Corporate Principles / Organizational Principles

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Corporate Principles / Organizational Principles

🔥 Below I briefly explain what are Corporate Principles (CPs) and what are they used for. I welcome any comments, tips and experiences...

What are Corporate Principles? Definition and Demarcation

To begin, "corporate principles", "organizational principles", and "company principles" are terms having the same approximate meaning. I will use the abbreviation: "CPs".
It's hard to give a concise, precise and universally agreed definition. Here is my attempt: "CPs are statements that further concretize the mission and values of an organization. Among other things, they can guide managerial decisions, especially on important matters at crucial moments (e.g., a crisis), and help to communicate the rationale behind such decisions to stakeholders".

CPs are to be distinguished from the corporate mission, strategic vision, values and value statements (follow the links for clarification).

What can you use Corporate Principles for? Application Areas

• Make the company's values concrete.
• Guide decision-making (especially on important matters at crucial moments).
• Help to communicate and explain rationale behind decisions to various stakeholders.
• One major foundation for the organizational culture (alongside the mission and values).
• Provide guidance for strategy formation and strategy execution.
• Support recruiting of talented people.
• Increase organizational commitment and employee engagement.

Criteria for Good Organizational Principles. Characteristics

Interestingly, Fuchs et al. mention 5 characteristics of well-formulated organizational principles:

1. DISTINCTIVE. Instructive and unique.
2. DEBATABLE. Non-obvious and can reasonably be disagreed with.
3. TRANSFERABLE. Can be applied to various situations and scenarios.
4. INTEGRAL. Is core to the activities of the organization and helpful to meet its major challenges.
5. DEFINING. Establish norms that uniquely differentiate the company and the way it will confront crucial events.

⇨ Any reactions, tips and experiences about organizational principles are welcome!

Reference:
Fuchs J., Sandell S. and Shanker V., "It's Time to Define Your Company's Principles: Mission, vision, and values are not enough", HBR Nov-Dec 2023, pp. 124-131

		Comments by date▼ Comments by rating Rating
		1 Paul Pretorius Management Consultant, South Africa
	CP's are a Key Input to Organization Design Thank you for this input. I consider this to be a fundamentally important contribution to understanding the design of a business. CP's need to be clarified in addition to the organisation value proposition since it touches on 'how' the organization will behave. Excellent.

		1 Paramathmuni srinivas Kumar India
	Classification of Organisation Values and Spirit Behind Values Organisational values can be classified as systematic values and human centered values. 80 percent or more of the defects in decision making have a systemic origin or human behaviour origin. For example, the value of quick retrieval and management of documents can be done by implementing a suitable document control management system in the organisation. Similarly the availability of enough time for inspection can be implemented at the human behaviour front. Also the spirit behind the values need due consideration. For example, if an organisation says "we value relationship" it doesn't mean that they maintain the relationship by unfair and unethical means. I mean the spirits of delivering the positive side of the value while also detaching the negative side of it need to be done simultaneously.

		1 Pleiwon K. Dolopei-Saywah Lecturer, Liberia
	Question to Understanding the Difference Between CP and Organization Culture What's the difference between CPs and organization culture?

		0 Otaka Moris Manager, Uganda
	Manager and HR CPs mainly originate from project design and address the implementation frame work. The main result or effect of CPs is seen in the organisation behavior (culture). An organisation with well-framed principles is characterised with low staff turn over.

		0 UMAR MUHAMMAD WUDILAWA Director, Nigeria
	Principles of Organizations I found this description of the objective of organizational principles very educative.

		1 Jaap de Jonge Editor, Netherlands
	Difference Between Corporate Principles and Corporate Values and Corporate Culture I think the core of the distinction is that an organizational culture can be further described in values, which in turn can be worked out more practically in principles. For example, if you have a chaotic crisis situation and you need to make an important decision, knowing that you have some kind of organizational culture is not going to be very helpful. Remembering what your values are is already better. But if you have materialized the values in principles that will probably be really helpful.