Joy at Work. Dennis W. Bakke
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gets confused because of another concept we hold dear: equality. The logic of equality goes something like this: “I’m the same person or do the same job as another person, so I should be treated the same as that person.” Equality and fairness are not synonyms, however, and neither captures organizational justice the way I use it.
Leaders of organizations (including unions and corporations) consistently ignore the fact that employees are unique.
I can best illustrate my point using an example from my home. Even at an early age, my son, Dennis Jr., loved to spend hours of his time alone in his bedroom reading, designing games, and pursuing other solitary interests. His younger sister, Margaret, loved to spend much of her spare time in the kitchen or den with family members and friends. Whenever we had a party she was in the middle of the festivities, engaging older and younger people in conversation. When Dennis Jr. and Margaret misbehaved, my wife and I attempted to discipline them in ways consistent with their different personalities, even if both had committed the same transgression. It would have been easier and more conventional to punish them the same way, perhaps by sending them to their bedrooms alone for the evening with no TV or telephone privileges. But Dennis Jr. would have thought this was great, and Margaret would have felt she had been exiled from her family and cut off from her friends. We love them equally, but they are unique individuals, and we had to treat them differently in order to be fair or just.
While parents often understand that children need to be treated differently to get a fair result, leaders of organizations (including unions and corporations) consistently ignore the fact that employees are unique. Most managers prefer not to get enmeshed in the personal lives of the employees who report to them. This often makes it impossible to make judgments about individuals and their performance consistent with their personal differences. Furthermore, employees and their union leaders generally don’t trust managers to make fair judgments about individuals. As a result, businesses are forced to pigeonhole their employees according to artificial classifications such as years of service, union membership, level of education, and job title. If real justice or fairness were applied in organizations, it would radically change most of them, sometimes in very surprising ways—and almost always for the better.
In making “social responsibility” one of our core values, we recognized that every corporation is given certain rights and privileges by the state. In return, the company should operate in ways that benefit society and mitigate the potential negative consequences of its activities. Improving the environment is an obvious way to be socially responsible. For example, AES was widely praised for its programs to offset CO2 emissions from our U.S. and U.K. facilities by helping to plant 52 million trees in Guatemala and by preserving hundreds of thousands of acres of forest land in the Amazon region and in Paraguay. Charitable activities to help the disadvantaged and safety programs for employees and the public constitute other socially responsible corporate activities.
While these undertakings are important, I gradually concluded that we could serve society best simply by fulfilling the company’s mission. The primary social responsibility of AES was to be the best it could be at meeting the world’s need for safe, clean, reliable, and economically priced electricity. That took 90 to 95 percent of our resources and of our people’s skills and efforts.
For example, in Leflore County, Oklahoma, unemployment fell from 13.6 percent to 4 percent after AES built a 320-megawatt plant there. But that was minor compared with what happened after AES acquired a distribution company in the Dominican Republic in 1997. The year before we bought it, 385 Dominicans had died in electricity-related accidents within our utility service area—a fairly typical toll at the time. By 2000, the number of fatalities had dropped to 29. In other words, we saved hundreds of lives because AES took seriously its primary mission “to serve society in an economically sustainable manner with safe, clean, reliable electricity.” I can think of no other “project” AES has undertaken that was as socially beneficial.
The selection and identification of our shared values were just the first step in creating an ethos for AES. The role of these values and principles in the life of our organization became more important each year. After that first strategy session, I kept working to define what our values meant in a practical sense, both to me and to others in the organization. We then integrated the values into all aspects of AES life. As a result, we never needed special values or ethics initiatives or programs to encourage diversity or community involvement. These things were part of our everyday working lives. They were perfectly compatible with the way we did business. As Lynn Sharp Paine, a professor at the Harvard Business School, put it, “Values are not a ‘management tool’ or a special type of management system that runs parallel to a company’s audit or compensation system. Nor are they bits of ethereal matter … [they are] beliefs, aims, and assumptions that undergird the enterprise and guide its management in developing strategies, structures, processes, and policies. They constitute an organizational ‘infrastructure’ that gives a company its distinctive character and ethos—its moral personality.”
When we first defined our values, two of the AES senior leaders who had participated in the conference were skeptical. They had a hard-nosed, no-nonsense approach to business and took a dim view of the “soft, touchy-feely stuff” that they believed was on the table. Economics was “hard” and important; other things were not. Knowing the belief system and personalities of the two, I was not particularly surprised by their lukewarm response.
The surprise came the following year when we gathered for another strategy meeting. We decided to raise the Seven-S framework we had drafted a year earlier and asked for evaluations, including suggested changes. Almost immediately, the two skeptical leaders jumped into the conversation. “Don’t change anything,” one of them said. “We love these values. They really work! People like doing business with us. I think it’s because they trust us.” They were nonplused when I responded with a downcast face and silence. “What’s wrong, Dennis? We think this stuff is great. People like to do business with us because of fairness and integrity.”
“I think you have missed a most important point,” I said. “We are trying to live these values because they are right, not because they work.” High ethical values rarely conflict with pragmatic economic behavior. However, this does not mean that economics should be the reason or motive the organization undertakes to live the shared values. Amar V. Bhide and Howard H. Stevenson explained why in a Harvard Business Review article titled “Why Be Honest if Honesty Doesn’t Pay?” They wrote: “There is no compelling economic reason to tell the truth or keep one’s word—punishment for the treacherous in the real world is neither swift nor sure. Honesty is, in fact, primarily a moral choice. Business people tell themselves that in the long run they do well by doing good. But there is little factual or logical basis for this conviction. Without values, without basic preference for right over wrong, trust based on such self-delusion would crumble in the face of temptation. … And for this, we should be happy. We can be proud of a system in which people are honest because they want to be, not because they have to be.”
Why it’s important to live values and how we judge their efficacy were recurring questions inside and outside the company for 20 years. They were also the source of many disagreements between me and some AES board members and managers, not to mention students of management outside the company.
Related to the question of whether we should adhere to values simply because they are right is whether values should change when circumstances change. Should we adjust our interpretations of principles when the stock price goes down or our product doesn’t sell well or we make a mistake on an acquisition? My answer has been no, but it is a no that remains open to further examination and new insights.
I believe there is a transcendent truth behind principles like integrity and justice that does not and should not change over time and should certainly not be adjusted because of economic setbacks. Adjustments in definition and interpretation should take place only when we gain new understanding of the truth. Our understanding of the values may change with time, but the values and principles themselves are timeless. As an old rhyme puts it, “Methods are many, principles are few. Methods change often, principles never do.”
“Methods are many, principles are few. Methods change often,