The examples in today's news of the disconnect between a corporation's mission statement and its actions teach that poor company values can lead to poor company performance -- and vice-versa.
BP is living the corporate image nightmare. A company with a terrific ad campaign ("Beyond Petroleum" -- you'd think it was all about being green) is now saddled with another terrible disaster. But the core issues are not new and they are rooted in the culture and values of the company. BP was blasted in 2007 following a congressional committee investigation where they were found to have ignored audits and underspent on maintenance in order to meet aggressive cost cutting goals. Even in late 2009, BP made strong statements in a video about the safety of offshore oil drilling for the environment as the new administration appeared to be weakening on the issue, but now, today, no amount of ad dollars and slogans can quickly recover their reputation or their stock price.
Two recent leaked memos from Wall Street show the values issue in a different way. In an email circulating the press today an anonymous author (who is clearly a trader, not a banker) flames at the middle class about how his job is to make money, and if he doesn't make money no one else will make money: 'We are wall Street... we are smarter and more vicious than [dinosaurs]'
The second is authored by an economist at J.P. Morgan who rants at "ignorant" senators, and about the need for "the grown ups to step in". J.P. Morgan of course apologized for this one -- how could they not -- but the sheer fact that a senior member of management wrote a memo like this is an issue.
As we exit from not just one, but two periods of excess -- first the tech bubble, and then the sub-prime bubble -- now maybe, finally, we can pay attention to the connection between true, living core values and corporate performance. Developing and growing humanistic companies will result in better financial performance and better shareholder value.
In the book Firms of Endearment the authors list the 15 operating attributes that create endearing, and enduring companies. Attributes like "their executive salaries are relatively modest", "they devote considerably more time than their competitors to employee training", "they honor the spirit of the law rather than merely following the letter of the law" and "they project a genuine passion for customers" ... and more attributes that you would recognize as a customer of Southwest Airlines, Whole Foods, Patagonia or IKEA. They build the case for why companies with a high-quality culture -- like Netflix and New Balance -- are actually better long term investments.
In most cases poor corporate culture and a disrespect for customers and the community you work with eventually catches up with you, whether you are BP or Massey Energy. But it does not always catch up or shareholders would be able to invest solely in good companies. Thankfully, there are enough examples now of good companies with strong core values and excellent financial performance that corporate responsibility and sound business management are now, beginning to align.
As a CEO myself, who is held accountable by my investors for financial performance first, last, every day -- my goal is to keep our focus on the customer and our culture front and center of every decision. Because in the end, that is the way to create sustainable success.