Lived values: How to create an ethical high-performance culture

How do you respond when you hear a fellow partner say something unfair or derogatory about someone else in the firm? Or perhaps when they act in a way that cuts a colleague out from a client relationship? Or when you have a concern about how they are working with a client and you believe something is not quite right? Do you speak out there and then, letting people know where you stand? Do you promise yourself to have a quiet word later? Do you tell someone else or do you let it go?

These and comparable behaviours often emerge in law firms which are not in the best interests of the business or the people in it. Partners are often allowed to behave with disrespect, intolerance and a lack of collaboration or recognition of the wider good.¹ These kinds of behaviours have been accepted because of the individuals' position, their force of personality or the revenues they generate. However, tolerating maverick partners will ultimately cost your firm new business (see box: Responding
to poor behaviour).²

 

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Responding to poor behaviour

• Give feedback quickly, clearly and directly

• Provide specific reminders of what is expected of everyone

• Connect the individual’s behaviour to their wider responsibilities

• Provide feedback when you see examples of positive change

• Introduce a mentor or a coach to help people to shift their behaviour

• If the behaviour persists, explain the consequences of not changing

• Be prepared to let them leave to preserve the long-term health of the firm

• Make it clear to others why you have acted

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The litmus test for leadership is when a high fee generator behaves in ways that cut across the firm's values. This is a test of the real versus espoused values held by leaders. Research by the CIPD has found that many leaders allow high-performing individuals to compromise firm values if it boosts short-term profits.³ Good leaders will shift the moral compass in the businesses and change how people see themselves, their purpose and their sense of what is right and wrong.

Good citizenship

Leadership is expressed in how we respond in these moments of choice. Leadership is an act; it is what we do rather than the title we hold or our position in a firm. Taking leadership is about stepping into situations to make a difference. Those who are most willing to step forward are the ones that others will follow. Those who often step forward are the natural leaders in a business, regardless of their position.

Of course, this means all of us can take leadership. All of us have a role in creating organisational culture, the ways of working that we experience. Those in more senior roles are the most visible. Their behaviour is watched and followed more closely; they can be seen to set the standard of what is acceptable.

Good citizenship means demonstrating a range of behaviours and attitudes. It is more than just obeying the formal rules of the business, just as being a good citizen of a country is more than simply obeying the law - that is the minimum level of participation required. A good citizen will be someone who makes a bigger contribution to the health of a business or society. This means behaving in ways that make a positive difference to the life of the business, that help the quality of its internal working and raise its position and relationships externally, making a positive difference in the wider world.

This means:

• being aware of the needs of others, inside the firm and among its stakeholders;

• initiating and supporting activities that develop the business and its professional life;

• setting high standards in our own professional behaviour and encouraging it in others;

• being prepared to confront situations where we see behaviour that is less than we expect; and

• offering the feedback, support and challenge to help to shift that behaviour.

The people at the top of a business have a responsibility for its health and their own behaviour needs to exemplify what is expected from others. Leaders get the culture they behave. They set the example, but good citizenship is not simply about what people at the top of the firm do.

Good citizenship is embodied in firm culture and how everyone interacts with clients and suppliers. It is about the myriad daily exchanges and patterns of interactions and working. It is very much around what is expected and prioritised, the climate in which people can raise and discuss issues and concerns, and their willingness to offer the feedback needed to help people understand the impact of their behaviour. Everyone has a responsibility to act and behave in ways that stay true to the purpose of the business and to its long-term health and standing in the wider world.

Leadership priorities

We recently published some research on how leadership needs to be different as regulation tightens in response to the challenges that engulfed the financial services industry.⁴ We talked to professionals at 21 of the world's leading financial services organisations about how to create an ethical high-performance culture. We then connected what they said with our own experience of organisational change.

We identified the following three areas for leaders to focus on:

1. offer some specific principles to guide action, taking account of the wider stakeholder perspectives;

2. align re-enforcing mechanisms such as recruitment, recognition and reward; and

3. act as stewards of the business, holding to its purpose and being aware of
   your legacy.

1. Provide principles to guide action

It is helpful for people to have consistent, clear messages about what is important to guide their decisions. The most effective of these are set in a current context and are immediately relevant to people. For instance, if the business needs to cut costs, then leaders need to offer specific direction on financial spend.

Most businesses invest time and effort in values statements that are intended to set broad guidelines for behaviour. I do not doubt they existed in the financial businesses whose people acted immorally or illegally (such on PPI miss-selling or LIBOR rate fixing). Too often, however, they are simply empty phrases, framed on meeting room walls and in annual reports. Usually, they are generated by senior leaders and then cascaded down the business for others to follow. Many value statements have vague generalities and platitudes. In our experience, lived values are usually quite different to an organisation's espoused values. It is leadership behaviour that matters, not words.

Where corporate values do have some substance, they are usually inherited and embedded from the early days of the business. They are part of the founding tradition and preserved in the culture, with re-enforcement both from leadership behaviour and the corporate infrastructure. They stem from the motivational roots of the business itself. People are attracted to the culture because of what it stands for and they re-enforce and deepen the way they
live the values.

Individual values are deeply rooted and change slowly, if at all, through time. Companies can encourage and expect certain norms of behaviour, but they cannot impose values on people. What they can do is recruit those who hold values that align with the business culture. The key is to understand the underlying motivations of potential new recruits and how those match with your firm's culture (see box: Recruiting for aligned values).

 

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Recruiting for aligned values

• Understand the key dilemmas people face in their roles and how they typically respond to them

• Ensure the behaviours you want to see have real business significance; do not assume they will only be found in people who are like you

• Explore past instances where senior recruits have worked through relevant dilemmas and how they were resolved

• Provide common examples of dilemmas junior recruits might have to face and explore how they might approach them

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2. Align behaviours with reward systems

Aside from recruitment, the other factors
that can influence the way people behave
are the firm's processes for recognition
and reward. This is a complex area
because of the interplay between
individual expectations, corporate
priorities/culture and industry practices.

One of the challenges for financial services firms is that they cannot change reward mechanisms or levels without taking account of industry norms. People can be quite mobile between firms and, in some cases, internationally. Many in the sector were mainly motivated by the financial rewards offered; changing them some
years later is far from easy.

Large law firms also need to look at their peers, other professional services firms and their financial services clients when considering rewards. There is a competitive marketplace for high-quality people and reward is one of the factors which entice some people to move between firms. Shifting the culture of a global industry is a significant problem which requires input from multiple stakeholders and takes time.

Senior leaders need to be concerned about the alignment between their reward structures and the culture they want to encourage. Many firms claim that teamwork and collaboration are key to corporate success, yet retain reward mechanisms
that focus on individual accountabilities
and contribution.

Actions will always speak louder than words; if you want to encourage collaboration, then you need to ensure this is re-enforced.⁵ In recent years, for example, Microsoft has shifted its approach to performance management as part of a process to better align its culture to a new strategy as the markets in which it competes have changed.

Having said this, the influence of reward on the behaviour of professionals is greatly exaggerated and there are many other motivators at play. Most people want to feel their pay is fair relative to others, but it is not the money itself which drives them. Some lawyers are driven to be recognised as leaders in their specialist fields, which leads them to work hard for clients. Others are motivated by the intellectual challenge of the nature of the clients and issues they work with.

If you want people to be good corporate citizens, then you need to offer guidance on what is expected and ensure alignment between leadership behaviours and recognition processes. This means recognising and promoting those who are seen to make a valuable contribution to
the life and development of the business more broadly, not just those achieving
or surpassing their financial targets
or objectives.

Most people want to work for a firm which stands for something positive and offers some meaning and purpose in the world, where they can make a real contribution as well as grow and develop themselves. Tapping into such intrinsic motivators by focusing on what the firm stands for, how it creates a benefit for
others and what it is working toward can make it easier to encourage positive corporate behaviours.

3. Enable business stewardship

This links to the third finding from our research in the financial services sector, which has relevance elsewhere: senior leaders need to recognise their role as
a steward of their business.

There is often quite a strong sense of stewardship among law firms. There is typically pride in the firm, its reputation in the marketplace and its commitment to developing a future generation of partners to secure its long-term health. However, the structures and assumptions which have served firms for many generations need to be rapidly adapted in an era of globalisation and technological advances. The ways of accessing and working with professional knowledge and expertise are changing
and current practices may be much less relevant in the future.

When firms are facing rapid and extensive market change, it becomes even more important for leaders to revisit their core purpose to guide their response strategies, while taking into account the needs of their clients and stakeholders.

One of the characteristics of citizens in a healthy society or organisation is that they are engaged in the big questions and changes faced by all citizens. They connect with others across the organisation and outside to process what is happening and what it means for them, the firm and others. This is leadership in action throughout the organisation. The role of senior leadership is about encouraging and enabling people to engage in these discussions and processes. It is about helping to frame the issues, enabling connections and listening to the views, ideas and opportunities emerging.

The challenge for leaders in senior roles is their desire to take responsibility and try to force a way forward. It is built deeply into human systems that the people at the top become driven by anxiety to find the answers and define the way forward. Usually, they have reached the top because they have demonstrated an ability to get things done.

The problem is that this is likely to be disempowering and disengaging for others. Consequently, staff will often lack ownership of the issues and will resist change. To encourage good citizenship, senior leaders need to resist the impulse to take responsibility and move quickly into action. They need to share the issues and challenges and create fora for people to engage with them. They need to allow staff to share in the strategic uncertainty and allow the organisation's future direction to emerge from across the wider community. This is much more likely to result in actions that will preserve the long-term health and development of the business.

Citizen leaders

Leadership is expressed through moments of action across the firm, not bound in a person's title or role. Good corporate citizens take leadership daily through their actions. They take responsibility both for themselves and for their firm, holding in balance the immediate issues and the long-term health of the business. They also take leadership in how they respond to the behaviour of others, offering feedback, challenge and support to help others to give their best, as well as responding to the feedback they receive.

Senior leaders need to act as role models in this respect because they are the most visible. They also need to to align recruitment, reward and recognition systems to support the behaviours desired in the business. Finally, they need to treat their colleagues as equal citizens, to share in the big issues and challenges facing the business and to allow them to live with the uncertainties, anxieties and opportunities arising so that they will engage with the strategic direction which emerges.

Christopher Smith is managing director
of organisational and leadership development at global performance improvement company GP Strategies
(us.gpstrategies.com)

References

1. See 'Maverick partners: Tactics for dealing with difficult colleagues', Adrian Crawford, Managing Partner, Vol. 18 Issue 3, November 2015

2. See 'There is no place for maverick partners in the age of artificial intelligence', Manju Manglani,
   Managing Partner, Vol. 18
   Issue 3, November 2015

3. See 'VW scandal a "stark reminder" of the dangers of compromising firm values', Manju Manglani, Managing Partner, 28 October 2015

4. See Leading in the New Regulatory World, BlessingWhite and Bath Consultancy Group, June 2015

5. See 'Competing via culture: How to give clients a true one-firm global service', Heidi K. Gardner and Rebecca Normand-Hochman, Managing Partner, Vol. 18 Issue 2, October 2015

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