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Introduction and assessment task
Actions are dictated by values. Identifying organisational values – both proclaimed and actual –
will assist an organisation to ensure that most, if not all, its actions are commensurate with these
values, and enable it to put in place a robust structure to support the ‘operationalisation’ of its
Many governance and CSR problems for multinationals and companies trading far from their
home base, for example, arise because of differing value systems. A values audit helps an
organisation to establish clear guidelines about the limits of acceptable behaviour which are
consistent world-wide, while recognising where appropriate local social differences. In other
words, a values audit articulates the core values of an organisation, and assesses the
consistency of their internal and external application: internal with respect to what the company
or organisation says about itself in its various documents, such as statements about mission and
conduct; external with respect to how they act in their host societies and internationally.
A values audit always begins internally, with a review of ‘paper’, ‘processes’ and ‘people.’ The
findings of the audit are then tested out with stakeholder groups, to ensure that the values base
is one which is shared by, or at the least acceptable to, key stakeholders. The results provide
important management information, and can (and ideally should) be used to report on the
organisation’s social and/or governance performance, either as part of the Annual Report or as a
In this assessment, you are asked to conduct a values audit of an organisation with which you
have had some association. It could be a large company, a family business, a school, a hospital,
a not-for-profit organisation. It could be any organisation that provides a service or conducts any
form of social activity that involves:
• Some form of statement about what it does and its commitments. This could be a
company or organisational mission statement; or marketing material; or any document in
which the organisation defines its commitment to abiding by the law, or certain moral
codes, or specific cultural or communal commitments. In other words, anything that
articulates what the company/organisation stands for with respect to governance and
social responsibility. It might be as generic as saying, as Google does, “do no evil”, or as
specific as BHP Billiton’s commitment to observing best practice in land remediation of
• Some level of financial management and accountability. This can be at a very high level
for a large company, or very modest in a small family business. Either way, there has to
be some level of financial or resource accountability, and some level of responsibility for
what the organisation does in the conduct of its activities;
• A defined set of services or products. That is, the organisation’s outputs – what it offers
its client or customers;
• A customer or client base. There must be some customer or client base for the audit to
make sense, and this needs to be identified, namely, who the organisations serves or
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• Some level of management structure or identifiable managerial accountabilities. For our
purposes, an anarchic group of people just doing things for the sake of it to help others,
or themselves, but with no formal structure, is not a suitable subject for this exercise.
There must be some specific roles and accountabilities, even if poorly defined.
First read the sections below to give you a better idea of the big picture, so to speak.
Note: you are NOT expected to conduct a full values audit with detailed interviews and indepth
analyses of organisational documents.
What you are asked to do is a ‘mini-audit’ in which you select an organisation and:
1. Give an overview of the organisation – what it does and how it promotes itself to its
shareholder (where relevant) and stakeholders, through official documents, policies,
procedures, and advertising. Provide evidence in the form of attachments, but only
important documents, or selections that make your point. Don’t go overboard with
attachments and evidence; just enough to make your point, and no more.
2. Clearly state the ‘advertised’ values of the organisation – what it says it stands for.
Where these are unclear, try to tease them out.
3. Describe the processes the organisation has in place that promote, monitor, review,
action its value commitments. Again, you can’t do everything, so be selective. In your
general overview of the organisation’s value commitments, you can state that the
organisation is committed to x, y and z, but focus only on z, for example. In other words,
don’t be too ambitious. You don’t have much time to complete what could be quite a
detailed exercise. So focus on something that is representative of the company’s values
commitment (or otherwise!).
4. Review the history of the organisation over the recent past, say, 5 years. You don’t have
to be rigid about this. If 10 years is a more appropriate frame of reference, then that’s
fine. What you are looking for here is the extent to which the company has been true to
its commitments. What evidence can you find one way or another? Remember,
corporate governance and/or CSR undertakings are major value commitments of an
organisation, and are absolutely central to this assessment.
5. If possible, interview a few key stakeholders for their views. This is not always possible,
but may be very relevant in some circumstances. This is up to you. You do NOT have to
interview anyone. But if you can, and if it is relevant, then this would be a good way to get
more data on the organisation’s fulfilment or otherwise of its value commitments.
6. Draw some conclusions about the company’s integrity (more on this below). In other
words, discuss what you have found. No need to be definite or definitive, since this is
only a mini-audit. But it can be indicative, and serve as the preliminary study for a much
deeper investigation. In other words, this is ‘audit lite’, so to speak, in which you do a
fairly quick and succinct review of an organisation to see if there is anything that would
lead you to look more deeply.
7. You need to be specific about the things you find that indicate organisational integrity,
and those that indicate organisational hypocrisy. You are not asked to solve the
problems you find, but once you have identified key issues, discuss them in light of the
key issues covered in the unit.
8. You do not have to provide heavy academic referencing, but where possible, draw on
examples from the readings and unit guide, and any other sources that you believe to be
relevant. Again, no need to go overboard. Just cite those sources and references that
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you have actually used; not a long list for the sake of impressing the marker – the
opposite will be the case. You will get good marks for authenticity and sound analysis.
It is important to note that a full-blown values audit is a comprehensive and integral approach:
integral, because it combines different approaches with different methodologies, and
comprehensive, because it takes the entire organisation (including its environment) into
consideration with all the different perspectives that prevail in different functional areas. The latter
especially finds expression in the values assessment process. The fact that values and policies
are discussed ensures that they are looked at from different angles, taking various fields of
interest into consideration. In a full-blown audit, it is particularly critical that values are checked
for economic viability as well, to balance social and values aspirations, because values policies
which are not based upon solid business economic grounds will not endure very long. In a fullblown,
large scale audit, it is essential that the social mission and the economic mission of a
company go hand in hand.
However, remember, you will not be undertaking a full-blown, comprehensive audit.
There is no specific template for the audit, because we wish to see what you come up with
as an appropriate format for the sort of organisation you are auditing.
1. Values Audit
The reasons for examining the state of an organisation’s values are many and various. They
include external social pressures, risk management, stakeholder obligations, and identifying a
baseline to measure future improvements. In some cases, organisations are driven to it by a
gross failure in ethics, which may have resulted in costly legal action or stricter government
regulation. More often, however, organisations simply want to know if they are doing the right
thing with respect to their governance commitments, the law, their shareholders and their
Values auditing is a process which assesses the internal and external consistency of an
organisation’s values base. The key aspect is that it is value-linked, and that it incorporates a
stakeholder approach. Its objectives are two-fold: it is intended for accountability and
transparency towards stakeholders and it is intended for internal control, to meet the governance
objectives of the organisation.
The point of such an audit is that it enables an organisation to see itself through a variety of
lenses: it captures the organisation’s values profile. Companies recognise the importance of their
financial profile for their investors, of their service profile for their customers, and of their profile
as an employer for their current and potential employees. A values profile brings together all of
the factors which affect an organisation’s reputation, by examining the way in which it does
business. By taking a picture of the value system at a given point in time, it can:
• clarify the actual values according to which the organisation operates;
• provide a baseline by which to measure future improvement;
• learn how to meet any social or governance expectations which are not currently
being met. Importantly, these are expectations that the organisation has set for itself –
not expectations set by others;
• give stakeholders the opportunity to clarify their expectations of the organisation’s
behaviour. Importantly, it assists the organisation to better understand who its actual
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• identify specific problem areas within the organisation with respect to its stated social
and governance values;
• learn about the issues which motivate employees and managers;
• identify general areas of vulnerability, particularly related to lack of openness.
2. International business
Multinational companies face special issues in relation to values auditing. It is, though, precisely
these special issues which can make values auditing so important to multinationals. Executives
of such companies are well aware of the added complications which operating across a number
of cultures brings. But problems tend to multiply when differing value bases are permitted to take
hold within different cultures. It may have seemed acceptable for Shell to apply differing
environmental standards to their drilling in Ogoniland decades ago to those they applied in
Europe or North America – but in an era of acute global consciousness of the interdependence of
the world eco-system the same standards are rightly expected in every continent.
One of the issues which most concerns multinationals is that of corruption: how to do business in
countries where backhanders are expected in the common course of events. The United States
has brought in legislation – the Foreign Corrupt Practices Act – which forbids US companies to
engage in this when dealing with the public sector in other countries. Australian laws are also
specific with respect to corruption. This, perhaps, more than any other, is an area where
executives might like to set themselves Warren Buffet’s publicity test: how would I feel if my
behaviour were headlined in my city’s local newspaper? How would I feel if my family knew about
Working practices and human rights are other major areas of concern. Some companies make a
principled withdrawal from countries where they could otherwise manufacture profitably, because
they are not prepared to work within that regime, as Levi Strauss did in China. Some companies
withdrew from South Africa because they would not cooperate with apartheid; others believed
that they could set an example and give opportunities to black people they would not otherwise
have had. Protest from outraged consumers may force companies manufacturing in India or
Thailand to sack the underage children they were previously employing as machinists – but what
if the 12 and 13 year old girls are then forced into prostitution to survive?
Companies alone cannot right all the evils of society. Many of the decisions they have to take
have no ideally right or ideally good answer. What matters is that they should have a clearly
thought out framework of values, and that these values should be consistent wherever they
operate. A multinational company must test its values across all its areas of operation if it wants
the findings of its values audit to be comprehensive and provide the greatest payback in terms of
identifying potential areas of vulnerability to consumer pressure.
3. Stakeholder power
Stakeholder power is increasingly being wielded to affect organisational behaviour. Boycotts are
called to protest against specific company actions: Nestle’s sales suffered from the boycott
protesting about their policy on selling baby milk in the third world, and Shell were forced to
change their plans for disposal of the Brent Spar oil platform when German consumers stopped
buying Shell petrol. A 1995 poll of 30,000 consumers in the UK showed that one in three had
boycotted stores or products in the previous because of concerns about values standards, and
six in ten were prepared to boycott in the future. Almost two in three of those surveyed were
more concerned about values issues at the time of interview than they had been previously.
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Pressure groups are growing more professional and more vociferous. Where in the past
unethical or hypocritical behaviour by a company might have been kept quiet by skilled public
relations people, there is now greater likelihood that someone within a company will alert the
relevant pressure group (loyalty to employers being lessened, and concern for the public good
being greater) and that the pressure group will succeed in generating significant publicity about
the incident. One of the greatest benefits of the values audit is that it assists an organisation to
scan its environment, to identify the issues that are most likely to provoke action by pressure
groups. It also gives the organisation an opportunity to encourage such groups to participate in
the decision-making process, or at the very least to inform them fully of the organisation’s
In the move to total quality, suppliers become key stakeholders. The quality of components or
raw materials used is crucial. Their timely delivery is crucial; their reliability is crucial. The best
suppliers want to develop long term relationships with customers whom they can trust to deal
fairly with them and to pay on time.
The picture which develops here is of an organisation/business at the centre of a network of
relationships – relationships with employees, with customers, with shareholders, with society at
large. Each organisation may have other groups of people whom it considers to be key
stakeholders. For example, a company with particular environmental concerns may consider
future generations to be key stakeholders; other companies may see their retired employees as
being important, while still others may have strong links with pressure groups and voluntary
Values auditing enables organisations to better comprehend these relationships. All relationships
are based on values such as trust and an expectation of fair dealing. Understanding these
dynamics and finding out where expectations and perceptions differ give an organisation a head
start on maintaining strong and stable relationships.
In contrast to social auditing, which aims primarily at measuring the social impact of a company
on its environment, the values audit from the outset is value-linked. It measures the ‘values
climate’, so to speak, of an organisation by analysing the values on which organisational actions
are based. Essentially, it is a kind of integrity or, more cynically, a ‘hypocrisy’ analysis – how
faithful is an organisation to its declared governance and/or CSR values?
A values audit is organisation-centred. It is not an audit of the values of individual managers or
employees, although clearly individual values play an enormous role in determining the values of
an organisation and the extent to which it is true to its values. In part these values are connected
with public opinion on matters such as respect, justice and responsibility and can, to some
extent, be derived from the rights and interests of stakeholders, but the bottom-line is that the
organisation ought to adhere to its publicly stated values.
4. Stakeholder perspective
The objectives of the values audit are two-fold. On the one hand, the audit is intended for
accountability and transparency towards stakeholders; on the other hand, the audit is intended
for internal control in order to meet the values objectives of the organisation. One of the aims of
the values audit is to give an organisation the opportunity to track progress through the years and
to find out where there is still some work to do with regard to its values objectives.
Accountability requires that stakeholders are provided with such information as they have a right
to. The right to information is determined by: (a) the social environment within which the
relationship between the organisation and the stakeholder is set (thus current legal standards
would represent a minimum basis for accountability); plus (b) the organisation’s own decisions
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about which stakeholders it particularly wishes to recognise and emphasise. Thus, stakeholder
groups do not have an absolute claim on businesses to provide them with information, because
the extent to which an organisation is accountable to stakeholders depends on the particular
social environment of the organisation, on its conception of relevant stakeholders and on the
social responsibility the organisation is willing to take for justifying its actions towards a particular
stakeholder group. Therefore, stakeholders’ right to information is in a large measure related to a
positive duty that the organisation has committed itself to.
It is possible and justified to assign different weights to the interests of different stakeholder
groups. Clearly not all stakeholders can ever be involved in an auditing process. For most
organisations, the external stakeholders which are included will be restricted to the minimum of:
shareholders, customers, suppliers and the wider community, although one could think of many
more groups that could be of importance to a specific organisation. The fact that the number of
stakeholder-groups taken into consideration is limited indicates that certain stakeholders are
perceived as being more important than others.
Second, stakeholder concerns will differ between groups. It is obvious that more important
stakeholders will have greater influence on an organisation’s actions, and that, in the case of
conflicting concerns, the interests of the stakeholder group with the most influence will prevail.
Dialogue with stakeholders is carried out in the external values assessment process and in this
process the interests of stakeholders are identified and balanced according to the weight the
company assigns to each stakeholder group.
The objective of accountability towards stakeholders requires information about general issues
such as product safety, the environment, employee relations, etc. An ethical bookkeeping system
collects data systematically about the organisation’s values behaviour, which is relevant for
stakeholders. This process is most likely to include ‘hard’ information, including for instance
complaints of stakeholders, business accidents or fines for unethical behaviour. A significant
quantity of this data will already be present in the organisation’s ‘normal’ accounting and
management information systems (e.g. human resources information: number and level of
female employees, payment ratios for employees of different ethnic origin, etc.). By collecting this
kind of information a company is in fact keeping some records on the social impact of its actions
and policies and therefore we might consider this social accounting.
The term ‘values accounting’ is used to refer to the process in which data is gathered with regard
to organisational values. This will include looking at the information provided by the bookkeeping
system and looking at the ‘paper’ and ethics-related processes in the organisation, in order to lay
bare the (explicit and implicit) value system of the organisation through analysis. Value-linked
corporate behaviour derived from bookkeeping records, will be tested against current guidelines
and opinions on environmental issues, hiring/firing policies, etc. A comprehensive check-list (with
regard to lines of communication, reward systems, chain of command, etc.) is used to determine
what behaviour the organisation values. This is done by looking at the formal and informal
structures and processes in the organisation.
In the internal values assessment process the prevailing values of employees are examined
through interviews, surveys, questionnaires, etc. The outcomes are then related to the value
system of the organisation, revealed by the accounting process. By doing this the values gap
(different perceptions on the organisation’s values) is identified, as well as conflicting interests
within the organisation and values that are inconsistent with each other. But internal values
assessment is not only concerned with uncovering prevailing values, it also looks at what the
organisational values should be. Since the purpose of internal auditing is to measure the
compliance of facts with norms, these norms – being the values the organisation wants to
incorporate – must be clear. This might be the case as a result of an earlier participative process
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(written down in a values statement or not), but it is important that this is an on-going process in
order to make sure that the company perseveres with these values. So, internal values
assessment is also concerned with internal audits. This is done by listening to employees (the
original meaning of the word audit being derived from the Latin word ‘audire’ means to listen).
Workshops and small group discussions often further raise values awareness and can be an
important tool for building consensus.
You will have limited time to conduct your values audit, so any interviews you may undertake will
have to be limited in time and scope.
So, the values audit will result in the identification of (actual) organisational values on the one
hand, and, on the other, the general direction of how the organisation wants to develop its value
system. The findings will therefore need to be translated into action planning for the following
year. If the values audit is performed every year or every other year, an organisation should be
able to track its progress based upon the baseline information provided by the different elements
of the values audit. Hence, the values audit provides a snapshot of the integrity of a company.
• The purpose of the audit is to provide an analysis of the values commitment of the
organisation. You can focus on key issues, or a business unit, or, if the business is
small, the whole organisation.
• Remember to provide relevant contextual overview of the organisation/business
unit/issue and information on key personnel/groups/stakeholders.
• Where the organisation has a specific governance or CSR statement, this must be
included in your documentation.
• In effect, you are being asked to provide a gap analysis, i.e. the gap between
commitments and action. Therefore, you must provide an account of what the
commitments are, and what the organisation has done (or not done) to keep those
• You also need to analyse why you think there is a gap, or no gap between commitments
and performance. This is where you can use the theory presented in the unit along with
case study examples.
• Indicative length: 4000 words, not including attachments, references or endnotes. Need
not be exactly this, but if you fall too far short, by more than a 100 words or so, you may
lose marks. If you fall short by a 1000 words, you will definitely lose marks.
• However, brevity will be rewarded over bloat, therefore try to be succinct and to the point.
Use appendices for the detail and present in a format appropriate to your organisation’s
context and practices.
• Use the Harvard referencing style when citing sources. You will lose marks if you fail to
• You may add links to YouTube clips or other multimedia if appropriate as evidence.
• This is an individual task and not group work.
• This assessment is worth 50% of your total unit mark.
• Due date: last day of exam week. Please consult LEO for exact date.
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