Summary by James R. Martin, Ph.D., CMA
Professor Emeritus, University of South Florida
Behavioral Issues Main Page | Ethics Main Page
This article begins with a statement of the following corporate values: communication, respect, integrity, and excellence. These are the meaningless values stated in Enron's 2000 annual report. Most value statements, according to Lencioni, create cynical employees, alienate customers and undermine management's credibility. To develop a meaningful set of values he recommends organizing values into four categories as follows:
| Type of Value | Definition |
| Core values | These are deeply ingrained principles that guide all of the company's actions and are part of the organization's culture. |
| Aspirational values | Values lacking, but needed. |
| Permission-to-play values | Values that reflect minimum behavior and social standards for employees. |
| Accidental values | Values that develop without being cultivated by management and reflect the common interest and personalities of employees. |
Many organizations confuse aspirational values with core values. Values do not become core values by placing them in a corporate values statement.
Values need to be authentic. Motherhood-and-apple-pie values statements such as integrity, teamwork, ethics, quality, customer satisfaction and innovation don't set an organization apart from competitors.
Lencioni argues that values initiatives should not be developed by building a consensus. Instead values initiatives should impose a set of fundamental, strategically sound beliefs on a broad group of people. The best values are developed by a small group including any founders, the CEO, and a handful of key employees. This process should not be rushed.
After an authentic set of core values are established, they need to be integrated into every employee related process (e.g., hiring, performance measurements, criteria for promotions and rewards, and dismissal policies) constantly reminding employees that core values form the basis for every decision the organization makes. Core values should be embedded into the system and continuously promoted and reinforced. Wal-Mart is mentioned as an example of a company that applies the recommendations presented in this article.
___________________________________________
Related summaries:
Cohen, J. R., L. W. Pant and D. J. Sharp. 1993. Culture-based ethical conflicts confronting multinational accounting firms. Accounting Horizons (September): 1-13. (Note).
Crossan, M., W. Furlong and R. D. Austin. 2022. Make leader character your competitive edge. MIT Sloan Management Review (Fall): 1-12. (Summary).
De Geus, A. 1999. The living company. Harvard Business Review (March-April): 51-59. (Summary).
Gladwell, M. 2002. The Tipping Point: How Little Things Can Make a Big Difference. Back Bay Books. (Summary).
Handy, C. 2002. What's a business for? Harvard Business Review (December): 49-55. (Summary).
Healy, P. M. and J. M. Wahlen. 1999. A review of the earnings management literature and its implications for standard setting. Accounting Horizons (December): 365-383. (Summary).
Lencioni, P. M. 2002. Make your values mean something. Harvard Business Review (July): 113-117. (Summary).
Martinson, O. B. and D. E. Ziegenfuss. 2000. Looking at what influences ethical perception and judgment. Management Accounting Quarterly (Fall): 41-47. (Summary).
Romney, M. B., W. S. Albrecht and D. J. Cherrington. 1980. Red-flagging the white collar criminal. Management Accounting (March): 51-54, 57. (Note and list of Red Flags).
Schilit, H. 2002. Financial Shenanigans: How to Detect Accounting Gimmicks & Fraud in Financial Reports. 2nd edition. McGraw Hill. (Summary).
Simons, R. 1995. Control in an age of empowerment. Harvard Business Review (March-April): 80-88. (Summary).
Waddock, S. 2005. Hollow men and women at the helm ... Hollow accounting ethics? Issues in Accounting Education (May): 145-150. (Summary).