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May 27, 2004 Have you ever gone into a retail store where the sales clerks were rude, indifferent, or just plain incompetent? It is something we have all experienced. And, conversely, we have been to retail establishments where the sales people were knowledgeable, helpful, and courteous. If you sought out the owner or head person for each of these establishments, you would very likely find someone with the same characteristics as displayed by their sales people. It is fundamental in small businesses, large corporations, and organizations of all kinds. New employees will look to see “how we do things around here” and quickly adapt. In this sense, every company has values, philosophy, culture, or whatever you want to call it. There is no other single determinant more powerful in a company’s survival and success than the attitudes of its employees. Think about it. Two companies of the same size in the same industry, one with positive employee values and the other with negative values. Which do you think will succeed over the long term? But, very few companies and organizations ever think through and work diligently and proactively to create the culture that will allow the company or organization to succeed long term. In small companies, it is almost always the personalities and values of the founders, owners, and general managers that determine the company culture. Employees perceive the values of the “boss” and work to emulate them on the job. It is obviously the logical thing to do if you want to keep your job and maybe move up at some point. In effect, the owner/ founder personality becomes the company’s personality over time. It is neither a good nor bad phenomena. It very much depends on the personality of the owner/ founder. In larger companies, company values evolve. Typically, the aggressive and often self-centered rise to top management. The company philosophy then becomes self-aggrandizement and “survival of the fittest”. There are, of course, corporations where more thoughtful top management has risen to the top and these companies have a richer and more humane culture. But, regardless, the company culture grows like topsy by the procession of top managers through the company. Development of company mission statements with underlying statements of company values is a recurring fad in corporate America. Typically, a committee is formed and they labor away to craft a high-minded statement of which the company can be proud. The mission statement is proudly trumpeted in all the corporate communications until the fad wears off. But, they mostly fail. The problem goes back to fundamentals. It is the values of the owners and top managers, with concessions to the necessities of the business, that determines the real company culture. A mission statement is just that – words on a paper. As an example, smart managers know that business is forever changing. There is a real competitive advantage for companies whose employees discern and exploit change. But, that requires creativity. We want our employees to be creative and so state in the company values. Now, guess what happens the first time one of the employees sticks his neck out and is publicly humiliated for making a dumb decision? I remember distinctly an incident when I was working for a large manufacturer. It was my first job out of college. I received a memorandum that stated clearly that the company would not tolerate nepotism and went on to explain how nepotism detracted from company operations and values. The memorandum was signed by the company founder’s son and heir apparent. At first, I thought the memo was a joke, but learned later that is wasn’t. It is not just the one statement of company values that is perceived by the employees as overturned by top management action. It is the whole collection of value statements that becomes a joke. Further, it poisons the well for the next time the company tries to develop a statement of company values. How do you develop a workable set of company values? Far and away, the best opportunity to develop an effective set of formal company values is at the front end. The company is small and there is usually only one or a small number of dominant personalities. At that point, if a statement can be developed that captures the positive attitudes of the key people, it has a very good chance of sticking and actually guiding future company growth and profitability. But, large, existing companies don’t have that luxury. You can’t turn the clock back. The challenge is to move from an ill-defined understanding of “how we do things around here” to a sharp, clear statement of how we want things done. It is not rocket science, but it takes work and the full backing of top management. In fact, if top management is not thoroughly committed to developing and enforcing stated company values, don’t even start. The first input is a definition of the key factors of success. In our industry, at this point in time, what must we do to be successful? It is not hard to come up with a laundry list of things that must be done, but this is not what you are after. It is a short list of the key things you must do well. For example, suppose we are running a used car lot. An underlying requirement for this business is that you must buy used cars “right” and that, in turn, is based on the ability to accurately and consistently value automobiles – an underlying basic skill, a key factor for success. The stated company values should be consistent with the key factors for success. The second input, is an assessment of the values of top management. If you ask them directly, you will likely find that they are four square for truth, justice, Mom, apple pie, and the American Way of Life. You are more likely to get at the real values indirectly. Ask the top managers to rate the other top managers, but not themselves. Better yet, with absolute guarantee of anonymity, ask the subordinates to rate the top managers on their observations of how they have seen their bosses respond in situations that required value judgements. Some of the simple “yes/ no”, preference psychological tests available are pretty good at pulling up underlying company values particularly if there is a pattern within the top management group. The point is that the company values statement will fail if it is not enforced and top management must enforce it. Regardless of lip service paid at the time, top management will not enforce values, over the long term, that are not their own. After the devastating 1908 San Francisco Earthquake, the president of a small local bank went to the company owners and offered loans to help them get restarted. This act of concern created tremendous goodwill for the bank. In fact the bank grew rapidly, changed its name from Bank or Italy to Bank of America, and became a banking behemoth. As demonstrated by the Bank of America’ s indifferent and bureaucratic customer service, it has moved light years from the values of the founder. At one point the owner’s daughter castigated the Board of Directors and asked the pointed question, “What have you done to my father’s company?” The third input, is an employee survey. If you seek to move employee attitudes from one set to another, you need to know from where you are starting. What are the prevailing values in the company? You will need help in putting together an effective survey. The employees will tend to tell you what they think top management wants to hear. It is not an employee satisfaction survey. What we want to know, are the values guide their actions and decisions on the job in areas not covered by company policy and procedure. If the company is large enough, there will be more than a few crackpots whose opinions must be isolated. But, in the end, you will need an accurate notion of prevailing attitudes. If they are at variance with the desired company values, they need to be addressed in the company value statement – we want this and not that. Employee meetings and a program for re-education is in order. But, far and away, the employees will learn from and respond to what they see top management and the company do in particular situations. Why bother developing an effective corporate value statement? Picture a boat race. The coxswain sits in the prow barking out orders to the rowing crew. The oars hit the water in perfectly timed harmony. That is the analogy of a company where the employees share an effective common culture. Think about a boat where the oarsmen work independently at their own pace and direction. This is an analogy for most companies and organizations. The oarsmen know that they need to paddle on down the river and win the race. But which boat do you think actually finishes first? A company with a well developed set of company values which are enforced is hitting on all cylinders. It is a thing of beauty in its ability to develop and accomplish challenging objectives. In my second job out of college, I joined a small, $15 million annual sales service company as Assistant to the President and Director of Plans. We worked very hard to develop an effective management system for the company that was based on a stated Company Philosophy that appeared first in the company employee manual, in our long range plans, and on the walls of our company offices. In twelve years, the company grew to over $700 million annual sales using the same management system developed when the company was small. Our president was the best motivator I have ever known. He valued and rewarded creativity. He convinced the company managers and employees that we could do anything we set our minds to accomplish and we did. It was not just company management that shared in the company philosophy. Part of my job was to go out with the service crews periodically and report back. I found the same “gung ho”, “we can lick anybody” spirit in the ranks. At the time, we were much smaller than two direct competitors, but we had the dominant market share of the service work in the territories where we operated. To me, effective company values are not theory. I have seen it work. But, over the course of my management and consulting career, I have been disappointed to see how few companies actually effectively address their single greatest opportunity for success. ------------ About the author: Tim Murray, business consultant and adviser to startup companies, author of "Memoirs of a Texan", a 3-part novel covering the Civil War, reconstruction, and early petroleum drilling. Email: murrayto@msn.com Tell a friend about this site! ------------ |
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