Corporate Values & Employee Cynicism

Sunday, September 16 2007 @ 08:55 PDT

Contributed by: Jason Hackwith

In an article called Corporate Values & Employee Cynicism,  Martha Lagace with HBS Working Knowledge interviewed Sandra Cha, an assistant professor at Desautels Faculty of Management, McGill University; and Amy C. Edmondson, novartis professor of leadership & management at Harvard Business School, about the dangers of business leaders not following their own declared corporate values.

They do have several good points, but as often happens with contemporary writing about business practices, it's hard not to feel that some of their arguments are either so obvious as to invite incredulity, or so cynical in themselves as to invite pity.  For example, Cha and Edmondson give Maverick Advertising, an advertising firm located in London.  Maverick employees stated that one of the best things about their company were its values, but said that the worst thing about their company was that their CEO had been breaching the values he himself had developed for the company.

Cha & Edmondson were "surprised" at the cynicism they found in Maverick's employees, but immediately proceed in excusing the actions of the CEO by basically saying that employees had interpreted the values in a way that the CEO had not anticipated.  Cha & Edmondson referred to this as "value expansion," and then go on to illustrate this argument with the actions of former Hewlett-Packard CEO Carly Fiorina in 2001-2002:

HP is famous for its values, known as the "HP Way." Employees saw the actions of former CEO Carly Fiorina in 2001-2002, including large-scale layoffs and the HP-Compaq merger, as violating HP values, which they understood as revolving around mutual respect and the company as a family. Focusing on a different element of the HP Way, Fiorina saw her actions as consistent with the HP value of seizing opportunities.

The problem I have with this analysis is that it assumes that employee understanding of corporate values is always relative.  Cha & Edmondson seem to be saying that nobody's ever wrong, the CEOs just interpreted the values statements differently.  They couldn't possibly be hypcritical, they just appeared that way to their employees.  This seems to be a common theme in contemporary business management theory: right & wrong don't matter as long as you can twist your corporate values to fit your ends.  Do what you want, just come up with some way to justify it afterward when everything hits the fan.  In HP's case, thousands lost their jobs, HP's performance suffered, and to top everything off, Fiorina received a $21 million severance package when she was ultimately terminated... but of course, there's nothing wrong with that, is there?

Cha & Edmondson go on to make some recommendations to business leaders to "avoid being seen as hypocritical."  Note that distinction: they don't just say, "don't be hypocritical," they are more concerned with being "seen" as hypocritical by employees.  Again, the assumption is made that the employee's analysis of the situation is purely relative and the business leader can't possibly be wrong.  They even go so far as to blame the employees at Maverick:

The problems at Maverick began with employees' interpretations of the corporate values, which were broader than the CEO intended, causing them to interpret some of his actions as breaching the values.

Oh, please.  An employee actually interpreted a CEO's statements about diversity literally?  Come on.  It must be the employees' fault.  What a bunch of whiners.  "They just all think I'm hypocritical because I don't practice what I preach."  Who would ever believe a CEO actually means what he says?  Which is exactly my point.

Then, Cha & Edmondson make a simply incredible statement:

Hypocrisy may be unavoidable for leaders in the modern world.

What a profoundly awful thing to say.  That statement just drips with everything that is wrong in what passes for corporate leadership these days.  The lonely leader at the top: never wrong, just always misunderstood.  If profitability is the number one value of a company—if the leaders of a company are willing to do anything to make money, no matter who they steps on along the way or how many promises they break—there's something wrong with those leaders.  Period.  People are generally not stupid.  Unethical practices may produce short term gains, but when people start seeing through the veneer to the greed and lies beneath, the company will ultimately suffer.

In the same way, awful service may be cheaper in the short term, but people will only stand for so much before they go somewhere else.  Treating your employees like dirt to increase profits while giving your leaders millions in severance pay may make sense to some business leaders who value profits more than their people, but in the end they'll start losing their employees—as HP did with the remarkable exodus of former Compaq leaders that followed shortly thereafter.

Cha & Edmondson do make several good points; namely that care should be given to throughly explain actions that may be construed as hypocritical, and that there should be an open line of communication so that employees feel that they can express negative views about leaders.  Clear communication is always good, and if genuine reasons exist for a business leader to have to make tough decisions, it's always better to be generous in explanation.

All of this concern with appearance without a thorough look at potential underlying exigencies is typical of modern corporate thinking.  Instead of fixing a problem, cover it up, paint it up so it's pretty until people forget about it... or blame your employees for thinking that you should practice what you preach.

I think Google has it right with their motto: "Do no evil."  They may not always live up to that standard, but they try harder than most companies I know... and they make billions.  Connection?  Of course not, it has to be something else, doesn't it?  Otherwise, nine tenths of what passes for "corporate leadership" would be revealed for being unethical.

It all comes down to action.  Don't want to appear unethical?  Don't prostitute yourself to gain profits, but weigh difficult decisions first and foremost in terms of right and wrong instead of merely profit and loss.

Don't want to appear greedy?  Pay a generous wage and don't shell out millions in severance pay and other goodies to CEOs and other corporate leaders while your employees scrape by on 2%-5% of what the CEO makes.

Don't want to appear to hold profits higher than the wellbeing of your employees?  Take care of your people.  Treat your employees for the vastly important resources they are, and don't throw them away just to gain a short-term increase in profits so that you can get more severance pay when you leave.

Don't want to appear heartless?  Take the time to genuinely care—about your employees, about their families, about their circumstances, about your customers and their needs.

Don't want to appear hypocritical?  Don't be a hypocrite.

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