Character Matters

It seems that character matters in the workplace seem to show up in the negative, not the positive. In other words, character is rarely addressed until something bad in the workplace happens to prompt the conversation.

For example, following Enron and WorldCom, ethics and the public trust became the central issue of the day. New regulations like Sarbanes-Oxley had to be formulated to control this vile behavior. Those authors and consultants who had been on the “character” bandwagon for quite some time – John Di Frances, for instance (Reclaiming the Ethical High Ground: Developing Organizations of Character) – were suddenly thrust front and center into the consciousness of the workplace.

Yes, it seems that character matters after all.

When large corporations violate the trust of shareholders, it casts a pall over all business, and it is usually extremely expensive. Bernie Ebbers and WorldCom (see Marshall Ramsey’s cartoon above and check out his Blog) cost investors $175 billion in the most expensive accounting scam in the history of the universe. Let that number sink in a little. That is $580 for every man, woman, and child in the United States. In fact, if you met 1,000 different people every day and collected $580 from each one, it would take you over 14 1/2 years to reach every person in the country.

The impact of WorldCom (and Enron, and others) was extraordinary. Many, many people watched their financial futures disappear into thin air. Despite the magnitude of this character breach, a more compelling question may be what is the impact of “character”, exactly, on the small businessperson or the average manager?

Let’s talk about one area in particular as it relates to managers – employee turnover. It is fairly easy to calculate the financial impact of employee turnover on the company. A typical estimate of the cost of turnover is 100% of annual salary. For a company with 100 employees and 15% turnover, this cost would be $309,000 annually if the average pay was only $10.00 per hour. If you are losing employees due to the impact of a manager whose actions a lacking in character, that is a direct hit to the company that could likely be avoided.

But what is meant by “character”? Character embodies a number of personal traits, but for a manager it certainly would include things like integrity, fairness, consistency, doing what you say you will do (which extends to truthfulness, responsibility, and dependability), and self-control. Each of these character traits will have a direct impact on an employee and ultimately lead to trust and engagement, or a lack of trust and disengagement.

According to the Gallup Organization research, 71% of employees are either disengaged or actively disengaged. In practical terms, that means 7-out-of-10 employees could not care less about your company’s objectives and, worse, according to Gallup 5 of those 7 employees are actively undermining your company in some way.

It sure would be a shame if your disgruntled employees were leaving your company to work for your competitor – particularly if a manager with a lack of character was the culprit.