Are corporate credos worthless?
At its best, a corporate credo can provide inspiration and direction to help management focus when times are hard. Johnson and Johnson’s credo is a great example. It was written 70 years ago by Chairman Robert W. Johnson himself, just before the company went public, and is chiseled in granite in the entrance to the corporate headquarters. It embodies Johnson’s commitment to the firm’s customers, employees, communities, and shareholders.
But sometimes a credo is just a clever marketing ploy. Enron had a highly developed corporate code of ethics espousing high-minded beliefs. They put together a compelling video that touted their good deeds in the community and the character of their leaders. But many of those leaders are still in jail, and the company’s name is now a byword for corporate corruption.
Credos matter when leaders and managers take them seriously. If a credo is mainly a clever way to use business ethics as a marketing strategy, it’s worse than useless. But if a firm’s core beliefs really make a difference—the way J&J’s did during the Tylenol crisis of 1982—then those values become valuable.
A credo can be priceless, but only if changes our actions. When it comes to ethics—business or personal—actions speak louder than words.
Douglas R. Tengdin, CFA
Chief Investment Officer