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Value Shift: Why Companies Must Merge Social and Financial Imperatives to Achieve Superior Performance Paperback – September 29, 2003
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From Publishers Weekly
Harvard Business School professor Lynn Sharp Paine had been studying corporate malfeasance long before the Enron debacle. In her forthcoming book, Value Shift: Why Companies Must Merge Social and Financial Imperatives to Achieve Superior Performance, she attempts to introduce readers to an "emerging new standard of corporate performance one that encompasses both moral and financial dimensions." Based on her researching, teaching and consulting experiences over the past 20 years, Paine has amassed an in-depth understanding of corporate values. She uses examples culled from these experiences to explain the growing emphasis on values, why this changing attitude is important and what the shift means for managers. She ends the book with advice for managers on setting up an organizational infrastructure, hiring employees whose views align with a company's value system and more. This is an important book for ethics-minded managers.
Copyright 2002 Reed Business Information, Inc. --This text refers to an out of print or unavailable edition of this title.
"Lynn Paine has an optimistic analysis of the need for--and the value of--bringing ethical values into business decision-making." -- Paul A. Volcker; June 2002
"This book presents a way of broadening the role of the corporation in our society [and is] a good read." -- John C. Whitehead, former Chairman of Goldman Sachs; June 2002 --This text refers to an out of print or unavailable edition of this title.
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In the process, she demolishes the sloppy thinking that has surrounded much of the discussion of business ethics, in particular the view that an organization is and should be an amoral entity and the related view that the only ethical duty that a corporation owes is that to maximize the wealth of its stockholders.
More important, she establishes clearly that ethical commitment and economic advantage are separate domains, with a degree of overlap that depends on context and timescale. The ethical dimension cannot be absorbed into the financial dimension with the cosy, but often untrue, assertion that 'ethics pays'. There is an area of activity within which ethical and economic considerations run together, but there are areas of activity where they are opposed. If one wants a simplistic assertion to support ethical behaviour, the author suggests that it should be 'ethics counts' rather than 'ethics pays'. The advantage of this formulation is that it establishes the ethical domain as existing in its own right. The author suggests that the two domains are different but complementary and need to be recognized as such.
What are the circumstances in which ethical behaviour and profitable behaviour are most likely to coincide? As a broad rule, the longer the time frame being considered and the more closely the corporation adheres to the standards of ethical behaviour accepted in first world countries, the more likely it is that ethical practice will coincide with profitable practice. The author discusses both the principle and some of the difficult and perplexing departures from it. There is no pretence that decision-making is easy where ethics and profitability do not run together, but there is guidance, in two chapters entitled 'A Compass for Decision Making' and 'The Center-Driven Company'.
In the course of the book, there is an excellent brief history of views of the corporation and its capacity to be a moral entity and an overview of the current situation, in which the full range of theories and behaviour from high to non-existent ethics can be found, but there is a discernible trend toward recognition of the importance of ethical behaviour. This is driven by community expectations, greater access to information (and greater difficulty of concealing unethical behaviour), and slow but progressive shifts in the law, as well as by the expectations and standards of managers and employees. The move is complicated by globalization, because increasingly the large corporations are operating in countries with a wide range of cultural frameworks where issues of corruption, near-slavery conditions for workers and so on may be endemic. There is a good discussion of the temptation to adopt local standards or to hide behind the practices of an 'arm's length' contractor and some of the longer term consequences of doing so.
This is not a 'preaching' book. It is a cool analysis of the various ethical stances possible and of the probable consequences of each, in the context of a slow but continuing trend for the community to demand ethical behaviour. It also provides an extremely well-argued case for a stance that recognizes ethical standards as standing in their own right as a co-equal consideration with the demands of economic operation. In this sense, it is complementary to the best of the literature on the 'triple bottom line'.
As we have seen in the press, it is not always the senior executives who perform ethical misconduct. Quite often it is the managers and employees of an organization that make unethical decisions that put the organization in harms way. So my disappoitment is in that she did not provide practical (and I stress practical) strategies, processes and tools for an organization to provide its workforce to adress the dozens of potentiallly unethical situations managers and employees face everyday that provide the same risk, if not more, than a few bad decisions by executives. The questions that she provides for executives are not practical for managers. I doubt a manager at a manufacturing plant will take the time to "reflect" on the thought-proviking questions provided by her to help make good decisions. She offers several examples of companies that she considers are making progress, but these steps are still at a very high level.
I offer an insight. There is a reason why the books "Execution" by Larry Bossidy and "Good to Great" are best sellers. Executives are asking for more actionable and practical guidelines to execute strategies in companies that already have established processes and cultures.
It is obvious that Lynn Paine has great insight and vast experience. I would like to have seen actual steps (i.e., training, communications, proceses, standards) by which a current organization, with an established culture, can leverage to shape their culture to fit this new ethical standard.
I hope she writes a "how to." I will be the first to buy it.
Lynn Sharp Paine, a lawyer and professor at the Harvard Business School, argues companies are being rated as if they were human beings; they are being asked to provide more than profits to their shareholders. The market demands that corporations respect their employees, be reliable to their customers and communities and be transparent with their investors.
The author argues "ethics counts" provides corporations with value-added in the truth, loyalty, gratitude and reciprocal respect it engender among its stakeholders. The new bottom line: a corporation's success comes down to the quality of its decision making. Moral scrutiny is becoming as important as financial performance in stakeholders' evaluations.