Why Purpose, Values, Principles Matter
10/09/2019 1:32 PM
WHY PURPOSE, VALUES, PRINCIPLES MATTER
In advising organisations about ethics and culture, our Ethics Centre consultants often start by asking a simple question: “Do you have an ethical framework?” What we’re trying to understand is whether the company has a well-defined purpose, supported by values and principles. It’s the bedrock upon which every successful and well-run company is built.
Over the last twenty years we have witnessed a veritable roll call of organisations who have faced an ethical crisis. And for some, this crisis has threatened their very existence. And while the individual factors will vary, there is often one underlying root cause of this failing – a drift from the organisation’s ethical framework.
An ethical framework is a critical foundation for any organisation. It expresses their purpose, values and principles – quite literally, what they believe in and what standards they’ll uphold. In making these visible, as well as living across everything they do, it allows the organisation to be the best possible version of itself, now and into the future.
If an ethical framework is practically useful, it will provide a way to diagnose ethical failure, apportion responsibility and offer a means to provide justice for victims. However, this is merely the minimum standard. It also provides the ideal that should be strived for.
An ethical framework demands something more than mere compliance. It asks employees to exercise judgement and accept personal responsibility for the decisions they make. In order to be effective, it must be consistently embraced by every member of the organisation.
• Values tell us what’s good – they’re the things we strive for, desire and seek to protect.
• Principles tell us what’s right – outlining how we may or may not achieve our values.
• Purpose is our reason for being – it gives life to our values and principles.
The power of a good ethical framework
A strong ethical framework will unite an organisation’s workforce under a common goal, creating a far better workplace culture in the process. It will help leaders make decisions that are consistent with purpose, and improve decision-making capacity across the organisation. It supports a company to be more adaptable to change and clearly demonstrates to clients, customers and other stakeholders what they stand for and where they’re headed.
A company will struggle to develop consistent workplace policies or a corporate strategy without an ethical framework. But the reverse is also true: with an ethical framework all of these processes become far easier to navigate.
In designing an ethical framework, much is made of purpose statements – primarily because they tend to be the most visible, public-facing feature of the framework. Creating a great purpose statement is something of an art form, it needs to achieve a great deal in a few words. It should be inspiring, have an aspirational quality, and capture the essence of your company’s ‘why?’.
Ideally, purpose statements should describe how your company is satisfying a need in society or in the market. Examples include Disney’s “To make people happy” or technology powerhouse Atlassian “To unleash the power in every team”. We’re quite proud of The Ethics Centre’s purpose statement which is “To bring ethics to the centre of everyday life.”
Values and principles
Values and principles enable employees to distinguish between what is regarded as important and the means by which they should be pursued. They help to frame business activity to ensure it stays true to its purpose and contract with society. A good framework will be;
• Stable – will not change significantly (in its essence) over the long term
• Understandable – by all of those required to apply it in practice
• Practical – able to be applied in practice and with consistency
• Authentic – it will ‘ring true’.
Good for business
Having an ethical framework isn’t designed to maximise profits – it’s designed to protect and improve the relationship between business and society. But it does often benefit business as a commercial enterprise as well. By motivating employees and demonstrating the value and purpose of the business to them, they serve as ambassadors for the organisation.
Although purpose statements, corporate values and organisational principles aren’t a guarantee of perfect ethical conduct, they are a crucial ingredient in building a culture in which bad behaviour is discouraged and dis-incentivised. They’re also a flag of goodwill to stakeholders that an organisation is looking to serve humanity and not simply turn a quick buck.
Ethical frameworks are not magic bullets to solve an organisation’s problems – they won’t guarantee that all employees will do the right thing every time. But approached with the proper degree of care and sophistication, the very process of developing these codes can have a profoundly positive effect on the culture of an enterprise. In establishing the things you believe in and identifying the behaviours you wish to encourage, you establish a framework for a great corporate culture – one based on respect, trust, collaboration and accountability. And who wouldn’t want that?
Creating an ethical framework
It may surprise you to learn that many companies have no ethical framework at all. And of those that do, many are working with largely meaningless statements that offer little in the way of guidance. Some were written decades ago. Some were cooked up by marketing strategists as part of a corporate branding exercise. Whatever their provenance, there’s a sense that the framework has ceased to have any meaning for the people who work at the company.
Developing an ethical framework is only the starting point. Ensuring the framework is fully embedded and understood throughout an organisation and lived by its people is the harder challenge. Over three decades of consulting work, we’ve helped countless organisations to develop and embed their ethical frameworks. We’ve worked across multiple sectors and with companies of many shapes and sizes.
First published by The Ethics Centre 13 August 2019
DISCLAIMER: this article is general ONLY in nature and is not advice