I recently spoke to two leading board and management advisors who are advocating a similar message: “listen to the angel on your shoulder and your businesses will profit.”
One of them was Dov Seidman, the ‘guru of good’ and author of How: Why How We Do Anything Means Everything in Business (and in Life) and the founder of LRN, a consulting firm that helps companies “outbehave the competition.” The other was Michael Beer, Harvard Business School professor and author of just published High Commitment, High Performance.
Both agree that the new organizational model is one where a transparent management inspires principled performance and creates a high-integrity work environment. These organizations, they argue, will be more efficient, more productive, and are more sustainable.
These ideas may sound Pollyannish, but both are convinced that organizations should be based on values rather than just value. High ethical standards and principles will outperform organizations who lack these fundamentals. What is new about their message is that it is not about doing the right thing because you should; or doing the right thing to avoid the penalties that come with doing wrong,; or even doing the right thing because there are profits to be made in areas that are considered social goods, such as alternative energy or green products; but simply this: ethical organizations perform better.
At the core of their argument is that a values driven organization motivates people. Employees and management are more committed and interact better. There is complete transparency and communications are streamlined. Compliance becomes integrated and requires less policing. The parts of the organization cooperate because they are committed to the whole.
At the board level, Beer says that directors need to re-frame their purpose from maximizing shareholder value to multi-stakeholders. This entails promoting a corporate culture that provides meaning to what people do and a brand that customers will be proud of. He says the companies he has studied that have outlasted their competitors tend to have a culture that is focused on a common mission.
They both see this as a logical evolution in management style from the old school command and control to an organization built on regulations and compliance (which is where most organizations are today), to one built on mutual trust and values. In these companies, the spirit of the rules are instilled in people and there is an element of self-governance.
Seidman compares what he expects to be a boom in managing for responsibility, integrity, and social good, to the drive for quality in the 1980s. He says at the time, quality was considered a “soft” pursuit, until companies were able to build the mechanisms to measure it and manage for it. He says companies will start to internalize metrics and processes around integrity. They will hire, compensate, and measure for culture. Both cited Southwest Airlines as a company that is moving in this direction, but they say no one is truly there yet.
I can’t say that I’m convinced that companies that turn themselves into goody goodies will outperform those who are known to bend the rules a little now and then. But there are plenty of good lessons in their work, and in these times it does seem like we could all use a little more transparency and integrity in what we do. Nor do I believe that nice guys finish last. I’m just not so sure they finish first either.