It seems like common sense that the integrity of leaders is key to their success and the financial success of their companies. 

But no one has ever proved that this is true.  In his new book, The Integrity Dividend (Jossey-Bass, October 2008), Tony Simons, reveals the results of an in-depth study he did with thousands of employees at a U. S. hotel chain. 
 
Simons has found that employees who believe that their managers can be counted on to keep their word, show deeper commitment to the business, leading to lower employee turnover and superior customer service  which in turn results in higher profitability. "Leaders' consistency between word and action supports employee trust and gives them clear direction," he explains.  "It promotes engagement of employees hearts in their work, which leads to a host of discretionary contributions, from enhanced initiative to problem solving to customer service. It trickles down through the organization to create a leadership culture of integrity . . . Behavioral integrity also increases the strength and efficiency of relationships with customers, suppliers, and unions."  All of these improvements can be expected to show up on the bottom line as "the integrity dividend."

Yet, keeping one's word and practicing one's stated values on a daily basis is extremely difficult to do.  For most managers, real life interferes and managers unwittingly undermine their own credibility.  In the book, Simons explains the factors that drive  and impede  integrity, including mission statements (as often a minus as a plus), company cultures, leadership hierarchies, communication habits, and personal discipline. 
 
Simons points out that not only must leaders be credible, but they must also be seen as such.  Employees bring their own "baggage" of expectations and past hurts to the task of interpreting their boss' actions.  Unfortunately, when employees misunderstand their boss' request, they typically blame . . . the boss.  Therefore communication has to be ultra clear.  "When you take the subjectivity of perception into account, the leader's already challenging task of maintaining credibility is made all the more difficult," says Simons.  The book includes many exercises that managers can use to analyze their own levels of integrity; recognize how they are perceived by those around them; and enhance the power of their word.

"Preserving credibility and maintaining people's sense that you live by your word means avoiding casual overpromises and respecting the weight of your words.  It means openly acknowledging your uncertainty, the limits to your ability, and other awkward truths . . . Communicating this way is not automatic for most people.  It has to be learned and practiced," writes Simons.

Some people say that talk is cheap.  But when it comes to leadership, talk can be very expensive.  When leaders or managers speak and then do not "walk their talk," it costs them credibility.  And credibility makes or breaks companies.