Leadership Effectiveness: Values and Financial Value

Leadership Effectiveness: Values and Financial ValueIt is great that many companies have values posted on their websites or on their walls, but are leaders talking about them? We all know what just happened at Wells Fargo. If everyone was talking about values (from CEO on down), could they have possibly opened up accounts about which the customer did not know, did not need, and did not want—and for which customers had to pay fees? No, they couldn’t, not if they were having robust discussions about their “Values,” “Ethics” and “What’s right for customers.”

Fallout from this values breach: as a result of not ensuring that their values are incorporated as behavioral guides from CEO to front line, the CEO of Wells Fargo has been pushed out and the company is exposed to enormous fines imposed by its regulators as well as to substantial civil litigation. All of that on top of important damage to its reputation.

Were Volkswagen values discussed throughout the company (especially their values of “Responsibility and Sustainability” which they describe this way: “We are responsible for people, the economy, society and the environment”) when VW cars were manufactured with systems intended to override emissions standards? Obviously, that was not a “responsible” action to take on behalf of “people, the economy, society and the environment.”

Let’s turn to some better news. This is an excerpt from the Novo Nordisk Way:

  • “Growing our business and delivering competitive financial results is what allows us to help patients live better lives, offer an attractive return to our shareholders and contribute to our communities.”
  • “We never compromise on quality and business ethics.”
  • “Our business philosophy is one of balancing financial, social and environmental considerations – we call it ‘The Triple Bottom Line’.”
  • “We are open and honest, ambitious and accountable, and treat everyone with respect.”

The CEO of this company, Lars Sorensen, is at the very top of HBR’s list of “The Best Performing CEOs in the World” (November 2015 issue). The Novo Nordisk Way is a set of “guiding principles that underpins every decision we make.” This has translated to stellar financial performance for the company. HBR, in compiling its list of the best performing CEOs, in the past looked at only financial performance. The wise people at HBR realized that success is only partly defined by what is achieved. It is also defined by how it is achieved. While the preponderance of a ranking (80%) is still financial*, HBR rankings now factor in performance factors called ESG (environment, social, governance). It appears that Novo Nordisk’s emphasis on the “Way” has served them well.

On another positive note…how can you not like the Aflac® duck? Goofy and funny…guaranteed to bring a smile. Their CEO, Daniel Amos, also made the HBR list. In an article in Ethisphere (Pretty Is as Pretty Does), a corporate EVP writes about how the company hires in support of their values and continues to reinforce them throughout an employee’s relationship with Aflac. New employees not only receive a plush duck, but also a leather-bound copy of “The Aflac Way,” which to Aflac is “… the value of teamwork, respect, fairness, honesty, integrity, ethics and responsibility. Even after nearly 60 years, its teachings remain the foundation of how we at Aflac treat each other and how we treat our customers.”

Are you leading quality conversations about values in your organization? Do people view them as a guide to both every day and extraordinary decisions? What do you need to do to ensure that all employees know, buy into, and live your organization’s values?

*The country-adjusted total shareholder return; the industry-adjusted total shareholder return; and change in market capitalization, measured in inflation-adjusted U.S. dollars.

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