Reflections on Carillion, the BBC and more…

The Cambridge English Dictionary defines “integrity” as:

“The quality of being honest and having strong moral principles that you refuse to change.”

That sentence speaks to our times. We already know about the collapse of construction giant Carillion, with £1.5 billion of total debt and the threat to thousands of jobs, whilst former executives greedily continued to enjoy huge severance payments and bonuses. A parliamentary briefing has now revealed that, between 2012 and 2016, the company ran up debts and sold assets worth £217m, in order to finance payouts for shareholders. While the group paid dividends of £376m over the period, it generated just £159m of net cash from operations. According to a Financial Times article this week, if it is found that Carillion paid dividends out of capital, without prior court approval, this is illegal under UK company law.

Do those actions reflect the meaning contained in the definition above? I checked various FTSE 100 companies’ websites and the word “integrity” now crops up surprisingly rarely under their “Values” section: “Leadership”; “Trust”; “Respect”; “Accountability” and “Openness” all feature more.

When I first graduated from University, without any idea of what I wanted to do, I found myself being interviewed for a job by the Principal of Birmingham Careers Service. The interview was in the grandiose Victorian offices of Birmingham City Council, just round the corner from the Town Hall. I was daunted not only by the surroundings but also by this large, imposing man in a suit and tie, who stared at me from behind glasses, flanked on either side by two acolytes.

At one point, Herbert Heginbotham (that really was his name), placed his hands on his magnificent desk, leaned forward and asked: “What is the one essential quality you need as a Careers Officer?” I proceeded to give various answers -honesty, sincerity, trustworthiness, fairness – to each of which he replied, “Yes. And?” I never got what he was looking for. In the end, he leaned forward even further and stated, “Integrity. That’s what you need. Integrity.”

The world has changed beyond all recognition in the intervening years and you can argue that shining a light on shady practices has become easier with the advent of technology. But is the quality of “integrity” something our society no longer values? Is self-interest now the supreme god of our time?

This week six leading male presenters at the BBC “offered” to take a pay cut so that their salaries were more equal with their female colleagues. As a former BBC employee, I have the greatest respect for the talents of these male colleagues but do I think they would have offered this pay cut without the bomb which exploded in the form of the resignation of Carrie Gracie as the BBC’s China editor? No. And their combined successes certainly do not measure up to the definition used by the former First Lady in the White House in her speech to the Democratic National Convention in 2012:

“We learned about honesty and integrity – that the truth matters… that you don’t take shortcuts or play by your own set of rules…and success doesn’t count unless you earn it fair and square.”

It was this speech which gave rise to calls for Michelle Obama to run as the next President. How much do men and women, whose actions have called their integrity into question, measure their successes against their failures? And, more importantly, take actions to address them? Unfortunately human nature is such that the truth is far too uncomfortable to live with. Veils are drawn over our omissions and our brains distort the past to suit our present.

Of course, acting with integrity mean involves sometimes going against the flow and most decisions have distinct grey shades to them. A friend of mine was part of the senior management team of a FTSE listed company for many years before retirement. Quizzing him about integrity, he responded with this example:

“The company of which I was an executive director had for some years been “trade loading”, which means that to achieve its sales and profit targets, it was offering goods at discounted prices just before its financial year end, if customers were willing to take more than their normal requirements, knowing that the result would be reduced sales in the early part of the next financial year. The objective was to maintain confidence in the company and, in particular, its share price. This is not uncommon and not illegal, but it can give a false impression of success. After a few years, I advocated “making a clean break” by discontinuing the practice, meaning we would have a bad year’s result and accepting the consequences in terms of the share price. However, my fellow directors voted against the change and, as a result, the company got into serious difficulties some years later. Should I have resigned when outvoted? Possibly, but I had no other reason to question the integrity of my colleagues.”