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The question I want to address here is: what to lead an organisation by? Values, codes or rules? Of course, it is not an entirely either/or scenario. Even so, can we perceive the possibility of running an organisation solely based on values?
A look from a different perspective is also interesting enough to follow. What could one deduce when a company is run by rules versus codes and values?
Rules based organisations
they give an employee a clear and usually strict framework in which to move. Strict rules frameworks have lengthy decision-making processes, very little empowerment of employees, are hierarchic and, important to note, a very self-centred nature. In an organisation led by rules administration is, more often than not, rampant. You need to define rules, implement them, control them, check work-arounds and loop holes, redesign rules…. The need to collect internal information, to document, to be more and more granular takes a lot of energy from the actual focus of the organisation. Finally leading to a loss of purpose outside of managing stuff. It is a power play tool for the control of information and the right to interpret information.
Codes based organisations
on the path to change toward a values based organisation we can make out a codes based organisation as a good step and also as an advanced state for most organisations. It will have few rules, mostly in business-critical areas. It will have substituted them with codes. Codes define attitude and parameters to follow within processes. For example, a decision-making code would be “anyone directly impacted by the decision has to be involved within their role and know-how”. It does not say how many need to sign-off, how much an individual can decide or what who can do. It does not regulate the amount. Of course, legal compliancy is ingrained, as well as financials. However, most importantly, only those really impacted are involved as opposed to entire hierarchies. Codes are derived from a purpose and corresponding values.
Values based organisations
these organisations are highly self-regulated. They follow a common purpose and a corresponding value set which regulates their actions and activities. Depending on the purpose of the organisation a different set of values could be leading. Some are always valid common values. Those are centred around core values such as trust, truthfulness etc. Others are more centred around cooperation, communication and productivity. You will find organisations that follow a purpose and values are self-regulated even to the extent of redefining how to deal with remuneration, strategy or investments by letting those decide who know and are impacted. You will not find hierarchic structures or bloated administrations. The maturity of employees is very high, if regulation is required it is by the surrounding employees while values are the regulative.
The two necessary inherent core attitudes we should have, while developing an organisation toward values as the driving force, are: respect for the achievements of the company as well as respect for the current maturity of the employees. A step taken, should not be big. Just big enough to digest without any added effort through change management. The approach needs to be incremental in its implementation design, either confirming the direction taken, giving new directions or pointing to a diversion. That way an iteration is built on success and experience. Gaps are not left open but filled. There is an “instead of…” as a replacement for sometimes dropped beloved practices.
Running an organisation by values is only possible when the organisation has a high value based maturity level. As discussed this cannot be achieved in one go even if there is a need to bring about change resulting from market factors, ongoing digitisation, need for innovation, management change or other factors. The approach seems slow at first but is much faster eventually. It is driven by internal forces as opposed to external pressure. It is understood as a continuous process for any learning organisation. From the rule of rules through a codes based learning phase to a values based self-organisation all steps are important for the sustained success of transformation.