This guest post is by David Greenberg, executive vice president of knowledge at LRN, a company that helps businesses develop ethical corporate cultures and inspire principled performance.

Culture, values and leadership are critical priorities for business leaders. No matter how many resources your company deploys, how many experts you retain and no matter how many programs you run, little matters if you’re not reaching your global workforce at heart, mind and gut level.

Companies are grasping this and embracing values-based corporate cultures, governance and leadership as new sources of advantage. Southwest Airlines, Zappos and Google are leading the way, demonstrating the benefits of values-based behavior.

LRN recently surveyed more than 100 companies on their biggest challenges and top priorities for this year and found that when it comes to core values and ethics/compliance leadership in corporate America, it’s a “good news, bad news” scenario.

The good news first: Ethics and compliance leaders view themselves as the champions for creating ethical, values-based cultures. In fact, 58% see that their primary mandate is to ensure ethical behaviors and alignment with core values. Further, 68% indicated that creating long-term value for the business is a principal benefit of promoting an ethical culture.

Now for the bad news: As organizations embark on a journey to become more values-based, companies are failing to execute in several areas; 57% are still not giving ethics the same weight as business outcomes in performance evaluations, and 54% never formally celebrate acts of ethical leadership.

So what are some ways companies can advance their ethical journey?

Treat culture as a strategy: An ethical culture is not created by accident. It is deliberately crafted at many levels of the organization under the guidance of leaders who hard-wire it into the processes and practices by which business gets done.

To make ethical considerations truly central to operations, ethics and compliance must expand beyond education and communications and encompass the wide variety of corporate practices, including performance appraisals, promotion and recruiting practices.

Seek better alignment and purpose: Ethics and compliance programs serve a distinct purpose, but they cannot adequately fulfill that role unless they help reinforce corporate priorities. They fall short if they operate in isolation from rapidly shifting business needs and conditions.

For this year, spurring growth, strengthening customer service and advancing innovation are key corporate goals for many companies. Ethics and compliance leaders need to find meaningful and visible ways to show how living company values in day-to-day behavior can help deliver on these priorities.

Seek partners beyond your traditional domain: Ethics and compliance leaders can extend their influence and better fulfill their mandate by building deeper partnerships with business units, human resources, corporate communications, and environmental and social responsibility departments. Isolated compliance and ethics functions will never reach the hearts and minds of employees.

Culture as a strategy, fueled by values that are translated into tangible behaviors and embedded in the gears of a business, can create a sustained competitive advantage in the marketplace. Ethical cultures are not created overnight. But ultimately, tomorrow’s winners will be those who invest in systems inspired by values-based culture.

Image credit, travellinglight, via iStockPhoto.com

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9 Responses to “The journey toward values-based cultures — are you on the way?”

  1. Amber says:

    Hello David,

    I believe that the steps you outline here, would lead to improved integration between core values, ethics and leadership. The few companies you mention are leading the way and workers recognize those companies as supportive. However, most companies, as you point out, are focused on bottom line profits and production or outcome. How might we, the workers and the communities in which these companies exist, assist companies to embrace the steps you outline? Currently, it seems to be an adversarial relationship, less training, less appreciation, less pay and benefits, more demands on less workers. Surely, the value of promoting core values, ethics and leadership would produce happier workers, improved customer satisfaction, and bottom line, more profit.

    Thank you,
    Amber

  2. Great article and timely topic. Doing business in global markets and at home here in the U.S. can create unforeseen challenges for ethics and compliance in any organization. The key is to ensure everyone is on the same page and understand the importance. While circumstances can change, your core values are key to manage any challenge or opportunity.

  3. "An ethical culture is not created by accident. It is deliberately crafted at many levels of the organization under the guidance of leaders who hard-wire it into the processes and practices by which business gets done." – That's a brilliant – and quite true – statement, David.

    Doing just that – hard-wiring ethics and values into the daily work – is what many find challenging. We strongly advocate achieving this through the most positive means possible — recognition and appreciation. Our Strategic Recognition approach strongly recommends using the company values as the reasons for recognition, then encouraging all employees at any level to frequently and very specifically recognize their colleagues and peers any time they demonstrate those values in their daily work.

    We (and our clients) have found that doing so makes the values real for employees – not just a plaque on the wall. And the most success is achieved when this is encouraged from the CEO all the way down the ranks.

    I co-authored a book with my CEO on this — how to build a culture of recognition based on your values that lets you proactively manage company culture to what you want and need it to be. The book is Winning with a Culture of Recognition – http://www.recognitionculture.com

  4. Jamie Billingham says:

    Yet another post I wish I had written :-) – Culture as strategy – because it is both the way it ought to be and the way it is… or in the words of several other great blogs – Culture eats strategy. If "culture eats strategy" then one way to address that is to align your preferred culture with.. or as strategy.

    When I work with organizations of any kind.. or individuals for that matter, we always start with values. Core values, means values, end values and their alignment with behaviours all form the foundation of the person and the org. I wonder how may companies use values alignment testing like the Barrett Values Inventory (or something similar) with staff or as John Heinrich suggest, with customers. Can you imagine if they did?

    The book Tribal Leadership does a great exploration and explanation of values based leadership this as does pretty much everything written by Peter Senge. With this kind of dialogue coming up more and more in online spaces I'm really hopeful that the idea will get more leverage. Thanks for the great post!

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  6. Corinne Gregory says:

    The irony is, in the examples set in this post, Zappos, Google, Southwest and others are also achieving financial objectives exactly BECAUSE of the culture they have created. As I discuss in my latest book "It's Not Who You Know, It's How You Treat Them" (www.ItsNotWhoYouKnowItsHowYouTreatThem.com), if you look at these organizations, and many that are consistently in the Fortune 100 list, the companies that are consistently growing are those for whom "values-based culture" — both internal and external — is key. Treating your customers with honesty, integrity, respect and more…and having that reflect in your own employees, is a huge strategic differentiator in a business world that is becoming increasingly rude and "me-centric."

    For more topics related to this, I invite you to visit http://socialsmarts.wordpress.com/category/leader
    I'm glad to see others are making the connection that you can do "right" and still do well.

    - Corinne Gregory http://www.corinnegregory.com

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