Blog Articles
SOCIAL BANKRUPTCY: THE ROLE OF ORGANISATIONAL VALUES
November 2010
Is there a role for values in a confused world
This blog article discusses the role of values in successful organisations (and societies) and introduces a set of tools that assists organisations with measuring, tracking and directing organisational maturity and values.
Values and beliefs underpin individual behaviours and corporate culture. If we want to change where the world is heading this is the place to start.
I have for some time been considering writing a newsletter on values and their role in the bankrupt state of the global nation. Much as greed and lack of care have led to global warming, putting the planet at risk, so too, in the aftermath of the spectacular downfall of the strongest economic period the world has arguably ever seen, it is emerging that two of the major driving forces were greedy behaviours and actions. Nationally, we are bombarded daily with reports of behaviours and actions of greed and criminality that badger our fragile young democracy.
Introduction
“The economy is a wholly owned subsidiary of the environment. When the
environment is finally forced to file for bankruptcy because its resource base has been polluted, degraded, and irretrievably compromised, then the economy will go
bankrupt with it.”[1]
So what do values have to do with this? It is simple: our behaviours and actions are ultimately expressions of the values and beliefs we hold. This is true for individuals, organisations and societies. Values act as the DNA code that directs our actions and behaviours. Values guide what we do and don’t do, what we deem acceptable and not. If we want to shift the excessive destructive behaviours we see in the world, reconsidering values is a critical place to start. And, as we have corporatized the world – of the world’s 100 largest economies, 51 are global corporations while only 47 are countries – there is no better place to start than organisations.[2]
How do values impact culture?
Values are the deeply held beliefs and principles that impact how people live their lives and make their decisions. Individuals express their values through their lived out behaviours, while organisations express their values through their culture as represented by structures, systems, processes, ways of doing and leadership. Alignment between employees’ personal values and organisational values leaves individuals with a sense of congruency, which has a huge impact on employee engagement, thus productivity and thus the financial bottom line.
The left brain business case for clear common values and a strong culture
I can already hear my friend the engineer-now-manager questioning the relevance of all of this for his manufacturing business. This section is for him and the many other left brain driven leaders in organisations.
Numerous research studies have now empirically proven that companies with strong adaptive cultures based on shared values outperform other companies by a significant margin. One such study, by John P. Kotter and James L. Heskett [3], found that over an 11-year period companies that emphasised all stakeholders (client centricness is a typical organisational value) grew four times faster than companies that did not. These companies had job creation rates seven times higher, stock prices that grew 12 times faster, and profit performance that was 750 times higher than companies that did not have shared values and adaptive cultures.
Similarly Jim Collins and Jerry Porras[4], in their now famous study, showed that companies that consistently focused on building strong corporate cultures (based on clear common values) over a period of several decades outperformed companies that did not by a factor of six and outperformed the general stock market by a factor of 15[5]. The simple logic for why values-driven companies outperform others is that:
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- values drive behaviours and the behaviours of a group are collectively referred to as culture;
- the right culture attracts and retains top-quality employees;
- engaged top-quality employees lead to satisfied customers;
- and customer satisfaction ultimately drives the bottom line.
So, can one track organisational values, their impact on the bottom line and potential negative impact on society?
Richard Barrett[6] has developed a set of Culture Transformation Tools (CTT) that enables the translation of something as intangible as values and culture into powerful metrics. These provide a basis for leaders from which to actively measure and manage culture by mapping the values and behaviours expressed by individuals and organisations. It has been used worldwide in over 68 countries and in 2009 alone over 330,469 people participated in 1,566 assessments. The CTT assessment provides a detailed diagnostic report of an organisation’s culture and an analysis of shifts necessary.
The basis of the bouquet of tools is a Seven Levels of Consciousness (Maturity) model originally developed from the Maslow hierarchy of needs, and which indicates and tracks organisational maturity, development, purpose and focus. The Individual, Organisational and Leadership Consciousness/Maturity models are all built on the same framework but slightly adjusted for different purposes. The foundation of the Seven Levels of Consciousness/ Maturity is that a balanced organisation should ultimately address and conquer all seven levels to ensure longer term success and sustainability. All values and behaviours can be plotted in one of the seven levels with levels 6-7 indicating values that present a consciousness for societal and environmental issues respectively.
The Tools make it possible not only to track the ‘state of the organisation’ but also to measure and compare (thus check the alignment of) the personal values of the employees (as a whole or in different groups) with those of the current culture of the organisation, and those of the desired culture. Included in the measurement is an indication of potentially limiting values and behaviours, those that potentially have a negative impact on productivity in an organisation. These are called entropy values.
A South African example of success using the tools
Nedbank South Africa has, since 2005, made extensive use of the Barrett Culture Transformation Tools to understand current values and facilitate a programme of cultural transformation. Between 2005 and 2009, they managed to reduce the number of entropy values (negative/ limiting values) in the organisation from 25% to 13%. This was accompanied by substantial growth in revenue and share price. The shift in values was thus accompanied by a significant improvement in shareholder value and profitability.
Another tool in the Strategic Human Capital Toolbox
Strategic Human Capital Consulting follows a holistic comprehensive approach to human capital management, with organisational culture and values intrinsic to this. To this end we are continuously searching for and adding best-of-breed tools that enable us to serve our clients better – we have now included in our offering the Barrett Value Centre assessment tools, of which we are certified providers. In line with our overall approach these can be customised to assess a specific organisational culture.
What information does the values assessment provide?
The actual assessment which is done electronically via the web, but can also be done in paper format, provides a myriad of valuable analyses, including:
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- An individual or group’s chosen top 10: personal values and behaviours; perceived values and behaviours of the current organisational culture; desired values and behaviours of the organisational culture.
- The values and behaviours graphs clearly show where values are aligned (individually or in groupings) and where there is misalignment.
- The levels of organisational maturity or consciousness as indicated by all participants based on the Seven Levels of Organisational Consciousness/Maturity model.
- A Business Needs Scorecard that translates the values and behaviours chosen by the group (one view being analytical, representing current culture, and the other aspirational, representing desired culture) into a business perspective. The Business Needs Scorecard focuses on six key areas of business needs recognised as being necessary for high performance: Finance (profitability); Fitness (performance); Client relations; Evolution (new products and services); Culture; and Societal contribution.
- The Leadership Values Assessment (LVA), uses the same Seven Levels of Consciousness/ Maturity model to plot the values and behaviours of the Leaders based on a 360-degree review process. This can be a powerful starting point for an effective coaching process.
The Culture Transformation tools have even been adapted and used internationally to evaluate countries (the bankruptcy of Iceland was predicted using the CTT tools).
Conclusion
The state of the global nation (environment and corporation) dictates that each and every one of us (individually and collectively) takes a hard look at ourselves and transform or live with the consequences. As organisational culture is ultimately a direct reflection of the personal consciousness of its leaders, organisational transformation can only be effective if it begins with the personal transformation of the leaders. The language amongst leadership often indicates the belief that “they” (the employees) are not performing and “they” or the organisation has to change but it is only when the CEO or the senior leaders of the organisation are willing to take action and commit to their own personal transformation that you can expect real action and transformation from others. Thus we recommend that organisations begin this process by mapping the values of the senior executives.
To find out where you are on the Seven Levels of Leadership model you can start with a self-assessment questionnaire: http://www.strategichumancapital.co.za/our-services/leadership-development
References
1. Timothy Worth at a World Bank conference on Spiritual Values and Development
2. The Top 200: The Rise of the Global Corporate Power, Andersen & Cavanagh (Washington D.C.: Institute for Policy Studies)
3. Corporate Culture and Performance, New York: The Free Press, 1992
4. Built to Last, Jim Collins and Jerry Porras, New York: Harper Collins, 1994
5. In The Living Company: Habits for Survival in a Turbulent Business Environment, Harvard Business School Press, 1997 (Arie de Geus comes to a similar conclusion in a study examining 27 international companies incorporated before 1913)
6. Liberating the Corporate Soul: Building a Values-Driven Organization, Richard Barrett, 1998; Building a Values-Driven Organization, A whole System Approach to Cultural Transformation, Richard Barrett, 2006