Shared Values

Not realising the importance of shared values - these are what bind the staff together and help to maintain consistency throughout the organisation. This puts the "fire in the belly", ie a motivation tool and is what holds staff together with one purpose, one set of values, one set of principles. For example,

- Proctor & Gamble have values that underscore the importance of leadership, ownership, integrity, passion for winning and trust

- IBM has its values based around the customer, world-improving innovation, respect and responsibility. IBM

"...uses these values as connective tissue, that has longevity. If people can connected and have pride in their entity's success, they will do what is important to IBM..."

Sam Palmisano(IBM) as quoted by Rosabeth Moss Kanter, 2008

Furthermore,

"...Values aroused aspirations to increase the company's positive impact on the world, and that is worth more to many people than increases in compensation..."

Rosabeth Moss Kanter, 2008

. Not realizing that staff are inclined to be more creative when the organisation's values stress helping the community. For example, Banco Real (a Brazilian arm of a European bank)

"...put social and environmental responsibility at the core of its search for differentiation. The result was a spate of new financial products, including consumer loans for green projects (such as converting autos or houses), micro-finance for poor communities, and the first carbon credit trading in the region.......also chose suppliers with high environmental and social standards and even helped them improve their practices. By 2007, it was enjoying the fruits of its values; it more than doubled its profitability, and had grown in size to become the third largest bank in Brazil..."

Rosabeth Moss Kanter, 2008

A negative example of shared values is the Australian financial industry. During the 2016 Australian election, governance issues around the 4 major Australian banks dominated political discussion. Then in late 2017 a Royal Commission was establish to investigate the behaviours in the Australian financial services industry, eg many instances of poor advice, market manipulation, questionable sales practice, etc, ie the need for a Royal Commission to look behind many instances of poor advice, market manipulation and questionable sales practice, especially in insurance. This was based on the conflict of interests inherent in the industry as shown by commissions, bonuses, incentives and a sales-driven culture to act in the interests of the bank rather than the customers'. This was made more acute by vertical integration in the industry that resulted in cross-selling of products between insurance, wealth management and banking and the type of pressure on staff to meet monthly targets by achieving specific performance indicators, etc.

The focus on profit at the expense of values can placed at risk the whole social licence, good name and reputation of an organisation. Some financial incentives encourage behaviour which is not in the interests of the customer.

When setting the matrix for performance evaluation, they needs to be and explicit statement of attitude that the customer comes first.

NB Compliance can be more easily measured than culture. Surveillance is a form of compliance.

What measures do you use to measure cultural performance? What might be good performance one stakeholder, like shareholders, may not be the best for another, like customers. For example, short-term profit focus may be good for the shareholders' dividend but not benefit the customer in the long term.

Linked with culture are behaviours, values and ethics. These banks encourage a shared set of values that resulted in unethical behaviour!!!!!

Developing the right frameworks and processes (including criteria) can help create the right environment around items like selecting talent, remuneration (including incentives), etc and can help develop a better culture.

The banks' approach is "explained" or justify by Chairmen of 2 of the banks involved

"...remuneration should encourage long-term thinking, for the benefit of the bank, all the banks stakeholders which includes customers, the society, and the staff...... the board and management must always backup pay and incentives with the right messages......profit is important......if we don't make the sort of earnings we want, there goes the share price...... it's that constant trade off all the time in business between short-term performance and long-term......owe a duty of care to the customer..."

David Gonski & Lindsay Maxsted as quoted by Joanna Grey 2016

Need to be able to handle conflicts of interest between different stakeholders. As the banks and their staff have more information than their customers, they need to realise they have a duty of care to the customer rather than take advantage of the imbalance in the relationship.

 

 

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