Core Values: 3 Ways to Cut the B.S.
Does it shock anyone these days that so many companies’ mission statements and codes of ethics seem to bear so little resemblance to what companies actually do? The words are crafted to quicken our heartbeats and bring tears to our eyes.
- Bank of America, whose aspiration is to become “the world’s most admired company,” says it’s committed to helping customers and clients at every stage of their financial lives--well, maybe not every, as this is a company paying huge financial settlements because of its abuse of the mortgage origination and foreclosure processes.
- BP’s core values place safety as No. 1--this for a company with employees killed in a Texas refinery explosion and a poor occupational safety and health record even before the Gulf oil spill. Under “What We Stand For,” BP states, “We care deeply about how we deliver energy to the world. Above everything, that starts with safety and excellence in operations.”
- United Airlines, the company that consistently ranks low in on-time performance and toward the bottom of the American Customer Satisfaction Index’s rankings of airlines, aspires to be “recognized as the airline of choice,” in an industry where unfettered consolidation means at U.S. hub airports, there is ever less choice.
Of course, there are values-driven companies that genuinely take those values seriously--such as DaVita, the kidney dialysis equipment maker that opens its quarterly conference calls discussing not its earnings but patient outcomes; Patagonia, the clothing company that has somehow resisted the temptation to make its products in factories that burn up and employ slave and child labor; and many others. But for the vast majority of companies public and private, mission statements are cheap decorations to put on the walls and public relations gambits to make outsiders and customers feel better.
Why the disconnect between words and deeds? Probably many reasons. One is the excessive focus on short-term, often financial, performance measures. Companies trying to meet growth or profit goals face pressures to cut corners. Sometimes they violate labor laws by calling permanent employees contractors to avoid social security and unemployment taxes; sometimes they sacrifice customer well-being by shipping products that aren’t ready for prime time; and sometimes they shade accounting rules to book revenue in advance of approved and signed contracts, move revenue across quarters, or inflate the supposed prospect pipeline. Companies focusing too much on the short term don’t ensure their suppliers aren’t going to embarrass them and do layoffs at the first sign of financial stringency, losing employee commitment as a result. Building a values-based, ethically-behaving company requires taking a longer-term view of the business and focusing on business processes, not just financial end results.
Companies incur costs when they say one thing and do another. Such behavior induces cynicism among customers and employees, in the process destroying economically important loyalty. And the words-deeds gap erodes trust, and trust is fundamental in building well-functioning entities, be they businesses or political systems.
Companies that want to get serious about aligning values with everyday behavior can do something about it. A few starter principles:
1. Start measuring for ethics and values.
You can’t achieve anything if you can’t assess how well you are doing. So the first step is to develop a set of measurable performance indicators. For safety, the measure could be the number of people killed or injured per year or number of work days lost to accidents, something that Accelor Mital Steel reports. Becoming the airline of choice means flying on time, not losing bags, and not being deluged with customer complaints. How well your suppliers pay, their accident rates, and whether you buy using criteria other than low price might be indicators of how seriously a company values human sustainability.
2. Publicly share the results.
Not only figure out some measures of your adherence to values--maybe by doing surveys of customers and employees and their beliefs about how well the company is doing--but publish the results for the world to see. That permits internal and external constituencies to hold you accountable. Are the numbers getting better or worse? Is there evidence that serious decisions about promotions and resource allocations get made to address notable deficiencies?
3. Make ethics performance part of employee performance.
Evaluate everyone by their promotion and adherence to these standards. DaVita takes employee development seriously, and has fired senior executives when they failed to give nurses, and not just MBAs, opportunities to attend internal leadership programs. Southwest Airlines will terminate employees who behave rudely to their customers and teammates. Hewlett-Packard used to make employee survey results about leader behavior part of the performance evaluation process, when HP still practiced the HP Way.
It’s actually not that difficult to close the values-behavior gap. The day-to-day measures that companies use to guide what they do and how they evaluate employees need to incorporate, in very concrete, specific fashion, the values they espouse. Unless and until that happens, profit and loss, something that is always measured, will remain the only focus of attention. As the quality movement taught us, if you want something (like quality or values adherence), measure it. What’s not measured will almost certainly be ignored.
JEFFREY PFEFFER | Columnist | Professor, Stanford's Graduate School of Business
Jeffrey Pfeffer†is the Thomas D. Dee II Professor of Organizational Behavior at Stanford University's Graduate School of Business, and a regular contributor to The Company Ethicist, a new blog about business ethics and leadership, published by Convercent.