First in a three-part series
By Cal Stevens
“The only thing you need to do is to keep us out of court!”
With these words, the CFO shut down our conversation. We were discussing the best aspirations of our company’s HR department. This was the 90s when HR departments like ours were increasing their assertion of values-based ways of working. This included an emphasis on corporate citizenship, ethical management practices, employee engagement, career development, inclusion, fair hiring, and much more. Yet all of this seemed to make the CFO impatient. He didn’t directly say “cut the fluff,” yet that was inferred in tone. I was early in this career, and in the face of his bluster, I did not challenge what he said.
He was not a person without values, but I could tell he was not interested in spending a lot of time on them. His values were not absent but were woven into his battle-hardened instinct. He felt no need to examine them. They were seemingly locked for safekeeping and could be called up in a pinch if the company needed to assert them. In the end, for him, values serve an extremely unglamorous purpose, providing only enough goodness in business practices to keep bad behaviors, and their corresponding legal exposures, at bay.
Capitalism’s Values Come from Us
Capitalism is like a half-finished house. The system under which our economy operates does not come with a fully baked set of values by which to operate it. This is intentional. We want it that way, allowing for ambition and strategic choices to be custom-applied to an enterprise. We quite like the freedom to engage in business or a cause, and to apply our organizational values while we work.
Sure, the economy has regulation, and we argue across the political aisle about how much is too much in that regard. But there’s a lot of room nevertheless, both to be ambitious and kind, both to doggedly pursue results while building the careers of the people who work for us. The system will not naturally prompt us to be generous, or set examples of honesty, or to balance tough management style with a passion for employee success. Those are values, and they do not come from the system. They come from us.
Our economic niche, our market, bids us strategize for what to do to produce our product or service. Values are what we apply to answer the question of how we will do what we do. This is intentionally applying the way we work (how) to what we produce (what). The result can be something more than just behaving good enough to stay out of court; we can intentionally enliven vision, enhance productivity, and generate an engaged and motivated workforce.
Values refer to an individual’s stable life goals and practices. They reflect either certain valued end states (e.g. inner harmony, beauty) or instrumental behaviors (ways of living and working) such as forgiveness, obedience, open-mindedness, or risk-taking. In an organization, these are stated differently. Organizational values are shared and centered on the work, resulting in practices such as service, flexibility, results, or corporate citizenship.
We can regulate ourselves, apply our own constraints and conditions on how we work, and thus adapt to markets to achieve our ends. This is not to say that we are above regulation by outside forces, but as corporate citizens we would honor the rules embedded in law. Yet what a liberating notion: We can shape our direction for great purposes, satisfy market demand, and address societal needs, not from imposed strictures, but from ourselves.
So, capitalism by itself requires values to be applied, but does not supply all of them. Given that, we can determine and apply strong strategy-shaping values, but instead we often do nothing, based on the assumption that market forces will reward successful values. We can also do nothing based on the assumption that values will emerge naturally from our organizations. Both are fraught with danger.
The Danger of Assuming Our Values Will Emerge in Markets
What we have advocated here so far is what’s come to be known as “conscious capitalism,” about which much has been written of late. To do nothing involving conscious application of values might be called
unconscious capitalism, which, in the absence of applied values, operates on the belief that markets will drive both usefulness and success. This is an assumption we make when we regard the market as supplying our values for us.
This is overconfidence in the market’s power to reward the values it wants and that these might be, by some measure of luck, the values we want. Given the opportunity to work on applying our values consciously, we might abdicate to the market, hoping we will get the right values rewarded.
This is naïve. It is also a capitulation to a kind of economic Darwinism to believe that values will emerge only as needed and be the right values. This puts our ethics at the mercy of forces outside of us. Species of business that do not adapt to and serve markets will die. Thus, we adapt, doing what it takes to survive. Markets provide a kind of raw appetite to which businesses respond, thus inviting both our excesses and the governmental regulations designed to control them.
The Danger of Assuming Our Values Will Emerge in Our Organizations
If we claim to be better than to simply allow the market to drive our values, we might assume that we already have the values we need embedded in our collective character. We put decent people in place and assume that our values are organizational bedrock. They will emerge from within us, from our diligence in training and hiring. By this design, leaders assume that values are instinctual and therefore can be ignored.
The danger is that activity will become a proxy for values. Companies will spend a lot of time determining strategies, thus setting strong intentions. If those intentions were designed without conscious consideration of values, it might be due to an assumption that the values are present in the organization. The intentions themselves, the what of business, begin to mimic values. Because the values are not purposefully determined and applied and are assumed to be present, the activity becomes a proxy for the assumed values. Because we can say “we make widgets” and the values of how we make them are assumed, “we make widgets” becomes the value itself, as if any movement forward is good.
By this, activity has supplanted values. Activity by itself, even profit, is morally neutral. We are running blind, ethically speaking, if we assume the activity will operate with the right values.
Does this seem harsh? Someone might charge that our concern for setting values takes a negative view of an enterprise, insinuating that the company is devoid of values, or has bad ones. The organization then might take a defensive posture, saying that the values are already there, that they have been serving them quite well, and are actually pretty good.
But how do we know this without looking at them? We might have no idea whether our values have been compromised by the things we let slide with a wink. Because assumed values operate under the radar, we may not see the deficiencies they generate. Even our best values, when they operate without routine examination can be engaged sub-optimally, or even ignored. At best, assumed values are a risk, a potentially unmanaged power deep in an organization, operating without oversight while hoping for good corporate behavior; at worst, assumed values are a malignancy we refuse to diagnose.
In his book, Organizational and Leadership, Edgar Schein noted that leaders have trouble implementing strategies because they find assumptions to be embedded so deeply, that the strategies fail. In a variation on the familiar Peter Drucker maxim, Schein would say old habits eat strategy for breakfast. (Schein 381) The dangers of the “unexamined life” of an organization are these: An unconscious capitalism that notes only base activity as its “value,” leaving the issue of how we work to capitalism (which does not provide complete working values), regulation, market forces, or chance, i.e. the “dumb luck” of organizational assumptions working out.
Making the Change to Work with Values
The annals of business stories over the last century are replete with cautionary tales wherein companies found it hard to change old habits. And we all love to tell them: infamous early statements
dismissive of personal computing (Ken Olsen, “There is no reason for any individual to have a computer in their home.”), Kodak’s stubbornness relative to film photography, the early techie culture that could not see “user experience” over their love of product capability. These are all about embedded, unexamined ways of working based in our values.
OK, so we decide to pay attention to these embedded values, maybe because we got in some trouble from our ignoring them, as above, or perhaps we have some worry that trouble awaits us, even if said troubles have not yet arrived. In other words, we might treat values either in a remedial way, to get us out of trouble, or a prophylactic way, to protect us from future woes. If the former, we may have been driven to seek help from someone who can remedy our cultural, ethical, or legal dysfunction that has struck our business. In the latter way, we work on values in a protective way, a bit ahead
of any trouble.
Working with values, then, is a matter of the right timing, and ascribing a proper weighting of importance to them. After our experience with clients who may work on values either never or late, we find that the best place for working on organizational values is early (if not first), and with equal weight and importance with our strategic objectives.
If values are up and out, early and clear, they begin to shape the work that an organization intends. Strategic objectives then, when formed simultaneously with (or after) the identification of an organization’s values, begin to carry in them the manner of working, the intended outcome, the agility to read the environment, and the way to hire and equip those whose abilities match those intentions.
I have a financial services client that is quick and clear to identify its endgame based on the values around customer experience. The profile of this company’s customer is in a particular career environment
(clergy and other workers in religious non-profits), and the company puts a high value on knowing the typical occupants of this career and its unique challenges. This value shaped the strategy of recruiting former occupants of that career as financial planners. There have been instances when this group
also had opportunities for shortcuts that would place company revenue above their clients’ interests, and it was their values that shaped the strategic decision to say no to any deviation from their stated values around the customer.
For Leaders: How the heck DO you lead with values?
Are you convinced that values should drive strategy but are now wondering how difficult it is to accomplish or where to start? Stay tuned for the second article in this series, “The Power of Values for Intentional Leaders” that explores the importance of establishing and operationalizing values to organizational leaders.
Cal Stevens taught organizational development and human resources at California Polytechnic State University at San Luis Obisbo (2014-2022). Before that, he worked in the same disciplines at Intel Corporation (1997-2014).