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From Values to Action

The Four Principles of Values-Based Leadership

by Harry M. Kraemer
Copyright © 2011 Jossey-Bass, an imprint of John Wiley & Sons
224 pages

Focus Take-Aways
Leadership & Management • People hunger for authentic leaders who have core values and strong ethics.
Sales & Marketing • A “values-based leader,” an executive whom employees look up to and emulate, follows
Finance four key principles:
Human Resources
• First, “self-reflection” helps the leader determine what is important and what is not.
IT, Production & Logistics
Small Business • Second, “balance and perspective” prepares the leader to develop the right attitude for
Economics & Politics wise decision making.
Global Business • Third, “true self-confidence” enables the leader to build a team of highly qualified people
Career & Self-Development without fear of being overshadowed.
Concepts & Trends
• Fourth, “genuine humility” allows the leader to stay grounded.

• Values-based leaders set the standards for ethical organizations.

• They communicate openly and share information with the people they lead.

• They meet crises head on and take accountability.

• Ethical leaders and organizations live up to their social responsibilities.

Rating (10 is best)
Overall Applicability Innovation Style
9 9 7 8

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People with false self-confidence feel they are right and everyone else String that jumps is wrong. it is fortitude based on being String that jumps String that jumps competent in all the important areas of your life. I didn’t ever think that would String that jumps happen to me. who asked. and he remained aware that to delegate. as well as his weaknesses.” Many students express disbelief at this response.” move ahead on it. String that jumps String that jumps String that jumps 3. String that jumps “The strategic “Well.” String that jumps acquisition price. the deal made no financial sense. String that jumps String that jumps Kraemer told his boss that he planned to speak to the CEO. an audacious move since String that jumps Kraemer was low on the company’s totem pole. Indeed. his company asked him to String that jumps String that jumps perform a financial analysis of a firm it was considering purchasing. He believes that most CEOs pinpoint their attention on doing the best possible From Values to Action getAbstract © 2011 3 of 5 . which in itself is a good talent exists at all levels. He was sure he was right and the firm was wrong on the specific direction.String that jumps welcome numerous viewpoints. True Self-Confidence String that jumps Early in his career.” Kraemer thought. They do not become String that jumps consumed by work or anything else. and they seek thorough reporting rather than confirmation of their it difficult to know what matters most – own ideas. Dismayed.” all the facets of String that jumps your life work well together.why are we paying $100 million?” “Exactly. they want to develop reflection. Kraemer possessed true self-confidence. True self-confidence is the opposite of “false self-confidence. This means and to stay focused their staff members feel comfortable speaking their minds and don’t worry that their on it. Genuine Humility String that jumps Although he became Baxter’s CEO. “I can’t come String that jumps up with a valuation of more than $75 million. When you achieve “life balance. He knew his own worth and his strong the company in a points. the firm did not make the acquisition.. leaders String that jumps String that jumps should solicit as many outlooks as possible on significant issues. Such humility depends on self-knowledge. Later. True self-confidence is not just inner fortitude. thing. lost touch with what “At what point in your career did you decide that you were going to become a CEO?” the is happening day to day. as a high-level roadmap that you How did Kraemer find the courage to go over his boss’s head (conceivably a firing constantly refer to and update offense) and speak directly with the CEO. but he listened as the young manager String that jumps explained why paying $100 million for the acquisition was not smart. Kraemer could not put the looming acquisition aside. He deliberately ran into the CEO in the String that jumps String that jumps firm’s cafeteria. who was a stranger to him? Even as a young in order to take man. including those that differ from their own.” Kraemer told the CEO. Balanced leaders have open minds and listen willingly to others. he learned that biggest benefits of the firm planned to spend $100 million on the purchase.” leader will think less of them for presenting different ideas. He knew it was String that jumps String that jumps bad for his company and its shareholders. but it doesn’t surprise String that jumps String that jumps Kraemer. he confronted his self-reflection is identifying what immediate boss and reiterated that at $100 million.. when Kraemer was a junior manager. String that jumps String that jumps 4. Kraemer reported “One of the that the acquisition would be a good idea at a price of $75 million. String that jumps “Without self. but not when it gets to the point CEOs often come to speak to Kraemer’s management students at Northwestern that the leader has University’s Kellogg School of Management.” which String that jumps is empty bravado. Kraemer never forgot that he started in a six-foot- String that jumps String that jumps by-six-foot cubicle.” typical response is. The CEO did not know Kraemer. He remembered the great “The temptation is ideas and terrific work that originated from such cubicles. “I never thought I’d become a CEO. Leaders who rely on balance String that jumps String that jumps and perspective extend this sensibility to every area of their lives. you’ll find well-rounded opinions. Their primary concern is not to be right but to do the right thing. When his students ask these guest speakers. His comes first and what boss told Kraemer not to worry because the company’s senior executives had decided to comes last. As a result of this process functions discussion.

” When firms turn String that jumps to their values for guidance. String that jumps String that jumps “respect. Honorable firms focus on doing the right thing. focusing on where the firm is and where you want it to go. work on an String that jumps “Values are not ongoing basis. measure your staff's progress. and that this focus – not excess ambition – explains why they attained executive String that jumps String that jumps positions. Inevitably. break things down into separate. leaders who do not practice is.” values-based leadership turn employees into bitter cynics who believe their companies String that jumps espouse empty words. String that jumps String that jumps Clearly communicate the way forward to make sure everyone is aligned. Some leaders think that spreading String that jumps information widely in an organization takes too much time and effort. Indeed. communication . “Operations process” – Ensure that day-to-day operations support long-range goals. does not rely on acronyms and Applying Values-Based Leadership buzzwords. “People process” – Create and lead a quality team that can achieve its objectives.” To communicate effectively. String that jumps String that jumps not merely the legal thing. A self-confident CEO String that jumps doesn’t fear a challenge. manageable components and set a String that jumps course for each element. you must String that jumps be a good listener and a compelling storyteller. lunchroom. When setting an overall route.” String that jumps String that jumps Values-based organizations work to recruit and hire like-minded staffers. Avoid hasty emails can generate and voice mail. which String that jumps involves four management processes that “must work in tandem”: String that jumps String that jumps 1. If you communicate effectively with your employees on all issues. simple. Kraemer’s basic communication dictum is String that jumps “My team should know everything that I know.” while making sure employees feel that they are in charge of their own String that jumps professional development. and it Leaders who use the four principles of values-based leadership in their professional and certainly isn’t meant personal lives become role models for their employees. Aim for String that jumps String that jumps “clear. Conversely. staff members can head off on different paths and disrupt the different story. String that jumps “Some companies The Importance of Knowing Your Path talk a good game and have plaques on Strong leaders set a “clear direction” and ensure that everyone understands where the the wall stating their organization is heading and what it wants to achieve. These leaders prove that the grand to show off how smart the speaker promises in mission statements have meaning. talk directly with your team. CEOs should follow Albert Einstein’s String that jumps String that jumps advice: “Make everything as simple as possible. as he called them. they don’t overstep their bounds. “Good works your organization will accomplish more with increased efficiency. Recount stories from your experience From Values to Action getAbstract © 2011 4 of 5 . A reflective. on a poster in the 4. the “3R’s. but no simpler. This is a necessity in building a mission and values. Do not assume that everyone shareholder value. corporate website or motivational phrases 3. String that jumps values-aware CEO understands what type of employees the company needs and promotes String that jumps String that jumps those who present alternative perspectives and balanced advice.” or. not bad ones. straightforward and concise” messages. “Strategic process” – Instead of making a time-limited strategic plan. That is the String that jumps String that jumps wrong attitude.” String that jumps understands. Kraemer worked to exemplify Baxter’s corporate values.. Instead. bullet points on a 2. “Measurement process” – To achieve success. As CEO.” company’s plans. the CEO should always “own the String that jumps String that jumps people process.” If complexity is inherent String that jumps in your situation. Such deliberate leadership requires superior execution. Because values- String that jumps based employees help keep a company on track. Make sure each person precisely grasps your intent. but followers flock to those who “Effective are confident and yet act with genuine humility. But without day actions tell a straightforward guidance. a humble CEO doesn’t always have to be right. Most employees want to do good things. Plan to communicate String that jumps more often during bad times than good ones. responsiveness and results. but their day-to- values-based firm.. unbridled ambition turns people off.String that jumps job. businesses that String that jumps push legal boundaries end up in trouble.

Leaders who believe in the four principles of values-based leadership must meet their social responsibilities. The String that jumps head of manufacturing had a typical reaction: “Although I don’t like the idea of cutting String that jumps String that jumps manufacturing expenses by more than 10%. what can wait Kraemer could simply have met with his division president and worked out how each unit another day. a health care company. To reach Baxter’s 50. the key is to consider the Engage Your People trade-offs among When Kraemer was the controller of a Baxter division early in his career...” should your company focus its pro bono efforts? One tactic is to exercise philanthropy in areas where your expertise makes a difference. you must prepare for bad times during good times. I think we’d all be better off if I reduced String that jumps manufacturing costs by 20% in order to fund. something has to give.” String that jumps “For some people. From Values to Action getAbstract © 2011 5 of 5 . an ethical leader remains committed on. from poverty to pollution.For you to live a balanced life. He is a former chairman and CEO of Baxter International. he learned that what needs to employees were more receptive to his message when he engaged them personally. and sent information about what had gone wrong to other String that jumps dialysis filter makers and to the governments in affected countries. therefore. the light self-reflective leader thoughtfully weighs the obstacles ahead and plans accordingly. took responsibility. Kraemer “recommended” that the board cut his annual String that jumps bonus 40% and his executives’ bonuses 20% because patients who relied on the firm had String that jumps died while he and his officers were in charge. Although Baxter still String that jumps String that jumps had good financial results that year. absorbed a $189 million loss. The others. this realization Crisis Leadership happens early in Leadership is important in good times and even more crucial in bad times.” Coping with these factors requires they achieve better life balance. Yet bulb never goes challenges do arise unexpectedly. Jansen Kraemer Jr. get everything done.” In his articles. closed the plant. Kraemer believed he String that jumps could convince the department heads to unite and work out a way to cut costs so that String that jumps String that jumps the division would benefit. For “a fourth C: courage. baffling problems. Their values demand nothing less.” As a leader. For Baxter. which are their careers and marked by the “3C’s. But as a self-confident leader.change.000 employees.. to doing what is right. his division’s sales and profits were off.String that jumps to make points your staff will remember. Kraemer’s team investigated String that jumps String that jumps the tragedy. Northwestern University. Instead.. provided String that jumps funds to the victims’ families. So where from a fire hose. At be accomplished immediately and one point. controversy and crisis. teaches management and strategy at the Kellogg School of Management. In such situations. Kraemer used family “None of us will ever anecdotes to illustrate points he wanted to make about Baxter’s business. so he had to cut expenses by 10%..” would reduce expenses. These were Kraemer’s colleagues. By respectfully engaging his String that jumps peers. About the Author Harry M.important [divisional] initiatives..” To confront this disaster. And that is what happened. he met with the senior department heads and gave each String that jumps String that jumps one an opportunity to offer opinions and solutions. Kraemer persuaded everyone to approach cutting costs in a selfless manner. String that jumps String that jumps String that jumps Values-based leaders also work to fulfill their organizations’ social responsibilities amid “Being a leader is numerous. String that jumps They didn’t have to defer to him. Kraemer String that jumps String that jumps wrote an internal column called “On the Home Front. Ethical leaders know that they often like drinking must contribute to the world around them and must be exemplary citizens. this has been health care. 53 people died because of a problem with a “dialysis filter product made in a String that jumps Swedish plant owned by Baxter.” In 2001.