Sunday, September 7, 2008

Companies Should Live By Their Values, but Which Ones?

Values are becoming an increasing area of interest and concern for corporate executives. The Arhtur W. Page Society’s The Authentic Enterprise document suggests that communications professionals should help define their company’s values, not just articulate them. Bill Nielsen, retired head of communications at Johnson & Johnson, has been urging the profession to take ownership of values and has put together a “credo” of values for the profession to follow. In addition, the Arthur W. Page Center for Integrity in Public Communications at Penn State University has put out a call for research aimed at determining if values play a role in a company’s behavior.

This focus on values is well founded. Values form the foundation of an organizations reputation, since they shape organizational strategy, its decisions in terms of what and what not to do, its policies and practices, how it treats employees, and ultimately, its actions toward its external stakeholders.
While many communications professionals have been entrusted with leading their organizational efforts to define its “vision and values”, there still remains a question whether or not we are helping to develop and then articulate the real values of company.

Organizational business strategists differentiate between “first-order values” and “second-order values”. The former are values that are intrinsic to the organization --part of its cultural DNA. The latter are values that the company articulates and attempts to demonstrate through a variety of external programs because they are believed to have market benefits. It is interesting that many business writers include CSR programs as examples of “second-order values”.
At first glance, the inclusion of CSR as an example of what a company does to influence the market perceptions may seem to be an affront to communicators. However, upon honest reflection, one can recognize that far too often companies espouse values that are different from those they live. Moreover, many communications professionals have been behind these efforts to make companies appear to be something that they are not. Some companies have external programs that reflect their true values; many, however, have external programs that are designed to make them look good to stakeholders and have little or no relation to the real values of the company.

Over the course of my career, I have managed, talked with and worked with countless professionals inside the company and the agencies serving the companies. Far too often, there was a tendency to believe the corporate leadership’s view of what constitutes the company’s values and far too little attention paid to really “taking these views to ground” to determine if they were in fact real.
Let’s consider that Enron had a statement of values which they called RICE (respect, integrity, communications, excellence). It is clear in hindsight that these values were not worth the paper they were printed on. Enron had values, but these were primarily focused on creating financial value for shareholders and the senior management team. Or, consider Mattel, a company which had well articulated values about its responsibility to its customers and other stakeholders on its website. After learning that its toys made at its outsourced plants in China contained lead, Mattel failed to file the mandatory 24-hour notice with the Consumer Products Safety Commission, took 6-weeks to withdraw its toys from the market, blamed the Chinese and claimed no responsibility for the problem. Another example comes from a major corporation where I was called in to be a consultant. The CEO was upset that his company did not enjoy the reputation he believed was deserved and indicated that another company in the same industry was viewed much more positively. He was jealous, angry, defensive of his company, and wanted my counsel as to how to build the reputation. I asked him some pointed questions to determine if there were gaps between his view of the company and the perceptions of stakeholders. He readily admitted that employees of the company did not believe that the executives “walked the talk” and that he backed promotions of those who were good at financial returns even if they were not well regarded as people managers. I challenged him that this was a serious gap and noted that the company he envied was well known as one of the best companies to work for and placed high value on the ability of managers to be both financially profitable and to build a positive work environment. They would not accept those who were only financially oriented. Other questions led me to recognize that he wanted to “paint a good picture”, but that the reality of the company left much to be desired. I indicated that I was not right for the job. Instead, he hired an advertising and PR firm that could help shape his “image” the way he wanted.

In contrast, consider the Tylenol crisis that confronted Johnson & Johnson in 1982. While many people point to this as an example of good crisis management, which it surely was, the real learning for me was that the company turned to its values to determine what to do. J&J turned to its Credo for guidance and determined that that document “required” it to withdraw its products from the market within 4-days, stop all J&J advertising for several months, and introduce new packaging within 2-weeks. This was a true demonstration that J&J had first-order values that it lived by, while the other examples noted above had only second-order values.
So, while I applaud the efforts on values, I also challenge all of us to really recognize the difference between real (first-order) and articulated (second-order) values. Conduct research with employees and external stakeholders to determine the gaps between the organization’s values, perceptions and culture. Values-perceptions gaps will highlight that external stakeholders do not believe that the company behaves in accordance with its articulated values; while values-culture gaps will determine if employees believe that the company “walks the talk”.

I believe that unless we are dealing with “first-order values”, we will not be able to realize the full reputation value of our organizations and the type of organizational change espoused in The Authentic Enterprise.