The Principles of a Decision-Maker Organization

A mission statement that challenges people to create the world’s most fun place to work is essential for organizations that want their employees to have one of the most gratifying experiences in their lives. This end requires no other justification. However, for executives who can’t get the dollar signs out of their eyes, it’s worth noting that the link between fun and superior performance is extremely strong. Research shows that when employees feel like tightly controlled robots, with no opportunity to make decisions or take action on their own, productivity and performance decline.

Even so, at AES it required constant attention to keep fun and our other shared values at the top of our list of priorities. Merely listing the key principles of an organization on a wall plaque will never make those principles a vital component of a company’s collective thinking. If values and principles are to set the tone for organizations and guide their decisions, they must become part of every task, plan, discussion, and operation.

Most employees make corporate decisions on the bases of what they believe their leaders value. How do they determine what their leaders think is important? They pay attention to criteria used for determining compensation. They read company presentations to shareholders and banks. They consider what factors their bosses use in making decisions. They track how leaders steward corporate resources. They watch how leaders live their private lives.

Three purposes or goals–service to society, economic health, and ethical values–should drive a company in equal measure. Major business decisions should be evaluated both on the basis of economic and noneconomic criteria. Strategic planning should start and end with an assessment of whether a plan serves all three elements of a company’s purpose. Compensation decisions should reflect “performance” in all three aspects of the company mission. Board members and other company leaders should stress the reasons that the organization has goals beyond economic success. In hiring and firing decisions, a person’s performance in non-economic areas should get heavy consideration. Communications with investors, banks, communities, and other stakeholders should describe the major aims of the organization and include a note of humility concerning its ability to live up to the standards it sets for itself.

I believe that private, profit-making institutions rather than governments and nonprofits can supply most of the products and services needed in society. If profit-making companies make “serving society” an important corporate purpose, organizations might even do a better job of providing services to the public than governments or nonprofit organizations. Moreover, capital is more easily obtained by profit-making companies because investors and financial institutions have the incentive of making a return. Non-profits are limited to donations or government allocations, which are often more difficult to obtain. There is no reason profit-making organizations cannot be just as effective as their nonprofit cousins in operating schools, hospitals, welfare organizations, and other public services.

Adapted from Dennis Bakke’s Joy at Work.

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