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CHAPTER 1
VALUES AND ETHICS
Ethics and values are critical. Business can no longer get by saying one thing and doing another.
Jackie Orme, CEO, Chartered Institute of Personnel and
Development
Values and ethics have a vital role to play in the modern business world. Leaders and managers are faced with an increasingly complex and challenging business environment. They are battling to keep up with the pace of technological change, struggling to fend off growing competition and grappling with a difficult economic climate.
In the midst of this maelstrom, a strong set of values can serve to illuminate the way ahead. They are the foundation for strong leadership and management, the glue that sticks the organisation together and the unwritten code that helps managers make the right decisions about what they do and how they do it. Values help employees make sense of the new and constantly changing challenges they are being asked to take on and give them a clear picture of how the organisation wants them to behave.
There are some high-profile examples of organisations that have achieved outstanding results by putting values at the heart of everything they do. Virgin and Pret A Manger, for example, are both highly successful businesses with a distinctive, ethical approach. This is not just tokenism, but a deep-seated ethos that permeates both organisations. Virgin, for example, places huge emphasis across its operations on being a responsible service provider, managing its impact on the environment and playing a role in the communities that it operates in. Pret A Manger has a strong tradition of developing its people, places a high value on encouraging diversity and actively raises funds and donates products to charities for the homeless across the UK.
The truth, however, is that many organisations are still struggling to get to grips with how they can effectively harness the power of values on an ongoing basis. They may well have a glossy values statement pinned to the wall in their corporate HQ, but their employees are not living and breathing those values on a day-to-day basis.
The pages of the national press are full of examples of what happens when organisations fail to approach business from an ethical standpoint ā or when the actions they take are not congruent with the values they pretend to espouse.
Reputations that have taken years to build can be damaged by a succession of unfortunate media headlines. BP is the latest in a long line of examples from the corporate world. It is estimated that damage done to the business as a result of the Gulf of Mexico oil spill could result in losses of up to Ā£15 billion. The recent MP expenses scandal in the UK, where MPs were exposed for unethical charging of expenses, has also graphically illustrated the importance that people attach to following a moral code rather than simply obeying the rules.
But what do we really mean when we talk about values? How do leaders and managers develop values propositions that support their business objectives? What do they need to do to ensure their employees buy into those values and demonstrate them in their dealings with stakeholders on a daily basis?
Leader insights
Ethics and values are absolutely essential for a successful business. Leaders must accept that they are being watched all the time. Businesses should not complain about transparency ā they must deal with it.
Steve Holliday, Chief Executive, National Grid
Recession has reinforced the need for sharing values ā to overcome adversity and build back faith in the future.
Lord Bichard, founder, Institute for Government
Ethics and values have a central role. You need to be transparent in your decision-making and exercise a clear sense of propriety. You should have your limits, beyond which you will not go.
Phillippa Williamson, Chief Executive, Serious Fraud Office
Perception versus intent
Itās important to recognise that most organisations do actually go about their business with honourable intent. Yes, they are there to make a profit and provide a good return for their shareholders, but they donāt generally set out to rip people off, damage the environment or have a negative impact on the communities they operate in.
Despite their good intentions, however, organisations tend to get a pretty poor press. The media are quick to jump onto any misdemeanour and to bay for the blood of the leaders involved, even if there was no malicious intent or serious operational failing.
Trust and respect for business leaders themselves ā with a few notable exceptions ā is also generally low. Indeed, surveys have shown that business leaders come second from bottom, just above politicians, in terms of public regard.
This negative perception is not just external ā itās often prevalent inside organisations too. Endless rounds of cuts and re-organisations have left employees feeling insecure, initiative-weary and, frankly, pretty cynical about the businesses they work for.
Organisations such as the Chartered Institute of Personnel and Development (CIPD) have been warning for some time that a lack of employee engagement is one of the biggest issues facing the corporate world right now. On the front line, the troops are becoming weary and are feeling disconnected with the battles they are being asked to fight. āWeāre all in this togetherā, even if it is true, has a somewhat hollow ring.
In this scenario, values are the secret weapon. They can help organisations protect their reputation and improve the way they are perceived by the outside world. Values can create cohesion within the business, ensure everyone is working towards the same goal and help employees make that all-important personal connection with the tasks they are being asked to perform.
The right time ā or all the time?
The V word has a tendency to rise to the top of the organisational agenda when things are going badly. Itās often a bit of a knee-jerk reaction. The top team need something that will quickly bind the business together after a merger; HR want to re-energise people following a significant downsizing exercise; managers need an intervention that will help them focus on priorities and deliver their business objectives in a difficult climate.
Thereās nothing wrong with taking a fresh look at values at times of significant change and difficulty. They can play a valuable role when thereās an urgent need to boost morale, accelerate change or respond to a new business challenge. Itās not necessary, however, to wait for the worst-case scenario. Becoming a values-driven organisation is an approach thatās equally relevant in good times and bad. A values-driven approach can help keep the business on an even keel when times are good and can even help it get better at what it does.
Itās not about responding to a crisis with a quick fix. Itās about setting the tone, establishing the ground rules, making it clear āhow we do things around hereā and ensuring that employees know what kind of behaviours will be recognised and rewarded.
Itās also important to recognise that becoming a values-driven organisation is not a one-off event. The business world never stands still; as the sands shift around them, organisations need to review their values constantly to make sure they are still fit for purpose. This doesnāt mean starting all over again ā itās just a case of recognising that the business may need to tweak the values occasionally to make sure they still fit the bill.
The stringent savings being demanded of the public sector right now are a case in point. As budgets are slashed, significant changes will have to be made to the way services are designed, packaged and delivered.
Values will provide the guidelines to make sure organisations act responsibly and in the best interests of the people they serve when they are faced with difficult decisions.
Leader insights
Ethics and values are right at the heart of any great management and leadership team.
Martin Bean, Vice Chancellor, The Open University
Ethics and values are absolutely critical to every successful business. In Magmatic, I have asked all my team to draw how they see the company values and to display these pictures in their own work areas. Somehow the visual representation really helps them understand the values that are most important in our culture.
Rob Law, founder, Magmatic
I believe ethics and values are critical to business, a bit like oxygen is essential to life. Itās not about being puritanical, itās about inspiring trust, particularly during difficult or hard times..
Jonathan Perks, Global CEO Leadership Coach
Consultation, not coercion
The big question facing many organisations is how they go about defining what they stand for and what their values really are.
Thereās a tendency for leaders and managers to spend hours closeted in boardrooms trying to thrash out some kind of statement that resonates with all. When the discussion and debate are over, what often happens is that a list of agreed values is printed on cards and posters and launched with much fanfare to the waiting staff.
The problem is that this kind of approach just doesnāt work, because values canāt simply be decided by the chosen few and imposed from on high. An organisation will only get buy-in to its values if they are developed in consultation with the people who will have to implement them on a daily basis and with the stakeholders who will be on the receiving end.
Organisations need to think about what they want to achieve, how they plan to get there, what messages they want to convey to the outside world and what obstacles might get in the way. They need to invite contributions and feedback from everyone involved and gradually paint a picture of what makes the organisation tick, what needs to be done differently and what customers and stakeholders really want.
The most effective values statements are likely to be those that build on existing strengths and tackle areas of difficulty head on. They need to be intrinsically linked with the organisationās strategic objectives and fully endorsed and espoused by the top team.
Leader insight
What we are seeing is a broad shift in culture. We are seeing a global push towards more accountability. People need to make judgements all the time, but they need to be able to justify them. We need to enable business executives to be accountable and robust.
Paul Idzik, Chief Executive, DTZ Holdings plc
Living the values
If values are going to make it off the piece of paper and into something that becomes an integral part of how the organisation does business, they need to be communicated to employees in a way that makes it clear what they are required to do.
Thereās a tendency for organisations to describe their values in quite sweeping, general terms. āOur people are our most important assetā, āWe strive for continuous improvementā and āWe respect diversityā are the kinds of phrases that are often bandied around. These are all very laudable statements, but the problem is itās not clear to employees what they might need to do differently when they come to work on Monday morning.
In the command and control regimes of the past, this wouldnāt have been a problem. Managers issued very specific directives and employees did exactly what they were told. Itās now widely acknowledged that these old management styles just donāt work in the new world. In the fast-moving, technology-driven, global reality of business today, organisations expect ā and indeed need ā their employees to take the initiative, respond rapidly, seize opportunities and deliver what the customer wants.
Leaders need their people to be fully engaged with what the organisation is trying to achieve so that they will generate the new ideas that will take the business forward and will be willing to go the extra mile when required.
As a manager, when you are creating your values statements, you should consider making them much more explicit so that they provide real guidance to the employee on the front line about how they are expected to behave in pursuit of the targets and challenges they have been set. Statements like āWe always go one step further for the customerā, for example, would help employees connect in a much more meaningful way with a customer service-related value.
This more direct expression of values gives employees a shared purpose, a common goal and a benchmark against which to measure their behaviour. It provides a clear indication of the actions that will be rewarded and gives managers a framework for dealing with behaviour that is inconsistent with the values, should it arise.
Demonstrating that values are at the very core of the business and driving actions and decisions is a key requirement of the Investors in People (IIP) standard. To be awarded IIP status, organisations need to show that they are taking a values-led approach and that managers and employees within the business truly understand what this means and are applying it to their work.
Assessors explore whether this is the case through interviews with employees and by demonstration of evidence against some key criteria.
The following indicators of good practice, taken from the IIP framework, can help organisations judge how far down the road they are to becoming an authentic values-driven business.
ā¢ Top managers make sure the organisation has a clear set of core values that support its purpose and vision.
ā¢ Top managers make sure the core values are at the heart of the organisationās strategy and govern the way it operates.
ā¢ Managers can describe the organisationās core values and what this means to the way they are expected to manage.
ā¢ Managers can describe how they make sure the core values are at the heart of the way that the organisation operates.
ā¢ People can describe the organisationās core values and ...
