The 6 ways corporate values fail

The Ethics Centre works with companies and organisations of all shapes and sizes. We know how different a bank with 40,000 employees is to a small non-profit or a university, or even to a division of the military. Despite that, the same issues arise in business time and again. A failure to live up to corporate values.

One of the first things we do when we start working with an organisation is helping them to define, refine, or re-build their purpose, values, and principles – what we would call an ethical framework. A strong ethical framework is a North Star for all people and all decisions within an organisation.

We frequently encounter companies that have values in place  – but they’re not being “lived.” They’re either entirely unknown, or else they are not being used as a reference point. Rarely are they being used to their full potential.

In the course of our work, we’ve uncovered six main ways that corporate values fail to stick.

1. Values without purpose or principles

We often encounter a lack of understanding of the way that values, principles and purpose inter-relate.  They are fundamentally different and they work best together. Purpose is your “why” (Why does your organisation exist?).  Values describe what is good. Principles describe what is right. When making a decision we must ask:

• Does this decision help us achieve our purpose?
• Are we upholding our values in this decision? Is this what we consider to be good?
• Is this decision aligned with what we consider to be right? Is it the right thing to do?

The point about all of this is that we are required to think before we act. Without an ethical framework of purpose, values, and principles, we are left with nothing but a list of rules and  behavioural directives. And when we are simply following rules or habits, the critical thinking needed for ethical decision making is removed.

2. Leaders failing to lead on values

Ethical frameworks don’t have to start with the CEO or board. It’s been our experience that the best frameworks arise out of consultation with all levels of the organisation. But it is certainly true that it’s the job of all leaders to talk about the values, create a narrative that demonstrates true commitment, and exemplify them in their own behaviour.

This is partly a communication challenge: leaders have to explain the values and tell the story of how they are lived within the organisation. They need to explain how their decisions reflect the values.

But it’s also important the organisation and its stakeholders can see the values being applied constantly and consistently. When leaders fail to do this, the hypocrisy will be noticed and called out – often with disastrous and costly consequences. Hypocrisy over values can destroy the credibility an organisation.

3. Designing for a marketing purpose

No offence to marketers, but they definitely shouldn’t be the sole drivers of your ethical framework. In this scenario, the marketing team have identified the need to communicate a particular set of “brand values” to their customers, so they craft uplifting slogans that give the appearance of an ethical framework. Sadly, these values are a facade. They are window dressing designed to sell a product. Managers and staff either don’t know them, can’t relate to them, or don’t know how to use them in decisions.

4. Confusing values with behaviours

The danger of HR being the sole architects of your ethical framework is that they will probably build something based on behaviours. Behaviour-based statements tend to describe the desired “good” behaviours and call out the undesirable “bad” ones.  They are displayed in posters on the kitchen wall – and the only time they are really discussed is in performance reviews, where they become a stage-gate for a bonus. The employees may find the behaviours helpful in interacting with colleagues within and across teams, but they won’t be very helpful when applied to the big day to day decisions.

5. Values not embedded within your systems and processes

The beauty of an ethical framework is that it can help guide every decision that your managers make. This includes major corporate manoeuvres and daily interactions with customers and other stakeholders.  But this will only work if your values and principles are embedded in your policies, systems, and processes.

It’s easy for these frameworks to become misaligned.  If you uphold corporate values like trust, integrity, and customer service whilst imposing ambitious KPIs that prioritise profit growth above all else, then you will have a confused workforce with no idea what to do.  When systems are in conflict with values, bad decisions can be made by well-meaning people.

6. People failing to talk about corporate values

You can tell a purpose-led organisation from any other because their values and principles are on display, every day. They’re not just a page on the website, but the subject of daily conversation. They come up time and again in company presentations, in meetings and in micro-interactions. In times of change or disruption, they’re the only way to navigate successfully.

Your people need not only to know what the values are and what they mean; they also need to understand how to communicate with them and apply them to everyday decisions.  And perhaps most importantly, you need to foster a culture in which a failure to live the values is explicitly called out. You know a company truly has a strong ethical framework when even the most powerful executive is held to account for not living the values.

Corporate values are much more than mere slogans or behaviours. They are an important and fundamental element in decision making. Organisations are shaped by the choices their individual employees and directors make. And this in itself shapes the world around us.

A famous Australian corporate leader once said that companies are successful when they “make more good choices than bad choices.” If values represent what is good then we know where to look to shape good choices.