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Are Your Organisational Values Valuable?
By Kevin Dwyer
Tuesday, 22nd July 2014
 
I subscribe to much of business thinking borne of an understanding of individual and team psychology; for example, I think that vision and mission statements have a strong role in shaping organisational culture: the vision setting out what kind of an organisation we want to be, and the mission describing the boundaries of what we are prepared to do to reach our vision.
 
However, I struggle with the concept of written organisational/corporate values. I find that there are many instances where vision and mission statements fail in their purpose, because they have been word smithed to the point of lacking any singular meaning – or because they reside in a frame on wall, or on a web page, never to be referred to again. I also find that vision and mission statements very frequently have a positive impact. However, I find that published values are almost always a failure.
 
The reason that corporate values fail more often than vision and mission statements lies – in my view – in our expectations of what publishing the values of our organisation will accomplish.
 
With a vision and a mission statement, we expect that people will read them and understand what we want to achieve. That’s not unreasonable, if they are well written.
 
With written values, we expect them to have a significant impact on the way people behave. This is an unreasonable expectation.
 
Social proof
 
Research suggests that in driving behaviour, the written or spoken word is secondary social proof. The principle of social proof “…states that we determine what is correct by finding out what other people think is correct. The principle applies especially to the way we decide what constitutes correct behaviour. We view a behaviour as correct in a given situation to the degree that we see others performing it” (Cialdini, 2001).
 
Not living the values
 
Consider Enron. The values they espoused before filing for bankruptcy on November 30, 2001 were:
 
***
 
Communication
 
We have an obligation to communicate. Here, we take the time to talk with one another… and to listen. We believe that information is meant to move and that information moves people.
 
Respect
 
We treat others as we would like to be treated ourselves. We do not tolerate abusive or disrespectful treatment.
 
Integrity
 
We work with customers and prospects openly, honestly and sincerely. When we say we will do something, we will do it; when we say we cannot or will not do something, then we won’t do it.
 
Excellence
 
We are satisfied with nothing less than the very best in everything we do. We will continue to raise the bar for everyone. The great fun here will be for all of us to discover just how good we can really be.
 
***
 
Anyone with even a peripheral view of the Enron scandal and the criminal actions of its directors will realise how hollow those values were.
 
Not only did the maleficence grip Enron, it gripped employees at its auditor, Arthur Andersen, too. Arthur Andersen was charged with – and found guilty of – obstruction of justice for shredding thousands of documents and deleting emails and company files that tied the firm to its audit of Enron. The company surrendered its CPA license on August 31, 2002, and 85,000 employees lost their jobs.
 
Even the biggest and most venerable companies have failed the test of complying with their own written values.
 
Hewlett Packard (Davani, 2011), Siemens (DW Author, 2006), Royal Dutch Shell (Fawcett, 2004) and Tyco (PR Newswire, 2002) are but a few of global names that have been tied up in allegations of misconduct by senior executives, in direct contravention of their written values.
 
Impact of generic value statements

 
The written values I observe are too often generic. In the effort to make them universal truths, they are distilled down to words like “Integrity”. A word like “Integrity” as a value has two issues, in my mind.
 
One issue is that the value attached to the word changes, as we ask different people to make a decision on specific evidence, based on their interpretation of the meaning of the word.
 
The second issue I have is that the values described in this way do not differentiate one organisation from another, and yet most organisations are working in different contexts of regulation, competition, markets, history, vision and mission. The values which we expect people to exhibit, to drive a business to achieve its vision in a manner congruent with its mission, should be different.
 
Furthermore, many leaders create a written list of values to impose upon the company and its employees, rather than creating a company whose values are woven into the policies, processes and risk framework of the business. They hire people who have the skills and knowledge they need, and then try to instill the values into them once they are hired. They should preferably recruit people who embody the values, and teach them the skills and knowledge.
 
So, if written values are not the answer to ensuring we align individual values with the organisational ethics we would like to be known for, what is the answer?
 
What to do

 
To have the values you wish to see in your organisation embedded in its way of working, there are two approaches which need to be executed in about equal measure.
 
Processes and Procedures
 
Processes and procedures can be created and implemented, which make it clear to people what the organisation values are, and ensures that those values are being observed.
 
Statement of ethics
 
A statement of ethics goes further than a set of values. A statement of ethics is created by the board and/or a collection of senior executives which provides stewardship of the organisation, and multidisciplinary subject matter experts.
 
A statement of ethics gives employees the principles by which they should conduct their daily interactions with colleagues, customers, the general public and regulators. A statement of ethics should address the particular nuances of the industry in which the organisation operates, as well as its broader organisational goals; being concrete enough to serve as a guide for employees in a quandary, without laying out rules for every situation that could arise.
 
Code of conduct
 
A code of conduct allows specific do’s and don’ts to be designed for different parts of the organisation. A code of conduct may be specific for a particular group of employees, for example, a code of conduct for directors. A code of conduct may be applicable to vendors. A code of conduct will often refer to industry or government standards policies, but may also give guidance where a separate policy is not warranted.
 
Compliance letters

 
Letters of compliance outline – for each job role, and in particular senior roles – what they are expected to do each year in order to comply with the code of conduct and, more broadly, with the code of ethics, as well as industry and government regulations. They can be a means of getting assurance that senior managers and the teams they lead are complying with the ethical requirements of the organisation. It should be noted that people in the roles should be subject to more severe penalties for fraudulent completion than for non-compliance, to avoid a tick-the-box exercise.
 
Performance management
 
In addition to letters of compliance, part of the performance management system should address the behaviours required, to be consistent with the values of the organisation. The assessment of behaviours is, by its nature, subjective. Referring to a code of conduct reduces that subjectivity. Using devices such as 360 feedback surveys averages the subjectivity across a range of perspectives.
 
Formal (appraisals) and informal (specific timely feedback) performance management not only helps people understand what the norm is, it also allows those whose personal values are not congruent with the organisational values the opportunity to reflect on whether their personal goals can be achieved whilst working in that organisation, or whether they should move on. For those whose values are contra to that of the organisation’s, it’s best for both parties if they move on.
 
Leadership
 
A process and procedure approach to embedding values has many merits, but cannot replace authentic leadership in ethical considerations of decision making. The manifestation of authentic leadership is essentially composed of two elements: training/communication and demonstrating by example.
 
Training and communication
 
Training people in ethics can be quite an eye opener for most people. Most people have a simple sense of right and wrong. It is not until they are introduced to the topic of ethics and the shades of grey that can exist, that they understand that their version of ethical undertakings are not the same as their colleagues. This is exactly why a code of ethics is needed. People’s behaviour can be changed through use of consistent training and communication about the organisation’s ethics and how people should behave, giving examples of poor and good behaviour, and not just at induction. As people become aware what the organisation regards as the norm for behaviours and that others they respect also believe it is the norm, they form an intention to follow that norm.
 
Lead by example
 
By far the most influential means of embedding values is the old adage of “Lead by example”. In the words of Mahatma Gandhi, “An ounce of practice is worth more than tons of preaching.” Ensuring senior executives practise the ethics the organisation requires may need specialist training, requiring self-reflection and 360 degree feedback.
 
Benefits of organisational values
 
At the beginning of this article, I told you that I believe that written organisational values, particularly those in the form that can be hung on a plaque, are not very useful. From observation and research, I know that those organisations that are able to get even a large minority of people with their personal values aligned to the organisational values will benefit from higher levels of employee retention, customer loyalty and profitability.

However, there is much more work to be done and leadership to be shown, if values are to live in an organisation, than putting words to paper. Unfortunately that is what, in most cases, they are.

Contact Kevin by email at kevin.dwyer@changefactory.com.au or via phone on +61 (0)408 508 490

www.changefactory.com.au
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