The Renaissance of Values

There is an ongoing debate regarding the true purpose of business; is it solely to generate a return on investment for shareholders? It is often argued that the Board of Directors wields considerable influence in pressuring leaders to prioritize profit-making for shareholders above all else. Investors expect companies to deliver on their financial targets and tend to favour organizations meeting these expectations. And, after all, it is common practice to keep investors happy above all else.

Consequently, a short-term approach often prevails over a long-term strategy. When projections are not met, investors tend to divest from the stock. This binary corporate climate has led to many takeovers, mergers, divestitures, right-sizing, and reorganizations. Companies initially prioritize their most important value as their employees, but when faced with the need to meet financial targets, they resort to letting people go to satisfy investor demands, usually in the fourth quarter.

Rapid globalization continues to add layered complexity to the global real-time marketplace, making competition for profit even more intense. Businesses look for ways to enhance productivity and profitability, process improvement

programs, restructuring, and downsizing flourished. All this has historically been driven by the pressure to bolster shareholder confidence—the Darwinian effect - survival of the fittest. The survival response became the focus. Adding value was primarily centred on financial (corporate) value. In the post-millennial era, numerous mission statements, annual reports, and investor calls emphasized creating and sustaining tangible monetary value.

At the same time, companies were indulging in the concept of culture. A flourishing number of organizations spoke about their values and how important they were to the company's success. Companies created credos, values, vision, mission, and philosophical statements. During the 90s, the number of companies with such statements more than doubled. Reflecting on the political environment of the times, the driver was not a sudden realization that companies need to treat people and conduct business ethically; instead, the impetuous legislation was holding companies accountable for their transgressions. An almost forced corporate morality was suddenly in play.

The efforts were positioned to encapsulate the essence of the company's work environment. A plethora of empty promises was posted on boardroom walls with pithy motivational posters in reception areas and company cafeterias, which further caused cynicism because of the disconnect among employees.?While a minority of these statements did indeed have positive effects and even results, the majority landed as empty promises.

The concept of creating an ethical foundation began to resonate with employees. There were cases where having the credo or value statement proved that when all employees share a calibrated understanding of the meaning of the values, you create an ethical quality inspection process. The most frequently acknowledged example of the time was the Tylenol episode and how the employees at all levels of Johnson & Johnson responded in unison.

The Value of Values

Building up to March 2020, many companies began to move from the value statement as an empty aspirational promise to a more nuanced and meaningful expression of ethical actions that were able to differentiate the highly successful from the average employee.

Various factors have gradually influenced the shift from creating superficial value statements to establishing meaningful and actionable ethical codes of conduct.

By the beginning of the 21st century, in addition to the oversight laws, increased scrutiny and demand for corporate social responsibility, diversity, and inclusion were more prominent. High-profile corporate scandals and environmental disasters also prompted consumers, investors, and regulators to call for greater accountability and ethical behaviour from companies.

This led to the development of more comprehensive value statement defining acceptable conduct that addresses legal compliance and broader social considerations, including human rights, environmental sustainability, and fair labour practices. Companies began to recognize the importance of aligning and discovering their authentic values and behaviours, moving beyond mere rhetoric to live a genuine commitment to not the value but the behaviour that expresses living the value.

Social media and digital transparency have amplified public awareness and scrutiny of corporate conduct, making it increasingly difficult for companies to merely pay lip service to ethical principles without facing repercussions from employees, investors, and the public.

Overall, the transition from superficial value statements to meaningful ethical codes of conduct has been driven by a combination of regulatory pressures, societal expectations, and a growing understanding of the long-term benefits of conducting business by living one's value, resulting in building trust and sustaining success.?

The Watershed Moment

By March 2020, employees found themselves amidst a confluence of factors that prompted introspection and, in many cases, led to a significant divergence between personal values and the actions of their employers. The onset of remote work provided individuals with the opportunity to reflect, and this period of self-assessment became one of the driving forces behind what is now referred to as the "Great Resignation." The realization that life, especially in the workplace, is too short fostered a collective desire for alignment with organizations that upheld similar values.

The COVID-19 pandemic emerged as a profound and emotionally transformative event for many individuals, reshaping their values and reorienting their priorities. As people grappled with the multifaceted challenges of the global crisis, a heightened emphasis on empathy, community support, and work-life integration became apparent. This shift underscored a misalignment between certain companies' values and actions and their employees' evolving priorities, leading to heightened scrutiny and a growing demand for genuine adherence to corporate values.

Consequently, an increasing number of individuals sought out companies that authentically reflected their values and demonstrated decision-making in line with these principles. This shift in consumer and employee preferences prompted a select few companies to reconsider their organizational values and practices, placing a renewed focus on aligning their values with the evolving personal values of their stakeholders and leadership.

In response to this realization, companies increasingly recognized the importance of authentic alignment between their stated values and their actions, leading to the development and reinforcement of ethical codes of conduct, enhanced employee support programs, and a greater focus on corporate social responsibility initiatives to bridge the gap between personal values and company values.?

What Went Wrong

While the efforts were well intended, they did not practically reflect the authentic culture of the company.

Companies' value statements can fail to resonate or be effectively implemented for several reasons:

1. Lack of Authenticity: The expressed value statements were perceived as insincere or disconnected from the actual practices and behaviours of the company leadership; employees did not embrace them because many executive decisions were perceived as antithetical to the values. This lack of sincerity has a negative effect.
2. Aspirational: There is a disconnect between the stated values and the day-to-day norms of employees' and customers' operations, decision-making, or treatment. The values statements lost credibility. When communicating the company values to an employee, they expect everyone, at all levels, to immediately live the behaviours that define the values. The result is a loss of both trust and respect in leadership.
3. Inconsistency: Value statements fail when employees perceive that values are compromised during challenging times; an excellent short-term business decision that violates the values is an erroneous long-term business decision and one that will cause a spike in retention issues.
4. Lack of Clarity and Communication: If the company's values are not clearly defined, or if there is a failure to communicate and integrate them effectively into the company culture and people practices, the values are less likely to guide behaviour and decision-making.
5. Overemphasis on Profits: Companies prioritizing financial goals over their responsibility to live their values struggle to create and sustain trust in leadership. Leadership needs to remember that profit is the by-product of doing business correctly, not the purpose of the business.
6. Making the wrong hires: In the rush to fill vacant roles, people were hired who behaved counter to the company's values, causing distrust among employees, a lack of a shared understanding of what is right, and ultimately decreasing productivity and, thus, profits.
7. Wanting to create winning, innovative, or other cultures. Values are strongly held beliefs, emotionally charged, resistant to change and universally applied. The correctness of the business strategy lies in its ability to enable people to live the existing values. A change in strategy is not a change in values. When was the last time you woke up in the morning and simply changed your values because you were asked to change them? The mere act of being asked to change one's core values is unlikely to lead to immediate or lasting change. In fact, it's likely to be met with resistance and disappointment. The values of the organization are organic to its unique history. You cannot create that which is not authentic. Ensure your strategic business plan is aligned with the values; don't align the values to the business plan.
8. Focus on the stakeholders and business plan first. An additional pitfall is that companies are increasingly developing inclusivity and value statements that align with the needs and expectations of their stakeholders, those they aspire to hire. The attempt to integrate the values into their organizational culture and decision-making processes failed. In reality, this approach lacks authenticity, does not respect the history and evolution of the company and alienates the most valuable resource, their long-term employees.

1. Fail to personalize them. Putting up posters, redesigning the company website, creating swag, and having a town hall where the CEO hands down the new values lacks any opportunity to personalize the values to the employees' own experience. This is often met with derision and futility, as these words are just that - words. They do not align with actions and certainly don't resonate with the average employee. Who does the employee believe, and whose behaviour do they follow - the CEO or their direct boss? Companies need to create an ongoing process that brings the values to life for the employees.

The pandemic did cause, for many, an emotional catalyst that changed the individuals' values. Companies must take the time to ensure a current, accurate understanding of the behaviours that represent actually living the values. For most, changes are an evolution of the meaning, not an abandonment of the values, but rather a revision, an updating, of them. Ensuring alignment among all employees will lead to higher motivation, retention, productivity, and innovation levels.

A word of caution. When hiring new employees or promoting current staff, please make sure you hire and promote ONLY individuals who already exemplify living your values. Not doing so sends a clear non-verbal message that the values are only wall décor.