The Challenge of Relative Values

By: Sheila Moorcroft

Two new research studies examine on the one hand personal values among young adults on the other the realities of corporate values and culture. Both have some harsh truths to tell. The two forms of ‘relative values’ these studies discuss, have implications for strategic flexibility and devolved decision making for market success. Coupled with greater transparency they may also mean that companies need to take a long hard look at their corporate cultures.

What is changing?

The first study looks at the current generation of young American adults – 18-23 year olds – and indicates that they are facing an even more difficult transition to adulthood than previous generations. Not just that transition is delayed and protracted, but that many of them are confused, disconnected, distrustful and disempowered, and show few clear moral and ethical boundaries. While major issues such as murder or rape are seen as clearly wrong, cheating in exams or on partners, driving while drunk are seen more as issues of personal choice or about whether someone is likely to be caught, than right and wrong per se.

The second explores the realities of values based management, among major companies where there is a belief among senior executives that they have an open, caring, ethical culture. Extensive research among American employees argues differently. The study divided companies into three categories: command and control, or blind obedience – about 43%; informed acquiescence – about 54%; and self-governance – about 3%. Tolerance, in the form of non-reporting, of unethical behaviour was far higher among companies in the first as opposed to the third category. Uptake of good ideas from staff was conversely far higher in the third rather than the first category.

Why is this important?

Doing what is right, over and above compliance, is seen as increasingly important for success – as witnessed by the continued expansion of Corporate Social Responsibility reporting.  Consumers regularly say that they take ethical issues into consideration in making choices and brands which take an overtly ethical stance are seen as more likely to succeed.  But if young employees no longer have their own clear moral compasses, that clarity will need to come from elsewhere.

As the demands on business get ever more complex and the need for greater strategic flexibility and more devolved decision making grow in order to complete successfully, so the need for a clear and shared set of values, by which employees can make those decisions, grows. Just as governments cannot legislate or regulate for every last eventuality, nor can or should companies attempt to have rules for everything. They need to provide clear principles and values instead. They also need to walk the talk. Inconsistency and hypocrisy on ethical issues are likely to be treated increasingly harshly by consumers and employees alike.

Clear leadership is part of this equation, not a million and one rules. UBS, a Swiss bank, hit recently by a rogue trader for $2.3 billion losses, and during the financial crisis for $50 billion of toxic high risk assets, is perhaps a case in point. It sent a now notorious 40-page dress code memo to staff about a year ago, in an attempt to improve its image, detailing acceptable length of skirts and number of jewels for women, no hair dye and length of fingernails for men. It appears to have got its priorities very wrong.

The new Chairman at the BBC Trust on the other hand has taken a strong lead on top people’s pay within the organisation, setting new limits and reducing top executives’ pay both in real terms and in relative terms compared with the median wage, clearly demonstrating greater emphasis on equity and public interest.

There would seem to be a long way to go in terms of generating truly values based cultures, today. If younger generations also have far less clarity about ethical and moral codes, those values will need to be even clearer without being dictatorial in future: a difficult, but essential, line to tread.

By Sheila Moorcroft