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How Warren Buffett defines integrity

(MoneyWatch) When Warren Buffett looks for companies to buy, he looks for two qualities in the CEO: energy and integrity. The benefits of energy are obvious -- every entrepreneur and leader needs stamina to keep going through tough times and take advantage of good ones. What's more intriguing about Buffett's second requirement -- integrity -- is the way he defines it: The ability to say "no."

One company Buffett bought was Pampered Chef, founded by Doris Christopher. She said "no" to runaway growth when the food products marketing company was starting to take off because Christopher felt the business needed a year of consolidation before taking on any more people or customers. That takes nerve.

But I wonder how many corporate executives display this kind of integrity. If you're asked to sell a product you think isn't quite good enough, do you dare to refuse? If you're asked to lead a project that is underfunded and understaffed, do you accept the challenge or point out that it's doomed?

Although defining integrity as "saying no" sounds simple, we all know that, in fact, it's difficult. There are mortgages to be paid and student debt to reduce. Everyone wants to get ahead, build that resume, climb the ladder. Moreover, most people believe that doing a good job is synonymous with doing what you're told.

Yet companies that want employees with integrity need to create the conditions in which it is acceptable to question, to argue and, if need be, to refuse.

This represents a very significant challenge for leaders. If no one ever disagrees or refuses, this could mean you're surrounded by people with inadequate integrity. Did they start that way, or did the organization create them? If decisions are unanimous, is it because they're blindingly obvious, or because most people in the room are contributing nothing?

Most organizations have some sort of friction, of course, but it often around the wrong issues, like parking and food. Resilient and robust companies know that they need argument and debate to reach good decisions. If nobody is saying no, how much integrity can the company have?

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