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Culture counts: The value (and profitability) of making tough choices with integrity

Ann Ness
Ann Ness

A debate unfolded in Twin Cities newspapers this summer about whether all large companies are “bad,” and small, independently owned companies are “good.”

It is a paradox. Some CEOs must ask themselves if they wouldn’t be happier running the corner hardware store rather than overseeing a large company amid the challenges that have flogged this economy and drained our optimism.

“Is anyone having fun?” a friend asked me at my daughter’s softball game last summer when I asked him how things were going at his financial investment job. “Are you having fun?” he asked balefully. “Is anyone having fun in this economy?”

At my former organization, the ability to hold two opposing ideas in your head is seen as a measure of intelligence, based on the premise that “both/and” opens up a world of possibilities not found in “either/or” binary thinking. That “either/or” approach is evidenced in the debate over whether leaders who value profits over people have created the distinction between companies that are good, and those that are bad.

CEOs value people and profits. This is the paradox they are entrusted to manage.

How do you confront large-scale layoffs without cratering the culture? How do you recapture confidence in this country when tens of thousands of people have lost their jobs through no fault of their own? How can companies create a culture built on “trust,” when so many promises have been broken?

Hubris or humility?

Families, companies, churches and communities all face tough times and either band together or fall apart. Countries, too.  How these challenges are faced defines the cultural coda for the company, family or country. Conceit and hubris create enemies. Competence and humility forge a camaraderie that creates a powerful alloy built on trust, confidence and pride.

Small companies, particularly advertising and PR agencies, weathered 2008 by sharing salary cuts across the board, a move not feasible in large, multinational organizations. My former company did what it could to avoid layoffs in 2008 but reacted to the continued challenge with a 2,000-person layoff in December of 2011.

I don’t know whether the company leaders would turn back the clock on this large-scale layoff, but I do believe they regret its toll on a strong culture envied for its employment stability. Among war correspondents, the adage goes that “the first casualty of war is the truth.” It could be argued that the first casualty of this recession is our corporate cultures and our trust in them. It is a sad, true paradox. What to do?

Brand strategists work with companies to identify their corporate soul. This corporate introspection was very much in vogue in the 2000s, but has become less so today. There was a going-in premise that the corporate “purpose” had to be about more than money, and could not be built on synthetic values. The benefit of this is that it allows companies to know what to say “yes” to and what to say “no” to. The values must be enduring, in good times and bad, just like the favorite people in your life have been when the chips are down.

An interesting thing happens, routinely, when companies embark on brand strategy work. Their employees alternate between the exuberance of “exceptionalism” and the reality of knowing they don’t always live their expectations. Ultimately, though, they shine up their best company Sunday shoes and put on the smiles for the camera. Families are like that, too, except parents don’t lay their kids off when times get tough. That’s why they are society’s cultural “center.”

Deciding what you won’t do or be

Brand strategy requires choices, tough choices. It isn’t just about what you want to be, but also what you won’t do or be. An executive recruiter friend describes how hard it was for her and her business partner to turn down three business leads in 2009 that were beneath their “lowest” marker, but they did. They are happy today that they did. Strategic clarity leads to confidence but not conceit, and leads to that ineffable advantage of a highly focused and engaged work force that puts company on the “high performance” lists.

In workplaces and in families, people understand sacrifice if they understand the reason for it. Employees are willing to follow corporate leadership that provides a vision for a new future, even if it involves tough personal choices, provided that leadership is sharing in the sacrifice and making their decisions based on an established set of values. The corporate brand is not just a set of images for marketing the company; it is an ethos -- one that becomes more important, and more evident, in difficult economic circumstances. Too often in our current economic environment the sacrifice has not been shared, and the specific business decisions made have not followed the ethical “brands” developed by companies when the business climate was more favorable.

“Doing what’s right isn’t the problem,” said Lyndon B. Johnson as he agonized over the Vietnam War. “It’s knowing what’s right.” This is the leadership challenge of our time, to make tough choices, but make them with the integrity that we would hold ourselves to in a good economy.

Value-based leadership is good business

Just as there are economic “corrections” that are weathered with a grimace, surely there are there are social corrections and corporate corrections. Maybe our culture of entitlement needed a correction. In this correction, I hope there is a return to a corporate culture of respect that is grounded in trust, where corporate leadership sets the moral compass and ethical decision-making is required of everyone in the organization.

It has been demonstrated time and time again that this type of value-based leadership is good business. The much noted “best places to work” surveys reveal companies that are not only good places to work, but also profitable. One reason for this is that employees care deeply about their company culture. The most recent USA Today survey found that trust, pride and camaraderie are more important to employees than their salaries. Companies with exceptional workplace environments have three things in common:

1. Employee trust in management.

2. Pride in the company.

3. Camaraderie with colleagues. 

Trust, pride and camaraderie matter more to employees than their pay. Equitable pay is important both practically and ethically, but it’s not as simple as a people-over-profits discussion, because the successful CEO has to deliver profit. It’s the people who work for them who deliver those profits. It is a cultural paradox but, more importantly, it is a cultural truth.

No matter what your role in the company is – CEO, overworked manager, under-paid front line worker, under-employed supervisor: Treat your employees with respect and they will reward you with their loyalty.  Go the long way with your employees, even when the times are tough. Strong, values-based companies outperform those that are not, and the S&P 500 confirms that.

Ann Ness, of Deephaven, is a brand marketing executive.

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Comments (2)

Evidence-free assertions abound

Three quick examples:
"CEOs value people and profits" ...based on what survey? See today's global post on "How Walmart, Chiquita avoid labor oversight in Honduras". Are those people valued?

"Maybe our culture of entitlement needed a correction." What entitlement? Are you referring to the stagnant wages, dissolved pension funds or the displacement of sick leave and vacation days with paid time off experienced by so many in the work force while CEO compensation has exploded? If there is a culture of entitlement I'm not seeing it at my pay grade.

"Strong, values-based companies outperform those that are not, and the S&P 500 confirms that." Given the churn each decade in the companies that make this list are we also to conclude that "most companies eventually go bad?" I think a little more intellectual rigor and less ideological posturing is in order here.

Good piece

I hope companies will start being more loyal to their employees. I won't hold my breath, but there are companies out there that create a culture, not just a work place. Those companies have fierce employee loyalty and often do well (see, Google). But it's going to take a lot to restore faith in the big guys who bailed on the little guys when the pockets got a bit thinner. Workers don't show any loyalty to companies because companies have shown that they don't deserve it, especially after being laid off and finding out that, in fact, profits for their former employer were better than ever because of it. It tells workers that the fat cats are willing to sacrifice only others rather than sacrifice a few extra dollars. Those companies will have troubles finding permanent talent long into the future. The long term result of making jobs temporary is not only reducing morale and worker output, but losing the ability to retain long term talent.