The Heart of the Matter

Energy and direction are the primary attributes of personality. Energy comes from willpower and effort. Direction comes from ideas. Ideas inspire. They possess the power to release energy and channel it in a creative direction. There are several types of ideas that give direction to a company and constitute the core of its personality, its psychic center. These ideas include the beliefs, values, mission, goals, objectives, and attitudes that influence its thoughts, guide its decisions, mold its policies, and determine the course of its actions. The psychic center consists of those ideas that actually influence corporate behavior.

There is a tale from the Arabian Nights entitled "Barmecide’s Feast," about a prince who decided to amuse himself by inviting a beggar to an imaginary feast of words. The beggar was led into a grand dining hall laden with ornately decorated covered dishes. The prince went around the table describing each dish in mouth-watering terms one by one before uncovering the empty plates. The beggar eventually caught on to the prank and pretended to eat and drink from the empty dishes. Feigning drunkenness, he then got up, stumbled across the room, and punched his host in the face.

It has become fashionable these days for some companies to publicize idealistic statements of corporate philosophy, which are essentially feasts of words. This has evoked a natural and justifiable response of skepticism and cynicism from many people who are reluctant to assume that a company’s pronouncements necessarily reflect its intentions. The relationship between words and deeds is the crux of the issue. To what extent do a company’s stated beliefs actually determine the way it acts?

When a man died of gunshot wounds, the coroner’s investigation found that it was a case of suicide. The man had taken out a Northwestern Mutual life insurance policy, which did not provide coverage in the event of suicidal death. But Northwestern Mutual was not quite satisfied by the coroner’s report and decided to launch an investigation of its own. The company concluded that there was a reasonable doubt about whether it was a case of suicide and paid the full value of the policy to the deceased man’s family.

Why on earth would a company act contrary to its own financial interests when law had freed it of any possible liability? Such acts, numbering in the hundreds, maybe thousands, are characteristic of Northwestern Mutual’s personality. They are expressions of the company’s mission, which is stated in a corporate credo dating back to 1888: "The ambition of the Northwestern has been less to be large than to be safe; its aim is to rank first in benefits to policyholders rather than first in size." In practice, this means that the company is highly selective in underwriting new policies but extremely liberal in awarding benefits even under doubtful circumstances. A century-old credo, a simple idea, charts the company’s course of action. But there are still questions that remain unanswered: Why? Who? and How? Why does a company adopt idealistic values and then seek to follow them? Who determines a company’s guiding values? How are the values actually translated into action?

There is an old proverb that says, "Thought is the soul of act." Ideas determine decisions; decisions dictate actions. There are virtually hundreds of ideas that influence the behavior of a corporation. The impact of ideas depends on their inherent validity, the extent to which management is committed to them, and the level at which they are implemented. A real test of an individual’s or a company’s commitment to an idea is the way it behaves during a crisis.

Such a crisis descended on Johnson & Johnson in the fall of 1982 when seven people died in Chicago of cyanide poisoning after consuming extra-strength Tylenol capsules. A company whose products had become a byword for quality, gentleness, and the finest in health care for nearly a century was suddenly associated in the minds of millions with the very antithesis of the values it had tried to embody. At stake was a $400 million a year product and the reputation of one of America’s most respected companies.

The FBI and the Food and Drug Administration counseled Johnson & Johnson not to take any precipitous action. Despite that advice, Johnson & Johnson decided to immediately recall the 31 million bottles of Tylenol at a cost of $100 million. The company’s second major decision was made a few weeks later—to relaunch the product in triple-sealed, tamperproof packages. Contrary to the consensus of the experts, within a year the product had regained 90 percent of its previous market share.

Johnson & Johnson’s credo, which was written by General Robert Wood Johnson 40 years ago, is based on two central beliefs. The general expressed the first of them in these words:

From this belief arose the text of the credo, which sums up the responsibility of the company to its customers, employees, the community, and its shareholders. It states that the company’s "first responsibility is to the doctors, nurses and patients, to mothers and all others who use our products and services." On the basis of this belief, the company felt the obligation to withdraw $100 million of product from the market—not only to eliminate even the slightest possibility of any further poisonings but also to alleviate the widespread anxiety arising from the events. It acted to protect the public’s safety and also to bolster the public’s emotional security.

On the night of March 1, 1984, the lights were burning a little brighter than usual at the New York headquarters of The Wall Street Journal. A news story was about to break, and the editorial staff was carefully examining the facts as they came in, sifting substance from rumor, trying to arrive at the truth. The largest-selling newspaper in America, published by one of the most admired companies in the country, which over the last ten years has earned an average 26.3 percent return on equity (second best in the United States), a close observer of the business world, a relentless seeker after the secrets of corporate failure and success—perhaps the Journal has learned more from watching others than it reveals to its readers. Its appeal is not the alluring excitement of sensationalism and scandal but, rather, authoritative and factual reporting backed by integrity, reliability, and a commitment to the highest ethical standards of journalism.

But on this particular occasion, the big story was a scandal, and the subject of investigation was the Journal itself. That day the Securities and Exchange Commission had notified the Journal that one of its reporters for the "Heard on the Street" column, R. Foster Winans, was under informal investigation for periodically leaking market-sensitive information to a stock trader that may have affected trading in the shares of 21 companies.

At stake was the Journal’s most precious possession—its reputation for integrity and impartiality. It had to make a difficult choice—to chase after the story and reveal all of the facts or to hide behind the screen of legal precedents that provide journalists with a certain degree of immunity from public scrutiny. The Journal made its decision immediately. The next morning it came out with a feature article on market leaks, in which it disclosed the SEC investigation of Winans. A few weeks later, after the first round of investigations was over, it published a front-page article headlined "Stock Scandal" in which it revealed all available information on Winans and the investigation. Meanwhile, Winans had been fired.

These two incidents do not prove that companies always act in the public interest. But they do illustrate how a company’s central beliefs give direction to the decisions and actions of top management during a crisis. Such crises are, of course, rare. Of more practical importance is the impact of a company’s central ideas on its normal day-to-day functioning.

One corporation that has become renowned for living up to its word is Sears. The most striking characteristics of Sears are its size and its plainness. With 798 retail stores and 2,389 catalog-sales centers, with 60 million Sears credit card holders representing half of all American families, with nearly 450,000 employees worldwide and almost $39 billion in annual sales, the company is gigantic and possessed of enormous reserves of vitality.

Yet, in spite of its size, Sears is somehow very ordinary. The company is still grounded in the simple values and levelheaded common sense of middle America’s rural heartland, and this is by far its greatest strength. As the corporate director of human resources, Mary Kay Kennedy, put it: "We are about as U.S.A. America as anybody can be." Sears’ personality is rooted in values like utility, reliability, consistency, and worth. Its patient, unpretentious, nonaggressive demeanor has often misled people, especially sophisticated northeasterners, into seriously underestimating its capabilities and intelligence. But Sears is not lacking in either, as its remarkable history amply demonstrates and its present diversification into financial services will undoubtedly confirm.

One thing nobody doubts about Sears is its integrity. Just before the turn of the century, Julius Rosenwald introduced a policy at Sears that was highly instrumental in the growth of the fledgling mail-order business into the largest retailer in the world. That policy, which can be found printed in bold letters above the front door of every Sears store in the country, reads "Satisfaction Guaranteed or Your Money Back." There is nothing very high-sounding about this policy today, primarily because Sears popularized it so widely over the decades that most major department store chains have been forced to adopt something similar—at least in words, if not in practice. But in 1895 such an idea was far from common.

When Rosenwald joined the company, he found that Richard Sears, the founder, had quite a penchant for poetic license in advertising his wares. At a time when the company was barely known outside of Chicago, Sears emblazoned the cover of his catalog with the modest claim: "Cheapest Supply House on Earth. Our Trade Reaches Around the World." The catalog included obesity powders to get rid of superfluous fat and a hair restorer—hardly products any company would like to back by a guarantee. Rosenwald recognized that in order to win the confidence of conservative and skeptical farmers living in the rural areas, the catalog had to be factual. He curbed Sears’ literary impulses, introduced clear, factual descriptions of each product, and established the famed policy.

The policy itself is based on two values—the value of trust and the value of reliability. It says, in effect, that Sears is a company you can trust because it sells reliable, quality merchandise. The idea of a trustworthy and reliable merchant is certainly appealing. But the power of the idea arises from the fact that it has been converted into a policy that is enforced.

A few years ago a man walked into the Sears store at Wayne, New Jersey, with an old beer carton containing some five-to ten-year-old Craftsman tools and asked the service counter representative to replace them because they were rusty. The service representative called over the store manager, Bill Collett, to speak with the customer. The man explained that he had just moved to another house and in the basement he found these tools, which had obviously been abandoned by the previous owner of the house. He saw that they were Sears’ Craftsman tools, which he knew carried a lifetime guarantee. Since they had rusted, he had come in to exchange them. Collett was a little stupefied by the customer’s request, but after ascertaining that the man was both serious and adamant, he exchanged the tools for new ones.

Hatchets with smashed heads that are sold with clear instructions not to use them as hammers, broken screwdrivers that have been used as crowbars, shoes that are nearly worn out, even furniture purchased six months earlier—all are brought back to the Wayne store for adjustment. Collett says that in 24 years he has never refused an adjustment to a customer.

Sears’ money-back guarantee is not just a policy enforced by the manager in extreme circumstances. It is communicated down the line from manager to the sales floor and to customer service as a guideline for everyone to follow. Mike Minetti, who had been working as a sales clerk at the Wayne store for only six months, could recall installing entire kitchens for customers exactly according to the specifications of a written contract and approved plan, then ripping them out and changing things around at no extra charge because the customer was not happy with the layout. "The bottom line with Sears is that if the customer is not happy—even when the conditions of purchase are explicit and clear—satisfy him."

Employees carry out the Sears policy even when they know the customer is taking unfair advantage of the company. Since the policy is clearly written above the door, there is no alternative but to comply. Kim Newburg, a college student and part-time customer-service representative at the Wayne store, says: "The company wants us to make sure the customers are satisfied and they get whatever they need. … We take back almost anything, even if there is no receipt, even if it is the customer’s fault. We take back clothing, even if it is a year old."

Edward Brennan, Sears’ president, explained the significance of the policy this way:

Johnson & Johnson has a credo that guided the decisions of its top management during a crisis. Sears has a policy based on certain values, which it communicates to its employees and which serves as a guideline for their conduct in the day-to-day operation of the business. These are two different levels or expressions of value implementation. At Merck Sharp & Dohme, we found another.

Values were not the first thing we thought of when we visited MSD’s facilities at West Point, Pennsylvania. There was a cool air of military discipline about the place as we struggled to pass through security and were rushed along to our first meeting. Merck has a strong, assertive personality, highly professional, hard-driving, very intelligent. It has a systematically organized character, undoubtedly a legacy from the company’s founder, George Merck, whose family had run a pharmacy and drug-manufacturing business in Germany for more than two centuries prior to his move to the United States in 1891.

This first impression hardly prepared us for what we encountered during our meeting with John Lyons, a former president of MSD who has since been promoted to executive vice-president of Merck & Company, Inc. In fact, we were quite taken aback as Lyons waxed eloquent on the value of integrity. He believes that the company’s credibility with physicians is one of the most important factors in its success:

Quite frankly, we did wonder for a while whether we were being treated to a Barmecide feast like the beggar. But all doubts were very soon dispelled. Lyons warned us not to take his word for it. What we discovered was that his obsession with credibility was only one expression of the company’s preoccupation with integrity. At MSD credibility is not just an idea or even a policy. It is a value that has been converted into a top-priority goal to be pursued at every moment in every department at every level of the company.

Credibility at MSD starts with training. The professional representatives who meet physicians to present information on new drugs are inculcated from the first day of training with the doctrine of "fair balance." Fair balance means that the representative must present the strengths and the weaknesses of each product in an absolutely objective manner, with no exaggeration of positive claims about a drug and no understatement of its side effects. Eugene McCabe, vice-president of marketing, explained: "From the very beginning we explain to the representative that it is in his or her interest and our interest and the patient’s interest and the doctor’s interest that we be very, very much aboveboard, that we present things in a balanced way, and then we drill them on this."

Credibility begins with training, but it does not end there. The representatives are also evaluated monthly on the fair balance of their presentations to physicians, and this is one of the criteria for determining their performance ratings. A recent study by Scott-Levin Associates found that MSD’s representatives scored highest among all major U.S. pharmaceuticals firms on the quality of their presentations to physicians.

MSD also has a rigorous system for ensuring that all literature presented to the medical community passes the test of fair balance. Every single communication that is sent out of the company—including letters to physicians, sales bulletins to representatives, and prescribing information contained in the drug package—must first be cleared by one of the half-dozen medical-legal review boards, each consisting of a lawyer who reports to corporate headquarters and a physician who reports to the research division. Representatives are not even permitted to write out a note at the doctor’s office containing any product information. "That’s strictly forbidden," says McCabe, because "we must have trust among the medical profession that what we tell them is truthful and honest."

Maintaining and enhancing credibility at Merck is not just the responsibility of the review boards or the training department. It starts with the CEO and includes just about everybody. Every manager at Merck is responsible for preserving the image and credibility of the company and for everything that is done by those who work under him or her. Managers have to be informed and alert regarding every detail. "Details are important in this business," says McCabe, "because it is in the little details that you can get in trouble. It is little facts, over-looking little things, which can hurt patients." In addition to the responsibility of managers, there is also an intense peer pressure from colleagues to maintain the company’s high standards.

Those words were spoken in 1950. To what extent have they proved true since then? According to John Huck, chairman of Merck & Company, Inc., "every time." In the midsixties the firm started putting an extra emphasis on its obligation to the community and on fair balance. This coincided with a period of rapid growth that took the company from sixth in the industry to its present position as No. 1. As MSD’s president, Doug MacMaster, put it: "It made good sense to be ethical. To tell the full truth about your product makes you all the more believable. Our success in selling is really based on very good products and having tremendous credibility." The company’s integrity has earned it not only the confidence of the doctors but the loyalty of its own employees as well. As one executive commented: "It is very, very nice to work for a company in a marketing job where the underlying philosophy is to be as honest as you possibly can with the customer. That is a nice thing, because I think it is the right thing to do."

Value implementation at Merck is based on a lofty idea, to which top management has very seriously committed itself. This idea has been translated into a formal program that includes a clear statement of policy, explicit standards for conduct, training, and a series of systems designed to control, monitor, and evaluate behavior to ensure that it is consistent with the value. Responsibility for value implementation goes right down the line and is reinforced by pressure from peers.

The most powerful corporate values are not the ones that are preached and practiced by top management. They are the ones that penetrate through all the layers of the organization down to the bottom, where they are implicitly followed, often unconsciously.

When Eleuthère du Pont immigrated to America from revolutionary France in 1790, he had to abandon the property and privileges of his aristocratic past. But he did carry with him two valuable assets—a technology and an idea. The technology was for making the best gunpowder in the New World. Du Pont established a gunpowder factory alongside the Brandywine River at Wilmington, the seed for what is today the seventh largest industrial company and most admired chemicals producer in the United States. Du Pont’s formula for gun-powder is no longer valuable, since the company left that business long ago; but the idea he brought along with it is more valuable than ever before.

Du Pont started a safety tradition at his powder mill that has long outlived its founder or the mill and become a core value of the company. He designed his first powder mills to minimize the danger in the event of an explosion. He tested new gunpowder formulations himself before permitting other employees to handle them. He established a rule that no employee was allowed to enter a new mill until he or his general manager had first operated it safely. But more than all these precautions, he demonstrated his commitment to safety by living with his family on the plant site beside the mills along with his employees.

Two hundred years later Du Pont’s safety record is truly impressive. Its workdays-lost rate (related to accidents) in the United States is 69 times better than the average for all U.S. industry and 17 times better than the average for the U.S. chemicals industry. Even the worldwide rate for Du Pont’s 146 facilities is 67 times better than the U.S. average. In the wake of the recent disaster in Bhopal, India, where 2,500 people died and more than 100,000 were injured due to leakage of gas from a chemicals plant, Du Pont’s performance takes on far greater significance. During the past five years, Du Pont’s 157,000 employees have been involved in only 253 lost-workday injuries. If the company had been typical of U.S. industry, it would have had more than 12,000 such injuries.

How does Du Pont do it? It begins by converting the corporate value of safety into an explicit objective—zero accidents. This objective is based on the belief that all accidents are preventable. One Du Pont plant with 2,000 workers actually went for 445 days without a recordable injury. At Du Pont safety is a line management responsibility. All managers, from the chairman of the board to the supervisors who manage groups of workers in plants or offices around the world, are responsible for safety in their departments. If an injury occurs in any Du Pont plant, it is reported to world headquarters within 24 hours. If a death occurs, it is reported to the chairman. At Du Pont the CEO is also the chief safety officer, and at all executive committee meetings, safety is first on the agenda.

The same importance is given to safety by plant managers. Every plant defines standards, sets goals, designs a safety program, and conducts regular safety audits. Training is a key element. The first thing taught in every training program is safety. Studies have shown that safety performance is proportionate to the level of training of the work-force, so training is continued as an ongoing activity. More impressive than all these things is the fact that all supervisors in Du Pont facilities must review one safety feature every single day with each of their subordinates. Every sales and administrative department also conducts regular safety meetings. An open file drawer in a Du Pont office is considered a safety hazard and attracts immediate attention.

There is also a specific set of safety-related rules. Wearing seat belts in company vehicles while on company business is mandatory. Defensive-driving courses are given to employees who travel on the job by car. When one traveling employee in Florida was identified by his manager as a problem driver, an outside driving expert was flown down from Wilmington the next day to give him special instruction.

Safety at Du Pont does not end at 5 P.M. There are off-the-job safety programs, too. According to the National Safety Council, in 1983 off-the-job accidents cost the nation $25 billion, of which $8.5 billion was borne by employers. Although it is still many times safer to work at Du Pont than to play off the job, the company has managed to reduce off-the-job accidents by 58 percent over the last 30 years. Through special programs at some locations, the percentage of Du Pont employees wearing seat belts during nonwork hours has been raised to 70 percent, compared with a 20 percent national average. In fact, as you drive out of a Du Pont parking lot, the guard could ask you to buckle up.

Does Du Pont’s obsession with safety really justify the cost? According to John Page, director of safety and occupational health, "Safety is good business." The average cost of a disabling injury in the United States works out to about $17,000. On that basis, Du Pont would have spent an additional $48 million last year if its safety record were at the all-industry rate. The company’s workers’ compensation costs measured in dollars per employee are about one-tenth the all-industry level. That translates into annual savings of about $30 million.

Safety pays in other ways, too. Page says:

We have said that corporate intensity is generated by perfect attention to small details. We asked Page what is the smallest detail that is considered important for safety at Du Pont. "A toothpick or paper clip on the floor is a safety hazard," he replied. At Du Pont value implementation has been taken another step further down the line. It includes conversion of the value into a policy and the policy into an objective for each facility, commitment and active responsibility by top management, establishment of standards and rules, ongoing training, systems for monitoring and enforcement, middle-and lower-level management responsibility, regular meetings, and involvement of all personnel on a daily basis.

This is an excellent example of comprehensive value implementation. Not only is implementation done through formal systems and procedures but the value has become so fully institutionalized that it is a custom or culture of the company. As a value becomes more institutionalized, the formal structures for implementation fade out of use.

In December 1975 a 32-year-old stockbroker, a married man with children, failed to pay the quarterly premium on his $100,000 life insurance policy with Northwestern Mutual. In spite of repeated reminders from the company, the policy owner allowed his policy to lapse. Six months later the man’s wife phoned the Northwestern Mutual agent who had sold the policy to her husband and informed the agent that her husband had been hospitalized with a brain tumor. The doctors said he had only one or two years to live. She was informed by the agent that the policy had lapsed. The agent was quite upset and started dwelling on the case in his mind. He recalled a casual statement of the man’s wife that her husband had been making irrational business decisions for several months, perhaps because of the tumor. The agent referred the matter to the Northwestern Mutual head office, asking if anything could be done. The company agreed to reopen the case for investigation. Months went by, then one day the policy owner’s wife received a call from the agent. The company had decided that her husband had been disabled by his illness prior to the lapse of the policy and was entitled to a waiver of premiums from that time. The policy was reinstated at no cost. On hearing the news the woman replied, "Oh, my God!"

All these factors help to explain the character and conduct of the company, but there is one more that stands out from the rest—the credo itself. Being better in order to be bigger may be considered a sensible idea by which to run a business, but being better instead of being bigger is not a business idea at all. It transcends business. It is an ethical ideal. Taken as a mission for corporate behavior, it is a goal that challenges management and every one of the employees in every activity they undertake in each and every minute of every day—in dealing with each other, in dealing with the company’s agents, and in dealing with the policy owners—to strive for qualitative excellence rather than quantitative gain. The acceptance of such a goal, however imperfectly it may be carried out in practice, imposes an ultimate discipline on the company that no system of authority can match. It demands a constant effort to think always of what is best for the customer and to act according to that knowledge.

During 1983 the company conducted a similar amendment program that offered the owners of policies issued before January 1, 1982 an opportunity to receive higher dividends on the unborrowed cash values of their policies. This dividend feature is a part of all Northwestern Mutual’s permanent insurance policies issued after January 1, 1982.

What type of person did Northwestern Mutual grow up to be? Our impression is of a company quiet and reliable—everyone spoke very softly, yet seemed unaware that they were doing so and denied it was according to any policy—consistent and conservative, yet very hard-working and surprisingly dynamic, honest and fair, friendly and cheerful, proud and responsible, accomplished yet ambitious, "with an almost religious devotion to excellence." There is a harmony at Northwestern Mutual between the company’s employees, its field agents, and its policy owners—the harmony of a close-knit family that believes that what it is doing is good. Like any real family, North-western Mutual’s family of policy owners is difficult to enter; but once you are inside, the commitment is total.

The most impressive thing about Northwestern Mutual is the way it translates its highest ideals into daily practice. We have already looked at companies that implement values through a strictly enforced policy, rigorous training, carefully monitored systems, and detailed operating procedures. Northwestern Mutual has all of these things, and it uses them to express several of its core values like cost control, speed and skill of service, and cooperation between office and field staff. But when it comes to the company’s single most important value, which is the basis of its mission, the primary means for its implementation is none of these. Rather, it is expressed through the personal attitudes of the employees and the agents. Service at Northwestern Mutual is not—at least it is no longer—merely a policy or program established by top management and implemented through the company’s operating systems. It is an attitude that saturates the entire personality and atmosphere of the company and has become institutionalized as a self-perpetuating custom or culture of the organization. That attitude influences the way all employees in the company think about their work and act in executing it, without anyone else’s reminding them or instructing them to do it. It is not even the force of peer pressure that perpetuates it. It is a pressure from within each person, not from outside. Northwestern Mutual is the most mature example of value implementation that we have come across, a place where the value is actually internalized by the employees as a personal belief and commitment in their own lives. As Jere Whiteley, assistant regional director of agencies, put it: "I think the company would run without anyone sitting at the top, because everyone has their job, and I think it would run just as well."

Who determines the guiding values of a company? At the heart of the corporate personality is a deeper psychic center, consisting of the company’s most cherished beliefs, values, and true mission, which give lifelong direction to the activities of the corporation. As in the development of personality in the individual, the process by which the corporate personality acquires a specific set of beliefs and values is influenced by several factors—the personality of its founders, external social conditions at the time of its birth, and geography, as well as experiences and important persons that enter its life later on.

When a company is born, it acquires from its founder or founders many of their dominant beliefs, values, attitudes, opinions, and objectives in life, in much the same way as a child inherits its early value system from its parents. Marriott Corporation inherited a tradition of hard work and an insistence on quality from Bill, Sr. Delta inherited the thrifty ways and personal kindness of C. E. Woolman. External factors also influence the values a company acquires. Like many middle-aged people today, both Delta and Marriott Corporation were children of the Great Depression. Geography had a significant impact on all the companies we visited—California informality at Apple and Intel, midwestern hard work at Northwestern Mutual, and southern gentility at Coca-Cola. In addition, the experiences of the company during its formative and later years are influential. Deregulation has profoundly affected the values and objectives of commercial airlines in the United States. Divestiture has imposed new priorities and new demands on AT&T. The succession of CEOs that come after the founder leave a mark on the corporate personality as well, in proportion to the strength of their own character and the length of their stay at the helm of affairs. Rosenwald and Wood at Sears, Woodruff at Coca-Cola, and Palmer at Northwestern Mutual were far more influential than the companies’ founders in shaping corporate values.

As a result of all these influences, the company acquires a core of central beliefs, values, attitudes, a mission, and objectives—the psychic center of the corporate personality—that gives direction to all the firm’s activities. The ideas that constitute the psychic center are of several types, and the words used to designate them are frequently interchanged or used as synonyms; therefore, it is better to briefly define the most important of them here.

Beliefs: Beliefs are ideas or principles that are accepted by an individual or an institution as true and serve as a basis for its actions. Johnson & Johnson believes that service to the public helps a business to prosper. Merck believes that "good ethics makes good sense." IBM believes that "if we respect our people and help them to respect themselves, the company will make the most profit."

Values. Values are the operational qualities that companies seek to achieve or maintain in their performance. We do not use the word in a strictly moral sense, although ethical values may be included. There are many functional corporate values. Here are some of the most important physical, organizational, and psychological values:

Mission. A mission is the guiding purpose for which an organization exists. The mission is not a statement of beliefs or values, but rather a statement of broad intention. General Motors Corporation’s mission, as formulated by its founder, William Durant, was to produce "a car for every purse and purpose." Ford Motor Company’s original mission was to build an inexpensive car for the masses. AT&T’s was to provide service to all telephone users throughout the United States under a standardized policy and a single, unified system.

Objectives. Objectives are the specific goals that a company seeks to fulfill in carrying out its mission in accordance with the beliefs and values it has accepted. Objectives range from broad and general to narrow and specific. IBM has a broad objective "to serve our customers as efficiently and as effectively as we can." General Mills has a specific objective to achieve a 20 percent return on equity every year. Coca-Cola’s present objectives include doubling its revenues between 1984 and 1990.

Corporate attitudes. Corporate beliefs and values are the ideas that guide the decisions of top management, the choice of its mission and objectives, the formulation of its policies and plans. In addition to these central beliefs and values, an organization, like an individual, possesses a variety of fixed attitudes relating to particular issues. When the psychic center is well developed, these attitudes tend to be in harmony with the central beliefs and values of the organization. The helpful attitude of the Northwestern Mutual agent reflects a mature psychic center. The company’s mission to serve the policy owners has become a personal attitude of the agent. On the other hand, in companies where the psychic center is not yet developed—where beliefs, values, and mission are poorly defined or poorly translated into action—the common corporate attitudes expressed at lower levels of the organization tend to be at variance with or in opposition to the company’s stated convictions. We all know countless instances of companies that proclaim good customer service as a top priority but where the attitudes of customer-service personnel do not seem to reflect that stated goal.

Figure 1. The mature psychic center.