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Values are not powerful because they are posted on the wall, written in annual reports or proclaimed before meetings of executives and shareholders – no matter how much or how often. Values are powerful when and only when they are expressed in actions and tangibly impact the way a company operates.
It is true that in the initial stages, the leaders of a business may have to speak about them at every opportunity and continuously inject them into decisions. But the real power of the values does not issue from either the talk or the decisions. It issues from the intensity of belief and commitment with which the values are embraced and expressed. Values have power for those who understand the power of values, feel it, cherish it and express it – for those who feel they are valuable!
Values can be implemented in a company just as systematically as companies now implement strategic plans. In fact, the two processes are parallel and complementary. The process of strategic planning and implementation focuses on quantitative goals, objectives, strategies and initiatives designed to promote growth and development of the business. It is a process for systematic change. Value implementation focuses on the qualitative side of the business. It is a process for continuous improvement in all existing activities. Plan implementation can be likened to the voluntary system that governs the conscious movements of the human body; while value implementation is like the autonomic system that ensures all the routine functions required to maintain perfect health are carried out in the most effective manner.
Process of value implementation
In the entrepreneurial stage of a company’s growth, the founder or CEO makes a decision about which values are most important and ensures that they are implemented by his or her own personal effort and attention. Bill Marriott, Sr., insisted on quality in his first seven Hot Shoppes by personally visiting each facility every day to inspect the operations. Jack Welsh inspired to GE the passionate commitment to quality, speed, openness and other values that have propelled the phenomenal growth and profitability of GE even during the years after his departure.
At a later stage of growth, the organization institutionalizes the attention to values by the creation of separate departments to assume responsibility for each of the most important values. A controller’s office is established to enforce the values of thrift and efficiency. A research division is created to foster the value of innovation. A human resources department is set up to give proper attention to employees. A customer service desk is opened; perhaps even a safety department, as at Du Pont; and so on. Each value has been institutionalized as a structure.
At the next level, performance standards are set with respect to each value, rules are established, and systems are designed to enforce the rules and achieve the standards. At first, there are many separate systems operating somewhat independently of each other—some for quality control, some for cost control, some for innovation, some for customer service, and so forth. Gradually the systems become more and more coordinated with each other to eliminate duplicate and conflicting activities and improve efficiency. Later, systems at different levels of the organization are integrated with one another to function in a harmonious manner.
Achieving values requires a variety of specialized skills for their effective expression. Product innovation and quality control require technical skills. Customer service and good communication with employees require interpersonal skills. Coordination and integration require organizational skills. Discipline and motivation require managerial skills. Companies recruit people with the essential personality traits and train them to impart the skills needed to achieve the values they consider most important. Merck recruits professional representatives "with a good impact, a high energy level, and an elevator that goes all the way to the top" and then trains them in the necessary skills for presenting drugs to doctors. In hiring customer-service representatives, Hertz Corporation looks for people with energy and sensitivity toward people and then teaches them how to handle customers pleasantly, even when a customer may be angry or upset for some reason.
The highest level of organized value implementation is achieved through an appropriate structure, standards and rules, systems that are coordinated and integrated, and people recruited and trained to possess the right skills and traits. But it is possible to raise the quality of value implementation to an even higher level by creating an institutional milieu or culture. This usually occurs naturally, after a formal system as described above has been in operation for many years. The values gradually become so deeply ingrained in the people and the organization that external systems of enforcement are no longer necessary. An atmosphere of peer pressure develops that acts to uphold the value and discourage deviation. At Merck we were told that if a copywriter of promotional material ever got a little too exuberant in praising the virtues of a drug, peer pressure would immediately force him or her to retract the idea. In many mature companies the most important values have become part of the institutional milieu. The Hewlett-Packard was able to do away with time clocks and removed the locks on the laboratory storerooms because an atmosphere of peer pressure "enforces" responsible behavior from employees.
At a still more advanced stage, the individuals in the company come to accept the importance of living up to the company’s values, even in the absence of external pressure from peers. They feel that it is part of doing the job right. Hard work at Marriott, satisfying the customer at Sears, safety at Du Pont have become customs in these organizations. Finally a stage is reached when the individuals in the company internalize the value and make it a personal conviction in their own lives. They come to feel, like the Delta flight attendants, that making the customer happy is not just a part of the job but is also a means to their own happiness. Many Northwestern Mutual agents come to believe that benefiting the policy owner is a way to make their own life richer and more rewarding—which prompted one business journal to describe Northwestern Mutual as "the company created by God, or so its agents would have you think." When a company has many employees who have adopted its central values as their own personal values, then we can truly speak of a mature culture within the company.
Ten Steps for Implementing Values
There are ten steps a company can take to implement values:
1. Decision: Choose a value that you are fully willing to implement and then make a total commitment to live by it.
2. Structure: Create a suitable structure for implementing the value, with a clear allocation of responsibility and clear lines of authority.
3. Standards: Precisely define the standards you seek to attain and maintain with reference to the value. Formulate specific rules and regulations for enforcing the value.
4. Systems: Design systems to achieve the standards, monitor performance, and reinforce the right behaviors.
5. Recruitment: Recruit people with the necessary personality traits and basic skills needed for implementing the value.
6. Training: Educate new employees so they understand the importance of the value and provide training to equip them with the additional skills required to achieve it.
7. Coordination: Coordinate the activities of all systems related to the value with other activities at the same level to improve performance on the value and eliminate duplication and conflict.
8. Integration: Integrate related activities at higher and lower levels of the organization through effective systems to eliminate gaps in execution.
9. Communication: Educate employees at all levels of the company, so that they come to fully appreciate the importance of the value to the success of the company. Through communication, a general atmosphere of acceptance is created as well as a supportive milieu of peer pressure. For effective communication, top management must be fully enthused about the value.
10. Identification: Relate the value to the personal growth and fulfillment of each individual, so the individual comes to identify with the value and strives to realize it personally in his or her own life.
Role of the CEO in Value Implementation
Ideas are the starting point; intensity is the goal. Intensity is the direct result of a company’s commitment to a higher belief or higher value to an extent far beyond the level achieved by ordinary companies. What is the role of the CEO in this process? The decision to adopt a higher belief or value requires a tremendous mental effort on the part of a CEO. The very thought of maintaining a commitment to full employment during the 1930s when markets were crumbling would have been enough to send most executives into a permanent "depression." Tom Watson, Sr., not only thought about it but actually decided to do it as an expression of commitment to one of IBM’s cardinal beliefs. You can be sure that decision was hard work!
But this was only the beginning. Once such a decision has been made, it must travel a very long, ever widening path to be fully put into practice by the company. This path consists of simultaneous movements in two directions. On the one hand, the decision of the CEO or the board of directors must be communicated to all the other levels of the organization and accepted by them with the right attitude and commensurate enthusiasm. On the other hand, the decision must be translated into corporate policy; converted into programs for execution by top-, middle-, and lower-level management; and reduced to action plans for implementation on the plant floor or in the field.
Watson’s work did not end with his decision. He had to carry conviction with the board of directors and top executives and, through them, with all the levels below. It was not only acceptance of his decision that was required but a wholehearted commitment at all levels to carrying it out. In practice, this meant that IBM would have to multiply its sales effort during the depression in order to maintain production volume. It also meant that every possible effort had to be made to improve productivity and reduce operating costs in order to compensate for the possibility of falling revenues that could not be offset by reducing labor costs, since full employment was to be maintained. When other companies in the 1930s were feeling that labor was a dispensable and disposable resource, IBM introduced programs to improve its workers’ skills and output.
Watson had to inspire confidence throughout the entire organization. He had to enthuse managers and workers for a far greater effort, and he had to conceive of programs for translating his belief into action without endangering the corporation’s very existence. These two movements—communication of the decision throughout the organization with an enthusiasm for implementing it and translation of the decision at the top into programs at the bottom—require an enormous expenditure of energy, a total effort, and a constant strain to keep up their momentum.
In order to fully accomplish these movements throughout the entire corporation, the chief executive must continuously increase the quantity of his or her effort. At the same time, the quality of the CEO’s energy must change. Mental energy, which has converted the ideal into a policy, must be augmented by buoyant vital energy to communicate the right attitude to others and release their enthusiasm, and these must be supported by physical energy for translation of the policy into action. The entire energy of the leader’s personality must pour forth and sustain the movement until the whole company endorses the idea, is enthused with the right attitude, and implements the program. The energy that is expressed as thoughts, will, emotions, enthusiasm, commitment, determination, and eagerness builds up into a pure energy of personality and turns into a simple intensity that radiates from his or her being.
The same process of release, accumulation, and conversion takes place at all levels of the organization as the movement spreads vertically and horizontally. It is communicated from one level to the next, from one department to the next, and one person to the next, until the whole company is saturated with mental, nervous, and physical energy that accumulates as a pure energy of the corporate personality and radiates as corporate intensity throughout the company.
In IBM’s case, the impact of Watson’s decision cannot be overstated. As one IBM executive explained it:"It is not correct to say that we managed to maintain employment during the depression because we grew. We grew because we had committed ourselves to the maintenance of employment. This forced us to find new users and uses for our existing products. It forced us to find unsatisfied wants in the market and to develop new products to satisfy them. It forced us to develop foreign markets and to push export sales. I am convinced that we would not today be one of the world’s leading producers and exporters of office machinery but for our commitment to maintain employment during the depression years. Indeed, I sometimes wonder whether we wouldn’t be well advised to commit ourselves to increasing employment constantly."
That is the power of translating a higher value into action.
A Luxury for the Rich
Serving the public, maintaining a good corporate reputation, formulating a high-sounding credo and idealistic mission statement may be fine for AT&T, Johnson & Johnson, Merck, Northwestern Mutual, and Sears, but what about the little outfit? Aren’t high values really a luxury that only rich, successful companies can afford? The answer is that all these companies adopted high values when they were little outfits, and it is these values that enabled them to grow to their present stature. When Tom Watson insisted on the value of job security for employees during the Great Depression, IBM’s annual revenues were less than $20 million. Today they are 5,000 times greater. When Julius Rosenwald introduced the famed money-back guarantee at Sears, the company had only $750,000 in sales. Last year Sears’ sales were 30,000 times higher. Striving for high values is not a luxury for the rich; it is a way to become rich.
This article contains excerpts from The Vital Difference: Unleashing the Powers of Sustained Corporated Success by Frederick Harmon and Garry Jacobs, AMACOM, 1985. http://www.mirainternational.com/books/difference/index.htm