The shadow side of values

By Martin Vogel


Only about a decade ago, corporate values were all the rage. We lived in a world in which business was largely viewed as a force for good and corporations identified their success with the general wellbeing. Now, as we labour to fund the bailouts of the banks, we have a more nuanced view of business and the statements of values seem hollow.

But values remain potent. The public cares about them: not the values of PR spin but the actual lived values of organisations. Most of the corporate scandals of recent years became scandals precisely because they generated perceptions of values betrayed.

Take the banks: their first duty is the safekeeping of customers’ money; but not only did they bring the economy to the brink of collapse but, even now, they manage IT systems which offer no guarantee of access to the funds we deposit with them.

Take the BBC: public anger over its failed reporting around the Jimmy Saville scandal and over its executives’ pay-offs arises partly because these incidents seem a betrayal of the trust which the BBC proclaims to be its foundation.

Take the NHS: an official report this week has catalogued incidents of “mediocrity” in care which led to excessive numbers of deaths at fourteen hospitals. How to square this with a national institution whose values purport to include “respect and dignity”, “quality of care” and “compassion”?

Take into account a long-list that would include Enron’s financial engineering, BP’s Deepwater spill, News International’s phone-hacking, Parliament’s abuse of expenses and the supermarkets’ ignorance of food adulteration in their supply chains, and one is forced to consider whether high-minded adherence to values is the exception rather than the rule?

The bland, generic nature of most corporate value statements is a clue to their emptiness as an instrument of leadership. Companies and organisations routinely profess adherence to values such as trust, respect, quality, customer service or creativity. But these are really no more than hygiene factors; they don’t express anything about why the organisation is in business nor how it will deal with us. Worse, even these minimal standards are no more than statements of aspiration.

The lived values, as revealed by actual behaviour in an organisation, get closer to its heart. The lived values usually tell a different story to the professed ones. There’s often more nuance and passion to be found in them as well as tensions in how the organisation conceives of itself. These tensions need not be a bad thing. They often indicated creative adaptation as the organisation tries to maintain its relevance to a fast-changing world.

But the lived values can also reveal a dark side which may be at odds not just with the organisation’s professed values but its very purpose. A good example is contained in a recent report by the Australian Transport Safety Bureau. This traces the cause of an aircraft engine explosion in 2010 to a manufacturing misalignment of less than 1mm at the engine maker, Rolls Royce. An engineer at the company identified the problem in 2009 but the affected components were approved retrospectively, even though the error could have proved catastrophic. The report spoke of a culture in Rolls Royce whereby not adhering to procedures around manufacturing errors was “a viable form of behaviour”. The company had already identified in 2007 that staff were allowing “minor non-conformances” in manufacturing because they realised that their managers would let them through. In an industry in which the paramount expressed value is aircraft safety, this was overridden by a lived value of the path of least resistance.

It’s usually a sign of effective leadership when an organisation’s professed values feel distinctive and seem to express an underlying truth. Take this from John Lewis:

“The Partnership’s ultimate purpose is the happiness of all its members, through their worthwhile and satisfying employment in a successful business. Because the Partnership is owned in trust for its members, they share the responsibilities of ownership as well as its rewards profit, knowledge and power.”

Or this from Apple’s Tim Cook:

“We believe that we are on the face of the earth to make great products and that’s not changing. We are constantly focusing on innovating. We believe in the simple not the complex… We believe in saying no to thousands of projects, so that we can really focus on the few that are truly important and meaningful to us. We believe in deep collaboration and cross-pollination of our groups, which allow us to innovate in a way that others cannot. And frankly, we don’t settle for anything less than excellence in every group in the company, and we have the self-honesty to admit when we’re wrong and the courage to change.”

But even for values which have positive connotations, there can be a dark side. We might recognise this with respect to values such as profit or risk. But what about customer service? Isn’t this a simple positive? Try asking that of Standard Chartered whose customer service ethos led it to execute Iranian financial deals worth $250 billion. The only problem was that these deals were illegal under the US sanctions regime.

The days when organisations could derive a halo effect by wrapping themselves within a bland statement of values are behind us. Trust in institutions has been so damaged by successive scandals that it is now more risky to define values and fail to live up to them than to articulate no values at all. It’s the public not the corporations who are making the running in defining business values – as demonstrated by the opprobrium for companies that avoid corporation tax. Organisations that disappoint public expectations are increasingly found out and brought to book. Through social media, activists are discovering the means to hold companies to account. It was such activists who quickly made advertisers realise that the News of the World had become a toxic brand and who forced Facebook to take action against mysogynistic content.

For all the talk of corporate values in the past, we were living through an era in which business became ever more detached from an ethical dimension. In fact, the hollowing out of values highlights a typical dynamic in business whereby interventions that may offer an ethical perspective are sanitised to make them palatable to corporate sponsors. The writers Ron Purser and David Loy bemoan this dynamic with respect to the currently fashionable advocacy of mindfulness in organisations. Other corporate interventions – like coaching and leadership development – often seek to optimise performance without asking to what end?

Some of the most interesting signs of change are among those companies that have been through the fire with ethical lapses. Barclays now exhorts staff to show courage to do and say the right thing, to act in private as they do in public and to challenge things they believe to be wrong. News UK – the former News International – says it has established clear rules on the conduct of journalists covering such things as bribery, whistleblowing and behaviour at work. It’s hard to tell whether such statements amount to anything more than window-dressing but they at least demonstrate some engagement with the reality of their corporate cultures and external expectations on them.

External perspective is needed for values to be a meaningful influence on behaviour. Without awareness of how the outside world sees it, an organisation’s behaviour drifts unchecked towards the self-serving and corrupt. Despite increasingly sophisticated consumer insight, corporations remain curiously unable or reluctant to foster behaviours which would turn round declining public trust. What would help is a language of corporate performance – less focussed on metrics, more focussed on purpose – that would admit some reflective critique. This would enable organisations to evaluate their behaviour in the world and move beyond their blind spots. Only then will they be able to talk about their values realistically and align staff behind those that are worthwhile.

This piece was originally published at Jericho Chambers.

Image courtesy Aman Deshmukh.