A few weeks ago Professor Adrian Furnham of Cranfield School of Management wrote an interesting piece on corporate ethics in the Sunday Times. Keene Communications do quite a bit of work in the field of corporate ethics and so we have been itching to write something about this on our blog.
Firstly, a brief summary of Professor Furnham’s article – this is our interpretation of the key points so apologies for any errors or misinterpretation.
1. Values are enduring beliefs that guide action, either consciously.
2. Psychologists try to measure motivation by what people value.
3. Values are all the rage in HR.
BUT: cynics point to the following
1. Every company basically have the same values
2. Values statements are too abstract to be of ‘any use other than for PR’
4. The best mission is instead “Maximise returns for stakeholders”
5. There is always value conflict within an organisation (but it is hidden)
6. Values don’t change behaviour, behaviour always changes values. Internalising values is key
7. ‘Organisational change is more effectively brought about by restructuring, hiring and firing and performance management than it is by fiddling with values’.
8. Senior management MUST model and reward value informed behaviour
9. The role of challenge is key. If one rules out the questioning of some ‘great truths, you will encourage and underground of unbeleivers who will form their own powerful counter-cults.’
10. It is key to acknowledge that there are generational differences in work cultures.
Despite all of this Furnham says that ‘Paradoxically, the most successful organisations in the world today hold the strongest and most powerfully demonstrated sets of corporate values and beliefs’.
Jim Collins, the former Stanford Professor and author of Good to Great and Built to Last, has very much pushed this agenda. Values are key to most of the sustainable big businesses from the 20th and 21st Century.
We did a review of 100 mission statements of top global firms from Coca-Cola to Sony to Phillips to Microsoft. Only 10% would pass the test of an old-fashioned news editor. What do we mean by that? When journalists used to train they were told by their news editors that for a story to be newsworthy they needed to apply a simple test; would anyone claim the exact opposite? So when firms say that they exist to provide superlative customer service alarm bells ring. Not all companies might say this but to what extent would any firm, Gerald Ratner aside, say they delivered rubbish?
Yet in our view, most firms are run by and owned by capitalists without a cause. They forget the intrinsic social good in what they do. Firms just take it for granted. In our mixed market capitalism that exists to a greater or lesser extent across the EU businesses have become timid about their social purpose. So often it is that raise d’etre which politicians, regulators, NGOs and the media don’t understand.
Firms need to look at whether they have values that they would stick to even if it cost them money.
We think more firms should start to look at what Pearson are doing – analysing their social impact and building into corporate strategy. This will stop them being so defensive about what they do. Moreover, we believe that firms should start to explore how they can use this to embrace a new social dialogue – as the General-Secretary of the TUC, Frances O’ Grady has emphasised recently many of the things which the UK automotive industry, about production and powertrains including electric hybrids, has adopted were suggested by workers in the 1970s. In moving away from the dark days of industrial relations firms now have the opportunity to create value relations.
He was formerly Head of Policy at the Society of Trust and Estate Practitioners (STEP). With degrees in history and economics from the Universities of Oxford and London, Jake is a Fellow of the Royal Society of Arts, a trustee of the European Association of Philanthropy and Giving and advises several governments on public policy. He also advises clients on CSR and philanthropy activities.
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