Importance Of Values
Corporation, as many people won’t aware,
is now the focal point of many people’s lives. It is simply because most of
the people spend 40 to 60 hours per week of their lives for the corporation.
Then it becomes an institution that they have the most contact with and the one
they are most familiar with. For comparison, family, another institution which
is traditionally viewed as a focal point of people’s live, the interactions
were reduced significantly as the typical family has become highly mobile, and
its members are often preoccupied, with significant interactions limited to an
evening meal, if that.
Those
above facts have remind us that corporation has been a major influence of
someone’s life. Nevertheless, while life is a process of competition and
selection, corporation needs to compete for the minds and hearts of those that
would join and follow them, in this case, the employees. This is where corporate
values comes into picture, it serves as an appeal to employee’s hearts and
minds.
What
is Values?
Corporate
values is often defined as “set of distinctive or fundamental beliefs the
corporation stands for” (Quingley, 1994). It serves as “guidelines” in
making decision within corporation.
If
you find it too conceptual and difficult to grasp, let’s take analogy of our
childhood times. Recall what your parents always taught you during that time: “Say thank you..”, “Don’t
lie..” or “Ask permission if you
want to use someone’s stuffs..”. Those are the “guiding principles”
that they tried to indoctrinate within our life, as if we embraced those
principles, then we would never play with the abandoned toys, for example,
because it opposed what we “valued” during that time.
Similar to these “values” that we learned from our childhood times,
corporate values is a fundamental element for a company. Because, as corporation
becomes an institution, and thus a society in itself, a set of values becomes a
necessity. It helps employees to “learn and grow” within the corporation,
just like what we all experienced with our parents during our lives.
“Soft”
Values Generates Hard Result
One
empirical study done by James C. Collins and Jerry I. Poras (1993) as written in
their book Built to Last, showed that
most visionary companies,--- premier institutions in their respective industries
which are widely admired by their peers and have long track record of making
significant impact on the world around them---, are characterized by having a
set of strong and deeply believed core values. Strongly hold to this set of
“ideology”, these visionary companies, Citicorp, IBM, Nordstorm and Sony
alike, outperformed their rival companies, such as Chase, Burroughs, Melville
and Kenwood in terms of cumulative stock returns, as shown on the graphic:
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What’s the relation between the success
of these companies to their set of values?
Good
question. Let’s take Sony for example. Sony is widely known for their values
on “innovation”. This belief is clearly stated on their as their management guidelines, which part of it are read
as follows:
Purpose
of Incorporation: To establish a
place of work where engineers can feel the joy of technological innovation, be
aware of their mission to society, and work to their heart’s content….”
“Management
Guidelines: … We shall welcome technical difficulties and focus on highly
sophisticated products that have great usefulness in society, regardless of the
quantity involved…”
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Indeed
a very strong message to support the innovation within corporation. A deep sense
of purpose which aims far more beyond profits.
But
does it all what it takes?
I witnessed a lot of corporations put those words
nicely on their annual report, and nothing reflects the reality.
Again,
very good point. Remember, people won’t embrace words. They will be only
highly influenced by actions, real actions.
This is what differentiates
visionary companies with their comparisons. The set of values was deeply
practiced into their day-to-day activities. In case of Sony, the innovation
spirit is solidly cultivated that made them came with a series of decisions to
launch products for which there was no proven demand, including the first
all-transistor radio (1955) or the Sony Walkman (1979). As we know then, these
products were very successful in the market, and had proven Sony’s innovation
values lead them to be ahead in the competition.
Moreover,
on a case where values become deeply ingrained on each individual within
organization, it creates a “cult-like” environment which enable people who
enter into organization to feel either “fit” or “ejected like virus”. It
becomes a natural selection process that eliminates inappropriate behaviours or
even people who don’t fit into corporation values. In case of Nordstorm, a
giant retailer in the US, where customer satisfaction is their most sought after
values, there are lot of people who were smart and technically excellent but in
the end left the corporation within short period of time. This happened because
they were not willing to “…not get irritated when facing a irrational
customer, or start their career by being a gift wrapper…”. They left not
because they are not good. Actually they’re among the best graduates in the
country. They just don’t fit with the corporation values. And that’s already
been a powerful “mechanism” to build a strong corporation.
In
a nutshell, company with strong values like the visionary companies, have such
clarity about who they are, what they’re all about, and what they’re trying
to achieve, and they tend to not have much room for people unwilling or unsuited
to their demanding standards.
How
to Build the Strong Values?
Of
course, after all these facts, the next question is “How could we cultivate
and build the strong values and eventually culture in our organization?”
Based
from Arthur Andersen experiences in several significant change within Indonesian
companies or around the globe, there is actually no “one size fits all”
approach. Each company is unique, and each of them needs a tailored approach
that fit with their current culture. However, we noted that there are several
“common elements” in the process that are critical to the success of the
cultural change or values building programs. The remaining part of this article
will discuss about these elements.
“It
starts from the Top”
Values
have to be driven by the top management team. The top management team are the
“role models” for the rest. In the paternalistic culture like Indonesia, it
is commonly cited that “organization is the shadow of their leaders”. When
leaders demonstrate the required behaviours that fit with the preached values,
people got the message clearly. The leader is the message. Once the leaders are
not committed or consistent with the so preached values, people quickly come
into conclusion: “It’s a lip service, it ain’t gonna change anything!”
>One
experience came from a major mining company in Indonesia which experienced
dramatic change during the early 90’s. To eliminate the culture of feudalistic
in the company, the first step that the new CEO took, was demolishing all
visible symbol of this culture. He traded his official luxury car with the most
commonly used type of vehicle, Toyota
Kijang. He prohibited person’s position level to be stated on both their
name cards or room signs. And he refused to wear “Safari”, on that time was
the suit of state top officials, and instructed all employees, from directors to
the miners, to wear the same work uniform. And it did work out. The people got
the message that the organization was serious to change as demonstrated visibly
by the leaders.
“There’s
Nothing Soft about Changing Culture”
Even
though values and culture tends to be more “soft” issues, meaning that
they’re more intangible in nature and deals more with hearts and less with
head, the interventions for changing culture or building values are nevertheless
“hard” stuffs.
Based
on Peter Senges’ Fifth Discipline
(1992) concept of Systems Thinking, we understand that “structure drives
behaviours”
For
example, to change values and culture we need a reconstruction of organization
structure. The old organization structure which tend to support the bureaucratic
culture in one of our client, were reconstructed to become leaner and have
element of matrices.
Take
a look on the case of Wainwright, a US company that has successfully transformed
their company into customer focused organization. Before begun the era to
promote their customer satisfaction philosophy, the organization had several
“hard” systems in place that supported their philosophy, such as Internal
and External Customer Satisfaction Process, a Continuous Improvement Program and
a Performance Measurement system. These hard structures and systems are
nonetheless the primary drivers in changing the behaviours. (Jay Fedora and Viki
Welding, 1999).
For
the same purpose, we have attempted to revise an Indonesian client’s HR
system. The client’s Performance Appraisal system is realigned to more
values-based, where people’s performance is partly rated by their peers,
superiors and subordinates, on how well they have demonstrated the required
behaviours on the work place. And to create such “motivation and drivers”,
it was directly linked to the employee’s compensation and career path. People
started to listen, paid attention, and took actions. Their behaviours changed.
The question of sustainability of this behaviour change is then lied on the
application of the system and also how the company reinforce it with “leading
with the heart” efforts described on the next element. But for sure, to
successfully lead with the heart, organization must be healthy throughout.
“It
requires a lot of Talk”
Even
though most interventions are hard stuffs, the efforts of reminding and
encouraging the appropriate behaviours are still needed as reinforcement.
However, from our experience, it should come after people have seen the changes
in hard stuffs. Communicating and preaching what are not visible is like
“…hearing a fictional story from unpopular story teller”.
During
the major transformation of the above mentioned major mining company in
Indonesia, the leaders never get bored in preaching the employees about the new
values and culture. Almost no single corporate meetings, gatherings or trainings
were adjourned without mentioning or discussing about the new values and
culture. Even the company invested 5 billion rupiahs to install a 120 hectares
outdoor-experential learning activities, as a media to reinforce and
indoctrinate the set of new values to every single of their employees.
It
is consistent with another finding came from the same book, Build to Last, suggested that visionary companies tend to employ
stronger indoctrination of their employees into their core ideologies. This
indoctrination is achieved through training, employee orientation, corporate
mottos or slogans, and even singing company’s mars.
In
the end, nobody in the world dare to say that developing values and changing
culture is easy. Actually it has been extremely difficult. But having seen the
dramatic improvement resulted from both efforts, and how it sustained the
competitiveness of the company over the long period of time, as what visionary
companies on Built to Last benefited,
every company should be tempted in moving to this direction. If you’re one of
the many who haven’t, start to think about it! You don’t want to be
outperformed in the end, do you? Ibnu A. Mulyanto, Arthur Andersen Business Consulting)
References:
James C.
Collins and Jerry I. Porras (1994), Built
to Last, p. 47-90, Harper Business
Joseph V.
Quigley (1993), Vision: How Leaders
Develop It, Share It, and Sustain It, p.15-23, McGraw-Hill
Peter Senge
(1992), Fifth Discipline,
Jay Fedora
and Vicki Welding (1999), “There is
Nothing Soft About Changing Culture”, Arthur Andersen BC Journal, June
1999
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