The overriding rationale for the banking scandals of the last decade “have among their root causes a failure of culture as manifested in governance, remuneration, risk management or tone from the top” (Andrew Bailey, head of PRA, 09/05/2016).
This cultural failure has apparently spread far wider than just corporate Britain. Bernard Jenkin, writing in the Guardian after the Kids Company debacle, felt that “(Charitable) Trustees (must be) responsible for their charities’ values and … for ensuring everyone behaves ethically…”.
The police leadership in the Hillsborough disaster was described as “rotten to the core”. This complete lack of Values to guide their actions has led to an “erosion of public trust”.
So, a failure of Culture, Values, Core and Trust.
Such comments lie in stark contrast to those of Mark McCall, director of rugby at Saracens. He credited the players with having the “humility and hunger” to realise their goals. This from a team who invested in philosophy classes to ensure the players “were cared for as individuals with souls rather than commodities shovelled into the money furnace pits….”.
Values are not a ‘nice to have’. Values that resonate, daily, are the standards, the credo, by which an organisation lives and its actions are judged.
They are the starting point for any transformation, be it from broken to fixed or good to great. Values are the innate rules, the unconscious tramlines, by which the actions of the leaders and the organisation itself are judged.
Values Based Transformation (“VBT”) was developed as a process in 2007 by Alinsky Partners. Its principle tenet is that by defining appropriate core Values and then applying them consistently, within the context of the desired outcome, the management are given the permission to lead. They are also given the strength to be judged.
VBT is corporate pilates; without a strong core, every body and everybody ultimately crumbles.
Values are the compass against which the other factors for success, such as leadership, processes, strategy, remuneration and prioritisation, are continually referenced.
The process adopted is far from some Kierkegaardian ‘leap of faith’. The VBT programme embeds within it baseline metrics. It provides feedback to the leadership, through qualitative and quantitative assessment of progress towards the stated goal. It requires honesty, particularly of those delivering transformation, and regular recalibration of core competencies and prioritisation. It requires leadership to endorse and live the Values.
VBT is channel and sector agnostic. It is as relevant to retail customer service as it is to UGC digital marketing communications as it is to sport or the Third Sector.
A business that states that one of its core Values is innovation but, say, invests only 5% of its IT budget on research, cannot achieve its goals. Employees will feel the disconnect, as will consumers. Commentators will judge it accordingly. The management will be seen as hypocritical, especially if short term profitability drives annual remuneration. Likewise, a company that propounds sustainability or social responsibility as a core Value but puts profit as the singular focus, is clearly misaligned. Regulators, the wider public and potentially even legislators will ultimately judge its actions harshly.
Perhaps most important, organisations that teach leadership and profess devolved accountability, but do not permit their leaders to make independent, Values based decisions, nor to challenge established norms or to make mistakes but thereafter admit their errors and learn therefrom, are designing operational paralysis into their structures.
VBT delivers to management and employees a silent permission to act. It provides shareholders, employees, suppliers, customers, commentators and even competitors a framework by which they can understand, a prism through which they can view, the reason behind actions.
It does not guarantee that all decisions are correct. It does however guarantee that the rationale for each decision, even those with poor outcomes, is understood. By so doing, the business, the leader or the team develops an inner sense of progress in good times and resilience in tough times. Competitors fear strong Values. Regulators admire appropriate Values. Detractors understand Values based decisions and employees derive confidence from them.
Further, Values create value for shareholders. Increasingly, financial value equals “chosen operational metric x multiple”. The multiple allocated is a reward for sustainability, for the long term delivery of the metric. Values enhance customer loyalty and bolster approval ratings. VBT drives enhanced employee satisfaction and performance. In this way, Values based transformations deliver understood, consistent performance and thereby attract a multiple premium on exit.
If you are not convinced, ask yourself why Europe’s biggest airline was forced, eventually, to turn 180 degrees and adopt Values that recognised how important customer perception and satisfaction was to its stock market value.
In essence, VBT delivers permission. A VBT programme delivers the consistency, the certainty and the enduring commitment to principles that a change programme requires. Mark McCall took over from Brendan Venter. He may have changed some players. He may have increased fitness levels. But he stayed true to and built upon the Values that the players and back room staff had already committed to and which the owners had invested behind.
They understood that transformational progress is rarely linear. But they also understood that a transformation programme that is consistent, understood, clear and aligned, based on embedded Values, will, over time, deliver tangible results. In this way, Values are a necessary precursor to delivering enhanced and sustainable value.
VBT or values based programmes appear to be ever more needed. For, as Bailey, Jenkin and the Hillsborough Tribunal have all shown, companies or leaders that cannot exhibit compelling Values based leadership will be judged harshly, especially in the intense, short term, social media cauldron in which all sectors increasingly operate.
Al Insky
May 2016