In 1727, Benjamin Franklin formed the Junto, a forerunner of modern-day civic clubs. It was dominated by businessmen having goals of community fellowship and service. Charter members were a shoemaker, a surveyor, a woodworker, a glazier, and four young printers. Character was a significant concern of that organization. Franklin’s own values included temperance, order, resoluteness, industry, sincerity, justice, moderation, cleanliness, and humility. Clearly, these are poles apart from current-day expressions such as “one-upmanship,” “looking out for number one,” and “assertiveness,” which have captured considerable public following1.

Management author Peter Drucker states:

Each organization has a value system that is influenced by its task. In every hospital in the world, health is the ultimate good. In every school in the world, learning is the ultimate good. In every business in the world, the production of goods and services that please the customer is the ultimate good. For an organization to perform at its highest level, its leader must believe that what the organization is doing is, in the last analysis, an important contribution to people and society, one that is needed or adds some value3.

In A Business and Its Beliefs: The Ideas That Helped Build IBM, Thomas Watson, Jr., explains the importance of values:

  1. To survive and achieve success, an organization must have a sound set of values on which it premises all policies and actions.
  2. The single most important factor in an organization's success is its leaders' faithful adherence to those values.
  3. If an organization is to meet the challenges of a changing world, it must be prepared to change everything about itself except its core values.

The need is to be open to change in structure, tasks, technology, and people, but always guided by, and remaining true to, basic or core values.  Watson goes on to say that when IBM has been successful, it has been true to its three core values--respecting the individual, providing the best customer service possible, and performing every job with excellence. And when IBM has gone astray at times in its history, it is because it lost sight of--or deviated from--one or more of these three business values4.

Values and the Importance of Courage

Certain values are mentioned most often in the American workplace:

  • Honesty in all dealings, as a foundation for all other values.
  • Respect for others, as shown by consideration for their beliefs and needs.
  • Service to others, guided by the principle of doing for others as you would have them do for you.
  • Excellence in all work performed, reflecting the Greek ideal of excellence as a virtue, and resulting in both public admiration and personal pride.
  • Integrity, having the courage to act and live by one's convictions, thus providing strength in moral dilemmas.

Philosopher-psychologist Rollo May explains the importance of courage:

Courage is not a virtue or value among other personal values like love or fidelity. It is the foundation that underlies and gives reality to all other virtues and personal values. Without courage, our love pales into mere dependency. Without courage our fidelity becomes conformism.

The word courage comes from the same stem as the French word Coeur, meaning "heart." Thus just as one's heart, pumping blood to one's arms, legs, and brain enables all the other physical organs to function, so does courage makes possible all the psychological virtues. Without courage, other values wither away into mere facsimiles of virtue.

An assertion of the self, a commitment, is essential if the self is to have any reality. This is the distinction between human beings and the rest of nature. The acorn becomes an oak tree by means of automatic growth; no courage is necessary. The kitten similarly becomes a cat on the basis of instinct. Nature and being are identical in creatures like them. But a man or woman becomes fully human only by his or her choices and his or her commitment to them. People attain worth and dignity by the multitude of decisions they make from day-to-day. These decisions require courage5.

Many leadership situations are characterized by ambiguity, uncertainty, and even danger. The leader must be able to act in spite of these factors. Many decisions will require overcoming fear, gritting one's teeth, and doing what must be done. True leadership requires courage to act and live by one's convictions.

Leadership and Values

Why is it important for an organization to have values, and what is the role of the leader in establishing and enforcing values? There are many ideas on these questions, but few are as influential as those of the philosopher Plato.

Plato answers these questions as he lays the groundwork for his book The Republic. He retells the myth of Gyges and the invisible ring: A young shepherd stumbles upon a magic ring that has the power to make the wearer invisible. Immediately, he takes advantage of the ring to do things he could never do before -- eavesdrop, steals, trespass -- and in a short time, he amasses wealth, kills the king, seduces the queen, and rules the land14.

The moral of the story is that, given power without accountability, an individual may do terrible deeds that are harmful to others. People need the values of a just society and the oversight of wise leaders to govern their actions; otherwise, they may engage in selfish and destructive behavior.

Plato's Allegory of the Cave

Imagine human beings as though they were in an underground cave-like dwelling with its entrance open to the light across the whole width of the cave. They are in it from childhood with their legs and necks in bonds so that they are fixed, seeing only in front of them, unable because of the bond to turn their heads all the way around15.

In this allegory, people trapped in the cave represent the world’s ignorant masses. They see only representations of objects, sights, and sounds that can be discerned by the physical senses. The individual who escapes the cave to witness the true nature of things is the philosopher. Using intellect, philosophers are able to discern forms -- abstract, immutable truths that are the real foundation of the universe. The philosopher who escapes the cave knows the true nature of reality16.

The Republic is ultimately concerned with the question of justice. Plato believed that to establish justice, one must know what is good. Therefore, philosophers who understood the form of the good should rule as kings. The rest of society should be organized to fulfill those rulers' demands17.

Plato believed that for the good of all individuals, a republic is needed, administered by philosopher-kings. The argument can be made that, in a similar way, every workplace needs high ethical values upheld by strong and caring leaders.

It must be recognized that a leader may have false or harmful values that are injurious to others. The examples of Hitler, Stalin, and many other tyrants in history can be cited. These cases only point more clearly to the need for caring leaders who are both strong and good.

How Leader Behavior Influences Employee Conduct and Organizational Reputation

People will forgive the leader who fails to manage by objectives, is inefficient in the use of time, or fails to achieve the smoothest human relations, but they find it difficult to forgive the leader who is immoral and non-principled. Such a person lacks moral authority and is not trusted or respected. Even as important as vision is to leadership success, more important are values, because the values of the leader will determine the rightness and wrongness of all that he or she does.

The leader sets the moral tone of an organization. What the leader says and does regarding values has an enormous influence on others. More than any memo, directive, or brass band, the actions of the leader communicate. The leader's actions set the standard for people's behavior toward one another and for performance on the job.

When Warren Buffett took over as interim chairman of Salomon after the Treasury auction crisis, his first action was to instruct senior managers to report "instantaneously and directly" any legal violations or moral failures by Salomon employees. He told the firm's assembled personnel: "Lose money for the firm, I will be very understanding; lose a shred of reputation for the firm, I will be ruthless." Leaders like Buffett understand instinctively what researchers have documented--a commitment to basic values such as honesty and responsibility is crucial for building trust, and trust is the bedrock of organizational survival and growth over the long term21.

The more you understand your values, the clearer you can be in your ideas about life, the more confident you can be in your actions, and the more developed you will be as a leader.

Because of the ability to influence moral behavior, the leader should address two questions:

  1. What values or principles do I wish to promote?
  2. Are my actions helping accomplish that goal?

Author Carol Cooper summarizes the need for values-based leadership: The world needs more people who do not have a price at which they can be bought; who do not borrow from integrity to pay for expediency; who are as honest in small matters as they are in large ones; who know how to win with grace and lose with dignity; whose handshake is an ironclad contract; who are not afraid to go against the grain of popular opinion; who are occasionally wrong and always willing to admit it. In short, the world needs leaders23.