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Operational Integrity - A Strategic Imperative for Business Government and Industry
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April 09, 2009

Operational Integrity - A Strategic Imperative for Business Government and Industry

By Kevin G. Coleman, Certified Management Consultant and Strategic Advisor with the Technolytics Institute

You can hardly pick up a new publication today without reading about cyber security, data breaches, fraud allegation or sanction for non-compliance. Is it possible for a decent human being to succeed in business?  The answer is yes in both the short and long term. Many times in the complex world in which we live and operate ethics, business practices and trust are compromised in the name of short term revenues and profits. While there have been many articles published recently on business practices, perhaps as a reaction to the moral outrage over the scandals practices and greed of many financial services firms and other companies, the fact remains it is the design of our operational models that allow questionable operations. This has evolved to become laser focused on executives and their past practices that seem to have led to the current executive scandals. Operational Integrity (OI) offers perhaps the single greatest challenge and opportunity in modern business and government. Significant forces are at work to negate and compromise operational integrity in our businesses, governments and educational institutions and society in general. These forces include human behavior, criminal activities, global politics, climatic change and the list goes on.

These are four critical issues; but, what they should be talking about is the overarching characteristic we refer to as operational integrity. Integrity is one of the most important and oft-cited virtue terms. It is defined as a core guiding principal and practice that stands for reliability, security, credibility, dependability, and trustworthiness. It represents how an organization controls its actions and operations, as well as its interactions with customers, clients, regulatory agencies.
A 2009 survey by Technolytics found that the lack of integrity is a major factor that influences ongoing businesses.
Each individual component brings with it measures that improve the operational integrity of an organizations.  These components are not merely additive, but rather increase the organization’s integrity exponentially when combined.
Security in the corporate world security refers to techniques and programs designed for mitigating identified risks. In the information technology world, it represents the measures for ensuring that data stored in a computer cannot be read or compromised by any individuals without authorization.
Organizational security represents the quality or state of limited risk and the condition of being safe from loss or the minimized or limited risk of loss.
Governance is the set of processes, customs, policies, and rules affecting the way an organization is directed, administered or controlled. It describes a system based on principals an organization uses to ensure that it meets or exceeds the expectations of its internal and external stakeholders.  Policies and procedures are our primary means of maintaining security oversight and accountability throughout the organizational structure. These security policies and their implementation in our operational procedures are what dictate security, compliance and resilience behaviors of all stakeholders.
Compliance represents a state of being in accordance with established guidelines, specifications, or legislation or the process of becoming so. Compliance in a regulatory context is a prevalent business concern, perhaps because of an ever-increasing number of regulations and a fairly widespread lack of understanding about what is required for a company to be in compliance with new legislation. Organizations should view legislative mandates as an opportunity to strengthen its integrity.
Resilience is what we refer to as the capacity to respond and recover from unusual events, endure stress and bounce back. It is the capacity that may be available to organizations at a time of need, under some unusual circumstances. It represents the ability of an organization to adapt to a dramatic change and overcome obstacles. Resilience Engineering represents the actions taken by an organization and a new way of thinking about the integrity of its operational systems. It should be noted that conventional risk management approaches are based on hindsight and typically reactionary.  Resilience Engineering looks for ways to enhance the ability to design processes in a manner that they are robust, yet flexible, with critical measures monitoring designed-in and the ability to proactively recognize threats that pose a risk of disruptions.

Integrity is now a core quality for success. The total value of driving operational integrity is difficult to calculate. However, done separately the four initiative areas could cost on average 27% more than it would cost using our unified approach. What is the value of a trusted relationship with your customer, shareholders and employees? The single most important quality any organization can ever develop is integrity. Operational Integrity is a business issue and decisions are based upon compelling value drivers including:
  1. Brand defense
  2. Customer loyalty
  3. Shareholder protection
  4. Risk reduction.
Operational integrity must become a core value of the organization and reinforced through a proper measurement and rewards system. In order to achieve operational integrity, an organization must also strive to function with accuracy, reliability and consistency. These attributes require attention to hiring, systems, security, governance, compliance, and resilience. Achieving operational integrity demonstrates to your employees, shareholders and your customers that you are serious about conducting business in an ethical, performance driven way, focused on delivering on promises and meeting expectations.
Security + Governance + Compliance + Resilience = Integrity
Customers and clients want to have relationships and do business with organizations they can trust and rely on. Therefore, operational integrity must be at an organization’s heart principles and practices and reinforced by their executives’ words, actions and behaviors. Implementing an integrity based approach to management creates an environment that encourages operations that are beyond reproach and is the best way to discourage questionable practices, behaviors, as well as control and measurement systems that increase risk. The challenge is to promote through self-regulation, the highest standards of operational integrity and to instill confidence in responsible business processes through programs of education and action that informs, protects and assists in the integrity of operations. We all need to remember integrity is the resulting sum of everything we do right and ends in success!
In the coming months we will examine each of the four individual components that combine to create operational integrity. The articles will focus on critical aspects and characteristics necessary to have a high degree of operational integrity and highlight the most common shortcomings that serve to negate integrity.

Kevin G. Coleman, a consultant and advisor with Technolytics Institute, writes the Data Security column for TMCnet. To read more articles by Kevin, please visit his columnist page.

Edited by Greg Galitzine

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