Getting caught lost and unprepared, if not naked and afraid
You probably remember some headline-grabbing stories of companies suddenly faced with crisis. Companies that have come under fire in recent times include the following (and we don’t mean to purposely shame these ones, as the list could be lengthened almost exponentially):
Volkswagen and diesel engine emissions: The German-based automaker was caught altering emission-control devices to reduce pollution on millions of its diesel-powered products so they would “defeat” legally required standards and increase power and MPG fuel consumption — all the while touting its green credentials and deep respect for the environment. Top executives ultimately were terminated, and billions in fines were imposed.
Target Roofing & Sheet Metal and COVID-19 relief funds: It’s not just the big dogs who do this stuff, though they do get the most media attention. The owner of this small business in Fort Myers, Florida, was charged with fraudulently diverting $2 million in government funds intended to provide relief for his company’s employees hurt by the COVID-19 pandemic and buying himself a flashy new $700,000 40-foot boat, among other purchases.
The Hall of Shame Fame list could include episodes involving companies of every size in all industries in all countries, from day-care centers to giant investment firms. Faced with unexpected events, unprepared companies often react as though they’re in total disarray, the classic deer caught in the headlights. When a company lacks stated values that everybody subscribes to, the interpretation of important issues is left up to anyone and everyone. The company is likely to find itself speaking with many voices and going in several directions, resulting in confused employees, unhappy customers, an angry public, disappointed investors, and sharp-eyed law enforcement officials.
A values statement is a summary of the beliefs and principles that guide your company’s activities.
Clearly stated values can help your company react quickly and decisively when the unexpected strikes.
Everybody in your company must understand and embrace your company values.
Understanding the value of having values
A clear values statement can be most important when the unexpected happens.
Here are two current examples of firms, one who saw the light and reaped the rewards by focusing on issues beyond short-term bottom-line numbers … and one that was apparently blinded by the light:
San Francisco-based Salesforce.com, founded in 1999, is the global leader in the customer relationship management (CRM) software industry. Under the guidance of its founder Marc Benioff, in 2000 the firm established a model for philanthropy it called “1-1-1.” This stands for the company’s giving of 1 percent of its products, 1 percent of its equity, and 1 percent of its employees’ time annually to communities and nonprofit organizations far and wide. Given the size of Salesforce, this has been significant (the firm has more than 65,000 employees and a market capitalization of more than $250 billion — 2021 figures). Its staff has donated more than five million hours of volunteer work, and nearly half a billion dollars in grants have gone to more than 40,000 organizational beneficiaries. The www.greatplacetowork.com site shows that more than 90 percent of the firm’s employees rate it highly, compared to a national average of 59 percent. Given the competition for talent in this industry, this is a significant competitive advantage for Salesforce and its leadership team.
Equifax is one of the world’s largest credit reporting agencies, with more than 10,000 employees and more than $3 billion in annual revenue. Chances are your credit worthiness was scored and reported on by the firm when you last applied for a credit card, a mortgage, or some other form of financial debt. But in September 2017, it had a problem: Equifax reported that nearly 143 million Americans had their personal data exposed in a massive cybersecurity hack by some unknown miscreants. A month later, it announced the number of compromised accounts was even larger. And then the following March, it increased that number yet again — data that included names, Social Security numbers, birth dates, addresses, even driver’s license identifiers. The firm’s CEO said, “Equifax will not be defined by this incident, but rather by how we respond.” Shortly thereafter, the firm had to acknowledge it had known about the breach months prior to its initial public reporting, and several of its executives had sold shares in the firm during the interval.Trying to repair the damage, Equifax offered no-fee credit monitoring — but only if victims waived their right to sue and submitted a complicated form. Under pressure from outraged customers, it also offered a free credit freeze — but valid for only one month. Soon thereafter its CEO of 12 years, claiming he was “deeply sorry,” was terminated along with other top officials responsible for security measures. Obviously no clear disaster recovery plan was in place, and the top C-suite folks in charge seemed befuddled if not outrightly negligent in their collective responsibilities. In April 2018, the firm’s chief transformation officer declared, “We should have been quicker, more frequent and more transparent in our customer communications immediately following the incident… . We are committed to being as proactive as possible in the way that we communicate and rebuild trust.” Duh. The management of this fiasco was not good, not even close. In fact, it was abysmal. This proves the case that when disaster strikes, firms typically are judged not on the root cause of the problem itself, but on how they respond. Value-driven planning counts.
Clarifying Your Company Values
Values statements often address several audiences. Salesforce.com’s vision statement notes employees, customers, partners, communities, and the environment — a rather broad array, to be sure. Should there be a priority ranking here, as well as for your own organization’s statement? We think so, and in fact one reason we like Salesforce’s pecking order is because it recognizes that a vision is only as good as it will be lived by its exemplars — that is, employees (or if you operate a business alone, yourself).
But your company’s values have an obvious impact on all your stakeholders, including the owners, investors, bankers, customers, suppliers, regulators — and heck, even crazy Uncle Ernie if he’s the one who loaned you the $10K to start your business. (See Chapter 2 for more info on stakeholders.) As you start to identify your company’s most important values, you have to consider different viewpoints, including the following:
The demands of your investors (if you have any)
The interests and expectations of all your stakeholders
The beliefs and principles that you and your company already hold
When you come up with a preliminary list of company