A Publication of Lighthouse Consulting Services

But they're not interested only in soft, fuzzy, and intangible benefits. They need to see results. And in at least ten ways, they're finding that sound ethics can have practical impact on the bottom line.

1. Shared values build trust. Any company benefits from a high level of trust among employees. That trust translates into faster decisions with less churning. Since decision-making is time-consuming and costly, that means immediate savings to the bottom line. Just as important, however, is the quality of the decisions. In a company that has come together around a common set of values, managers are more apt to react in the same way. A shared-values company, in other words, reflects a consistency in response. Companies without that consistency can find themselves challenged by debilitating levels of suspicion, envy, and back-stabbing.

2. Consistency leads to predictability in planning. Shared-values companies are more able to do serious strategic planning—and have some certainty that the plan will be carried out. The clearer the sense of predictability based on shared values, the clearer the ability of executives to prepare accurate forecasts and implement strategies based upon them—especially across the far-flung collection of business units that makes up the modern multinational. Absent such predictability, what confidence is there that top management will not suddenly shift gears and dismiss months of careful thinking? In that case, why bother to think carefully?

3. Predictability is essential for crisis management. Having common expectations about decision making, shared-values companies are able to react more quickly to severe situations and sudden emergencies. They can respond rapidly, without having every move delayed while it is checked back with headquarters. If the values are sufficiently explicit, managers will trust in right doing rather than stonewalling—and will know that they will be rewarded for so doing. By contrast, managers in firms in which the values are foggy or absent often learn the tough lesson that, in times of crisis, no good deed goes unpunished.

4. Confidence in such rewards builds loyalty. A culture of shared values creates the basis for a flattened management structure, giving increased autonomy to managers in the field. Shared-values companies can deliver more power to more people, thereby increasing the pace of business, the allegiance and commitment of those with a stake in decision making, and the likelihood of developing excellent future leaders within the company's own ranks. As firms become increasingly global, there is clear benefit to promoting top executives from various parts of the world. Such a practice will be successful in the degree to which the promoted executives' values are aligned with those at headquarters and widely shared.

5. Companies are as good as their people. Developing clear statements of expectations is vital to successful hiring and promotion. Those expectations should include a sense of character shaped by the core values of honesty, responsibility, respect, fairness, and compassion. Those five values, which our Institute's research suggests are cross-cultural and universal, reflect themselves in the moral integrity of leadership. By developing screens for employment and promotion based on core values (as well as on competence and performance), human resource managers can have greater confidence that employees from different backgrounds will fit well into the corporate culture. Without those screens, any firm risks building a base of bright, vigorous, smooth-talking, hard-working individuals who, lacking a moral compass, drive up the levels of employee turnover, absenteeism, cynicism, and dishonesty.

6. Consumers care about values. Increasingly, customers are holding companies to account for their products and services. A shared-values company sees no difference between its own values and those of its customers. Result: Smoother handling of problems related to damaged products, returns, wrong labeling, missent orders, conflicts over sales territories, and so forth. Such companies put the customer first not only to improve the sales record but in recognition that the firm and its customers are one in values, attitudes, and expectations. Managers without that sense of shared values can easily imagine that the customers are out to "get" them—and that, in defense, they better "get" the customers first.

(Continued on page 3)

Lighthouse Consulting Services 
3130 Wilshire Blvd., Suite 550, Santa Monica, CA 90403 (310) 453-6556