paper

*

*

Consider how your own company, organization or school (or dormitory or fraternity/sorority) differs from a similar one. Is there a “type” of person stereotypical of your organization, dormitory, fraternity/sorority? Are there unspoken but still influential standards and expectations that shape students at your school? How would you be different if you had chosen a different institution, or had joined a different fraternity or sorority, or had participated in a different organization?

Example:

Businesses also have unspoken yet influential standards and expectations. IBM was once famous for a culture in which highly starched white shirts and ties (for it was a very male culture) were part of the required dress code. Many software and technologies companies have reputations for a culture of informality and playfulness. Some companies have a straight 9-5 work schedule; others expect employees to work long hours and weekends. A person who enters that firm with a nine-to-five attitude, intending to leave as the clock strikes five, might not have a “fit” and is likely not to last long. The same might hold true for a firm’s values. If you join a firm with a culture that supports other values than those with which you are comfortable, there will be values conflicts – for better or worse.

No culture, in business or elsewhere, is static. Cultures change; but modifying culture or having any impact on it at all is a bit like moving an iceberg. The iceberg is always moving and, if you ignore it, it will continue to float with whatever currents hold sway at the moment. One person cannot alter its course alone, but strong leaders can have a significant impact on a culture, and a strong business leader can certainly have a significant impact on a corporate culture.

Refer to: REALITY CHECK

Built to Last

Does a corporate culture matter? As described in their best-selling book, Built to Last: Successful Habits of Visionary Companies, authors James Collins and Jerry Porras researched dozens of very successful companies looking for common practices that might explain their success. These companies not only out-performed their competitors in financial terms, they also have outperformed their competition over the long term. On average, the companies they studied were founded in 1897. Among their key findings was the fact that the truly exceptional and enduring companies all placed great emphasis on a set of core values. These core values are described as the “essential and enduring tenets” that help define the company and are “not to be compromised for financial gain or short-term expediency.” [i]

Collins and Porras cite numerous examples of core values being articulated and promoted by the founders and CEOs of such companies as IBM, Johnson & Johnson, Hewlett Packard, Procter and Gamble, Wal-Mart, Merck, Motorola, Sony, Walt Disney, General Electric, and Phillip Morris. Some companies made a commitment to customers as their core value, others focused on employees, their products, innovation, or even risk-taking. The common theme was that core values and a clear corporate purpose, what together are described as the organization’s core ideology, were essential elements of enduring and financially successful companies.

Talk of a corporation’s “culture” is a way of saying that a corporation has a set of identifiable values. All the companies described by Collins and Porras have been described as having strong corporate cultures and clear set of values.

[i] Built to Last: Successful Habits of Visionary Companies, James Collins and Jerry Porras (New York: HarperCollins, 1994), p. 73.

*

*

The distinction between compliance-based and value-based cultures is best applied in accounting and auditing situations, but it can also be used more generally to understand wider corporate cultures.

*

*

Integrating these values into the firm’s culture encourages a decision-making process that uses the values as underlying principles to guide employee decisions rather than as hard and fast rules.

*

Refer to:

Reality Check

Do Codes make a difference?

As a result of its quick and effective handling of its experience with tainted Tylenol in both 1982 and 1986, Johnson & Johnson has often been viewed as one of the most admired firms in the world. J&J had sales in 2001 of $33 billion, almost triple those of the previous decade and representing its 69th year of consecutive sales increases. They have had 17 consecutive years of double-digit earnings increases and 39 consecutive years of dividend increases. Its market value ended in 2001 at more than $180 billion, up from $38 billion in 1991, evidence that a firm that lives according to its strong values and a culture that supports those values not only can survive but sustains profit over the long-term. CEO Ralph Larsen credits these successes directly to the J&J Credo, “it’s the glue that holds our decentralized company together. . . For us, the credo is our expression of managing the multiple bottom lines of products, people, planet and profits. It’s the way we conceptualize our total impact on society.”[1]

The Johnson & Johnson Credo and History

At Johnson & Johnson there is no mission statement that hangs on the wall. Instead, for more than 60 years, a simple, one-page document – Our Credo – has guided our actions in fulfilling our responsibilities to our customers, our employees, the community and our stockholders. Our worldwide Family of Companies shares this value system in 36 languages spreading across Africa, Asia/Pacific, Eastern Europe, Europe, Latin America, Middle East and North America.

Our Credo History

General Robert Wood Johnson, who guided Johnson & Johnson from a small, family-owned business to a worldwide enterprise, had a very perceptive view of a corporation's responsibilities beyond the manufacturing and marketing of products.

As early as 1935, in a pamphlet titled TRY REALITY, he urged his fellow industrialists to embrace what he termed "a new industrial philosophy." Johnson defined this as the corporation's responsibility to customers, employees, the community and stockholders.

But it was not until eight years later, in 1943, that Johnson wrote and first published the Johnson & Johnson Credo, a one-page document outlining these responsibilities in greater detail. Johnson saw to it that the Credo was embraced by his company, and he urged his management to apply it as part of their everyday business philosophy.

The Credo, seen by business leaders and the media as being farsighted, received wide public attention and acclaim. Putting customers first, and stockholders last, was a refreshing approach to the management of a business. But it should be noted that Johnson was a practical minded businessman. He believed that by putting the customer first the business would be well served, and it was.

The Corporation has drawn heavily on the strength of the Credo for guidance through the years, and at no time was this more evident than during the TYLENOL® crises of 1982 and 1986, when the McNeil Consumer & Specialty Pharmaceuticals product was adulterated with cyanide and used as a murder weapon. With Johnson & Johnson's good name and reputation at stake, company managers and employees made countless decisions that were inspired by the philosophy embodied in the Credo. The company's reputation was preserved and the TYLENOL® acetaminophen business was regained.

Today the Credo lives on in Johnson & Johnson stronger than ever. Company employees now participate in a periodic survey and evaluation of just how well the company performs its Credo responsibilities. These assessments are then fed back to the senior management, and where there are shortcomings, corrective action is promptly taken.

Over the years, some of the language of the Credo has been updated and new areas recognizing the environment and the balance between work and family have been added. But the spirit of the document remains the same today as when it was first written.

When Robert Wood Johnson wrote and then institutionalized the Credo within Johnson & Johnson, he never suggested that it guaranteed perfection. But its principles have become a constant goal, as well as a source of inspiration, for all who are part of the Johnson & Johnson Family of Companies.

More than 60 years after it was first introduced, the Credo continues to guide the destiny of the world's largest and most diversified health care company.

Our Credo

We believe our first responsibility is to the doctors, nurses and patients, to mothers and fathers and all others who use our products and services.
In meeting their needs everything we do must be of high quality. We must constantly strive to reduce our costs
in order to maintain reasonable prices. Customers' orders must be serviced promptly and accurately.
Our suppliers and distributors must have an opportunity to make a fair profit.

We are responsible to our employees, the men and women who work with us throughout the world. Everyone must be considered as an individual.
We must respect their dignity and recognize their merit. They must have a sense of security in their jobs.
Compensation must be fair and adequate, and working conditions clean, orderly and safe.
We must be mindful of ways to help our employees fulfill their family responsibilities.
Employees must feel free to make suggestions and complaints. There must be equal opportunity for employment, development and advancement for those qualified.
We must provide competent management, and their actions must be just and ethical.

We are responsible to the communities in which we live and work and to the world community as well.
We must be good citizens – support good works and charities and bear our fair share of taxes.
We must encourage civic improvements and better health and education. We must maintain in good order the property we are privileged to use,
protecting the environment and natural resources. Our final responsibility is to our stockholders. Business must make a sound profit.
We must experiment with new ideas. Research must be carried on, innovative programs developed and mistakes paid for.
New equipment must be purchased, new facilities provided and new products launched.
Reserves must be created to provide for adverse times. When we operate according to these principles,
the stockholders should realize a fair return. Reprinted with permission from Johnson & Johnson, http://www.jnj.com/our_company/our_credo_history/index.htm and http://www.jnj.com/our_company/our_credo/index.htm

[1] Ralph Larsen, “Leadership in a Values-Based Organization,” Sears Lectureship in business Ethics, Bentley College (2/7/02).

*

For example, when ethics officers were first introduced to the corporate structure in the early 1990’s, a clear indication of their relevance and influence within the organization was reflected in the extent to which they were supported financially. It was clear that ethics was not a priority if the general counsel served as the ethics officer “in their spare time,” and no additional resources are allocated to that activity. To the contrary, ethics may hold a different position in the firm if a highly skilled individual is hired into an exclusive position as ethics officer and is given a staff and a budget to support the work required. Similarly, if a firm mandates ethical decision making from its workers through the implementation of a code of conduct, extending the same standard for its vendors, suppliers, and other contractors is a symbol of how seriously the firm takes the code.

*

If an executive is “quietly ethical” within the confines of the top management team, but more distant employees don’t know about it, she or he is not likely to be perceived as an ethical leader.

Refer to:

Perception of Leadership Qualities