Values – they may seem vague but they matter. Four out of five listed businesses have a statement of corporate values. Not only do they set the moral and ethical tone and describe the aspirations of a company, they are also an under-recognised source of competitive advantage in an increasingly homogenous world.
Values motivate people - a business culture with positive values and high performance is hard to replicate. Someone who leaves can’t take it to a competitor, nor can an upstart rival readily copy it.
The outgoing director general of the Institute of Directors, Simon Walker, agrees, saying 'Not so long ago, the idea that corporations might hold core values would have been considered fanciful. Times are changing. In an era of radical transparency…values are now understood to be one of the foundations of successful companies.'
There is also a fair body of evidence that businesses with strong sets of values perform better than those without. Research on around seven hundred firms, using five years of data compiled by the Great Place to Work initiative, suggests that while there is no performance link with firms that have simply published a set of values, there is a strong positive link with those firms whose values are seen within the company to be prominent.
As defined by Oxford English Dictionary, values are ‘principles or standards of behaviour; one’s judgement about what is important in life.’
On that definition, even a business that doesn't have a statement of values still has values. They may not be widely shared and they may not be the right ones: greed, power and status are all values, but have no moral claim.
Happily, the most commonly expressed value for companies in the FTSE100, for example, is the rather more anodyne ‘integrity’ – although as Steve Marinker, partner and head of comms consultancy Maitland Corporate, cautions 'I would urge businesses to think hard about values such as integrity… it is rather like introducing yourself at a party as someone who has never once kicked a dog or stolen from the elderly, and expecting a round of applause.'
Over the last year, alongside my day job which is to grow new co-operative businesses based on a global set of values, I have been talking to people in firms and business schools across Britain about corporate values. I have learnt a lot from many inspiring examples, and written a book on the toolkit of how to make a success of values.
But values are also vulnerable, in particular to being undermined from the top. The great case studies I explored of failed corporate values, such as Barclays and Nokia in Europe, and Enron and most recently Wells Fargo in the USA, are often complex and subtle tragedies, even if hindsight makes them look like simple conspiracies. But they do share some similarities in the ways they went wrong.
Perhaps little has changed since the Harvard Review of Books in 2002 exposed a widespread ‘debasement’ of values in business – concluding that while 80% of large companies worldwide 'tout their values publicly', too often, these 'stand for nothing but a desire to be au courant.'
So what are the biggest pitfalls to look out for? Here are the five most common way to wreck your corporate values.
Pay lip service to boosting performance, but reward senior staff with bonuses and shares whether or not things really improve.
Try to paper over the failings of your actual values by publishing a ‘wish list’ of ideal corporate values that contradict them.
Let leaders behave – and misbehave - as they wish, but police staff by issuing numerous and prolix manuals, policies and directives.
Choose a new leader who doesn’t understand the values, who sets about making big changes without understanding the impact they will have on the organisation.
Fail to act according to your values – if people don’t live them everyday then they don’t mean anything.
As a business leader, it is essential to avoid acting in ways that undermine organisation-wide shared values. The little things done wrong fast become legends, and although you may stay in your job for years, your leadership overall is tainted from that day on.
Ed Mayo is Secretary General at Co-operatives UK and author of a new short book, "Values: how to bring values to life in your business"