you can do better. 
  • Take Responsibility - Just because you have integrity, that also doesn’t mean you’re perfect. Instead, you have an overwhelming desire to quickly acknowledge your faults and mistakes and make them right whenever possible. 
  • Stay Consistent - Having integrity means being driven by a sincere desire to do what is right, even when it is costly or inconvenient. Times of crisis are known for testing integrity. Can you remain consistent when the going gets tough? 

Can Technology Help or Hurt?

The days of keeping the books in actual physical books are long past, with new technologies constantly appearing to automate and streamline financial and accounting tasks. This begs the question of whether technology can help or hurt in terms of integrity. That depends. 

Technology solutions can help make financial reporting more efficient as well as more accurate since manual processes introduce the potential for human error. Technology also opens up the possibility of reporting in more sophisticated and detailed ways, providing internal and external audiences with the data they want or need. Finally, technology gives an organization or leader simple internal controls for proper oversight. 

That said, there could be some ethical challenges presented by the use of technology, specifically automation and artificial intelligence. As we’ve seen with various financial scandals, it’s simple enough to manipulate a tiny figure on a computer screen to the tune of billions in losses

But technology-based tools are only as effective as their programming. In other words, what controls are in place to catch nefarious activities and alert business leadership? How secure is the technology being used? Does it have your stakeholder’s or the company’s best interests in mind? Finally, has your organization considered any potential bias AI algorithms that may not treat customers, staff, or shareholders with the equity they deserve? 

Creating a Culture of Integrity

When organizational and personal failures in the area of finance occur, we want to understand what happened to prevent a repeat performance. The popular press has dissected various scandals at length, but the work of academicians holds more substance and weight. 

One study called “The Irony of Integrity” conducted by the Center for Creative Leadership examined these issues in extensive detail. While a company’s C-suite is essential when it comes to leading an organization in the right direction, so is its team of mid-level managers. 

When examining the character traits that were most important for top-level executives, the study concluded that integrity was the winner. This trait, coupled with bravery, is vital because it drives leaders to decide what actions must be taken, even when they might be unpopular. 

While you want all employees to have integrity, the study surprisingly found that social intelligence was an essential trait for success among mid-level managers. The danger for organizations is having staff with a high level of social intelligence but lacking in integrity. 

The consensus among most organizations is that you should hire for character (read integrity) and train for skills. This might be challenging with a high-level position. But most organizations can fill some experience and skill gaps provided they connect with leadership that exhibits the integrity that is tough to instill through an onboarding process. 

Finding the Right Financial Leadership

In today’s rapidly shifting economy, proper financial leadership is proving essential to business success and longevity. Organizations must be ready to not only face complex challenges but also tackle financial risks with integrity. 

The roles of the CFO now encompass a wide range of responsibilities and functions, which include the management and administration of financial issues, interfacing with governmental agencies and investors, developing talent, and leading strategy. 

Integrity might be a tough thing to evaluate but having leadership with integrity can ultimately impact your organization's economic situation and longevity. 

When you are ready to begin the search for your next CFO, reach out to us. Whether you are looking for a full-time CFO or a consulting CFO, we can help you find the right individual that matches your organization’s values. 

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A similar article that may be of interest:  

Integrity in Business - A Priceless Essential for Success

"How Do We Measure the Integrity of Our Business?"

Topics: Leadership Company Culture Integrity