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CFO Corner: Words Matter—Hollow Purpose Statements Hurt Your Organization

Toxic CultureMany organizations have wasted immense sums of money in developing corporate values and re-orienting their strategies around corporate purpose. Usually, their intentions are good but unless these investments have an impact, where is the ROI?
By Nick Shepherd
Creating a purpose statement might seem like good public relations. In today’s skeptical age, what is critical to success is that there is a clear operational linkage between the words that are used and the operational outcomes that are expected. What do the words mean in day-to-day reality? Otherwise, not only is the effort to create a purpose statement a waste of time, it can backfire.
Nowhere is this more critical than the clarity required around corporate values. These are supposed to be the foundations of behavior; yet, in many cases. the words used do not result in the expected outcomes. In my book “Toxic Culture” there are several examples of organizations that have stated values about the importance and value of people that are currently in court for contraventions of labor law. Organizations that proudly report statistics such as the hiring of minorities and the percentage of females in management positions are often the same organizations being sued for harassment and discrimination. However clear their stated purpose, the words apparently did not translate into how people build relationships and treat each other internally and externally.
This explains why so many corporate purpose statements amount to white-washing of little value or worse.
Anyone who has assembled IKEA furniture knows that in their drive for simplicity, instructions often fail to deliver clear guidance. So, it is with human behavior. Every single person within an organization—and especially those with supervisory roles at any level—must know exactly what the words being used translate into in terms of day-to-day decision-making and relationships. Without this, any hope of successfully optimizing employee engagement will fail. Expectations will be created but not be fulfilled because of a lack of agreement and understanding on “what does this mean.” Rather than creating a positive culture, hollow purpose statements can lead to cynicism and scepticism and a belief that what management says is not actually “what goes on around here.”
To solve the problem requires a positive answer to three questions.
1. Does everyone know and understand what operational behaviors and approaches to decision making are expected to support and deliver on the stated values?
2. Does every manager believe in, accept, demonstrate, and actively support those stated behaviors in their daily relationships with their employees and with all other relationships?
3. What processes are being used to reinforce the purpose statement and values, and what metrics are being used to measure their effectiveness.
If the answer is no to either of these questions, then employee engagement will not be achieved to the level necessary for predictability and a competitive advantage. Worse still, nothing can be measured in terms of the expected outcomes because nothing has been defined as the planned expectation. While measuring employee engagement is subjective, it can be measured with a higher level of confidence if supported by clarity of expectations and metrics.
Nick Shepherd, FCPA, FCGA, FCCA, FCMC
Eduvision Inc.

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