“If we are to go forward, we must go back and rediscover those precious values — that all reality hinges on moral foundations and that all reality has spiritual control”

— Martin Luther King, Jr

This is the era of economics. Practically everything, including company performance is me­asured using economic indices. Sustainability is the buzzword in business, yet wh­at comes to our mind when we talk about sustainability are profits, share value, market capitalisation. In the measurement of numbers, what we sometimes forget is the ethos of the organisation. What helps a company survive in the long run are its values and culture. The origin of an organisation lies in the vision of its founder. The greatness of Infosys does not lie in its market capitalisation but rooted in its values. From the time that it started as a fledgling company to now, it is an organisation that has lived its values and its future generations have imbibed those values. Blue Dart is another example of promoters laying down the foundations of a value-based culture. When the company was still green behind the ears, the promoters thought it important to seek the best professional services and, therefore, appointed the best in class accounting and consulting firms to guide them.

The value system and culture of an organisation is the direct reflection of the consciousness of its leaders. The leaders’ values define the culture of an organisation and culture defines the organisation’s competitive advantage.

We have all read of the collapse of Arthur Andersen. To understand Andersen, one must step back into history. There is no doubt that the firm at one time had the reputation of being the best and delivering the best services to its clients. It was a firm founded on values of integrity, stewardship and personal growth. Arthur Andersen, one of the founders of the firm, followed the principle of “Think Straight, Talk Str­aight” while dealing with cl­ients. He evolved business standards so that all clients across the world received the same quality of work and the same approach to work. To achieve this consistency, he invested in training. Andersen’s logo of the mahogany ‘doors’ chosen by Leonard Spacek, the CEO after Arthur Anderson’s death, represented the firm’s values of confidentiality, privacy, security, and orderliness. The logo was meant to assure the client and the public that Arthur Andersen could be trusted and that the job assigned to it would be kept confidential and secure. The dotcom boom brought in a new set of leaders with a new set of values. The powers-that-be at Chicago believed that the mahogany doors had outlived their life and that Arthur was no longer relevant. They brought in a new logo, an orange ball and changed the firm’s name to Andersen. With that one act the values and ethos of the firm that Arthur Andersen had so diligently built were thrown out of the window.

The Tylenol case of Johnson and Johnson is an example of how a company had a strong ethical value system in place and responded to crisis in a manner that earned it the respect of employees and customers across the globe. Tylenol was one of the most successful over-the-counter pr­oduct produced in the US. Half a dozen pharmacies in the Chicago area were supplied with cyanide-laced capsules packaged as Tylenol. The capsules led to the death of seven people and the company was left to explain to the world what had gone wrong with its trusted product. It is said that then chairman of Johnson and Johnson, John Burke, laid down two basic principles to the team dealing with the crisis — “how do we protect people?” and “how do we save this product.” A national withdrawal of every capsule was ordered by the company; by doing that the company demonstrated that they were not willing to take a risk with public safety even if it cost the company millions of dollars. After two years of inquiry, when nothing was found, this drug was re-launched in the market and even today is a market leader.

Every organisation needs to define its values; culture then is built around those values. Values are not simply a set of statements printed on posters and appearing as computer screensavers. Values are what an organisation stands for and believes in. Values are the soul, culture is the outward demonstration of values that exist in the organisation. It is important to make a distinction between values and culture. While the basic values of an organisation remain the same, culture must evolve and keep pace with the changing environment. A company’s ability to build and maintain an ethical corporate culture is the key to attraction, retention and productivity of employees.

The leadership of organisations must brainstorm and carefully choose the core values that it wants the company to live by. Values then must be communicated across the board and efforts made to ensure that employees not only understand them, but also prepare to live by them. As Steve Jobs, the co-founder of Apple, put it, “The only thing that works is management by values. Find people who are competent and really bright, but more importantly, people who care exactly about the same things you care about.”

(The writer is deputy CEO

and head, advisory services

of KPMG, India)