posted 1 Feb 1999 in Volume 2 Issue 5
Discovering the Values Factor
Is it possible to leverage the dimensions of a company's implicit belief system, to place a spot light on all the skeletons in the corporate cupboard; on old traditions and dated ideas? Over the last ten years, Dr. Brian Hall has developed a system which will expose these values and evaluate the percentage of real communication going on across organisations.
Innovative organisations are about knowledge. The artifacts we produce like a telephone or a modem, the books we write and the services we create are an objectification of this knowledge. Business is about creating and distributing knowledge. Knowledge is about beliefs, action and meaning -it is the way in which we human beings adapt to the world around us, how we modify it and make it a part of ourselves. As a conceptual construct, values unite these three elements and are a direct measure of knowledge. The ability to measure values is a fundamental step in learning to manage knowledge.
What writers like Paulo Freire1 understood and what Hall-Tonna associates discovered over and over again in 20 years of research is that human values are embedded in language, motivating and driving our behaviour. What this article is about is an emergent technology that measures those values and makes them explicit. This in turn has lead to a cross cultural, multi-language technology that can have significant consequences on business success, especially in customer relationships, Mergers and Acquisitions. This article will explain some of this technology and illustrate its effect on the bottom line in an intervention with a financial services organisation.
Knowledge, organisational culture & relationships
It is the culture of the organisation that supports knowledge transference both internally and to its customers. Organisations are cultures of relationships that enhance or get in the way of knowledge management. Being successful in life and business means having special knowledge. Knowledge is always contextual and flows from a set of relationships that are underpinned by common values - it is that simple.
Twenty years of research and development at the University of Santa Clara in Silicon Valley by a group of international associates gave significant results in values measurement. The team was run by myself, a psychologist and Benjamin Tonna, a sociologist from the University of Malta. Early in the 1980's we ascertained that there are approximately 125 values, that are embedded in the spoken and written language. These underpin human behaviour. (Please see: http://www.valuesed.com to see definitions and the skills underlying these values).
A ten year development and validity process yielded three types of cultural and organisational values measures:
1. Document Analysis. A 5000 word thesaurus (in several languages) scans a document to link synonyms to the 125 values that are present in a document. It then can identify the values in priority order, in any given part or section of a document. Example documents could be Annual Reports, sales speech or training materials. Document analysis is particularly helpful in scanning open-ended questions in a customer focus group or a tailored questionnaire.
2. Individual Reports. These are reports that an individual receives after completing a 125-item questionnaire. The person sees what their values are in priority order, and what the implication is for their leadership and personal development. Several thousand skills are coded to the values allowing a person to convert the values into specific capabilities
3.Group Reports. These are reports on the value priorities of small or large groups. Individuals in the group fill out a 63-item questionnaire in order for the results to be processed.
Values cluster as priorities and form our attitudes and beliefs. In the following table there are two columns of four values -the same four values but in a different priority order. Clearly the beliefs of a person in column A are different from those of column B even though they have the same values. The difference is in the priorities.
We are usually aware of what some of our beliefs are, but not what the values are that underpin them. We say therefore that our values are tacit or partly hidden. Yet at the same time they drive our lives. All relationships, personal and team are based on a minimal set of commonly held values priorities. Since values priorities are measurable, and are the glues that facilitate a creative relationship, they are key to cultural alignment and knowledge management Therefore values measurement is very important because it makes our priority values explicit and puts us in control of our decision making process.
The Culture and values connection
The diagram below illustrates how these elements are related. After the 125 values had been unearthed in the early 1980's it became clear that they clustered into distinct developmental levels. The diagram is a simplified version illustrated with some of the values. Research has shown that leaders and employees function at different levels depending on their values orientation. In other words, the four organisational expressions on the horizontal axis are a consequence of the values of leadership and employees. As one moves from Level 1 to Level 4 so the values and the required awareness and capabilities become more complex. The vertical axis shows how each level views and manages knowledge.
What is essential to understand is that these values and behaviours are Tacit i.e. 80% unconscious. When the values are measured and certain educational processes are utilised the values become explicit. This becomes the first step in moving an organisation through the levels of development in order to cope better with growing business demands in an ever expanding global economy.
Level 1-Top down Autocratic Organisation.
The Values in level 1 naturally lead to autocratic. This is common where knowledge is simply data and its transferral strictly transactional and by the rules. This is essential for the bank teller, book keeping and in the military or any security or physical risk business.
Level 2.-Traditional Layered Organisation.
The Values in level 2 naturally lead to efficient management leadership with all the capabilities flowing from the values at this level. This is common where knowledge is packaged information. Knowledge is packaged products and services, delivered by an efficiently managed hierarchical system. This is the dominant model that has grown from the post industrial age.
Level 3-Transitional Organisation.
The Values in level 3 are really indicative of the transitional experience of a majority of modern corporations. It is a shift to a customer focused service economy, where Pioneerism is often less
expensive than competition, and where relationships skills begin to dominate. It is a half way house between Level 2 and 4. For this reason the values are mixed. This is common where knowledge is 'understanding' information. Knowledge here is customer based with a focus on tailored services and customer satisfaction.
Level 4-Collaborative Partnering.
The Values in level 4 naturally lead to leadership governed by peer collaborative facilitation for maximum efficiency, developing leveraged partnerships and solutions for customers at a multi-national level. This is common where knowledge becomes practical wisdom, leveraging creative partnerships to develop new services and products.
The second diagram (page 30) mimics the preceding diagram. It shows how customer's relationships manifest themselves at each of the developmental levels. For example a person at Level 1 will function with values like Security as their primary focus and view knowledge as transactional. Taking that same person to Level 2, he/she would listen to a customers needs and try to find the right product for him/her.
At Level 3 the service is more complex. For example a Company manager looking for a software solution to an accounting problem would prefer a tailored solution if he/she was coming from Level 3 perspective. Level 4 would be to take the issue to an entirely different level, of co-partnering or co-creating an entirely new product and service that would become a joint business opportunity.
What is being illustrated here is that there are different levels of viewing knowledge, of conducting customer relationships and of how the organisational culture functions. These are all underpinned by different values. All four levels are essential in the appropriate context. What we have in the modern global reality are organisations needing to move from Level 2 to level 4. Different parts of organisations are operating at different levels reducing their performance to the lowest common denominator and haemorrhaging the bottom line. The technology being introduced in the following case has the specific purpose of making the values explicit,causing the relationships and knowledge processes also to become explicit. This gives leadership the leverage it needs to align and move the organisation to much higher levels of functioning and efficiency.
The Case of Customer Focus
The example I have chosen is a Financial Services company operation in North America, the UK and several European countries. The company is 90 years old with a lot of traditions and pride wrapped around the service it has given on two continents. At the time of the intervention they had recently converted from a family held business to a public offering company for a year. At the time of our intervention the company also acquired another financial services organisation of one third their size.
The measurement instrumentation used was the values metrics explained earlier, using document analysis, individual and group assessments. The comparative measurement is the 'Knowledge Capital Scale' illustrated below. It consists of the four organisational and values levels discussed above with the added dimension of a high and low for each of the four levels to give a scale of 1-8 'Steps.'
What we have discovered during the last 10 years working with over 100 global organisations using this scale is that when two persons are communicating with each other and there is a gap in levels of more than one 'Step' the level of mutual understanding is about 20%. For example if a person at 2L is talking to a person at 3L or more, there can be as much as 80% misunderstanding. Basically their values and world view are quite different. It happens in marriages and it happens in leadership teams. When this occurs transmission of knowledge at any level is less than 20% efficient.
What we have also found by document scanning of advertising and similar forms of communication such as form letters to stockholders, is that similar problems of miscommunication occur. Finally, we have conducted large surveys in most regions of the world. The same problem is evident except that language and cultural differences exaggerate the problem even more.
Three assessments were conducted:
i. Fifty executives filled out individual inventories
ii. Employee audit. 7000 employees filled out a group inventory. This included a 3000 person sales force.
iii. Acquisition audit of 33% of the employees of the organisation to be acquired. This included 100% of the management leadership.
iv. Document analysis was conducted on transcripts from 10 Customer focus groups and on current sales advertising literature
v. Group audit of members of the customer focus groups
The following data was revealed from the Knowledge capital scale:
Basically it was discovered that 70% of the sales force was approaching the customer at level 2 (product solution) but the customer was looking for tailored solutions. Not only this but the Advertising literature was at Level 1 (transactional level), completely missing the majority of the customer population.
The analysis of the executive group revealed that many of the executives were functioning at a different level than the market place required. The sales force needed Level 3 or 4 leadership but instead this area was being run by a very efficient level 2 manager who was constantly frustrated by low levels of sales performance. Interestingly, the audit of their acquisition revealed that the leadership was functioning at 3H and higher.
The audit of the employees and all the executives led to a consensus of the values they wanted the organisation to run on. Once the values were explicit they were able to create a values based vision Level 4 for the top leadership and align other leaders and managers to the requirement of their constituencies. Basically the information was not so much a judgement on performance and leadership capability as it was a graphic picture of alignment requirement in a rapidly changing business environment. Over a two year period the organisation was able to remove barriers to customer service. This did require removal of two layers of management, painful but necessary! Finally, focus on the explicit values and issues of alignment created a branding process that led to a change in the name of the company.
Justification to stockholders did increase the price of stock. More directly, measures of sensitivity to customers through the alignment process were directly evident through reduced complaints and increased satisfaction.
Values measurement is not a new panacea for organisational renewal like many of the fads of the past. It is an intrinsic part of knowledge management. Knowledge creation after all is an essential part of what being human is all about - it is an important part of our 'meaning' system. The second factor is that being human is about relationships -from family to high performance teams, to customer sensitivity. All this is underpinned by values.
The emergence of a values metric that can look in an objective manner at discrepancies in an organisation will give those wise enough to use it the competitive edge. The place where this will be most evident is in a global market place where culture and language bring with them natural values discrepancies. Values measurement is simply an essential tool in global business, particularly when we are looking at mergers, acquisitions and a complex customer base
1. Author of 'Pedagogy of the Oppressed'. New York, Herder & Herder 1972
Dr. Brian Hall is President of Values Technology, Santa Cruz, California and Professor in the Graduate division of Counselling Psychology at Santa Clara University.