Will the scathing report from the Royal Commission into misconduct in the Australian banking industry be the wake-up call for corporate Australia to focus on their values and culture?
“Changing culture and governance” is one of the recommendations in the final report and includes suggestions for all financial services entities to take proper steps to:
- Assess the entity’s culture and its governance;
- Identify any problems with that culture and governance;
- Deal with those problems; and
- Determine whether the changes it has made have been effective.
As Graeme Samuel AC, co-author of the APRA Prudential Inquiry (called “required reading for every board member in Australia” by then treasurer Scott Morrison) into the culture, governance and accountability of the Commonwealth Bank of Australia and Professorial Fellow in the Monash Business School, wrote in the Financial Review, “Corporate Australia generally should study the governance and culture sections of both reports—they contain valuable insights and lessons for everyone responsible for the governance of our business organisations.” In both reports, recommendations urge businesses to ask, “Should I do this” rather than “Can I do this” to operate beyond reproach.
While misconduct exposed by the report was outrageous and those in charge continue to deal with the loss of reputation and position (deservedly so), it wasn’t the first public warning businesses could learn from. Last year, the Australian Cricket team abandoned its core values and resorted to ball tampering in an effort to “win at all costs.” If they would have adhered to their core values, the scandal would have never happened—it’s quite clear that cheating to win was a violation of their values.
So, what are the steps you must take to build a market leading Culture & Core Values?
- Define Your Core Values: The Foundation of an Organisation’s Culture
- Core Values Tests
- Live Your Core Values
Define your Core Values: the foundation of an organisation’s culture
Whether you’re a financial institution, a cricket team or leader of any other organisation, you must define a set of core values that all members of your organisation will live by every single day. Core values that accurately reflect the nuances of your organisation’s personality are key to maintaining a cohesive culture. A commitment to a clearly defined set of core values helps staff, management and leadership teams know how to behave and helps guide decision-making. Core values also influence how people are expected to interact with one another and their work ethic.
Many firms spend thousands of dollars and many months trying to develop their core values, but the approach I prefer is from Jim Collins that directs you to discover your core values through an exercise called “The Mars Group.”
Core Values tests
In order to test the effectiveness of your core values on your company culture and asses if they are alive and fully functioning, ask yourself these three questions from the Core Values Test:
- Would you fire a team member who consistently or blatantly violated one of your core values? This was the very question the American television station ABC had to answer when comedian Roseanne Barr, star of their flagship show “Roseanne,” made a racist attack on Twitter. ABC chose to fiercely defend its core values when it fired her for blatant disregard for their values of “inclusiveness and tolerance.”
- Would your company be willing to lose money or clients to maintain the integrity of a core value? At the time, the “Roseanne” show was expected to bring in $100 million in advertising revenue. With the show’s namesake and star fired, this revenue was in danger. Even understanding the risk to revenue, ABC leadership chose to fire her anyway.
- Is this core value alive among your team today (can you identify the name of a team member that is living out each of your core values in an energetic and obvious manner)?
While Roseanne failed to live out the company’s core values, the president of ABC Entertainment Channing Dungey did when he stated, “Roseanne’s Twitter statement is abhorrent, repugnant and inconsistent with our values, and we have decided to cancel her show.”
Live your Core Values – every day
Once defined, values will do nothing if they just live on your wall. All the people in your organisation need to embrace the core values. They should be integrated into every system from the recruiting and hiring process to performance evaluations to everyday management and decision-making. Since total commitment to values is easier said than done, here are eight ways to keep your values alive in your organisation:
- Storytelling: Identify a story that represents each value. Many great leaders teach through storytelling because stories can easily illustrate a concept that might be difficult to explain on its own. Stories help people remember a value and make it relevant.
- Recruitment and Selection: Interview questions and assessments should evaluate if a candidate aligns with your core values. The online shoe and clothing retailer Zappos established 10 core company values. To ensure any prospective employee is a cultural fit, they conduct two interviews: one to assess the candidate’s fit for the job and another that evaluates cultural fit with questions that align with the company’s values.
- Orientation and Company Handbook: Every company’s on-boarding protocol needs to emphasise its core values. Many companies organise their employee orientation around teaching the core values. It’s also a good idea to organise your employee manual into sections that emphasise each core value.
- Performance Appraisal and Handbooks: To truly live your company values, ensure that they provide the framework to evaluate employee performance.
- Recognition and Reward: Another way to keep values alive in your company is to organize recognition and reward programs around your core values.
- Newsletters/Employee Communications: With any form of employee communication, leverage the power of words and phrases from your values. You can incorporate stories that highlight people living the core values and the subsequent benefits to your company for doing so.
- Themes: Set up different initiatives to highlight one of your core values as a theme for the day, month or quarter. The Ritz-Carlton selects one “rule” to highlight every day throughout its global chain. By integrating core values into other company-wide initiatives, employees are more apt to keep values top of mind.
- Everyday Management: Leadership teams who take every opportunity to draw attention to values during everyday operations are more effective at getting the core values to be an integral part of their organisation’s success. Whenever possible, tie a decision, praise/reprimand or customer issue to a core value. This repetition is a powerful way to model taking action based on core values.
When I work with businesses ready to scale, one of the first things we tackle is the Core Purpose and Core Values of the company, because these set the foundation for business success.
I hope you have enjoyed these insights. Have a great week, and stay growth-focused! Interested in hearing more? Call me on +61 408 748 980 or email me at [email protected]
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- Schedule a call with Gazelles Scaling Up Coach and founder and chief adviser of Scale Up Growth Partners, Jonathan Herps.
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Scale Up Growth Partners is an Australian Business Advisory and Coaching firm that works with mid-market growth companies with revenue between $1M and $100M. We equip growth company leaders and executive teams with the knowledge and tools they need to scale their businesses. Scale Up Growth Partners purpose is to Grow Remarkable Leaders and Companies.