Most companies claim to have important values. In the best ones these drive the organisation, guiding both direction and culture.
Yet as Enron demonstrated, boasting about values is easy. Making them come alive, and sustaining them is far harder.
One leading global communication company for example, call its values “Guiding Principles”. Devised seven years ago, they’re still going strong. They were meant to inspire and help focus actions within the company. Used well they do help focus attention on choices that reflect the desired culture.
The problem facing this particular organisation is what it calls the “seven year itch”. After seven years the Guiding Principles are now rather taken for granted. The Guiding Principles need a boost in terms of raising employee use and awareness.
No one can claim an exclusive on how best to create sustainable values. Given there are many routes to keeping values alive, here are three Turbo Boosters, whose daily use can directly affect corporate culture and practice.
Turbo Booster 1: Reduce Ethical Fading
Turbo Booster 2: Build Ethical Engagement
Turbo Booster 3: Promote Tone in the Middle
BAE, CISCO, Novartis, and Unilever all have variations of these Turbo Boosters. They may not be called that of course, being merely viewed as best practice. Yet they certainly deliver a large impact on daily behaviour.
Turbo Booster 1: Reduce Ethical Fading
Like the equally intangible “social licence”, “ethical fading” is real. It happens when leaders, teams and employees suffer from ethical myopia—a failure to see some choice involves important ethical implications—or a direct challenge to current values.
A current example is Wells Fargo with its 5, 300 employees who collectively thought it was OK to take the banks’ customers for a ride. Inventing fake accounts and making unjustified charges, these misguided employees saw nothing unethical in what they were doing. In many ways they justified their actions as driven by the extreme demands of management to perform.
This has proved an expensive ethical fading. It has cost 5,300 employees their jobs, the bank faces a significant fine, and is still trying to draw a line under this reputation and commercial disaster.
Just about any organisation can suffer from ethical fading—often with serious adverse results. All the ones below missed the ethical aspects of choices they made with costly results:
Some, like the News of The World, ceased to exist as a direct consequence of ethical fading—in this case hacking into people’s private mobile phones. Following a national scandal, a large scale media enquiry and much adverse publicity, the damage to the paper’s reputation was terminal, leading to closure.
Others, like Sports Direct in the UK have faced prolonged press criticism and shareholders’ complaints over dire treatment of employees. One critic described conditions at the company’s warehouse as like a “Victorian Workhouse”. The shares have plummeted despite the firm’s financial success.
GM’s failure to realise the ethical implications of refusing to recall a faulty starter motor was equally unsustainable. With the company’s reputation in tatters, a huge financial hit from regulators, and a government enforced product recall, it led to a new CEO. She has spent much of her early time at the company trying to bring back a semblance of ethical awareness.
Through 2016 the VW emissions saga continues to hog the media headlines. Analysts compete to unravel what happened and why. Much of the trouble stemmed from an unhealthy culture in which the leadership demanded success at the expense of ethical behaviour. There is no evidence that hiding the damaging emissions data was due to just a few employees. The CEO even knew of the tactic a year earlier but did nothing about it.
Despite having apparently highly committed employees few, if any VW employees felt able or willing to speak up about the unethical actions before the damage was done. A lone engineer seems to have now come forward to admit guilt. It was ethical fading writ large.
As for banks, the list of exposed unethical behaviour and ethical fading, grows ever longer. Finance Watch an independent advocate for sound financial reforms publishes a list of misdeeds and the number of bank entries tops 100.
A clear framework for making decisions can be a powerful antidote to ethical fading.
BAE for example suffered grievously from this effect and has since done some excellent work to rehabilitate itself. False accounting and misleading statements about allegations of corruption went on for years. The firm refused to accept there was any wrongdoing—a clear case of ethical fading, in the face of mounting evidence of alleged bribes and kickbacks.
The company has since tried to draw a line under the tale of ethical fading. It has worked hard to put integrity at the heart of its revised culture. In particular, it has introduced measures to counter ethical fading through for example a company-wide decision process. This four stage procedure requires all employees to understand their part in helping the company do what’s right:
This gives a prominent place to the employees’ own values. It’s a key to encouraging people to link what matters to them personally, with corporate values. Only when that link happens will people feel connected with the responsibility to speak up about potential ethical fading situations.
Other companies such as Cisco have also introduced a standard decision systems to help employees plot a path that reduces the chances of ethical fading—ie seeing how and why a situation has important ethical implications.
Helping people think about their personal values is a continuous process of learning and development. Some companies have an ongoing program to ensure this happens, using creative mechanisms that get people thinking about the issues regularly.
Engagement of employees is high on many company agendas.
Those with highly engaged staff do better financially than those without such dedicated employees. Yet engagement alone is not enough, since it makes relatively few demands on people.
Reduced to its most basic, ethical engagement means people take responsibility for helping the company to do what’s right.
An ethical engaged employee does not feel a cog in a machine who must simply follow orders or hide behind a hierarchy.
Building ethical engagement is a long term cultural challenge for even the best companies. Only a continuous process of getting employees to through regularly discussion of issues involving ethics and values will the culture begin to change.
There has been plenty of concern in companies about creating tone at the top. This is where leaders and boards set cultural aspirations and communicate their desire for people to do what’s right.
Yet its mainly further down the organisation that real challenges to values arise. Getting middle managers, supervisors and others in charge to talk about ethics and values is just as important as pronouncements from the C Suite.
Recognising this, some companies have developed a range of tools to promote tone in the middle as a way of reducing risks and enhancing performance and reputation. These include: engagement kits, electronic support, guides, “real life” scenarios, scripts, discussion centres, and using “teachable moments.
For example, BAE finds it useful to share scenarios showing different situations at work which employees can discuss. It’s an involving approach, originally based on actual videos. More recently BAE has gone beyond costly videos, to handing out scripts for teams to read aloud to each other.
The impact is considerable. People find the scripts fun, stimulating and an imaginative way to brings values to life:
Promoting tone in the middle is a continuous process not a once a year event, such as an annual company day on values.
The three Turbo Boosters are important ways to bring company values alive. Naturally there are many more ways to make values sustainable and each company must create its own unique mixture of tools.
See also for example:
This post is based partly on a recent key note speech by Andrew Leigh to a global communications company.