by Greg Duerksen, Chairman & CEO, Kincannon & Reed
Chairman & CEO
In our personal lives, we teach values to our children; we live by them in our communities; we expect those we trust to uphold them; we grow sad or angry when our values are dismissed.
In our work lives, though, we tend to focus on rules. But following rules outside the context of clearly understood values can be fatal to our organizations.
Business leaders need to talk openly about values.
As business leaders, we need to put values before rules. I say this carefully. I say this very carefully because until recently, when one of my business partners suggested I talk about our company values at a meeting, I mentally rolled my eyes at the idea. Not because we didn’t have values, but because I believed that operating according to strongly held values is a given. Strong values are part of who we are. We hire for values. Why do we need to talk about them?
Values provide structure for rules.
Values inform rules and guide how and when we apply them. As longtime senior executive of The Walt Disney Company Roy E. Disney once said, “It’s not hard to make decisions when you know what your values are.”
When an organization fails to assert clear values, what can happen? Wells Fargo, Volkswagen, and United Airlines offer stark examples.
- Wells Fargo pursued a valid business objective — to increase sales — by urging employees to open new accounts without proper customer authorization.
- Volkswagen illegally installed devices in diesel engines that gave false emissions data, reportedly to boost U.S. sales and gain an edge over competitors.
- By rule, airlines have broad discretion to remove passengers from flights. But United Airlines crossed a line when security officers dragged a passenger from a plane, leaving him bloodied.
When an organization leads by values, what is possible? Consider USAA, a financial services institution that serves the American military community. The company’s core values of service, honesty, loyalty, and integrity are prominently displayed, openly discussed, highly prized assets. Guided by these values, USAA earns awards for best-in-class customer service, strong financial performance, and high employee satisfaction, year after year.
Values are a gateway to trust, purpose, and performance.
Shared values create an atmosphere of trust that appears to be good for the bottom line. A recent Harvard Business Review article, The Neuroscience of Trust, says people at high-trust companies report 74 percent less stress, 106 percent more energy at work, 50 percent higher productivity, 13 percent fewer sick days, 76 percent more engagement, 29 percent more life satisfaction, and 40 percent less burnout than those at low-trust companies. These results lead to the higher overall performance of an organization. In the worst case, they can’t hurt.
The way we trust is shifting.
The difficulty is, the way we trust is fundamentally changing. Just a few years ago, we taught our children to never meet anyone from the internet and to never get into a stranger’s car. Now we summon strangers from the internet, so that we can get into their cars. In “Who Can You Trust: How Technology Brought Us Together and Why It Might Drive Us Apart,” author Rachel Botsman writes, “The real disruption going on right now is not technology but the massive trust shift it creates.”
Given this shift, it’s not surprising that as a global population our trust in key institutions is declining. The 2017 Edelman Trust Barometer reports that trust in business, government, non-governmental organizations (NGOs), and media is “in crisis around the world.”
Interestingly, even though trust across key institutions is down overall, business and NGOs remain our most trusted institutions. The Edelman rankings even show increased trust in key industries. Technology ranks highest, and food and beverage ranks second, with 66 percent of respondents saying they trust the food and beverage industry.
What does all of this mean for our organizations?
Business leaders have an opportunity to reclaim trust and instill values.
Business has an opportunity to build trust and become a forum for speaking about and instilling values. In Kincannon & Reed’s experience with organizations around the world, we observe a simple fact. The best way to differentiate an organization in a low-trust environment is to be trustworthy.
- Always tell the truth. Do what you say you are going to do, and always give your stakeholders the facts, even when the facts are inconvenient for you and your organization. A few years ago, when leading the turnaround of a large fertilizer company, I overheard our new head of export sales tell our biggest customer, “Yes, yes, we will load the ship tomorrow,” even when he knew his statement was untrue. When he hung up the phone, we quickly agreed that the best course of action would be to admit our misstatement and delay. We called the customer, explained the facts, and insisted on paying any incremental costs he would incur. Our customer was indeed irritated, but a few days later, he called to say how impressed he was with our company’s new approach and added that as long as we kept it up we would have his trust and more business. Which we did.
- Eliminate risk. Choose to share the risk of a transaction. Indigo Ag Inc., is dramatically reducing their buyers’ risk with a price premium. The company promises that U.S. farmers who plant new Indigo seed products will receive a per-bushel price premium at next year’s harvest — helping make farmers more profitable in return for adopting the new products.
- Do the right thing. This is where we start at Kincannon & Reed. We do the right thing. We do it for our customers, for our colleagues, and for our company. Restating this core value, and reinforcing it, even with people who already share it, is liberating. It tells our people the company always has their back when they make a decision.
Related to doing the right thing, we have one rule: whenever Kincannon & Reed team members make a decision, we need to be able to pass what we call the “look-‘em-in-the-eye test” when explaining it. If we can look a client or candidate or colleague in the eye and support the integrity of our decision, we can be confident the decision is a good one. At a minimum, we know our intentions are good. The worst that will happen is that our client or candidate or colleague will point out something we may have overlooked, and that will lead to a constructive discussion, and together we’ll arrive at a better decision or solution.
Put values first.
Ultimately the question we business leaders should be asking is not, “How can we achieve the central purpose of our organization?” but rather, “How can we achieve our goals in the right way?” Whatever the purpose — earn a profit, attract investors, advance a cause, increase productivity, win customers — we can succeed through deception and deceit, or we can succeed by making our organizations trustworthy.
Values before rules. It is indeed liberating