Enron – Vetting Values

Vetting Values

In the wake of the 16 year anniversary of the Enron scandal in October, let’s review the value in values in the current organisational climate. There is now, more than ever, an expectation that an organisation that espouses values will embody, embed and promote those values in all dealings with all stakeholders: including both internally with employees, and externally in the market place.

Values are broad evaluative judgments about what is good or important. They are deeply ingrained principles. Individuals have values and so do organisations. Research indicates that organisational values are related to culture, performance and leadership. Today’s organisations place a premium on their company values, and the values of their employees – but why? What do values denote? What is their significance in the organisational context?

Just a reminder, Enron’s values were as follows:

And we all know what happened there. So what went wrong?

Values 101

Organisational values form the bedrock of a company’s identity. Values might be thought of as a corporate lighthouse: shining a light out to industry and the wider market place signifying who the business is and what they stand for, and also acting as a beacon searching for like- minded professionals. In this way, values represent an organisation’s worldview, and act as a rally point for employees. Values are principles that guide strategy; they can illuminate how success is defined in an organisation, or the means by which success is recognised. Values identify organisational standards of behaviour and create certainty and consistency around delivery of products and services. In this way, they can suggest the manner in which an organisation is likely to actover time, and this may encompass ethical values.

Values are related to, but not the same as, Corporate Social Responsibility (CSR), especially insofar as the wider stakeholder population is concerned. Values can also be touted as a source of competitive advantage; they are at the heart of an organisation’s raison d’être, and employees are held to be proxy of the company brand by embodying such values.

Values as Good Business

The importance of articulating what matters to an organisation, in the form of values, is imperative for competitive advantage. An organisation must determine those values that are core, those that are aspirational, and those that are ‘permission to play’ (the minimum behavioural and social standards deemed acceptable). Organisations must critically assess whether their espoused values are in line with their enacted values; vigilance is required to keep on top of accidental values that emerge spontaneously, but endure.

Assessing Values

The assessment of organisational values really hinges on the capture, analysis and discussion of values. Some argue that assessing for values at the recruitment and selection stage is intrinsically flawed: given the applicant propensity of ‘faking’ values assessments. The suggestion is that applicants can align their responses with espoused company values during recruitment, and thus the social desirability bias can mask true values. The face-to-face interview stage thus becomes critical for deep diving into values assessment: perhaps with a

line of questioning that asks a candidate what a particular organisational value means to them, or an example of when they have embodied (lived) said principle.

Trends in the psychological literature suggest that there are sex differences insofar as values are concerned. For instance, men consistently attribute more importance than women do to power, and women consistently attribute more importance than men do to benevolence (the desire to ‘do good’). However culture is recognised as a moderating factor of these sex differences, and age can also play an influencing role.

Demystifying Values

  • A value can be defined in many different ways. For example, it can be something that an organisation has. Alternatively, Lao Tzu’s recommendation from 2, 5000 years ago that “the best way to do is to be” is currently promulgated though the teachings of ‘conscious business’. This school of thought suggests that the company as a legal person has both a mind and a heart.
  • Values can be defined as the cornerstones of company culture. But where do the organisation’s values come from? In some businesses it is a case of the founder’s values (think Virgin, Facebook and other global brands with highly visible figureheads), and for others it is a more institutionalised source (think big banks and other large multinational organisations).
  • There are two types of values: espoused and enacted.
    • Espoused values are those that appear on glossy company collateral, websites and perhaps on display in offices.
    • Enacted values are the real values that are evident in attitudes, behaviours and interactions. There can be congruence or discrepancy between these two types of values within an organisation.
  • Values in the organisational context are distinguished from beliefs, morals, virtues and ethics: but there is some practical overlap.

Values and Motivation

Research into trends as to whether intrinsic versus extrinsic values are more highly ranked amongst individuals reveal that work values change throughout the lifespan. Findings of cross generational differences also reveal that younger groups have been found to place more importance on certain work values such as status and freedom when compared to older groups. Another Millennial differentiator in the current workplace.

Final Thought

Alignment of personal values and organisational values is key. The importance of cascading and communicating organisational values is vital: both the message and messenger are significant. Leaders should embody and role model organisational values, and the relevance of the organisational values should always be transparent. People care about organisational values because they impact the individual, organisation, and wider business community. The cautionary tale of Enron highlights that the cost of not getting organisational values ‘right’ looms large.

For more information on developing leadership and performance rich in values, contact Gavin or Craig at the Business Olympian Group:

gavin@businessolympian.com.au

craig@businessolympian.com.au

Written by Emily Knowles, Specialist Consultant, Business Olympian Group.

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