“We can afford to lose money. We can afford to lose a lot of money. But we cannot afford to lose one shred of our reputation. Make sure everything you do can be reported on the front page of your local newspaper written by an unfriendly, but intelligent reporter.” – Warren Buffett ((Russ Banham, “The Warren Buffett School,” Chief Executive, December 2002, downloaded from http://www.robertpmiles.com/BuffettSchool.htm, May 19, 2003))

Last spring, a prospective student—someone who had been offered admission and was considering joining our community–approached me and said, “You talk a lot about ethics and integrity in your speeches, blog postings, and tweets. Does Darden have an ethics problem?” I replied, “No—precisely because we do talk about ethics and integrity pretty regularly. They are not values that we store in a cupboard and only bring out on ceremonial occasions; they are part of our daily life.” The person smiled politely and turned to someone else for conversation, giving no hint as to the kind of impression I had left. A community of integrity is not everybody’s cup of tea; almost certainly, we lose some students who won’t make a commitment to a high community standard. Thus, it was with a bit of surprise and satisfaction that I saw this person enroll last August. Does all our talk about ethics help or hurt us?

A truism in management and family life is “if you can’t talk about it, it won’t get done.” Making progress on anything important is not a matter of giving orders: one must communicate, engage, enlist, and inspire others. So it is with creating a community of integrity. The best leaders get this and use plenty of opportunities to talk about integrity in the workplace. For instance, Warren Buffett annually reminds employees at Berkshire Hathaway how vitally important are ethics and integrity in all they do.

Working with integrity is hard–there are very few “bright red lines” that tell you what is right and wrong; rather, the worlds of business and academia offer blurry lines, and perhaps no lines at all. A core notion in the Darden Community is that we are called to a higher standard of conduct than what passes for “average” in the business world. What others do is no guide for what’s right, a fact that was sadly discovered too late in cases such as Enron, WorldCom, Tyco, and, more recently, in the subprime loan boom, Madoff Securities, and Galleon Fund. What’s right may differ substantially from what’s popular or convenient.

One hears many explanations for dodging the subject of ethics in the workplace: we have no training in business ethics; it is embarrassing to discuss these things; we’re too busy doing our work; it’s a dog-eat-dog world; it’s not in my job description, and so on. If all this is true, why should we pause here at the start of the calendar year, to dwell on ethics?

Let me answer it plainly: manage, study, lead, and work with integrity because

1. We want to create a sustainable legacy for Darden. To incorporate ethics into our workplace mindset is to think about the kind of community that we would like to live in, and that succeeding generations will inherit.

2. Ethical behavior builds trust and dividends of trust are valuable. The foremost dividend is an unimpeachable reputation. Equally important, ethics and trust build strong teams and strong leadership. Stronger teams and leaders result in more agile and creative responses to problems. Ethical behavior contributes to the strength of teams and leadership by aligning employees around shared values, and building confidence and loyalty.

3. UVA and the Darden Mission Statement call us. We share expectations that create a community of trust. Faculty members recently reaffirmed the Darden Mission Statement. It commits us to graduate “principled leaders.” The Board of Visitors of the University endorsed the University Code of Ethics. It states that “We do not condone dishonesty in any form by anyone.”

4. Darden can’t afford the costs of doing otherwise. To echo Warren Buffett, we cannot afford to lose one shred of our reputation; we cannot afford to lose one talented member of our community, applicant, or corporate partner over an ethical lapse; and we cannot afford to lose our self-confidence and self-respect.

These and other reasons should motivate all of us to walk the talk.

Here is what I ask of you in 2010. First, encourage others around you to do what’s right. We are not an “anything goes” community. We have mutual expectations for exemplary behavior. No number of messages from the Dean can top the impact of peer expectations. A community is only as strong as its most vulnerable link. Help those who may be headed in the wrong direction. Speak up for our values.

Second, if you see something, say something. The UVA Honor System provides representatives with whom students and professors can share their concerns on a confidential basis. Similarly, faculty and staff members can share concerns with senior leaders, me, and/or Barbara Deily, Chief Audit Executive of the University (434-924-4110, deily@virginia.edu). The mark of a good organization is not that it never has ethical lapses, but rather what it does about them. At Darden we must get the facts and take appropriate action as fast as possible.

Finally and most importantly, at a personal level, make a commitment to go the extra mile for what’s right. Mahatma Gandhi said, “you must be the change you want to see in the world.” If we want to live in a community of trust and integrity, we must live that behavior.