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Values & principles are your organisation's DNA: Get to know them

by Dr Simon Longstaff AO
20 October 2016
BUSINESS AND PROFESSIONAL ETHICS
Simon-Longstaff.pngI recall sitting in an employee meeting where Grant King, founding CEO of Origin Energy, made the deceptively simple observation: successful companies make more ‘good’ decisions than ‘bad’ ones and do more things that are ‘right’ than ‘wrong’. At one level this seems obvious. But how do employees know what makes a decision ‘good’ or ‘bad’?
 
The answer to this is found in values and principles. Together these form the bedrock for all decisions and therefore the foundation for the culture and conduct of organisations.
 
It is important to understand companies will only have a stable platform for performance if they have both values and principles. To build an organisation on just one of these pillars is to risk inherent instability.
 
Values are an expression of what we think to be good. They capture the essence of what we should choose if available. So, if one of a company’s core values is trust, then it follows that the company (through its directors and employees) should choose those things that build, display and support trust.

 

Values and principles form the bedrock for all decisions and therefore the foundation for the culture and conduct of organisations.

 
If, on the other hand, a company claims to value trust but in practice only ever acts in a way that is cunning, then we might reasonably conclude that the company is insincere or profoundly irrational. In summary, values determine the direction a company should take whenever there is a fork in the road.
 
Principles are an expression of what we think to be ‘right’. Their task is to shape the means by which we obtain the things that are good. If values tell us where to go, principles tell us how to get there.
 
Examples of principles include things like: ‘do unto others as you would have them do unto you’, ‘do unto others before they do it to you’, ‘only do those things you would be proud to do in the full light of day’, ‘don’t get caught’, ‘treat every customer as if they are your friend’, ‘treat every customer as sheep to be fleeced’ and so on.
 
Together, values and principles operate as the two strands of ‘organisational DNA’. They shape our choices and therefore the organisations we make. If the values and principles are changed then the organisation changes with them. They are the most powerful determinant of culture.

Developing an ethical framework of values and principles

 
There are many values and principles from which a company might choose. In order to make a proper selection, a company needs to understand its defining purpose (the reason that it exists) and the conditions under which it is likely to prosper.
 
The best ethical frameworks grow out of the organisation. A useful approach is to establish a steering committee drawn from different parts of the organisation to prepare an ‘exposure draft’. This can then be the basis for broad consultation across the organisation – giving rise to a final version.
 
In the beginning, it is important to distinguish between values and principles. Later, the distinctions can be relaxed in order to find a form of words that resonate with the people who have to apply the framework.
 
A good framework will be:
  • Practical – able to be applied in practice and with consistency
  • Authentic – it will ‘ring true’
  • Stable – will not change much (in its essence) over the long term
  • Understandable – by all of those required to apply it in practice
 Beyond this, each company should feel free to choose what works best for it. There is no ideal form – they can be short, they can be long, inspiring or dull. In this area, context matters.
 
Dr Simon Longstaff AO is Executive Director of The Ethics Centre.
 
If your company needs help putting together your statement of values and principles - and with applying it - contact The Ethics Centre's Advice and Education team on +61 2 8267 5746 or via email.


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