Importance Of Values

Importance Of Values

By : Muhammad Hatta

Republish : Zulfikar, ST (Industrial Engineer)

What is Values? Corporate values is often defined as set of distinctive or fundamental beliefs the corporation stands for (Quingley, 1994). It serves as guidelines in making decision within corporation.

If you find it too conceptual and difficult to grasp, let`s take analogy of our childhood times. Recall what your parents always taught you during that time: Say thank you.., Don`t lie.. or Ask permission if you want to use someone`s stuffs... Those are the guiding principles that they tried to indoctrinate within our life, as if we embraced those principles, then we would never play with the abandoned toys, for example, because it opposed what we valued during that time.

Similar to these values that we learned from our childhood times, corporate values is a fundamental element for a company. Because, as corporation becomes an institution, and thus a society in itself, a set of values becomes a necessity. It helps employees to learn and grow within the corporation, just like what we all experienced with our parents during our lives.

Soft Values Generates Hard Result

One empirical study done by James C. Collins and Jerry I. Poras (1993) as written in their book Built to Last, showed that most visionary companies,--- premier institutions in their respective industries which are widely admired by their peers and have long track record of making significant impact on the world around them---, are characterized by having a set of strong and deeply believed core values. Strongly hold to this set of ideology, these visionary companies, Citicorp, IBM, Nordstorm and Sony alike, outperformed their rival companies, such as Chase, Burroughs, Melville and Kenwood in terms of cumulative stock returns, as shown on the graphic: What`s the relation between the success of these companies to their set of values? Good question. Let`s take Sony for example. Sony is widely known for their values on innovation. This belief is clearly stated on their as their management guidelines, which part of it are read as follows:
Purpose of Incorporation:To establish a place of work where engineers can feel the joy of technological innovation, be aware of their mission to society, and work to their heart`s content. Management Guidelines: We shall welcome technical difficulties and focus on highly sophisticated products that have great usefulness in society, regardless of the quantity involved
Indeed a very strong message to support the innovation within corporation. A deep sense of purpose which aims far more beyond profits. But does it all what it takes? I witnessed a lot of corporations put those words nicely on their annual report, and nothing reflects the reality. Again, very good point. Remember, people won`t embrace words. They will be only highly influenced by actions, real actions.

This is what differentiates visionary companies with their comparisons. The set of values was deeply practiced into their day-to-day activities. In case of Sony, the innovation spirit is solidly cultivated that made them came with a series of decisions to launch products for which there was no proven demand, including the first all-transistor radio (1955) or the Sony Walkman (1979). As we know then, these products were very successful in the market, and had proven Sony`s innovation values lead them to be ahead in the competition. Moreover, on a case where values become deeply ingrained on each individual within organization, it creates a “cult-like environment which enable people who enter into organization to feel either fit or ejected like virus. It becomes a natural selection process that eliminates inappropriate behaviours or even people who don`t fit into corporation values. In case of Nordstorm, a giant retailer in the US, where customer satisfaction is their most sought after values, there are lot of people who were smart and technically excellent but in the end left the corporation within short period of time. This happened because they were not willing to “…not get irritated when facing a irrational customer, or start their career by being a gift wrapper. They left not because they are not good. Actually they`re among the best graduates in the country. They just don`t fit with the corporation values. And that`s already been a powerful mechanism to build a strong corporation. In a nutshell, company with strong values like the visionary companies, have such clarity about who they are, what they`re all about, and what they`re trying to achieve, and they tend to not have much room for people unwilling or unsuited to their demanding standards.

How to Build the Strong Values?

Of course, after all these facts, the next question is How could we cultivate and build the strong values and eventually culture in our organization?
Based from Arthur Andersen experiences in several significant change within Indonesian companies or around the globe, there is actually no one size fits all approach. Each company is unique, and each of them needs a tailored approach that fit with their current culture. However, we noted that there are several common elements in the process that are critical to the success of the cultural change or values building programs. The remaining part of this article will discuss about these elements. It starts from the TopValues have to be driven by the top management team. The top management team are the role models for the rest. In the paternalistic culture like Indonesia, it is commonly cited that “organization is the shadow of their leaders. When leaders demonstrate the required behaviours that fit with the preached values, people got the message clearly. The leader is the message. Once the leaders are not committed or consistent with the so preached values, people quickly come into conclusion: It`s a lip service, it ain`t gonna change anything!

One experience came from a major mining company in Indonesia which experienced dramatic change during the early 90`s. To eliminate the culture of feudalistic in the company, the first step that the new CEO took, was demolishing all visible symbol of this culture. He traded his official luxury car with the most commonly used type of vehicle, Toyota Kijang. He prohibited person`s position level to be stated on both their name cards or room signs. And he refused to wear Safari, on that time was the suit of state top officials, and instructed all employees, from directors to the miners, to wear the same work uniform. And it did work out. The people got the message that the organization was serious to change as demonstrated visibly by the leaders. There`s Nothing Soft about Changing CultureEven though values and culture tends to be more soft issues, meaning that they`re more intangible in nature and deals more with hearts and less with head, the interventions for changing culture or building values are nevertheless hard stuffs.

Based on Peter Senges Fifth Discipline (1992) concept of Systems Thinking, we understand that structure drives behaviours For example, to change values and culture we need a reconstruction of organization structure. The old organization structure which tend to support the bureaucratic culture in one of our client, were reconstructed to become leaner and have element of matrices. Take a look on the case of Wainwright, a US company that has successfully transformed their company into customer focused organization. Before begun the era to promote their customer satisfaction philosophy, the organization had several hard systems in place that supported their philosophy, such as Internal and External Customer Satisfaction Process, a Continuous Improvement Program and a Performance Measurement system. These hard structures and systems are nonetheless the primary drivers in changing the behaviours. (Jay Fedora and Viki Welding, 1999).

For the same purpose, we have attempted to revise an Indonesian client`s HR system. The client`s Performance Appraisal system is realigned to more values-based, where people`s performance is partly rated by their peers, superiors and subordinates, on how well they have demonstrated the required behaviours on the work place. And to create such “motivation and drivers, it was directly linked to the employee`s compensation and career path. People started to listen, paid attention, and took actions. Their behaviours changed. The question of sustainability of this behaviour change is then lied on the application of the system and also how the company reinforce it with leading with the heart efforts described on the next element. But for sure, to successfully lead with the heart, organization must be healthy throughout. It requires a lot of TalkEven though most interventions are hard stuffs, the efforts of reminding and encouraging the appropriate behaviours are still needed as reinforcement. However, from our experience, it should come after people have seen the changes in hard stuffs. Communicating and preaching what are not visible is like hearing a fictional story from unpopular story teller. During the major transformation of the above mentioned major mining company in Indonesia, the leaders never get bored in preaching the employees about the new values and culture. Almost no single corporate meetings, gatherings or trainings were adjourned without mentioning or discussing about the new values and culture. Even the company invested 5 billion rupiahs to install a 120 hectares outdoor-experential learning activities, as a media to reinforce and indoctrinate the set of new values to every single of their employees. It is consistent with another finding came from the same book, Build to Last, suggested that visionary companies tend to employ stronger indoctrination of their employees into their core ideologies. This indoctrination is achieved through training, employee orientation, corporate mottos or slogans, and even singing company`s mars. In the end, nobody in the world dare to say that developing values and changing culture is easy. Actually it has been extremely difficult. But having seen the dramatic improvement resulted from both efforts, and how it sustained the competitiveness of the company over the long period of time, as what visionary companies on Built to Last benefited, every company should be tempted in moving to this direction. If you`re one of the many who haven`t, start to think about it! You don`t want to be outperformed in the end, do you? Ibnu A. Mulyanto, Arthur Andersen Business Consulting)

References:

James C. Collins and Jerry I. Porras (1994), Built to Last, p. 47-90, Harper Business Joseph V. Quigley (1993), Vision: How Leaders Develop It, Share It, and Sustain It, p.15-23, McGraw-Hill Peter Senge (1992), Fifth Discipline, Jay Fedora and Vicki Welding (1999), There is Nothing Soft About Changing Culture, Arthur Andersen BC Journal, June 1999