Corporate values: a belief system, or a cynical calculation?
“We need to be able to trust pharmaceutical companies. We expect banks to be run and populated by honest people, to keep our money safe, and to give us our money back when we need it. We want oil companies to have a strong culture of engineering professionalism and commitment to health and safety.
If we are ever to have confidence in these companies, we want them to pursue these objectives, not because they are good policy, but because such goals are integral to the companies’ identity. Otherwise their literal or figurative licences to operate will be in jeopardy. The common mistake of all these businesses was to raise doubts about their values in the instrumental search for earnings.”
JOHN KAY Financial Times (July 10, 2012)
Stirring stuff from John Kay in the FT recently: corporate values have to be a deeply held belief, not a cynical calculation.
Professor Kay lambasted pharmaceutical companies, banks, oil companies and others for their collective failure to live up to their own much-touted values. Many of these top-name organizations have to come to grief lately: subjected to heavy fines by regulators; rejected and boycotted by customers; derided by society at large.
It need not have been this way. At its best, business is a noble enterprise. It should meet genuine needs in the lives of customers; it should direct resources to their most productive uses; it should reward the risk-taking and innovation that raises standards of living for all.
Big corporates are good at suggesting that this is indeed what they do: issuing flowery statements of values; dressing up adverts to suggest they are in the altruistic service of humanity; projecting a pious and righteous face to the world.
Few live up to this. Visit any large corporation these days, and you will see pretty much the same statement of corporate values on every wall: that the company believes in delighting its customers; that it believes in teamwork and shared responsibility; that it upholds good corporate citizenship.
Look beyond the hype, and you may discover that some of the very companies that show you the sugary stuff are the same ones that engage in a litany of bad practices: manipulating markets; breaching safety guidelines; suppressing employee dissent; fouling up the environment.
Look away from the words that companies throw at you; look only at their actions.
John Kay’s point is an important one. Companies should not just have values because they are a nice thing to show the world, or because a regulator is watching. Companies should have values because they are integral to good business; essential to longevity; and central to strategy.
So don’t just say you believe in good things; live and breathe them. Exemplify them, every day, in every employee, in every division and every territory. And when you fail to live up to your values, don’t sweep it all under the carpet: say sorry, clearly and convincingly; take very decisive action to correct the failings.
Good values are a belief system, not an act of public relations or a spreadsheet calculation. There is too much corporate fakery going on, and enlightened business executives and directors should have no part in it. People soon see through insincerity, and it causes severe damage to your brand and reputation for the long term when you are found out.
When it comes to values, stick to the ones you ACTUALLY believe in, not the ones you think the world wants you to believe in. When you have identified your genuine values, protect them at all times, as jealously as you would the reputation of your child. Do not let them be besmirched by the seduction of short-term gain.
Decades later, the value of embedding values in your very identity will become apparent.