My recent post “Getting to grips with corporate values, EVPs and Employee Engagement” received a lengthy response from Organisational Transformation Specialist – Ian Johnson querying the over-simplistic depiction of corporate values that is so prevalent in today’s business world. I’m not sure I agree with everything Ian said (I’m not even sure I followed all his arguments) but it did inspire me to further musings on the concept (and value) of corporate values.
A topical starting point was to review the espoused values of Goldman Sachs in the light of Greg Smith’s boat-burning letter to The New York Times. I didn’t actually know what Goldman Sachs’s values were but I was intrigued by Smith’s statement that: “…culture was always a vital part of Goldman Sachs’s success. It revolved around teamwork, integrity, a spirit of humility and always doing right by our clients.” To an outsider, the latter three virtues seemed entirely out of step with the prevailing perception, not just of Goldman Sachs, but of any global investment bank at this time so I was really interested to find out exactly what the bank was claiming as their core values. While I didn’t find a values statement, I did find multiple references to their 14 Business Principles, plus an extract from the Report of the Business Standards Committee from January 2011 which states that: “The core client service values of integrity, fair dealing, transparency, professional excellence, confidentiality, clarity and respect are embedded in our Business Principles…”.
There is obviously a huge gulf between the statements in the 2011 Report and the current operating principles and success criteria highlighted in Greg Smith’s letter whose views, it should be noted, seem to be endorsed by the majority of commentators.
Despite the doubts raised by Ian Johnson on the value and efficacy of core value statements, I find myself predisposed to take a less cynical view. I read a very thoughtful article written 10 years ago by Joe Marasco on Culture and Values which concluded with a thought I wholeheartedly endorse (and wish I’d written):
“Just as education is what remains after all else has been forgotten, culture and values are what govern when no one else is looking. Better get them right.”
I always thought of values as the bedrock of corporate culture but my recent re-reading around this subject has switched my perspective. I now view culture as the vehicle that determines how a set of abstract principles (the values) are translated into day-to-day behaviours.
According to Joe Mascaro, you can have a strong culture or a weak culture. Which one you have is dependent on two key factors:
- The degree to which the values are codified and effectively transmitted to all stakeholders
- The severity of penalties imposed on those who don’t comply
Implicit in both of these is the fundamental role of leadership. Prominent organisational cultural theorist Edgar Schein identified five primary leadership behaviours responsible for creating and reinforcing organisational culture:
- Attention focusing (i.e. the identification of priorities)
- Reaction to crises
- Rewards allocation
- Hiring/firing criteria
In his article “A Tale of Two Cultures”, David Burkus demonstrates that you can have a strong and effective organisational culture without a statement of corporate values (although the relatively small size of the company he cites – online shoe retailer Zappos – is, I believe, a relevant characteristic here), but I do believe that any misalignment between organisational culture, corporate values and leadership behaviours will result in values that switch from being a compass to codswallop and a culture that is both weak and confusing.