Values as a Basis for Leadership and Strategy
In today’s world of economic uncertainty and constant change, organizations are looking for a foundation on which to base themselves. Fundamental questions are being asked by the board and senior leadership team: How do we ensure the success of organizations? What should be the focus of the Board, senior leadership and employees? Is it economics, values, greater good of society, value creation, or some combination of factors? And what of the unethical behavior of senior leaders? (Price, 2006). Concepts such as values and value creation are on the agenda for the board and senior leadership. These dialogues explore not only how values provide a foundation for leadership but also how they lead to creating value for the organization, its stakeholders, and society.
In many different leadership models, values provide a foundation for leadership. Some research has linked values-based leadership to improved productivity and performance (Russell, 2001). And at the same time a breakdown in values-based leadership has been identified as a key factor in the failure of senior leadership in companies such as ENRON and Arthur Anderson. According to Price (2006), a surprising feature in leadership is the immorality of a relevant decision, action, or policy that was never in doubt. According to Price (2006), leaders can understand the immorality of an action. Yet these same leaders act unethically because they make exceptions for themselves to the appropriate morals or values.
Values and the culture crafted from them also provide the basis for an organization realizing its strategy. Values provide the foundation in developing the appropriate culture to realize the strategy as well as the vision and mission. It is essential for boards and senior leadership teams to not only constantly communicate these values, but also role model these values. The presence of a set of shared values along with a culture, vision, mission, and strategy that are understood and supported by all enable leaders to delegate responsibility and empower their employees to realize the vision, mission, and strategy (Whitmire, 2005).
Values-Based Leadership and Financial Performance
Values-based leadership has been linked to financial performance of organizations. Research by Van Lee, Fabish, and McGaw (2005) showed that financial leaders understand the relationship of values and performance. Often executives understand the importance of values in realizing strategic priorities, including corporate reputation or strategic relationships. Yet these same executives often cannot demonstrate how values contribute to creating value or impacting financial results. There are models available that link values, value-creation, and performance such as the Balanced Scorecard (Sim & Koh, 2001). There is need for more research on how leaders can leverage their values to improve the productivity and performance in their organization.
Shared Values and Contributions to Society
The need for shared values goes beyond the organization itself. The importance of stakeholders to the success of any organization is well known. Stakeholders such as stockholders or customers or even the community will often align with a company with which there is a set of shared values. Today, some of those values are very different than those in the past. These values include “being green” as well as making a contribution to society. Values that are being researched include corporate social responsibility, corporate citizenship, and sustainability (Samuelson & Birchard, 2003). More companies around the world are stating they have values in these areas. The World Economic Forum (WEF) provides a plan for corporate leaders to implement corporate social responsibility, and it provides a pledge to corporate social responsibility that was signed in 2003 by 46 leaders of large global corporations such as ABR, Coca-Cola, Deutsche Bank Siemens, and McDonalds (Samuelson & Birchard, 2003). The United Nations’ Global Compact which supports environmental and human rights has been signed by more than 1,000 corporations.
Greenleaf proposed that leadership was about serving others including employees, other stakeholders, and society. The leader is not about his or her self-interests. Rather they value others and focus on serving the interests of the other stakeholders. And it is through this service of including customers, employees, community, the environment, and society as a whole that an organization will accomplish its goals including its financial goals. In this role, servant leaders are providing stewardship. They are expected to hold organizations in trust for their stakeholders and for society. In this model, the leaders’ values provide the foundation for their focus on serving others. Stewardship and the commitment to social responsibility, human rights, and sustainability do not come from a company’s set of values. Rather, they begin with the fundamental values held by the leaders in the organization.
Values-based leadership is an underlying component of many leadership models. And values-based leadership is becoming a reality in many companies. The nature of the values has evolved over time. In addition to financial performance, productivity, and customer value, organizations are focusing on making a difference and contributing to society. Values in the areas of environmental rights, human rights, sustainability, corporate citizenship, and social responsibility are being integrated in to the set of shared values in many organizations. There is a linkage between models based on leadership and organizational values and the improvement in organizational performance. Today’s leaders are embracing a new set of values. They believe these values can improve performance and create stakeholder value through values-based leadership−in demonstrable ways.
Price, T. (2006). Understanding the ethical failures in leadership. New York, NY: Cambridge University Press.
Russell, R. F. (2001). The role of values in servant leadership. Leadership and Organizational Development Journal, 22(2), 76-84.
Samuelson, J., & Birchard, B. (2003). The voice of the stakeholder: Is sustainability sustainable? Strategy + Business, 32.
Sim, K. L., & Koh, H. C., (2001). Balanced scorecards: A rising trend in strategic performance measurement. Measuring Business Excellence, 5(1), 18-27.
Van Lee, R., Fabish, L., & McGaw, N. (2005). The value of corporate values. Strategy + Business, 39. Retreived from http://www.strategy-business.com/press/article/05206?pg=0