be able to bring many of their basic beliefs about life into an organization. AES people were encouraged to live their beliefs inside the business just as they would at home, in their places of worship, and in their communities. This was very popular with most AES people and somewhat novel. Most of us have heard the phrase “Business is business.” The phrase implies that business has its own set of rules. When we go to work, we’re supposed to leave our “Sunday school” or “homespun” values at the door. My view is just the opposite. Because our central values and principles were derived from mainstream values practiced by billions of people around the world, we hoped that most of our people could bring the key elements of their personal philosophies into the workplace.
Less popular was the idea that we should practice AES values both at work and in other areas of our lives. For example, integrity at AES meant that we did not cheat, steal, or lie on the job. It seemed logical that we should also adhere to those strictures in our private lives. “It’s personal” or “I’m on my own time” are no more appropriate excuses than “business is business” for not acting according to basic shared values whether we’re at work or not. Cheating on your income tax returns is not consistent with AES’s concept of integrity. If we became aware of such behavior away from the workplace, we would ask the employee to act in a more upstanding way—or to leave the company. My colleague Stu Ryan, an excellent strategist and an even better person, continually pressed me and other company leaders to deal aggressively with discrepancies between professional and personal behavior. I do not think we did a very good job living our values outside work. Many of our top people felt uncomfortable about becoming involved in the personal lives of other AES employees. I understood that doing so was delicate and difficult, but I thought we should at least struggle to achieve moral consistency.
When it comes to “fairness,” I often think we chose the right value but the wrong word. In my lectures, I often ask people to complete the sentence. “Fairness means treating everyone _______.” Ninety-five percent of the people I ask respond, “the same.” I usually respond, “I mean just the opposite.” The word “justice” better describes the standard we set for ourselves and AES.
I like the traditional Jewish definition of justice: “To each person what he deserves, to each one what is appropriate.” If I combine this definition with an assumption that each person is unique, I logically complete the sentence this way: “Fairness or justice means treating everyone differently.” We’ve all heard the story of the sergeant who stands before his troops and announces, “Nobody gets special treatment around here!” What fairness meant at AES was that everyone got special treatment. The interpretation of these concepts gets confused because of another concept we hold dear: equality. The logic of equality goes something like this: “I’m the same person or do the same job as another person, so I should be treated the same as that person.” Equality and fairness are not synonyms, however, and neither captures organizational justice the way I use it.
Leaders of organizations (including unions and corporations) consistently ignore the fact that employees are unique.
I can best illustrate my point using an example from my home. Even at an early age, my son, Dennis Jr., loved to spend hours of his time alone in his bedroom reading, designing games, and pursuing other solitary interests. His younger sister, Margaret, loved to spend much of her spare time in the kitchen or den with family members and friends. Whenever we had a party she was in the middle of the festivities, engaging older and younger people in conversation. When Dennis Jr. and Margaret misbehaved, my wife and I attempted to discipline them in ways consistent with their different personalities, even if both had committed the same transgression. It would have been easier and more conventional to punish them the same way, perhaps by sending them to their bedrooms alone for the evening with no TV or telephone privileges. But Dennis Jr. would have thought this was great, and Margaret would have felt she had been exiled from her family and cut off from her friends. We love them equally, but they are unique individuals, and we had to treat them differently in order to be fair or just.
While parents often understand that children need to be treated differently to get a fair result, leaders of organizations (including unions and corporations) consistently ignore the fact that employees are unique. Most managers prefer not to get enmeshed in the personal lives of the employees who report to them. This often makes it impossible to make judgments about individuals and their performance consistent with their personal differences. Furthermore, employees and their union leaders generally don’t trust managers to make fair judgments about individuals. As a result, businesses are forced to pigeonhole their employees according to artificial classifications such as years of service, union membership, level of education, and job title. If real justice or fairness were applied in organizations, it would radically change most of them, sometimes in very surprising ways—and almost always for the better.
In making “social responsibility” one of our core values, we recognized that every corporation is given certain rights and privileges by the state. In return, the company should operate in ways that benefit society and mitigate the potential negative consequences of its activities. Improving the environment is an obvious way to be socially responsible. For example, AES was widely praised for its programs to offset CO2 emissions from our U.S. and U.K. facilities by helping to plant 52 million trees in Guatemala and by preserving hundreds of thousands of acres of forest land in the Amazon region and in Paraguay. Charitable activities to help the disadvantaged and safety programs for employees and the public constitute other socially responsible corporate activities.
While these undertakings are important, I gradually concluded that we could serve society best simply by fulfilling the company’s mission. The primary social responsibility of AES was to be the best it could be at meeting the world’s need for safe, clean, reliable, and economically priced electricity. That took 90 to 95 percent of our resources and of our people’s skills and efforts.
For example, in Leflore County, Oklahoma, unemployment fell from 13.6 percent to 4 percent after AES built a 320-megawatt plant there. But that was minor compared with what happened after AES acquired a distribution company in the Dominican Republic in 1997. The year before we bought it, 385 Dominicans had died in electricity-related accidents within our utility service area—a fairly typical toll at the time. By 2000, the number of fatalities had dropped to 29. In other words, we saved hundreds of lives because AES took seriously its primary mission “to serve society in an economically sustainable manner with safe, clean, reliable electricity.” I can think of no other “project” AES has undertaken that was as socially beneficial.
The selection and identification of our shared values were just the first step in creating an ethos for AES. The role of these values and principles in the life of our organization became more important each year. After that first strategy session, I kept working to define what our values meant in a practical sense, both to me and to others in the organization. We then integrated the values into all aspects of AES life. As a result, we never needed special values or ethics initiatives or programs to encourage diversity or community involvement. These things were part of our everyday working lives. They were perfectly compatible with the way we did business. As Lynn Sharp Paine, a professor at the Harvard Business School, put it, “Values are not a ‘management tool’ or a special type of management system that runs parallel to a company’s audit or compensation system. Nor are they bits of ethereal matter … [they are] beliefs, aims, and assumptions that undergird the enterprise and guide its management in developing strategies, structures, processes, and policies. They constitute an organizational ‘infrastructure’ that gives a company its distinctive character and ethos—its moral personality.”
When we first defined our values, two of the AES senior leaders who had participated in the conference were skeptical. They had a hard-nosed, no-nonsense approach to business and took a dim view of the “soft, touchy-feely stuff” that they believed was on the table. Economics was “hard” and important; other things were not. Knowing the belief system and personalities of the two, I was not particularly surprised by their lukewarm response.
