The Values Revolution
Find out why values have become a business imperative.
By Joey Reiman
In 1993, a young maverick named Charles Brewer pinned up a set of core values for his fledgling company on the back of a stairwell in a rented warehouse in Atlanta. Those values, including frugality, respect for the individual and the notion that work should be fun, were upheld to the day his company, MindSpring, merged with EarthLink and became an estimated $4 billion telecommunications giant.
What’s truly remarkable is that when Brewer identified the core values of his company, he had no idea what business he would start. “I thought there had to be a way to do things better, treating customers better,” he tells PINK while vacationing in Aspen, Colo. “The only way to be different was to focus on the values. I wrote them down ahead of time, several months before I determined the business.” Laughing, Brewer says he had to start a business eventually because “the values were not generating profits on their own.”
However, it’s apparent today that good values do create profits and often dramatically impact the reputation of a business. This reality has made values a value proposition companies can’t do without.
Why Values Count
Values are for a company what religions are for cultures. They give soul to an otherwise mechanical model that was built to produce capital. In fact, Jim Collins, author of Good to Great (HarperCollins, 2001), goes so far as to link values to the very principles in the Declaration of Independence. “We hold these truths [values] to be self-evident,” he says. “Never perfectly followed, but always present as an inspiring standard and an answer to the question of why it is important that we exist.”
Values give purpose to creating profits. Without them, we are doomed to make “poor” money. No matter how much you have of it, you’re still morally broke. As Stephen Covey, Ph.D., co-author of Everyday Greatness (Rutledge Hill Press, 2006) and author of The 7 Habits of Highly Effective People (Free Press,â¨2004), explains, “Ends and means are inseparable. You cannot make a worthy end with an unworthy means.”
If ethics are rules, then values are guides. And they’re hot today. “Values are on everyone’s mind,” says Philip Kotler, professor at Northwestern University’s Kellogg School of Management and author of 40 books on business and marketing. But values haven’t always been in the forefront of business.
In fact, Kotler believes this emerging values revolution comes on the heels of unprecedented corporate corruption and public disillusionment. “This is the result of our obsession with materialism at the expense of values such as friendship and community,” he says, pointing to “certain companies’ greedy behavior, their abuse of customer trust, and people in power paying themselves huge salaries.”
Were Values History?
Capitalism has always wrestled with values. Ever since President Calvin Coolidge declared, “The business of America is business,” in 1925, it seems that value has taken precedence over values. This “whatever it takes” morality led many companies to break rules in an attempt to break the bank.
In the 1980s, in what many called the Age of Greed, hostile takeovers were common. Even motion pictures portrayed ruthless corporate traders as heroes. In the movie Wall Street, Gordon Gekko delivers the famous line indicative of the times: “If you need a friend, get a dog.” Values have taken a beating more recently too – with politicians serving their own interests first, athletes using steroids to win and business barons, from Enron to WorldCom, willing to do anything to make their fortunes last. Add on war and global warming and you’ve got a values debacle.
“The question ‘Has business lost its moral bearings?’ implies that it had moral bearings,” says Lynn Sharp Paine, a Harvard Business School professor and author of the best-seller Value Shift (McGraw-Hill, 2003). She says historically, business was amoral, rather than immoral, but that’s changing as a new band of business leaders is now searching for a moral center. On one hand, we want to be upstanding citizens, but on the other (outreached) hand, we say, “Show me the money.”
Not everyone agrees. “I would never say that business has lost its moral bearings,” says John Rice, who as vice chairman of General Electric and CEO of GE Infrastructure is responsible for $32 million in revenue. “Unfortunately it’s not always newsworthy to have good values.”
So important were values at GE that former CEO Jack Welch had them inscribed on a wallet-sized card and distributed to all employees. As Welch notes in Jack Welch and the GE Way by Robert Slater (McGraw-Hill, 1998): “There isn’t a human being in GE that wouldn’t have the Values Guide with them. In their wallet, in their purse. It means everything, and we live it. And we remove people who don’t have those values, even when they post great results.”
Yet, when Jack Welch’s affair with his mistress, Suzy Wetlaufer (now Welch), former Harvard Business Review editor, came to light, so did the question of whether values in business are separate from values at home.
Professor Paine agrees. “Values contribute to an organization’s positive reputation in the marketplace,” she says, “and many opportunities come by being a good citizen in the community.”
Rice correlates values with profits, saying, “Our reputation gets us in the door.” He credits values with lower turnover and easier recruitment. “It helps us keep the best people.” And he’s not the only one.
Joanne Smith, Delta Air Lines vice president, says values (focused on results and communication) have elevated her company, where profits are finally on the rise after Delta filed for bankruptcy. “We believe that our renewed focus on values has ignited the spirit of our employees and has been instrumental in our company’s financial performance.”
Smith explains how these two values contributed to financial performance. “The organizational restructuring we recently completed shaved $200 million off our annual costs, but we maintained our top performers in the process,” she says. “Unlike previous downsizing initiatives, we assessed 100 percent of management and administrative employees and retained or eliminated staff based on these results.”
The Value of Values
In fact, values have become so in vogue that Starbucks has been placing ads – using values of all things – to market coffee.” Values can actually enhance value, as revolutionary as that may sound,” reads a full-page New York Times ad. “By using our values as a starting point, we think we’re making headway. Our shareholders think so too.”
Values are such a good brew that the company is using them to drive new business. This fall the chain began selling a values-focused book, For One More Day (Hyperion, 2006), by Tuesdays with Morrie author Mitch Albom.
At Deloitte & Touche USA, Chairman of the Board Sharon Allen says, “Values equal dollars here.” How? She notes that the organization benefits from its commitment to promote women, who in 2005 constituted 45 percent of new hires and a 16 percent increase in female partners and principals from 2004 to 2005. “Diverse teams create better solutions,” Allen adds.
Wachovia takes its values to the bank too. Shannon McFayden, head of human resources and corporate relations at Wachovia, says her company’s core values of integrity, winning, teamwork, service, accountability and valuing the individual hit home for employees because they have real-world meaning. For instance, “service” includes customers – who give the company high marks – but also the local neighborhood. “We give our employees four hours a month with full pay to volunteer in their community,” McFayden says.
Research indicates they’re on to something. According to the 2006 Yankelovich Monitor Multicultural Marketing Study, the vast majority of consumers say a company’s support for a cause influences their choice to buy a product.
Interface, a progressive carpet manufacturer, is counting on it. With locations on four continents and offices in 100 countries, and a vision of becoming the world’s first environmentally restorative company, Interface and its founder, Ray Anderson, prioritize sustainability to improve people, profits and the planet. Interface has an internal recycling program that recycles 100 percent of the company’s industrial waste. Its corporate values promise to cherish nature and restore the environment. “Interface’s values are centered on ‘Mission 0’ – a focused effort to reduce our environmental footprint,” says Neel Bradham, vice president of business development. “A good values system makes a good company. A bad values system is a liability.”
Quick: Name Your Values
Kotler also points to Starbucks, IKEA, Procter & Gamble, FedEx and Southwest Airlines as other organizations that do well by adhering to a clearly articulated set of values. In his book Corporate Social Responsibility:Doing the Most Good for Your Company and Your Cause ( John Wiley & Sons, 2005), Kotler shares the actions of 45 companies. Each has chosen a cause like environmental protection, fighting AIDS, advocating exercise, better eating or breast cancer research.
If you can’t count off your company’s values, they don’t count. And if you can list them but don’t live them, you are no better off. Values without positive action are meaningless.
But to put values in place, you first need to know what they are. Ken Blanchard and Michael O’Con nor, co-authors of Managing by Values (Berrett-Koehler Publishers, 1997), encourage businesses to clarify their values, communicate them internally and align daily practices with them. “The most important thing in life is to decide what’s most important,” they write.
Accomplishing this requires getting the CEO and management team to articulate their values separately. Then compare and share. Get employee input as well as customer reaction. This will help you identify your company’s principles too. Lastly, synthesize and present values to the board and leadership for approval. Blanchard and O’Connor say that’s when the magic begins. “When aligned around shared values and united in a common mission, ordinary people accomplish extraordinary results.”
They are quick to point out that success can only happen when values rule. In a company that truly manages by its own values, “There is only one boss – the company’s values,” they write.â¨ But a company can’t just identify values that sound good (think of BP’s line, “beyond petroleum”). “Values need to be au then tic,” Brewer says. “It’s not going to work if the values aren’t really important to you.” So important were they to Brewer that he resigned from EarthLink because of company culture disagreements.
Wachovia’s McFayden, who co-led the development of the company’s core values when Wachovia and First Union merged in 2001, says her company’s values work because the new leadership actively sought employee opinions on what the core values should be. “As a result, they are a good fit. We are living whoâ¨we are as a company, culture and brand.”
Kotler encourages companies to put out public statements on the ideals they’re passionate about. “These companies should use their values in recruiting employees, and in dealings with customers, dealers and suppliers. Companies should be ready to expose lapses and enforce their values.”
Values are Personal Too
Integrity, transparency and authenticity are critical for success in any values-based company. GE, for instance, is committed to living its values.
“I think there should be no difference,” Covey says. “Integrity means you are integrated around the same principles.” It all comes down to integrity and trust – personal and professional.
In the daily struggle of value vs. values, many companies forsake their own ideals to deliver more bang to the bottom line. Says Covey: “Honesty is not the best policy because you’ll make more money. It’s the best policy because it’s right.”
The most valuable asset a company has today is its values. Lived every day, values have the ability to guide us and inspire us – and others. Equivalent to a moral compass, values steady companies during turbulent times and plot the best course in good times. Like all revolutions, the values movement in corporate America is capturing more than minds and hearts. “Any truly great company is guided by a set of core values and fundamental purpose,” Collins says. “Lose your core values and you lose your soul.
The Reiman Values Trianglesâ¨
Which best describes your company?
Compliant values are of almost no value. Found on pablum posters in company elevators, they are often the product of corporate due diligence. Vanilla values like “quality,” “integrity” and “diversity” sound more like legal requirements than principles held dear. As a result, employees don’t memorize them and companies can’t materialize them.
Committed values are real. In the best cases, company policies reflect them. If a company believes in balance, then work time will include time with family. The negative is that committed values are always company-centered, like “bold,” “creative” and “performance-oriented.”
Influential values do just that. They influence the world. With a circle of influence bigger than a single company, these ideals have the ability to inspire and motivate change in the way we work and live. Influential values help shape a clear message from a company and create company messengers who imprint the marketplace like religious missionaries.
Joey Reiman is a leading authority on purposeful excellence in business. He is CEO of the global marketing consultancy BrightHouse and teaches purpose and ideation at Goizueta Business School, Emory University.
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