Mapping the Pressures on Corporate Values, Priorities

Sometimes big lessons about corporate culture can come from very small businesses. We have such a lesson today from a butcher shop in New York and its attempt to deal with the Black Lives Matter and gay rights movements — an attempt that failed, miserably, and says much about who determines corporate ethical priorities these days.

The butcher shop in question is Fleisher’s, a high-end shop headquartered in Brooklyn with four locations in tony neighborhoods of New York and Connecticut. The menu includes a dry-aged porterhouse ribeye that sells in Las Vegas for $20,000, and 60-ounce servings of a similar cut for $1,000. Founded in 2004, these days Fleisher’s has roughly 40 employees. 

So what happened? A friend of the owner saw that the Fleisher’s store in Westport, Conn., had Black Lives Matter and gay rights signs in the window. The friend complained to the owner, who told the new CEO of Fleisher’s to remove the sign, which the CEO did — and then all the employees walked off the job. 

This all happened in late July, and Fleisher’s has been reeling ever since. The new CEO, John Adams, returned the signs to the windows of the Westport location within 24 hours of the walkout, but by then the damage was done. As recounted by an article in Forbes, the company is still trying to win back roughly 70 percent of its workforce. All four locations have been closed for weeks. They are still closed as of this weekend, according to Fleisher’s website. All because of these two signs, below, hung on the door in Westport.

A story of corporate blunder, neatly contained in three paragraphs — and yet, it also speaks volumes about a central struggle of our times. 

Who gets to determine corporate values and ethical priorities?

The Camps That Drive Values and Priorities

In the case of Fleisher’s, clearly employees had lots of power to decide those things. Their influence over the business was more powerful than that of the owner, a real estate investor named Rob Rosania. (It was his friend in Westport who objected to the signs, and he who told the Fleisher’s CEO to have them removed.)

So at first I envisioned that battle over values and ethical priorities as a tug of war between employees and owners. The more I thought about it, however, the more I realized that those two groups exercise various degrees of influence over values and priorities at the same time. The better way to think about that tension, then, is like a Venn diagram. A basic example would be Figure 1, below.

Now, plenty of people will look at that Venn diagram and say that many more factors influence corporate values and ethical priorities — the strength or weakness of the labor market, for example; or the charisma of senior executives, or the vested career interests employees have in staying with their employer, rather than leaving a corporate culture they dislike. 

Yes, those issues are real, but they aren’t separate bubbles that should be added to Figure 1, above. They are forces that affect the size of these two bubbles. 

So in today’s economic landscape, where employees in the food service business have enormous power to quit a company they dislike and take their labor elsewhere, the Venn diagram for Fleisher’s would look more like Figure 2. 

Management’s ability to dictate corporate values and ethical priorities is weaker. Rosania and Adams tried to dictate the company’s priorities: no political statements on the job. The employees disagreed, and they had the economic power to force the issue. Which they did, and now Adams is trying to reverse course: he put the signs back up. 

You could play with this Venn diagram quite a bit. For example, in lots of industries circa 2008 or 2009, Figure 2 would be reversed: management had more power to dictate values and priorities, because unemployment was high. My point here is just to offer a framing mechanism ethics and compliance professionals can use to better analyze the pressures you face as you try to guide corporate culture in the right direction.

Now Add More Bubbles

I also understand that the Fleisher’s example only goes so far. Large businesses work in a much more complex environment — but they do have fights over corporate values and priorities all the time. We’re seeing one unfold in the news right now at Activision Blizzard. California regulators have filed a lawsuit against the company for allowing a culture of sexual harassment, and now employees are in open revolt against management, with innumerable voices on social media piling on. 

How would we map out that battle on a Venn diagram? Perhaps something like Figure 3, below.

Those four groups are the ones that fight over a large company’s values and priorities today. That’s especially true for consumer-facing businesses such as Activision, where consumers and customers can express their opinions loudly and forcefully; but even businesses that don’t deal directly with consumers increasingly find their values and actions dissected on social media — certainly dissected enough that a company ignores social media opinion at its peril. 

A model like Figure 3 also explains why Activision’s corporate culture crisis exploded now. After all, the allegations are that management tolerated (or even participated in) a rotten corporate culture for years. So why did everything come to a boil today, rather than 2015 or 2009 or 2005? 

Because regulators (the California Department of Fair Employment and Housing) delivered a powerful punch with their lawsuit. That triggered outrage on social media, which quickly fused with long-simmering outrage among employees. Those three bubbles  have suddenly mushroomed in size and power. So a better Venn diagram might be Figure 4, below.

Today, Activision’s management has virtually no power to determine the company’s corporate values, ethical priorities, and culture. It’s in full retreat, ousting senior executives and acceding to employee demands. (Most recently, chief compliance officer Frances Townsend has stepped down as chair of the company’s women’s network, after multiple ill-advised public statements.)

But before regulators struck social media picked up this cause, while management apparently condoned sexism and employees (80 percent male) had little incentive to care about women’s treatment, the Venn diagram might be more like Figure 5.

Again, these are only approximations of the forces that can drive corporate values and priorities. Moreover, a collection of Venn diagrams doesn’t really depict how the size of each bubble can change over time — which would be a much better way to demonstrate the constantly shifting dynamics at large organizations. (If anyone out there wants to collaborate on making a Presi video using these bubbles, drop me a line at [email protected]. I’d welcome the help.)

Still, compliance officers can use a model like this to understand what pressures corporate values and ethical priorities. Expanding into more consumer-focused markets? Enlarge your social media bubble. Does the company have a history of low employee turnover, or does it have high growth prospects with lots of equity-based compensation? Enlarge the management bubble. Did regulators just enact new rules or announce an enforcement campaign? Enlarge the regulators bubble.

You could even list those factors and map them to the most appropriate bubble, to give you a better sense of how large each bubble should be. From there, you can start to ponder specific steps you can take (policies, procedures, and so forth) to give management a stronger hand in battles over corporate culture — or to give you more evidence so you can warn management, “This is a bad idea. Your priorities need to change.” 

Which would have been a useful exercise for Fleisher’s to perform, before its employees walked out the door.