Managing By Values
by Dr. Ken Blanchard

What if you could give your organization the gift of a magnificent and promising future while also discovering a way for all of its stakeholders to be satisfied in the process? To do so means implementing a new and broader approach that builds on the foundation of an effective organization, namely, its mission and its values. Rather than focusing solely on results, winning companies first emphasize values --- the beliefs, attitudes and feelings that top management has about employees, customers, quality, ethics, integrity, social responsibility, growth, stability, innovation, and flexibility. Managing by values, not by profits, is a powerful process that will set your organization on the path to becoming what I call a "Fortunate 500" company.

What is a Fortunate 500 Company? 

My colleagues and I at Blanchard Training & Development have devoted significant time and energy to defining exactly what a Fortunate 500 company would look like and how an organization could best move to become such a company. Although the criteria are still evolving, so far we have identified the following ten characteristics.

(1) Vision --Fortunate 500 companies have a clear vision stemming from top management as to what they are about and what they want to be. This vision is clearly communicated to all employees and used on a daily basis for making decisions.

(2) Empowerment --Employees are treated as though they are partners, not slaves, to the business. The organization expects a lot from every employee, but is willing to help employees do their job with minimal barriers. Employees are expected to constantly be learning new skills and growing, and the organization provides training and career development options to facilitate that growth.

(3) Performance --Employee performance is measured and monitored in a way that encourages optimal performance. Goals are set for all major areas for performance, and feedback is routinely provided as to how employees are doing against those goals.

(4) Team Approach --Employees are organized as much as possible into teams to facilitate the best means for solving problems, building morale, and creating synergy for achieving group and organizational goals.

(5) Customer Service --Customers are treated as if they are the most important part of the business, which they are. Every employee and manager seeks to serve the customer or support those employees that are doing so.

(6) Quality --The organization prides itself on producing quality goods and services all the time. The company knows that long-term success depends in large part upon the long-term reputation of the company and so consistently seeks to develop lasting, quality relationships and to build quality products.

(7) Communication --Management knows that communication is the oil that keeps the company operating smoothly. It seeks to communicate frequently to employees at all levels of the organization and to allow optimal opportunity for employees to communicate in any direction within the organization.

(8) Ethics --The company expects all employees to be ethical and to act on a daily basis in a way that is consistent with this belief.

(9) Wellness --The organization is concerned with the wellness of its employees, knowing that having a healthy workforce is a practical business decision as well in terms of employees having more energy and less absenteeism for illness.

(10) Profit --The company is profitable because being so is necessary to survive, but does not treat this objective as its sole purpose for being.

Now that we have laid out the characteristics of a Fortunate 500 company, how can an organization become such a company? Achieving this goal comes more from managing the journey than just announcing the destination. Too often, changes are announced by top management who revert to a "leave alone" leadership style --- and later wonder why nothing happens. Effective change must be monitored to ensure progress is made.

Becoming a Fortunate 500 Company 

I believe there are seven steps that should be taken to start the journey. The first five involve diagnosis; the last two involve implementation.

1. Articulate values. Top management needs to establish a clear set of values that they want the organization --- and its employees --- to represent. This would include specific descriptions of what each value would look like in practice on a daily basis, as well as a methodology for measuring each practice on an ongoing basis. For example, if one of the desired values was "outstanding customer service," on a daily basis this would be seen in employees going out of their way to help customers, perhaps in doing things beyond what was required.

2. Identify and describe key organizational practices. Key organizational practices need to be assessed to determine a baseline of current business operations. This information would come from a variety of methods including interviews, historical documents, observation of operational meetings, and so on.

3. Compare values with practices. The extent and nature of alignment (or misalignment) of the actual practices of the organization versus its stated values is then determined. It is helpful in this step to obtain additional information from focus groups, employee and customer surveys, and to conduct an analysis of practices compared with the experience of other companies.

4. Establish priorities for realignment. Issues and priorities regarding alignment of organizational practices with stated values are then itemized. Changes that are deemed to have the greatest impact are scheduled to be made first.

5. Recommend changes and implementation strategy. The required changes are defined and integrated with one another to create a vision of how the company would be run based on todayís information, products and markets. This vision includes a process for continual change as new information or priorities dictate. An implementation strategy and timeline is then developed.

6. Make desired changes. Alignment changes are made with care being taken that they are effectively integrated with existing organizational practices. This requires the combined and managed efforts of many people in the organization over a period of one to three years. Involvement of people is a key way to build commitment. Outside expertise may be helpful in specific areas, such as business planning, management training, performance management, team building, customer responsiveness, compensation and reward systems.

7. Monitor progress. A process for measuring the organizationís on-going performance and progress is developed and installed. An effective monitoring system helps maintain the appropriate degree of involvement by employees at all levels of the organization, and alerts management to the needs for mid-course corrections as they are needed.

Managing the Journey 

Making necessary changes in the organization is an important step. But, to sustain the changes, and manage the journey over the long-term, there are four systems that should be in place:

Accountability system. Everybody needs to have a clear understanding of whose responsibility it is to do what. People need to know where the organization is headed and what constitutes exceptional individual or group performance. The primary reason that change does not last in most organizations is that people donít know what is expected of them.

Information system. So often in organizations, only financial data is gathered and is distributed only to top management. Other key indicators that relate to performance areas also need to be tracked. Information on performance has to be made available to those people who can best use it --- those doing the work.

Feedback system. The number one motivator of people is feedback on results. It is difficult for people to correct and improve their performance if they do not have feedback about how they are doing. In the feedback system, managers add value --- mainly through praise --- to the objective information being tracked throughout the organization.

Recognition system. For change to last, good and superior performance has to be acknowledged. If current performance is below expectations, you have to reprimand or provide training as appropriate. To continue in the long term, good performance has to be treated differently than poor performance.

So, a Fortunate 500 company is one that is driven by values --- not by results. The journey is never complete --- one never achieves perfect alignment or values with practices in an organization --- just as one never truly achieves excellence. Yet, the journey is well worth taking.

Dr. Ken Blanchard is chairman of Blanchard Training & Development, Inc., headquartered in San Diego, CA, with offices throughout Canada. He is also the author of Managing By Values (Berrett-Koehler). For information about the services and products provided by BTD Canada, please call 1-800-665-5023. 

Many more articles on Creative Leadership, Leading Change, The Leadership Imperative and Authenticity & Ethics in The CEO Refresher Archives

Copyright 1997 by Dr. Ken Blanchard. All rights reserved.

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