European Management Journal Vol. 17, No. 6, pp.

625–634, 1999
Pergamon  1999 Elsevier Science Ltd. All rights reserved
Printed in Great Britain
PII: S0263-2373(99)00053-5 0263-2373/99 $20.00

Integrity Management
MUEL KAPTEIN, Erasmus University, Rotterdam, and KPMG

Integrity management is concerned with systemati- Walter (1995)

cally and completely reviewing, analyzing and has calculated
developing or safeguarding the ability of organiza- that a victim of
tions to combat breaches of integrity. Breaches of bullying har-
integrity occur where conflicting interests are incor- assment costs
rectly weighed against each other, so that the actor the company an
infringes the legitimate interests of the company average of
that employs him, or of individuals and parties 35,000 dollars.
inside or outside the company. These breaches of There is a con-
integrity cause enormous damage to the company siderable
itself, the employees and the external stakeholders. deterioration in
Breaches of integrity undermine the competitive the
advantage of the companies concerned. It is the task performance of
of the company’s management to find a balance both the per-
between the conflicting interests employees face petrators and
and to ensure that the balance is institutionalized. victims of
This article presents a conceptual framework for bullying. More-
describing the integrity of organizations and pro- over, victims
vides a basis for developing specific activities. tend to report
 1999 Elsevier Science Ltd. All rights reserved sick much more
often than nor-
mal. In The
Netherlands,
Introduction the financial
consequences in
Sexual intimidation, bullying, aggression and viol- terms of years
ence, price discrimination, fraud and bribery are just of absence from
some of the types of breaches of integrity that occur work through
in the business world. Moreover, they occur with physical viol-
increasing regularity. According to the International ence and intimi-
Labour Organization (Chappell and Di Martino, dation on the
1998), 7.6 per cent of women experience sexual har- shop floor are
assment in the workplace. Research carried out by 7800 and 11,800
the Ethics Resource Center (1996) showed that 29 per man years,
cent of employees questioned feel under pressure respectively.
from their manager to compromise their own ethical (Smulders et al.,
standards in line with the company’s objectives. And, 1999). Although
to cite a completely different figure, Shell indicates questions can
in its social report that 23 Shell employees were dis- be raised about
missed in 1997 for accepting bribes, while in 1998 the accuracy of
three employees were dismissed for this reason. the exact figures
reported, the
These breaches of integrity cause enormous damage total costs of
to the company itself, the employees and the external fraudulent acts
stakeholders. One third of Fortune 500 companies committed by
have been sued at least once for sexual harassment working Amer-
(Fisher, 1993). The US business community estimates icans on a daily
that the costs in lost time, benefit payments and legal basis currently
expenses as a result of violence in the workplace total $400
amount to around 4.2 billion dollars per year. billion annually

European Management Journal Vol 17 No 6 December 1999 625

INTEGRITY MANAGEMENT
(LeClair et al., 1998). Especially in America, identified
and adjudicated breaches of integrity can lead to
fines of millions of dollars. For example, Archer-Dan-
iels-Midland was fined $100 million after being
found guilty of price-fixing. Besides the directly
traceable financial damage, breaches of integrity also
affect an organization’s image, which can lead to
other effects such as the departure of highly valued
staff, a loss of goodwill among consumers and sup-
pliers, and a drop in share prices. Where trust is vital
for business success, and integrity is perhaps most
important for establishing trust (Shaw, 1997), bre-
aches of integrity undermine the competitive advan-
tage of the companies concerned.
For moral reasons (companies are morally responsible
for preventing dishonorable conduct and encour-
aging honorable conduct, so that stakeholders are let
down as little as possible), legal reasons (companies
are obliged by statute and case law to guarantee their
own integrity and that of their employees) and econ-
omic reasons (breaches of integrity cost money and
honorable practices are financially rewarding) com-
panies should not accept or tolerate objectionable
practices, or create a breeding ground for such prac-
tices. Therefore, companies like Shell, British Pet-
roleum, Nestlé, Deutsche Telekom, British Telecom,
and the ABN AMRO Bank do have a code of conduct
in which they formulate the responsibilities of
employees towards stakeholders and the company
itself. In countries like The Netherlands the number
of corporations with a code of conduct is increasing
rapidly: the last two years 12 top 100 companies
introduced their own code of conduct (Kaptein et al.,
1999). In Germany as many as 42 per cent of the top
1000 companies have introduced a business code
during the past three years (KPMG and Universität
Erlangen-Nürnberg, 1999). In spite of the importance
of organizing integrity, there is currently a lack of
any conceptual or integrated framework to enable
organizations to review and improve their integrity
themselves. See for example Payne (1994); Pearson
(1995). Moreover, breaches of integrity are generally
not studied in relation to each other, (see for example
Giacalone and Greenberg, 1997) so a patchwork of
models and insights has arisen, which makes it diffi-
cult to adopt an effective and efficient approach to
breaches of integrity in practice. In this article, I call
for the development of the management discipline
Integrity Management. Notwithstanding the start
made by Payne (1994); LeClair et al. (1998) to describe
the field of integrity management, I would like to
make a start here on a more fundamental and coher-
ent method of approach.
What Do We Mean by Corporate
Integrity?
An All-Encompassing and ‘hooray’ Word
The term integrity is a typical all-encompassing term.
There are huge differences of opinion between what
626
integrity actually means in practice and in theory.
Integrity takes on many different appearances. A
complicating factor is also that, in discussions about
integrity, the term calls up shouts of ‘hooray’. Every-
one is in favor of integrity. This is because it’s diffi-
cult to get a critical discussion going about what
integrity entails.
When someone’s integrity is in question or tarnished,
the grounds for trust collapse. The person loses credi-
bility or cannot fulfil the requirements of his/her job
or role. Integrity is concerned with virtues such as
purity, solidarity, involvement, intactness, sincerity
and scrupulousness. An analogy with fruit comes to
mind: a spot on an apple can indicate that it’s rotting
inside. A person’s lapse raises questions about the
person’s character and commitment.
Relational Notion
In the world at large, it’s often argued that the assess-
ment of whether or not a person has integrity is
purely personal. Individuals should be able to decide
for themselves whether they or others can be con-
sidered to have integrity. Reducing the notion of
integrity to a purely personal question ignores the
fact that integrity is important where people act
together. After all, it’s difficult to maintain that
people can be honest in isolation. The fact that integ-
rity is important where people live and work
together makes it an inherently social or relational
notion.
Relative Concept
As a social notion, integrity refers to the degree to
which people or associations of people satisfy the
legitimate expectations of the world around them.
The emphasis here is on the adjective ‘legitimate’. It’s
not a matter of fulfilling every expectation. Only
those expectations that are widely supported and
generally regarded as appropriate and essential can
be regarded as legitimate expectations. Whether or
not a person can be considered to have acted with
integrity depends on the specific situation, the place,
or the time. Integrity is therefore a relative concept.
Today’s acceptable behavior may be considered
objectionable tomorrow. What is considered normal
in one country may be unacceptable in another.
Organization Level
Discussions about the concept of integrity practically
always refer exclusively to a characteristic that only
human beings can have (see for example Taylor
(1981); Becker (1998)). However, we can also speak
of integrity at the organization level. Appropriate
expectations also arise in and around companies with
regard to the tasks and operations of the company or
European Management Journal Vol 17 No 6 December 1999

the people working for it. The way in which the vari-
ous expectations are aligned with one another is of
essential importance. Unfortunately, what the out-
side world may expect from a company doesn’t
always correspond with the expectations that have
developed in the company. Consequently, companies
regularly appear to be relatively insensitive to the
legitimate expectations of external stakeholders.
Result
The expectations developing in any company are
given shape by its employees on a daily basis. Some-
times the expectations are explicit and formalized in
rules and procedures, in which case we can speak
of a formal organization. Informal expectations also
develop in organizations: the informal organization.
A couple of the elements of the informal organization
are the degree to which questions of integrity can be
discussed and the extent to which management sets
the right example. Members of the organization may
or may not be aware of the unwritten expectations
(Drazin and Sandelands, 1992). When we speak of an
organization’s integrity, we mean the degree to
which its employees are actually encouraged, both
formally and (consciously or otherwise) informally,
to behave responsibly. The organization’s integrity is
the result — not the sum or the average — of the
integrity of its employees. It’s therefore also possible
to speak as Goodpaster and Matthews (1982) do of
the organization’s conscience.
A Matter of Organization
Internal expectations may develop in a way that
makes them harmful to the company or the com-
pany’s operational environment. Such cases consti-
tute breaches of integrity. Companies display bre-
aches of integrity in various ways: the actions of the
company or its employees fail to meet the expec-
tations that are seen as legitimate in and around the
company. Other types of breaches of integrity,
besides those mentioned in the introduction, include
abuse of power, discrimination, leaking confidential
information to the press or competitors, the reckless
use of the organization’s assets, and nepotism. Bre-
aches of integrity also include knowingly selling
defective products, obscuring financial failures,
extorting from suppliers, spying on competitors and
evading environmental legislation. When breaches of
integrity are also possible because of shortcomings in
employee guidance, the blame can also be assigned
to the company in question. It’s therefore a matter of
organization, that cannot be tackled solely at the level
of the individual employee.
Developing a company’s integrity amounts to
developing the organization in such a way that the
various expectations that exist in and around the
company are in line with each other, and behavioral
European Management Journal Vol 17 No 6 December 1999
INTEGRITY MANAGEMENT
integrity is encouraged, if not enforced. It’s true that
breaches of integrity cannot be entirely prevented
but, by taking measures at the organization level, the
management can ensure that the damage to the com-
pany and its environment is limited.
What Do We Mean by Integrity
Management?
The relationships between internal and external
stakeholders are geared to each other by means of
organizations. I differentiate between three types of
relationships that are relevant from the point of view
of integrity: (a) the relationship between the
employee and the company, (b) the functional
relationship between employees, and (c) the relation-
ship between the company and its stakeholders
(Figure 1). If these relationships involve conflicting
interests and expectations, we speak of dilemmas. An
integrity dilemma exists if there is a discrepancy
between the personal interests of the employees and
the interests of the company (the entangled hands
dilemma), if there is a conflict between the functional
interests of employees, managers, departments and
units (the many hands dilemma), and, if the interests
and expectations of the stakeholders are incompatible
with the interests of the company (the dirty hands
dilemma).
Dilemma of the Entangled Hands
Corporations can only act through employees. As
such, there is frequently the matter of entangled
roles. An employee fills multiple roles simul-
taneously and wears more than one ‘hat’ (Nash, 1990;
Velasquez, 1998). Employees have their own personal
interests and expectations which do not necessarily
parallel the interests and responsibilities of the cor-
poration. I use the entangled hands dilemma as a
metaphor for the conflicts between the interests of
employees and the interests of the organization in
which the corporate assets are at stake. Employees
use their authority, thereby misusing information,
funds, goods, equipment, time, and colleagues,
which compromises their integrity. This dilemma
would not exist, if employees had no interests at
heart other than those of the corporation: employees
would then have no motive for misusing the corpor-
ation’s assets. Some of the dilemmas that can occur
are concerned with the extent to which employees
are allowed to make use of the corporation’s assets,
to hold other jobs that are incompatible with the
interests of the organization, to accept promotional
gifts, to have business relationships with family
members, and to make private purchases from the
corporation’s suppliers.
627
INTEGRITY MANAGEMENT
Figure 1 Three Fundamental Integrity Problems
Dilemma of the Many Hands
At first sight, the second type of dilemma probably
seems less obvious than the dilemma of the
entangled hands, but this doesn’t make it any less
relevant. Within a corporation, each employee has his
own job-related duties. Internal specialization and
division of labor make efficient functioning of organi-
zations possible. However, the distribution of these
functional responsibilities may be inadequately coor-
dinated, with the result that certain corporate
responsibilities slip through the employees’ many
‘fingers’ or get lost (see for example Badaracco, 1992;
Bovens, 1998). In assigning concrete tasks, corpora-
tions run the risk that employees or departments do
their jobs with blinkers on, no longer concern them-
selves with the duties of others and lose the feeling
that the corporation is a corporate body. As a result
no one sees (or takes responsibility) for the whole
picture (Trevino and Nelson, 1999). Specialization
creates units which compete with one another for
corporate resources and the interests of the unit are
not necessarily the same as the interests of the entire
corporation. Unclear or inadequate responsibilities
can result in collective problems being left unre-
solved because nobody feels personally responsible
for them. The metaphor of ‘many hands’ alludes to
the moral risks ensuing from the need to employ
more than one employee in an organization. Once an
organization stops functioning as an entity, there is
fragmentation, which impairs the wholeness
(integrity) of the organization. Precisely because
employees form part of an organization and collec-
tively give shape to the organization’s responsi-
bilities, it’s necessary to ensure proper agreement
between their actions. In a corporation consisting of
just one person, this dimension is irrelevant. Some of
the dilemmas that occur in this area concern the
extent to which employees have to be collectively or
individually rewarded, the extent to which internal
628
cooperation or competitiveness is desirable, who can
be held accountable for mistakes, and the extent to
which functional responsibilities may be delegated.
Dilemma of the Dirty Hands
Stakeholders may have a legitimate reason to com-
plain when the company fails to identify or recognize
their interests and/or specific expectations vis-à-vis
the company, or when the company’s distribution of
the costs and benefits between various stakeholders
or between the stakeholder and the company itself is
inadequate. The dirty hands dilemma arises because
a corporation is usually confronted by stakeholders
with conflicting interests (Badaracco, 1997; Wempe,
1998). Precisely because of the pressure of compe-
tition and the need to survive, corporations may
become inclined to ignore those stakeholder expec-
tations that are not necessary for realizing their com-
petitive objectives. The necessity to produce goods
and services and to make profits may be seen as a
justification for neglecting the legitimate moral
expectations of stakeholders. It is sometimes inevi-
table for corporations and their representatives to get
their hands dirty because a choice between conflict-
ing norms, interests, and expectations is unavoidable.
If an organization had no stakeholders, this dilemma
would not exist. The metaphor of ‘dirty hands’
alludes to the efforts of the organization to keeps its
‘hands’ clean (i.e. to realize the expectations of
stakeholders). Some of the typical dilemmas that
occur in this area concern the extent to which
employees may be dismissed to increase returns,
environmental investments that go beyond what the
law requires can be justified at the expense of profits,
organizations are allowed to make use of child labor,
the positive discrimination of employees is con-
sidered acceptable, how information about competi-
European Management Journal Vol 17 No 6 December 1999
 INTEGRITY MANAGEMENT

tors can be obtained in a responsible manner, and the Consequences of Imbalance

extent to which organizations have to take measures
in connection with any improper use or deliberate An imbalance between these conflicting interests and
misuse of their products that presents a threat to pub- expectations leads to breaches of integrity. These fun-
lic health. damental dilemmas can be summarized as follows:

Fundamental Description Cause of dilemma Effects of imbalance Results of

dilemma (breaches of imbalance
integrity)
a. The entangled Tension between the Because employees Careless use or
hands dilemma individual interests represent the misuse of:
of the employee and organization, they Time
the interests of the have access to Information
organization corporate assets Funds
which should be Authority
used for the Equipment
company’s purposes Goods
but which they may Staff
divert for their own
use (mixing up of
roles)
b. The many hands Tension between The organization Counter-productive Stakeholders have
dilemma individual and consists of staff, competition between legitimate reason to
collective jobs, tasks departments and staff, departments complain
and responsibilities divisions (many and divisions Welfare of
in the organization hands), each with Responsibilities get stakeholders
their own functional lost decreases or fails to
responsibilities, Unresolved increase sufficiently
which presents a collective problems The company’s
risk of no-one Responsibilities are image is harmed
having an eye for shrugged off Stakeholders are less
the interests of Tasks are not willing to participate
colleagues, performed or only Stakeholders remove
departmental partially themselves from the
interests and the organization
interests of the License to operate
entire organization expires
c. The dirty hands Tension between the The organization is Stakeholders are
dilemma interests of the confronted with misled
organization and the conflicting demands Stakeholders are
interests of the from stakeholders misused
stakeholder and sometimes has The freedom of
to make painful stakeholders is
choices (dirty hands) limited
The resources are
taken away
Stakeholders are
discriminated
against

Organizations differ sharply in the extent to which
the three fundamental integrity problems are at issue
and there is, therefore, a difference in the degree of
attention paid to improving employee guidance. The
entangled hands dilemma mainly occurs in organiza-
tions where employees have access to valuable infor-
mation, goods or money, for example, or have exten-
sive powers of decision. The problem may also occur
when employees have intensive contact with each
other and there is a major inequality of power, which
therefore increases the likelihood of undesirable eti-
quette. In companies, these issues play a role, for
instance, within the procurement department where
buyers have considerable competencies, where
wrong decisions may have major consequences and
where potential suppliers do everything to get in the

European Management Journal Vol 17 No 6 December 1999 629

INTEGRITY MANAGEMENT
buyer’s good books. The many hands dilemma gen-
erally occurs in large organizations. The complexity
of the decision-making procedures, the considerable
distance between the top and the bottom, and the
partially conflicting interests of various units mean
that large organizations are particularly prone to
responsibilities getting lost and there is dysfunction.
Many government bodies often have to face this
dilemma when bureaucratic departments must
jointly solve a social problem. The dirty hands
dilemma generally affects organizations that have to
deal with major losses or tight and shrinking bud-
gets, and organizations that carry out highly pollut-
ing activities, have branches in divergent national
cultures, or operate in a turbulent environment. A
company like Shell (human rights issues in Nigeria,
sinking of the Brent Spar in the Atlantic Ocean) has
been wrestling with this dilemma.
Ethical Qualities
Integrity management has to safeguard the con-
ditions in the organization that enable employees to
find a responsible balance between the three funda-
mental types of conflicting interests. Employee guid-
ance can therefore be described in terms of three
dimensions: the employees’ responsibilities vis-à-vis
the organization (‘entangled hands’), within the
organization (‘many hands’) and on behalf of the
organization (‘dirty hands’). An organization’s integ-
rity is therefore reflected in the degree to which the
aforementioned conditions actually exist. On the
basis of an analysis of 150 different, factual and
extremely varied breaches of integrity (e.g. in terms
of company size, sector, country and consequences),
I have come up with seven factors which encourage
a prudent balance and are applicable in each of the
three dimensions (Kaptein, 1998). Here, integrity
management is concerned with:
1. providing clear expectations for employees with
regard to making a responsible choice about the
three integrity problems;
2. providing consistent and unambiguous expectations
by, for example, ensuring managers set a good
example;
3. formulating achievable expectations for employees
regarding the three problems;
4. creating support for attempts to fulfil the expec-
tations with regard to making a responsible choice
about the three integrity problems;
5. providing insight into whether or not employees
and the organization as a whole are living up to
expectations;
6. making conflicting expectations discussible, both
among employees themselves and between them-
selves and their managers, and encouraging
employees and managers to tackle each other
630
about failures to live up to expectations or any bre-
aches; and
7. rewarding employees who live up to expectations
or make an effort to do so, and disciplining
employees who wilfully fail to live up to expec-
tations.
The above conditions are more readily described as
a moral virtue or quality. Organizational virtues or
qualities are morally desirable characteristics of the
organization itself, which collectively constitute the
organization’s integrity. An organization’s integrity
can be determined on the basis of the extent to which
the following moral virtues or qualities are anchored
in the organization’s guidance of its employees: (1)
clarity; (2) consistency; (3) achievability; (4) support-
ability; (5) visibility; (6) discussibility; and (7) sanc-
tionability (Figure 2).
An actual example of each quality in relation to the
entangled hands dilemma is given in Exhibit 1.
Exhibit 1: A Few Examples of Breaches of
Integrity
Re 1. Example of insufficient clarity
Construction workers begin by retailing the bricks
left over from projects they worked on. The con-
tractors themselves had not decided what to do
with left-over materials. In a very short time, a
bustling retail trade develops after large-scale
orders are made on behalf of the company.
Re 2. Example of insufficient consistency
The owners of a grocery store set the wrong
example by frequently taking things out of the
warehouse during working hours to give to their
family and friends. In reality, only small amounts
were involved, and it was actually more a ques-
tion of taking it from the one hand and putting it
in the other. But because all the warehouse staff
knew of these practices, they had an excuse to
take things home themselves. Once begun, the
practice progressed from bad to worse. By the
time these practices finally came out into the
open, the wife of one of the employees was even
selling products from the store at the street mar-
ket.
Re 3. Example of insufficient achievability
Employees of an investment fund are not permit-
ted to trade privately in a particular security
within a period of 24 hours before or after a trans-
action by the fund in that security. It is by defi-
nition impossible for employees to observe this
rule always as (a) they are often unable to assess
what the fund is going to do within the next
24 hours, and (b) they are unable to reverse priv-
ate transactions when it becomes clear that the
European Management Journal Vol 17 No 6 December 1999

Figure 2 Seven Organizational Qualities
fund has traded in the same securities. The result
is a lack of support among personnel for both the
letter and the spirit of the rule. It becomes com-
mon practice for employees to trade privately in
securities of which it is internally known that the
fund will be buying or selling a large package
shortly.
Re 4. Example of insufficient supportability
The employees of a large production company
treat company vehicles recklessly and carelessly.
During working hours staff regularly enter into
rally contests with the company vehicles on the
company site. It is also common practice for
employees to urinate in the company vehicles, to
stick sandwiches into the radio fascias, and to dis-
regard the traffic rules on the company site. If the
oil light comes on showing that the oil needs to
be topped up, the general reaction is: ‘No need to
do anything, the light will go out of its own
accord.’ Among other things the staff blame their
behavior on the lack of any sense of company
pride. Staff feel little if any involvement with the
company, as they consider the management has
never displayed any appreciation of their efforts.
Re 5. Example of insufficient visibility
Funds transfers made by a bank’s internal staff
are checked by a staff member controlling
whether the signatures are valid and whether the
accounts can cover the requested transfers. The
transfer slips which have been checked are placed
in an internal mail pouch which is not sealed until
the end of the day. This gap in the processing pro-
cess leads to several cases of fraud before the
internal audit department becomes aware of this
organizational failure.
European Management Journal Vol 17 No 6 December 1999
INTEGRITY MANAGEMENT
Re 6. Example of insufficient discussibility
An employee is aware of the outside activities of
one of his co-workers. When he brings them up,
he is roundly attacked. When he subsequently
brings the matter up with the management, the
incident is ignored. Before he can take his com-
plaint to the CEO, the powerless employee is fired
for dubious reasons.
Re 7. Example of insufficient sanctionability
One of the partners of a large accounting firm has
been frequently harassing his female secretaries
for several years. Such sexual harassment varies
from questionable comments on the ‘tempting’
clothing of the secretaries to physical advances
and mandatory dates after work. Two secretaries
claim to have been forced to kiss the partner. The
victims of these advances assumed that they
would be fired for their ‘blasphemy’ against the
partner. However, when the board of directors
and the director of personnel finally hear of the
matter, they refuse to take action against the
accused partner. The reason behind their apathy
is the director’s contribution to the success of the
firm. He is good for winning more than ten new
major clients a year.
The (partial) lack of one or more of these qualities
implies a risk of breaches of integrity for the com-
pany concerned. The breeding ground for breaches
of integrity has been created. A company may be
tackled about letting down stakeholders, if its
attempts to embed these moral qualities in the
organization have been inadequate. The extent to
which the virtues are embedded is a measure of the
organization’s moral excellence or virtuousness. The
more embedded the virtues, the fewer grounds there
are for blaming the organization in the event of
631
INTEGRITY MANAGEMENT
unethical conduct arising. The management in parti-
cular plays an essential and irreplaceable role in
embedding the qualities in the organization. On the
one hand, it is the management that has the powers
of decision to give meaning to the qualities. On the
other hand, managers are important role models and
have to embody the qualities, and thereby indirectly
encourage others to imitate them.
How to Manage Integrity?
Integrity Audit
Because each organization is unique, effective meas-
ures can only be taken if the management not only
has an insight into the sort and extent of breaches of
integrity, but also into their nature, i.e. the organiza-
tional causes. An integrity audit can help clarify and
unravel the implicit and explicit, internal and exter-
nal (conflicting) expectations confronting employees.
The audited and analyzed expectations can form the
basis for taking concrete steps to improve employee
guidance. Some of the aspects that qualify for critical
investigation include:
1. the formal expectations in the organization, such
as the explicit tasks, powers, rules, guidelines, pro-
cedures, systems, measures and organization
charts;
2. the experienced or perceived expectations in the
organization, such as the actual norms and values,
implicit codes, etiquette, customs and practices,
rituals and exemplary behavior.
3. the existing, realized and unrealized expectations
of stakeholders; and
4. the dilemmas caused by the above incompatible
expectations with which employees are confronted
in their daily work.
Up until now 25, mainly Dutch, organizations, have
been audited by asking employees to describe the
organizational climate according to the three
dilemmas and seven qualities described here. In the
study at Amsterdam Airport Schiphol, for example,
the following organizational qualities scored rela-
tively low: lack of clarity as to how staff should
handle the company’s resources, lack of dis-
cussability of dilemmas and criticism within the
organization and inadequate supportability to dis-
seminate the airport’s existing policy externally. This
led, for example, to a situation whereby confidential
information was regularly leaked to the press and
that damage to capital equipment (including
vehicles) was so prevalent that the insurance com-
pany threatened to declare the airport uninsurable.
Within a reviewed sales organization it appeared that
may dilemmas were caused by managers sending out
632
ambiguous signals. On the one hand, an ethics pro-
curement policy was employed, while on the other
hand there were very high expectations that no
compromises would be made during negotiations.
On top of this, staff started to employ very dubious
tactics. At the Ministry of Justice in The Netherlands
it appeared that the formal expectations were regu-
larly at odds with the perceived expectations and that
all kinds of short cuts had developed within the
organization to avoid many rules and procedures.
One of the features of many organizations brought
into focus with the audit is the inconsistencies in the
organization that create an atmosphere lacking in
clarity and that then open the way for breaches of
integrity. A good example is the policy on giving and
receiving presents. Organizations often draw up
strict sets of rules to ensure that an employee’s judg-
ment is unbiased. At the same time, they may seek
to win a customer’s favor by giving very generous
presents. That sends very mixed signals within the
organization: using all the means at your disposal to
influence possible customers is not in itself wrong,
providing it is not done at the expense of the organi-
zation. Companies often also demonstrate double
standards in respect of information. If employees
leak information, it is regarded as a serious offense.
When, however, it is a matter of getting information
from others, any method would seem to be justified.
A very clear example of double standards within an
organization was given by a European based multi-
national bank. The culture of the organization was
such that it was considered perfectly acceptable to
break the law in order to keep customers happy. This
bank quickly found, however, that creative branch
managers not only provided these services to cus-
tomers, but also developed certain practices for their
own benefit, even when this was at the bank’s
expense. There was one branch manager, for
example, who got into currency speculation. Since
the books didn’t need to balance, this branch man-
ager would decide afterwards, solely for the purpose
of keeping customers happy, whether the purchase
should be recorded as a private purchase or as one
on the bank’s behalf. This ended up costing the bank
a great deal of money.
Interventions
The results of an integrity audit form the starting
point for the specific protection and improvement of
the company’s integrity. Numerous measures are
conceivable that can contribute to improving integ-
rity, such as a code of conduct, an ethics officer, a
compliance officer, segregation of duties, job rotation,
a conflicting interests register, personification of pro-
ducts, administration, an adequate remuneration sys-
tem, and recruitment and selection procedures. Some
measures can be deployed to improve a large number
of qualities. For example, a code of conduct may
European Management Journal Vol 17 No 6 December 1999

bring a large number of qualities explicitly to the
attention of the employees. Some measures, however,
apply to one or a small number of qualities. A regis-
ter for conflicting interests of employees can parti-
cularly contribute to an increase in visibility with
regard to the entangled hands problem. Personifi-
cation of products and services can contribute to an
increase in visibility with regard to the many hands
and dirty hands problem, thus ensuring that
employees can be called to account for reprehensible
conduct (sanctionability) at an earlier stage.
Despite the advantages to adopt a number of meas-
ures to prevent breaches of integrity, we need to be
aware that managing integrity is not only about what
measures are adopted. Integrity management tries to
improve the way employees are stimulated to realize
legitimate fundamental expectations of stakeholders.
A written code of conduct can be an appropriate
instrument to achieve this. However, the practice of
integrity management is often more about beginning
a focused, organization-wide process. Among other
things, integrity management should focus on the
creation of conditions within which an organization-
wide consciousness-raising effort and internal inter-
action can take place. Collective insights can arise
from organization-wide discussions. In the first place,
these will be focused on understanding one another’s
dilemmas within the organization and getting insight
into the different opinions that employees have. That
will quickly lead to the growth of new insights that
those involved will experience as an enrichment.
Having the employees to do the coding rather than
having the employees themselves coded is the key
to the process. Activities stimulating this process of
coding are for example training programs, group
assessment sessions, individual coaching, dilemma
discussions and management by walking around.
Thus it is possible to develop specific activities to find
the right balance between the conflicting interests
and expectations that confront companies and their
representatives. It is not a matter of high-sounding
ideals which organizations should strive to achieve.
Instead, the task is to establish tangible and achiev-
able requirements in terms of an organization’s integ-
rity. By examining the organization from this per-
spective, it is possible to work on improving the
organization’s integrity. Two years after the intro-
duction of a code of conduct at Amsterdam Airport
Schiphol it became clear that the ethics of those
departments which paid attention to the code
increased significantly in comparison with those
departments which did not undertake anything. The
relevant percentages were discussability 21 per cent,
European Management Journal Vol 17 No 6 December 1999
INTEGRITY MANAGEMENT
clarity 19 per cent and consistency 17 per cent. As a
result, the damage to company vehicles caused by
employees fell by 25 per cent.
References
Badaracco, J.L. (1997) Defining Moments: When Managers must
choose between Right and Wrong. Harvard Business School
Press, Boston MA.
Becker, T.E. (1998) Integrity in organizations: beyond honesty
and conscientiousness. Academy of Management Review 23,
154–161.
Bovens, M. (1998) The Quest for Responsibility: Accountability
and Citizenship in Complex Organisations. Cambridge Uni-
versity Press, Cambridge.
Chappell, D. and Di Martino, V. (1998) Violence at Work. Inter-
national Labour Organization.
Drazin, R. and Sandelands, L. (1992) Autogenesis: a perspec-
tive on the process of organizing. Organizational Science
3, 230–249.
Ethics Resource Center (1996) Ethics Poll.
Fisher, A.B. (1993) Sexual harassment: what to do. Fortune,
August 23, pp. 84–88.
Giacalone, R.A. and Greenberg, J. (1997) Antisocial Behavior in
Organizations. Sage Publications, Thousand Oaks.
Goodpaster, K.E. and Matthews, J.B. (1982) Can a corporation
have a conscience? In Business Ethics: Readings and Cases
in Corporate Morality, 2nd ed., eds W.M. Hoffman and
J.M. Moore, pp. 184–194. McGraw-Hill, London.
Kaptein, M. (1998) Ethics Management: Auditing and Developing
the Ethical Content of Organizations. Kluwer Academic
Publishers, Dordrecht.
Kaptein, M., Klamer, H. and Ter Linden, J. (1999) De Integere
Organisatie: Het nut van bedrijfscodes. KPMG, NCW and
Stichting Beroepsmoraal en Misdaadpreventie, The
Hague.
KPMG and Universität Erlangen-Nürnberg (1999) Unter-
nehmensleitbilder in deutschen Unternehmen. Frankfurt.
LeClair, D.T., Ferrell, O.C. and Freadrich, J.P. (1998) Integrity
Management: A Guide to Managing Legal and Ethical Issues
in the Workplace. University of Tampa Press, Florida.
Nash, L.L. (1990) Good Intentions Aside: A Manager’s Guide to
Resolving Ethical Problems. Harvard Business School
Press, Boston, MA.
Payne, L.S. (1994) Managing for organizational integrity. Har-
vard Business Review 72, 107–117.
Pearson, G. (1995) Integrity in Organizations: An Alternative
Business Ethic. McGraw-Hill, London.
Shaw, R.B. (1997) Trust in Balance: Building Successful Organiza-
tions on Results, Integrity, and Concern. Jossey-Bass Pub-
lishers, San Francisco.
Smulders, P.G.W., Kleine Hesseling, D.J. and Evers, G.E.
(1999) Geweld, Intimidatie en Discriminatie op het Werk in
de Europese Unie. Ministerie van Sociale Zaken en Werk-
gelegenheid, The Hague.
Taylor, G. (1981) Integrity. Aristotelian Society 55, 143–159.
Trevino, L.K. and Nelson, K.A. (1999) Managing Business Eth-
ics: Straight Talk about How to do It Right. John Wiley and
Sons, New York.
Velasquez, M.G. (1998) Business Ethics: Concepts and Cases.
Prentice-Hall, Englewood Cliffs.
Walter, H. (1995) Van Kwaad tot Erger: Pesterijen en Psychoterr-
eur op het Werk. Thema, Zaltbommel.
Wempe, J. (1998) Market and Morality: The Problem of the Dirty
and Many Hands. Eburon, Delft.
633
INTEGRITY MANAGEMENT

MUEL KAPTEIN, Fac-

ulteit der Bedrijfskunde,
Vakgroep Methodolo-
gie & Ethik, Erasmus
Universiteit Rotterdam,
P.O. Box 1738, 3000 DR
Rotterdam, The Nether-
lands, and KPMG Ethics
and Integrity Consulting,
Postbus 74555, DC
Amsterdam.

Dr Muel Kaptein is Assistant Professor of Business

Ethics at Erasmus University, Rotterdam, and a
Consultant for KPMG Ethics and Integrity Con-
sulting, Amsterdam. His current research is directed
towards socio-ethical reporting and sustainability
management.

634 European Management Journal Vol 17 No 6 December 1999