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CORPORATE VALUES IN A SLOWED ECONOMY

By Jerry Howard,2014-07-04 08:26
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CORPORATE VALUES IN A SLOWED ECONOMY

Corporate Values in a Slowed Economy

    Disconnect on values divides companies, leaders

    www.lrn.com

    Who are the most prized employees in corporate America?

    If you ask their top bosses, it‟s those inspired by a company‟s mission and organizational

    values. Unfortunately, corporate cultures and practices don‟t seem to be keeping pace with that vision.

    The disconnect between companies and their leaders is detailed in the recent “Value of Corporate Values Study,” conducted by ethics and compliance company LRN. A large majority (87

    percent) of the survey‟s respondents — 150 senior leaders with the title of director and above,

    including CEOs and general counsels said that employees inspired by mission and values are

    most favored. The companies they work for, on the other hand, see things quite differently, with only 33 percent of the U.S. business leaders saying their companies value inspired employees. The leaders said their companies prefer employees who conform and do what they are told (35 percent) and are motivated by material rewards (32 percent).

    That suggests a troublesome gap in the process of translating leadership values into corporate structures and culture, said Kenneth Goodpaster, a business ethics professor at the University of St. Thomas‟ Opus College of Business in Minneapolis. “It‟s good news that the leaders care about this but it‟s bad news that they haven‟t been able to institutionalize what they care about,” said Goodpaster.

    “The culture of the company is something the leaders bear some responsibility for,” he said. ”One of the roles of leadership is ethical in nature, taking steps that are aimed at reinforcing and transforming the culture of the company. That moral compass has to be woven into the culture of the company itself. The weaving process is difficult because building a corporate culture is a never-ending task of executives.”

    Greg Triguba, founder of ethics and risk management company Compliance Integrity Solutions, agrees with this assessment. “The senior leaders bring the behaviors to the culture,” he said. “They‟re supposed to set the tone of what the company is about, driving the value. There needs to be one clear vision in the company that helps make the culture. There has to be one voice that „We are a company that cares about values‟ at the very highest levels of the company.”

    Alignment and Economy

    So what role, if any, do the values and mission of companies play in making decisions in our slowed economy, where perks used to incentivize great performance don‟t flow as easily?

    According to the study, the leaders surveyed reported that nearly half (49 percent) of their companies weigh the degree to which employees are aligned with the organizational mission in

    making decisions to downsize teams and resources. Twenty percent of their companies do not consider the mission and values when scaling back the workforce.

    A majority of the companies (56 percent) tend to place a premium on workers who are allied with the underlying organizational mission versus an equally skilled employee who may not be as aligned; 17 percent were said not to value such workers.

    Also, the leaders said that the recent economic downturn has 52 percent of their companies emphasizing the organizational mission more to encourage greater performance from employees than in the period before the decline. But the leaders said that a total of 47 percent of their companies are stressing values and mission less (5 percent), the same (15 percent) or not at all (27 percent).

    When it came to actually investing more dollars and resources to encourage better performance from workers by aligning on values and mission, the companies came up long on verbiage and short on action. The leaders said that about 1 in 3 (37 percent) of their companies had no such plans to do so. Just 30 percent said their companies would dedicate resources. Dollars and Cents

    For some companies in the current sagging economy, the decision of whether to jump into investing in values comes down to simple dollars and cents, said Triguba. “Some companies

    looking into putting time and money into building an infrastructure wonder what they‟re going to get out of it. Values and ethics are important, but they‟re soft things, so it‟s difficult [to realize

    their value] in the short term.”

    This rather frugal-minded business thinking is really a meter of how companies may choose to prioritize limited resources in tough times, said Jeremy Price, program delivery executive of LRN. “Aligning employees to the company values does not always appear to be of top

    importance in times of economic downturn,” he said. “So this can be a difficult sell, internally, to shareholders and to Wall Street. If companies have a tight budget, and middle managers have to make choices, we are seeing that they are more likely to invest more on business operations, sales and marketing rather than on employee development. But ironically, senior leaders consistently tell us that they expect higher performance over the long term from employees that are aligned to the company values.”

    For some companies with tried-and-true long-term growth strategies, their ethics and value systems have been built into the core business for some time, with budgets set at specific levels, so the question of spending or not spending more, less or the same amount of money or

    resources during times of economic climate change may simply be a matter of consistency and structure, said Mark Detelich, VP of Leadership Solutions at LRN.

    “We‟ve found that some companies are already investing in this area, so investing more would

    be redundant,” he said. “Current activities may already be blended in with all of the other compliance and legal, board or HR obligations and strategic objectives, so it‟s not easy to track

change right away. Just because companies are spending the same as the year before doesn‟t

    mean that‟s necessarily a bad thing.”

    Role Models and Leadership

    But mere talk is cheap, said Detelich. “It‟s not good enough just to assert your values, you have to live them do something about it or you‟ll be seen as not being authentic,” he said.

    Leaders need to communicate continuously and have role models in the company behaving in a certain way. “It‟s the idea of educating employees on what these values actually look like and translating them to real behavior to make them tangible.”

    This new mindset requires a major shift in perspective, a reframing of orientation. Developing examples of times in company history when behaviors have been best represented is an important part of corporate education, said Goodpaster. Unless employees and managers climbing the ladder see it‟s acceptable to make tough choices in the name of ethics, there could be downsides from an economic point of view, he said. “Do regular development work with your talent in the company to reinforce the ethical messages,” he said. “Constantly send signals to the employees that „We really do care about this.‟ Companies should celebrate what they stand for and should recognize when employees exhibit behavior that upholds these standards.”

    With this in mind, some companies have specifically introduced multi-tiered evaluation processes, where core values are stressed in performance appraisals according to employees‟ work habits and personal conduct. Companies have also launched employee-engagement efforts, such as mentorship programs for newly hired employees, to introduce and reinforce organizational values, culture and mission to workers at all levels.

    Keith Darcy, executive director, Ethics & Compliance Officer Association, said the LRN survey brings out a larger discussion on leadership because employees at all levels of an organization should have the capacity to lead. “People talk of „tone at the top,‟ beginning with top management, but what we should really be discussing is tone at the middle and tone at the bottom as well,” he said. “Workers want to see the behaviors exemplified where they work and by the people they report to. In order to drive corporate culture, there needs to be leadership at all levels.

    “Real leadership is about being one‟s authentic self — what your values are and how you live

    out your values wholly and completely in community with others, leading with actions and not by words alone,” said Darcy. “It‟s about trying to gather the collective energy of the organization.

    If you‟re open to ideas, there will be a process of continual improvement in the organization. Companies need to create leadership opportunities for others by investing in people. There‟s no substitute for meeting and talking with people. And people need to work together in good and bad times.”

    *About this story:

    The study this story is based on was performed by LRN, the company founded by HOW Online founder, Dov Seidman. LRN provides financial assistance to HOW Online but does not directly influence its content.

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