By taking an honest view and doing the right thing, leaders can turn around companies and win over employees and customers.
• Lead by example. Show that you operate only with integrity.
Joe Grano, chief executive of New York-based business adviser Centurion Holdings and former CEO of UBS Financial Services Inc. of America, did that.
He headed PaineWebber before its merger with UBS. Early on, his firm ran a secondary stock offering and sold shares to clients.
The next day, the research department downgraded its rating on that stock to sell.
The firm did nothing wrong.
But Grano took a $2 million loss to make PaineWebber's clients whole.
"I would have lost a lot more than $2 million in goodwill," Grano told IBD. "And you can't let the broker be put in that position."
• Be blunt. When Grano took over at PaineWebber, he saw that his unit had lost $96 million the prior year.
He didn't make changes right away. He gathered data and learned what needed to be done.
His honest assessment of problems helped the unit turn a profit the next year.
"Being honest was critical, and it set the tone," Grano said. "People appreciate that you shared the true facts with them."
• Demonstrate vulnerability. It shows others that you're transparent.
Then they'll trust you.
"The more you open up, the more they'll open up to you," said John Bryant, author of "Love Leadership" and founder and CEO of Los Angeles-based nonprofit financial literacy group Operation Hope. "People tend to meet you where you are."
• Inspire your people. Honesty gives others a boost.
The results are tangible, Bryant says. If you lead by coercion, you'll get minimal performance. Lead through openness, and people will work longer and harder.
"You'll get above-the-line performance," he said.
• Strengthen relationships. After the 1992 riots in Los Angeles, Bryant put a group of bank leaders on a bus to tour the hard-hit South Central area. They felt a strong tie and saw the section's potential. They went back and told their people they should be lending there.
• Let truth overrule emotion. Grano was among the Wall Street executives who met with government leaders right after 9/11 to decide when the financial markets should reopen.
Many were fired up to open two days after the attacks.
Grano argued that firms weren't ready. By waiting an additional two trading days, the markets were ready to operate smoothly.
• Do what's right. "It's not about what you can get away with; it's about what's fair," Grano said. "That is a mind-set. My view is you always do the right thing."
• Reward what you want. Offer incentives for employees who operate with honesty, Bryant says.
• Eye the big picture. Bryant once turned down a donation of several hundred thousand dollars from a credit card company of questionable reputation. He didn't know if the company was committed to making changes.
"Your integrity and reputation are the whole ballgame," he said. "You can't buy integrity. And when you lose it, it's lost for life."