The value of values
How many of the headlines of recent ethical scandals come from company’s proudly staying ‘Integrity’ – and then mis-selling to customers? How many companies say ‘Integrity’ on the reception wall and mean ‘Turn a blind eye’ in the boardroom, knowing they are bribing clients, or dodging regulations?
A few years ago, my team and I (at a large communications and engagement consultancy) conducted research into the stated values of FTSE 100 and how they turn into values. Our report ‘The value of values’ provided a benchmark (and was even mentioned on the BBC’s satire ‘W1A’ a couple of years later, a career highlight).
At the time we found 75 of the FTSE 100 stated their values. Of these 38 stated Integrity, nearly as many claimed ‘Teamwork’, ‘Collaboration’ ‘Respect’ ‘Innovation’ or ‘Responsibility’. The overlap-rate was so high that only three companies had completely unique or distinctive values.
That didn’t necessarily mean they weren’t true, it just meant they were all so similar they merged together. There was nothing specific about belonging to one organisation over another. And because they all sounded the same it meant we didn’t especially believe them.
Arguably these kinds of basic values should be inherent, as part of a commitment by Boards of companies to the Seven Principles of Public Life.
These are demanded of public servants and public bodes. Wouldn’t it be great if all businesses were also accountable to uphold them?
And to show what they are doing about ‘What we value’ in their corporate report?
Because then they could show, specifically, how ‘what we value’ turns into value.
How ‘what we value’ turns into value
Don’t just say it… do it. Show us how ‘what we value’ guides your decision making and risk management.
How does this turn into revenue and profit?
- Considered decision-making, faster, because everybody shares a sense of the right thing to do
- Better risk-management, because people are prepared and have seen ahead: for example, can protect against the damage of ethical or safety risk
- Good underlying values, (such as the Seven Principles for Public Life) ensure leaders are conscious of wider and longer term implications, not just short term revenue gains
- Diversity and inclusion turns into broader input, and wider relevance to customers, seeing further and reaching deeper
- Attracting the right people, creating a sense of belonging, means you have an implicit as well as explicit shared values
- Boundaries are clear on what would you would NOT do, protecting the business from costly harm to reputation
- Morale is higher, so people are more likely to give additional work or time with discretionary effort
- All this adds up to loyalty and commitment by employees, customers and investors
- Sustaining loyal customers will generally result in higher profit: winning new customers can cost six times as much as looking after existing ones
The combined effect on the balance sheet is in increased revenue, growth, and profit. Also, reduced costs of lost customers, high staff turnover, low morale or poor reputation.
How a raw list of ‘values’ (without application) can turn into cost NOT value
Lists of values have not helped customers, employees, investors or business reputations. The ethical emergency room is full of casualties, with a long waiting list of Regulators’ investigations, to prove this.
This is a major business risk that hurst business.
By how much?
Well, in 2018, the Tech sector could face up to £122bn in regulatory penalties for cyber security breaches when new EU legislation comes into effect. And that’s just a drop in the water compared to the Finance sector, where the top 20 banks faced misconduct charges worth £268bn between 2012 ad 2016.
Because they didn’t really value those things at all.
- Values, as a list without action or meaning, can cost companies value by…
- Stated but not upheld
- Not being demonstrated visibly by leaders, therefore not seen as valuable by colleagues
- Not being made accountable: tolerance of poor behaviour directly undermines stated values
- Not being appreciated: do your recognition, bonus and career development schemes reward ‘getting the business’ or ‘hitting targets’ without appreciating HOW people have done that?
- Being taken for granted: it’s easy to catch people ‘out’ when things go wrong, but how often do your leaders catch people ‘in’ when they go right
- Attracting people who don’t share your values, or who don’t think any values are that important
- Not being applied to third parties and partners as well as direct employees
Any and all of these circumstances become business risks.
This can quickly create an environment in which a safety or ethical principle is contravened, an employee or customer is treated badly, a supply chain provides materials or people that are not compliant with regulations.
And this affects the balance sheet directly with:
- Lost revenue
- Loss of faith and loyalty from customers, partners, investors
- Regulatory fine
- Cost of lost time due to injury
- Compensation to customers or employees
- Low productivity
- Damage to reputation
Oh, yes, and
- Lawyers’ fees
Examples of ‘What we value’ in action
A few companies shared their great examples at our recent Belonging Summit.
We’ll be sharing in-depth Interviews with these companies and more on our news site http://www.belongingworks.com in the coming weeks.
Here’s a taster:
Airbnb… who have upheld core values since the set up nine years ago, after the founders were famously advised by an investor ‘Don’t f**k up the culture’. Their core mission ‘Belong anywhere’ is an unshakeable ethos at the heart of the company – and belonging is central to the attitude to employee as well as hosts. They have a dedicated Values Team around the world who conduct the last two interviews of all potential recruits. And they act quickly on policy to make sure employees and hosts uphold the principles.
Why? Because they are central to the trust of those hosts to open up their homes, and guests to book through the Airbnb.
Trust from these values turns directly into bookings and revenue.
In effect, values and belonging are their business.
Berendsen… who unified many companies by sharing ‘what we value’. Their assertive acquisition strategy resulted in hundreds of local companies in countries spread across Europe and Scandinavia. What they did and how they did it varied greatly: but they worked hard to make sure that ‘what we value’ is consistent.
Birgitte Skade, Marketing Director of Berendsen, describes how what they value turned into value:
‘Our Values helped unify us, gave us our focus for greater effectiveness and gave us a basis for confidence through changing times’
Metro Bank… the first new bank in the UK High St in 100 years. The founders set out to build a new bank for a new era based on great customer service and straightforward dealings with customers. Sensibly, they saw that the only way to do that was if employees received great service too. A strong bond based on ‘What we value’, clear guidelines, low tolerance of poor advice, means they can allow sensible room for branch teams to make discretionary judgements for their customers, locally. The result is a fast take-up of a new company in an established market – and a Stetson sense of belonging between employees, customers, and communities.
(We’ll be sharing in-depth Interviews with these companies and more in the coming weeks.)
What we value is at the heart of belonging and business success
‘What we really value’ (not just what we say) defines who we are and what we do. Upholding these principles takes constant vigilance. If a company lists ‘Integrity’ in their values, we should ask them ‘Why are you telling me? Show me, don’t tell’
Because companies that make ‘what we value’ central to their business decisions and risk management – at the heart of belonging as an employee, customer, pattern or investor – are more likely to survive and thrive long term.
Belonging Space helps clients put values into action, and create a healthy culture that supports their business success.
Hurrah to World Values Day for challenging us to stand by what’s important to us, sharing great examples and practical tips to encourage good practice – so we can share what we value, and mean what we say.