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How to avoid becoming the next KPMG


 

Most organisations profess to have a set of values, but, when it really matters, does the organisation enable its people to live by them?

By Dr Tim London


Only a few months ago, KPMG had an enviable reputation in South Africa. As recently as May this year it was ranked as one of the country's ten most attractive employers in Universum’s 2017 employer rankings.

The headlines it has been making recently, however, have not been favourable ones. KPMG has been heavily implicated in the story of state capture, particularly due to the report it put together for the South African Revenue Service (SARS) and the audit work it did for companies linked to the Gupta family.

The obvious question is: What went so wrong that a once-esteemed company could find itself on the wrong end of reporting in the Sunday papers? And how can other organisations ensure this doesn't happen to them?

Lived values

Almost every organisation professes to have a set of values; like most, KPMG puts theirs on its website. They include 'we lead by example', 'we seek the facts and provide insight', and 'above all, we act with integrity'.

It is self-evident that had everyone involved in KPMG's work for SARS and the Gupta family companies lived up to these values, the company would not find itself in the position it does now.

Having values that are espoused in posters on the wall or on a company website is easy. What matters, however, is that they are actually lived in the way the organisation operates. Do your people really care about your organisation's values, and do they work in an environment that constantly speaks to them?

If not, changing this is not easy, but it starts with ensuring that your organisation is built around a purpose – an understanding not just of what it does, but why it does it. This is the foundation of any organisational culture; it's the difference between having people who are doing work because it’s part of their job description and people who believe they are part of something bigger than just their day-to-day tasks.

For that “all in this together” culture to emerge, however, it has to be supported by an organisation's structures, which would be its formal rules and regulations, and its people. It has to inform who is hired, who is promoted, and why; it has to be clearly linked to every rule, procedure, and decision throughout the organisation

If there is no coherence between the organisation’s structures, culture, and people, you are forcing people to choose between themselves or the organisation. If they have to choose between what is best for themselves and what is best for the organisation, they will almost invariably choose the former, with thoughts about the organisation coming only after they have done what’s best for themselves.

When what is in an individual's best interests is also in the organisation's best interests, this obviously creates an environment where counterproductive or unethical behaviour is less likely to occur.

The right people

Organisations don’t do things; people do things. If leaders want the organisation’s values to be lived, they have to think about who they’re hiring in relation to those values, not just their skills.

While it is important to bring in people with the right skills to do their jobs, it is also vital to identify what they are passionate about, their core values, and how these match the values of the organisation. In an interview situation, this means asking more than just what the candidate believes in; asking this alone is likely to lead to them simply reciting the values from your organisation’s website back to you. But if you follow up by asking them how they have actually demonstrated those values in the past, and what challenges they have faced in staying true to them, it will quickly become clear whether their first response was for show. It also allows you to be very clear with them about what the organisation’s values are, which allows you to hold them accountable to those same values if they join the organisation.

This elevates the process beyond just knowing someone’s skills to include whether they are a good or bad fit for the organisation. It's then important to continue to show that these values matter – that those who live up to them are rewarded, and those who don't are penalised.

Recent research from the UCT Graduate School of Business points to the rather disheartening fact that only around a quarter of people are able to live out the values that are important to them consistently in their workplaces and social contexts. Imagine the power if this situation could be reversed?

Having shared values allows people to challenge each other constructively. They can question whether what they or their colleagues are doing meets with the values of the organisation, or not. In the case of KPMG, we know that a junior auditor flagged problems in the Gupta company audits, but these concerns were ignored. If the company truly had a shared set of values, perhaps that process would have gone differently, as “doesn’t this break our shared value of integrity?” focuses on a shared concept, rather than hierarchical positions or profit being the deciding factor of how this point was treated.

Values-based leadership

Those in leadership positions have a responsibility to set this example, starting with being clear about their own values and how they impact the way in which they go about their work. If one of your values is excellence, for example, you might be a leader who asks a lot of questions, who keeps pushing for more, and who is never satisfied. If the people you are working with don't understand why you engage with them the way you do, they might perceive this as relentless micro management.

If they understand why you do this, however, they can then engage with you and around what the best way of getting excellence from them might be. It’s much more constructive to have someone say to you “If you want excellence from me, the best way to engage with me would be…” than for an annoyed colleague to grumble about you behind your back in the break room. That helps both of you to live your values and better serve the organisation.

Ultimately, leaders have the responsibility to create an environment where pressures from both inside and outside of the organisation are less likely to cause people to stray from their values. No organisation exists in a vacuum and any number of things might have an impact – a difficult economy could reduce how much work is available, an employee may have trouble at home, or you may have clients who demand that work is done a certain way.

The biggest challenge for leaders is to ensure that when these pressures arise, their organisation’s structures, culture and people are all pulling together so that these challenges are avoided or tackled constructively. The KPMG example illustrates that we live in a world where these kinds of pressures will always be present, even at some of the world's most respected organisations. True leadership is making sure that you have created and supported an environment which ensures that even when pressure is applied, people will stay true to their values and those of your organisation.


Dr Timothy London is a senior lecturer at the Allan Gray Centre for Values Based Leadership at the UCT Graduate School of Business. 

 

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