Values Based Organizations: Smart and Ethical

In an era of business scandal, starting a corporate values programs is increasingly being seen as a strategic tool for organizations to both avoid litigation and achieve competitive advantage in the following ways:

• Avoid fines
• Reduce litigation
• Retain current employees
• Attract ethical new hires
• Build customer loyalty
• Maintain corporate reputation
• Strengthen supply chain

The secret to linking corporate values to the list above is go beyond implementing corporate slogans to management providing a living example of how the values should be implemented in the corporate context. Employees rarely act more ethical than is required by their managers, so it is important for management to set the bar high. Values-based managers model ethical principles for the entire organization, and especially less-experienced employees. The organization is looking to managers to preach high values and practice what they preach. The culture in a values-based organization is a deliberate creation and not accidental.

A useful exercise for directing systematic attention to the process is for employees to brainstorm about the mission (Devero, 2002); they literally state the values that will be required to fulfill the mission in a clear and actionable manner. Values are reinforced through implementing specific policies and the filtering of the values through the organization is measured. Successful implementation is rewarded.

Structuring the values based organization is a long-term commitment with tremendous return on investment. There is an implied link between ethical business and corporate reputation, as well as a relationship between corporate reputation and recruiting the best talent, enjoying durable company goodwill and ability to raise investment capital. Ethical behavior from stem to stern of an organization is modeled by executives, financially rewarding, and the right thing to do.

Reference

Devero, A. (2002). Corporate values: Aren't just wall posters—They're strategic tools. In J.E. Richardson (Ed.), Business Ethics (Chapter 8). New York: Mc-Graw-Hill.