Money and Meaning

Volume 7 • Issue 5 • July/August 2021
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High Performance and High Integrity

Money and meaning in business

In this issue of The Practice, we considered money and meaning in the legal profession, including in Mitt Regan and Lisa Rohrer’s “Money and Meaning in the Modern Law Firm,” in which they note that law firms need the latter irrespective of how often the former is exists. And, of course, these issues extend beyond the law. In High Performance with High Integrity, Ben W. Heineman Jr. pens what he frames as a “memo to the CEO,” where he outlines the core tenets of the “performance-with-integrity” culture CEOs and corporate leadership must foster for their companies to thrive. Heineman lays out key principles and practices to help CEOs (and other business leaders) navigate organizational problems with potential performance-integrity pitfalls. In the book, he defines his terms as follows:

High performance means strong, sustained economic growth that is based on superior products and services, and that provides durable benefits to both shareholders and other stakeholders;

High integrity means a tenacious adherence on the part of the corporation to the spirit and the letter of the formal rules, financial and legal; voluntary adoption of global ethical standards that bind the company and its employees to act in its enlightened self-interest; employee commitment to the core values of honesty, candor, fairness, reliability, and trustworthiness—values which infuse the creation and delivery of products and services and which guide internal and external relationships.

High-performing companies that lack high integrity, he writes, “put relentless financial pressures on their employees to increase net income, cash flow, stock price—pressures that can often cause corruption when unconstrained by high integrity.” The consequences, he goes on, can be devastating. “The CEO is fired in disgrace. Billions are squandered through fines, penalties, and lost business. In the worst cases, the company simply implodes.”

“This is not a frill or a nice-to-have,” writes Ben Heineman. “The fusion of high performance with high integrity is the very foundation of the corporation.”

Heineman, who spent more than fifteen years as General Electric’s senior vice president and general counsel, argues that high integrity is in fact the key to unlocking the type of high performance that CEOs and corporate leadership often pursue. More than a reminder to simply play by the rules, a high-performance-high-integrity approach actively strengthens a company “internally, in the marketplace, and in the broader society.” He continues:

Ultimately, it creates the fundamental trust of shareholders, creditors, employees, recruits, customers, suppliers, regulators, communities, and the public at large. Such trust is needed to sustain corporations’ enormous power and freedom … to allocate capital, to hire and fire people, to drive productivity, to invest in new geographies and communities, and to innovate with new products or services. So this is not a frill or a nice-to-have. It is not the initiative of the month. The fusion of high performance with high integrity is the very foundation of the corporation.

The benefits of a high-performance-high-integrity approach, he argues, multiply along both internal and external axes. Within the company, leadership stands to advance employee buy-in and genuinely merit-based HR systems, boost recruitment and retention, and provide an overall higher quality environment for people to produce the goods or services of the company. Beyond these gains, a high-performance-high-integrity company would be driving up the integrity of goods and services in the wider market, earning trust and goodwill from customers and potential partners, and “appealing to the small but growing community of socially responsible investors” while also “addressing emerging societal problems, like climate change, in ways that are good for both business and reputation.”

The arguments Heineman advocates for in High Performance with High Integrity have only become more salient in recent years. Indeed, major investors are scrutinizing potential investments for baseline measures of environmental sustainability, racial justice promotion, and contributions to other societal efforts. For instance, as we have reported previously in The Practice, in 2018 BlackRock noted that “society increasingly is turning to the private sector and asking that companies respond to broader societal challenges” and announced that it would look beyond the bottom line to invite in businesses that contribute to society. “Today, our clients—who are your company’s owners—are asking you to demonstrate the leadership and clarity that will drive not only their own investment returns, but also the prosperity and security of their fellow citizens,” the letter read. BlackRock doubled down on its message in 2020 with a second statement announcing it would stop investing in companies that present a “high sustainability–related” risk, adding that “[e]very government, company, and shareholder must confront climate change.” Likewise, in 2018, the Business Roundtable changed its definition of the purpose of a corporation to include duties relating to all the company’s stakeholders, including customers, employees, suppliers, and communities. In 2020, Goldman Sachs announced that it would stop participating in IPOs for companies with all-white-male boards, while the World Economic Forum called for a “great reset of capitalism in the wake of the pandemic.”

And, just this month, in July 2021, Wachtell, Lipton, Rosen & Katz—the Global 100 law firm with far and away the largest revenue per lawyer according to ALM data—penned a letter on the importance of “corporate purpose” and how “commitments to sustainability, diversity, inclusion, social responsibility and other ESG issues” are part of a wider corporate strategy to achieve long-term growth and sustainability, including the launch of a new partnership with Oxford called the “Enactment of Purpose Initiative.” As we see in “The General Counsel Elevation Sensation,” such approaches have perhaps already taken root in the (elevated) offices of in-house counsel at large corporations. And though it remains to be seen how this rising tide will intersect with law firm partners’ attitudes around professionalism in the legal profession (for more, see “Money and Meaning in the Modern Law Firm”) and overlapping demands from younger law firm lawyers (for more, see “If You Take Their Meaning”), Heineman’s high-performance-high-integrity approach is likely to enjoy renewed relevance in the years to come.

Money and Meaning Volume 7 • Issue 5 • July/August 2021

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