As officers and employees of Enron Corp., its subsidiaries, and its affiliated companies, we are responsible for conducting the business affairs of the companies in accordance with all applicable laws and in a moral and honest manner. –Kenneth Lay, CEO, Enron
Having a mission statement is one thing. Living it is quite another.
Latin for “a set of fundamental beliefs or guiding principle,” a credo–also known as a “code of ethics” or “code of conduct”–ostensibly provides an organization with a defined, sacrosanct set of ethics and rules of engagement. If a mission statement is to mean what it says, then it must have real impact on the behavior of the company’s leaders. If it is to do that, then it must be aligned with the leaders’ own mission and wider collection of beliefs. If it is to have meaning, there must be consequences for violating it.
The promise made above by Enron CEO Kenneth Lay was broken in spectacular fashion by the most successful and powerful employees of his company. At the time, Enron had grown to become America’s seventh-largest company, employing more than 21,000 staff in more than 40 countries. Its collapse in 2001 was the largest corporate bankruptcy in U.S. history until WorldCom’s the following year. In the process, Enron’s shareholders lost $74 billion.
While Enron’s code of ethics may have compelled Lay, for public relations reasons, to satisfy shareholders and to inspire employees, it certainly did not seem to compel him personally. And there’s a precedent for this: In The Smoking Gun of Enron’s Code of Ethics, author Bob Sutton writes of times when organizations spew out hypocrisy and dishonesty. Their frequent corrective? Have their leaders say the right thing, often and convincingly. In their minds, they are absolved of responsibility for the outcomes of their actions because they never intended to cause damage or destruction. This scenario is typical not only of companies in ethical distress but of individuals, too: While we tend to judge others by their actions, we judge ourselves by our intentions.
Some companies, on the other hand, just cut to the chase, forgoing all the inspiring language. WorldCom, which ultimately collapsed under the weight of its own moral decay, did not even bother with the ethical pretense. Their mission statement:
Our objective is to be the most profitable, single-source provider of communications services to customers around the world.
The most important priority in WorldCom’s statement is profitability.
Without careful qualifications, such a document can unleash powerfully dark forces so that the company operates by whatever means necessary to achieve the extrinsic goal. As Russ McGuire, online director of Business Reform magazine, points out, “Unfortunately, creating shareholder value is not really a useful company mission statement. It provides no meaningful direction to employees or managers. Unlike a mission that is focused on innovation or customer experience or serving God or serving humanity, a mission defined around wealth does not create a positive culture. Instead, it creates a culture of selfishness, greed, and results at all costs.”
Even though WorldCom went off the rails, resulting in harm to so many people, can we blame them for being so up-front? Is profitability not the ultimate criterion of success for every public company? Does that not define what business success is all about?
Yes and no.
To exist and then to thrive, a company needs to be more than just profitable. Its success is linked to intrinsic values, whether the company wants it to be or not. Whether a company chooses to compete ethically or not has consequences–some intended, some not. One of these deeply personal consequences is how you feel about yourself, even if you don’t articulate this to yourself every day as you leave the office to head home. To “compete” against some ethical standard is not to abdicate your company’s competitive edge. It is not to say that your firm gets top marks for integrity while having its lunch eaten by competitors, who may not be quite as evolved. Demanding conduct consistent with high ethical standards does not preclude business excellence. On the contrary, sustained business success is possible only when competence coincides with fair play. Even Ponzi schemer extraordinaire Bernie Madoff could not sustain his unbelievable success absent at least the appearance of a moral compass.
Here are the mission statements of some real companies:
- Create value for shareholders through the energy business.
Kerr McGee Corporation
- To be the most customer-centric company in the world, where people can find and discover anything they want to buy online.
- Profitable growth through superior customer service, innovation, quality and commitment.
Are these powerful mission statements? Do they provide useful, ethical guidelines for how to act? More to the point, do these organizations have structures in place to enable and encourage ethical behavior from their leaders and workers?
I’m not suggesting that one or all of the mission statements above do or do not drive and inspire ethical practices. I am saying that each statement places a critical stake in the ground that will have ethical consequences for as long as these companies compete for market share, growth, and sustainable earnings. And having such a document is but one piece of the puzzle. Cultivating an atmosphere where employees actually believe in the importance of embodying a values-based mission statement is as critical as the mission statement itself.
How to Write a Corporate Code of Ethics
When formulating a code of business, Joel Saltzman, a “corporate ethics trainer,” recommends the following:
- Begin with an opening sentence that speaks to the company’s general mission, values, and ideals.
- Make sure everyone knows the rules.
- Make sure everyone knows how to follow the rules.
- Establish a mechanism that ensures that employees are, in fact, following the rules.
In the absence of an agreed-upon ethical code, lawlessness is sure to follow. But, while words have power, I don’t believe values statements by themselves ensure ethical actions. Actions are guided by the deeply held, internalized beliefs and values embraced in one’s story. For a corporate mission
When ethical considerations are removed from the corporate playing field, there is little hope for winning in a way that makes us all proud. Competition becomes unhealthy; our organizations become deformed. We become compromised characters. And it’s easy to do, because temptation is strong. The prizes can be enticingly seductive.
However, if you break your intrinsic value proposition–by keeping two sets of books, by failing to report the full truth to shareholders, etc.–whatever extrinsic value you achieve will be fleeting and unsatisfying. Break your intrinsic value proposition and you damage your organization and perhaps even your whole industry. Break your intrinsic value proposition and you damage yourself the most–physically, mentally, emotionally, spiritually. In business, as in all areas of life, when all is said and done, it won’t solely be who won but how they won and at what price.
From The Only Way to Win by Jim Loehr. Copyright © 2012 James Loehr. Published by Hyperion. Available wherever books are sold. All rights reserved.
[Image: Flickr user Jason Patel]