We still get our hands stuck in the cookie jar – Mary T. O’Sullivan

By Mary T. O’Sullivan, MSOL

“We do not act rightly because we have virtue or excellence, but we rather have those because we have acted rightly” – Aristotle 384-322 BC

The scandals of the Deep -Water Horizon oil spill and the Wells Fargo account manipulation fraud, among other notable scandals (Enron and WorldComm for example) and the introduction of the Sarbanes-Oxley laws have driven the trend in corporate culture towards a more “value-based” system of ethics and behavior. Studies have shown that when employees are treated fairly and perceive their “leaders” to be legitimate and trustworthy, people pay more attention to values. Most corporations today have adapted the “Values” approach with particular emphasis on integrity and ethics, as well as others such as commitment, excellence, integrity, transparency, etc. Back in the days when Jack Welch ran GE, the GE culture emphasized values as a basic tenet for the GE leadership, as well as its employees. And the consequences for leaders not following a stated GE value hurt the leadership team where it hurts the most, in their annual stock option distribution. For a GE employee, the “GE Way” was a way of life and was readily accepted as fair and legitimate across the corporation.

Other corporate cultures have instituted their own interpretation of “living the values”. In a company we shall call “Big Red”, every employee wears a “values” card on his or her employee badge, and there are many reminders of “values behavior”. However, an investigation into the execution of the values and the rewards, awards and compensation enacted to support values behavior describes a very different scenario when compared to “The GE Way” back when Jack was the CEO. Interestingly, the CEO of Big Red was proven to have a somewhat tarnished “values” reputation, and the resulting consequence was considered inadequate in some ethics quarters.

Talking with some employees and further digging into “The GE Way, along with multiple published sources depict some interesting facts.

1. By withholding large monetary awards, a company can achieve desired behaviors at any level, but specifically among leaders.
2. Anecdotal samplings at all levels at Big Red reveal that employees sense a double standard in values behavior and attendant recompense.
3. Corporate Rewards, Awards, and Compensation tied to values behavior are often considered token offerings by employees, and therefore, not taken very seriously.
4. Incentives or sanctions have less bearing on employee values behavior than “procedural justice” or fairness.
5. There is sometimes a misalignment between what employees want and what companies actually deliver as recognition of values behavior.

Back in 1992, Jack Welch pointed out to his annual gathering of executives, that there were five fewer corporate officers present that year than the previous year. These were the people who had not lived the Jack’s pet value, “Boundaryless” and he detailed the examples publicly. Everyone in the room knew that when Welch used “the lack of boundaryless behavior as the principal reason for a manager’s leaving, the idea really hit home.” Welch knew there had to be a strong connection between desired behavior and a reward, in this case, the reward was the ability to keep one’s job.

“GE Values”: Around the same time as Boundaryless was being introduced, over 5,000 GE Crotonville attendees (GE’s corporate education center), were working to create the GE values statements. This effort took place over a three-year period. Once published, the value statements were subsequently turned into laminated badge cards, to be worn by every employee as a reminder of what GE was all about. By wearing the badge cards, there would be absolutely no doubt regarding what the desired behaviors were. (GE was the company that initiated the concept of every GE employee wearing the value statements with their badges.)

In his 2005 book Winning, Jack Welch makes the statement that the hardest thing he had to do as CEO of GE, was to fire managers who made their numbers, but were not living GE values. Having been a GE employee, and worked for a former GE Aerospace component (spun off in a GE “right sizing”), it was a significant culture shock to work someplace not steeped in the “GE Way”. I observed much inefficiency throughout Big Red; however, the company was very profitable in spite of crippling bureaucracy, a weak bench, and quite a bit of bad behavior. For all the cultural and values issues, the businesses were making their numbers every year. This fact aside, I became curious as to why Big Red was comfortable as abundant fodder for Dilbert cartoons, when the company could be so much more effective, efficient and professional. Nevertheless, it became apparent that as long as the company executives were incentivized based on their numbers, nothing would change. As shown in interviews, employees at all levels reflect similar thoughts. As expected, there was much sensitivity on the subject, and I had to promise to maintain the highest levels of anonymity. People felt the degree of hypocrisy was high, and didn’t want to be perceived as throwing stones, especially when they themselves are well compensated.

So, my conclusion to this little “study” showed that lapses in standards and little or no consequence for bad behavior can be directly tied to the fall of the likes of Enron, WorldCom, Lehman Brothers, Freddy and Fanny, etc. “Recognizing the complexity of ethics is not the same as embracing relativism. That the answer is not always clear or that judgments may be controversial is scarcely license for anything goes”.  According to Jack Welch, by not making values concrete there is a risk of “…values meltdown”. And in Welch’s world, “There will be painful times when you have to say good-bye to people…. who just do not get the mission or live the values.” Big Red issued values cards to all employees. Then, the theory goes, everyone was charged with awareness of the values and behavior expected. As proven numerous studies, employees exercise their own moral compasses when they perceive the leaders are legitimate and trustworthy and when management policies are fair and aligned with their own values. One study’s findings were that “management legitimacy and employee belief that management practices are moral increases rule following behavior.” The findings also show that “employee values… have an important influence upon employee rule adherence.”

The results of my little investigation are not as clear. They leave more questions than answers.

Can a company that is driven by the bottom line achieve true employee inculcation of other important values? How is a “numbers” driven company make rewarding values worthwhile and meaningful to their employees? What is justifiable punishment for a CEO who issues values cards, and apparently steals someone else’s ideas?

Despite seemingly ethical lapses, Big Red is still making great numbers. In fact, there is more direct, non-competitive business pouring in every quarter. And their stock price is still enviable.

And to end with a quote I’ve used several times before; a wise mentor of mine told me that “we can’t teach values; we can only teach behavior”. Interesting, coming from a senior vice president.

“Numbers aren’t the vision; numbers are the product. I never talk about the numbers.” – Jack Welch

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Connect with Mary:

[email protected] – www.encoreexecutivecoaching.com

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Mary T. O’Sullivan, Master of Science, Organizational Leadership, International Coaching Federation Professional Certified Coach, Society of Human Resource Management, “Senior Certified Professional. Graduate Certificate in Executive and Professional Career Coaching, University of Texas at Dallas.

Member, Beta Gamma Sigma, the International Honor Society.

Advanced Studies in Education from Montclair University, SUNY Oswego and Syracuse University.

Mary is also a certified Six Sigma Specialist, Contract Specialist, IPT Leader and holds a Certificate in Essentials of Human Resource Management from SHRM.

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“The Field Guide” to The Leader You Don’t Want to Be

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