Updated: Jan 2, 2021
It is hard to imagine that these things happened.
They are such extremes of "do what I say, not what I do", reinforcing that actions speak louder than words.
Many organisations are failing to communicate what's most important to them clearly and authentically. They risk confusing and misleading their stakeholders as well as missing the opportunity to explain how they differ compared to competitors or act as a rallying call to inspire and motivate their employees.
Enron's values are possibly the most highlighted for their glaring inconsistency with their actions. Their values were: Respect, Integrity, Communication and Excellence. Yet Enron is now synonymous with accounting and corporate fraud after costing thousands of employees their jobs and losing shareholders tens of billions of dollars when it declared bankruptcy in 2001. Its accounting shenanigans were the epitome of greed and hubris, not integrity!
But its not just Enron getting it wrong. Wells Fargo states its values as what's right for customers, people as a competitive advantage, ethics, diversity & inclusion and leadership. They would appear not to have followed two of their five values, the things that they say are most important to them and their 250 thousand employees. If they had truly believed "what's right for customers" as being core to their culture, then one could posit that they wouldn't have got into trouble for the fake accounts scandal. Their high-pressure sales targets drove staff to open over three million fake accounts for the customers that they (apparently) value so much. The fall out is still dogging their performance today, costing hundreds of millions of dollars in fines and compensation.
More recently, we have Boeing in the news with the tragic accidents involving two 737 max jets that claimed 346 lives. The reviews and investigations are still ongoing, but the investigation and recently leaked internal emails paint a compelling picture of a culture that has become out of sync with and lost sight of three of their values: integrity, quality, and safety. Current estimates for the total cost of grounding the fleet of 737 max jets could reach $20 billion — excluding any settlements from lawsuits from crash victim's families. Would you expect a company that makes $2bn quarterly profits and that has safety as a core value to charge extra for notable safety features?
"They're critical, and cost almost nothing for the airlines to install...Boeing charges for them because it can. But they're vital for safety."
Bjorn Fehrm, aviation consultancy Leeham
What do Enron, Wells Fargo and Boeing have in common?
Each of these organisations did not stay true to the things they said mattered the most:
Enron - Integrity
Wells Fargo - what's right for customers
Boeing - safety
Enron's failure was endemic in the top levels of management. Wells Fargo's failure was culturally driven by the high-pressure sales targets that were at odds to their core values. It is too raw and too early to conclude regarding what went wrong at Boeing.
Why are corporate values so important?
Values help set a company apart from the competition by clarifying its identity and serving as a rallying point for employees. An organisation's values and the corporate brand are closely aligned hence brand values. Think of the most successful or admired companies, and you will be thinking of their brand. A company's brand represents people's perception of a company from its reputation for quality and customer service through to how innovative it is or its impact on the environment.
A strong brand built on a foundation of strong organisational values will not only increase the value of the company by helping it gain new customers, or retain loyal customers. It will also provide employees with direction and motivation by telling the story and the mission of the company.
But strong values and not violating them requires discipline, persistence and consistency. Values place restrictions on an organisation's strategic and operational freedom and constrain the behaviour of its people.
Let's delve into the different types of values as this is where organisations are making mistakes and hence causing confusion.
The different types of organisational values
As Pat Lencioni says in the HBR article "Make Your Values Mean Something"
"If you are not willing to accept the pain that real values incur, don't bother going to the trouble of formulating a values statement."
In this excellent article, the author describes the different types of values:
Core values - These are the most important things that the organisation stands for. You must have more of it than everyone else and must not deviate even in the short-term and especially not for economic gain.
Permission to play values - These are important but generic and not a differentiator. Examples are saying you value teamwork and collaboration when almost all modern organisations do.
Accidental values - These creep into an organisation over time. They are true but should not exist. Probably means a lack of discipline when hiring new talent, and this eventually leads to a culture that won't serve your clients.
Aspirational values - These values are not true, but you wish they were. Aspire to have them, but it is best not to pretend they exist already. Often an organisation may need to develop a new value in response to a changing market or industry. For example, innovative is a universal aspirational value in more substantial and older organisations that are watching agile, more nimble, smaller new entrants in the market.
Stick with me, let's put what we have learnt into practice and examine a broader set of values to see the mistakes organisations are making. Displayed below are the values of the largest ten American and European global banks as per their public mission and value statements:
I have had to condense longer sentences to single words to reduce the word count and create a consistent list of words - any mistakes are my own. This list captures the essence of the values these banking organisations say they have. The three most common are:
Clients - six of the ten banks mention their clients in some way. For example, "putting our client's interests first" or "exceptional client service". Which of these institutions genuinely put their clients first in all things they do? For it to be a core value
they should have more of it than their competitors
not deviate from it - you can't be mainly client-focused
not let short-term economic benefit override client focus
Integrity - six of these banks list their integrity as a core value. The definition of integrity is "the quality of being honest and having strong moral principles." Wouldn't we all expect our banking institutions to exude integrity in their actions when dealing with us? Yet unfortunately, the financial crisis isn't too far in the past that we can forget that it wasn't this industry's finest hour. If integrity were core values for all of the banks, then would the great recession have ever occurred.
Excellence - is another value that shows up several times, whether it is "operational excellence" or a "commitment to excellence" or in one case just "excellence". I take this to mean that they will do their very best in all things, but it is generic and open to interpretation.
Anyone else thinks these organisations are guilty of not wanting to say no to any good word that comes to mind?
Let us put the more common of these values into the 2 x 2 matrix to test them against the four different types:
Do you see where the confusion and misalignment arise?
The first problem is that clients could feature in three of the quadrants. In the case of Wells Fargo based on their fake account scandal, one could reasonably put clients into the aspirational category (they wish it were true). At the same time, most people would assume clients to be necessary to organisations and hence place them into permission to play. Only those organisations that act with clients front and centre, such as the global bank that "puts clients first" can legitimately put clients as a core value.
The second problem is that most of these values are either permission to play or aspirational. We either assume these things, in the case of permission to play, or they aren't true (yet) because they are aspirational. Most of these organisations wish they were innovative, diverse and inclusive environments, and they are making substantial investments to move in those directions. However, they have a long way to go.
What about the empty quadrant, what about Accidental values?
These are the values that are true but are unintentional, which can be good but more often than not, it is a bad thing. Often organisations may not be cognizant of these values; they have grown and crept into the organisation culture over time. Do you recognise any of these in your workplace?
Short-termism - the focus is on short-term economic gain (the next quarter)
Presentism - long hours, always-on, must be in the office or online
Uniformity - hiring people like you, from the same schools and colleges, similar interests
Siloed - businesses don't always work together and often work against each other
Consensus - speaking up to question and disagree may be frowned upon which leads to groupthink
Some of these values will exist in high-pressure environments that are not good, but they are true. They need to be addressed and dealt with; otherwise, it can lead to misalignment where your words and actions are out of sync and a culture that doesn't serve your clients. Do not stick your head in the sand and ignore accidental values.
Values should be about doing things not because of the expected short-term economic benefit, but because we feel we are doing things to contribute to something bigger and enduring.
How can coaching help?
1-2-1 Executive coaching
Coaching is about creating change and action and accountability. A coach provides several crucial roles, including being a powerful independent sounding board, someone that will challenge you and hold you accountable. Someone that will give an outside perspective to raise your self-awareness, perhaps by saying things that others cannot say. Coaching will help compare the purposeful, authentic self we want to be with the person we are presenting to the rest of the world - highlighting where your actions are inconsistent with your values. https://www.rylncoaching.com/executive-coaching
Effective teamwork can be a strategic competitive advantage but are your core values consistent with the members of your team? Is there a misalignment that has arisen because accidental values have crept into your culture over time? Team coaching will focus on increasing the team's commitment to one another, the common goals and the cultural values through building trust, accountability and effective communication. https://www.rylncoaching.com/team-coaching
Transitions are essential for leadership development and crucial for business success. Aspirational values may require new, external talent to be hired into your organisation to bring much-needed skills and experience. For example, there may be a need or desire to become more innovative. Transition coaching helps executives integrate into a new culture and way of doing things. Thereby reducing the risk of "organ rejection" and accelerating their time to being fully effective in the new role. https://www.rylncoaching.com/transition-advisory
This article was inspired by episode 14 "The Limits of Diversity" of the TableGroup's "At the Table" podcast.
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