Corporate values are in vogue.
A Booz Allen Hamilton/Aspen Institute survey of corporate behaviour found that leading companies are crafting a purpose-driven identity. Of 365 companies polled, 89% had documented their corporate values.
But does corporate fashion translate into corporate practice in ways that truly create value rather than consume value for organisations and society?
The answer is “it depends”.
This applies equally to individuals as well as organisations:
- Getting your values wrong can hurt you
- Getting your values right can help you
Alas, The Corporate Credo
As Marshall Goldsmith observed:
Companies have wasted millions of dollars and countless hours of employees’ time agonizing over the wording of statements that are inscribed on plaques and hung on walls. There is a clear assumption that people’s behavior will change because the pronouncements on plaques are “inspirational” or certain words “integrate our strategy and values.” There is an implicit hope that when people — especially managers — hear great words, they will start to exhibit great behavior.
The big messages organisations typically come up with are all basically the same:
- “Respect for people”
- “Customer satisfaction”
They lack a level of true authenticity, genuine individuality and passionate self-expression.
Despite good intentions, most managers fail in their efforts to successfully decode the true core values of their organisation. Pushing with relentless honesty to discover and define what values are truly central is demanding work. Furthermore, as corporate values emanate from the values of the people within an enterprise, it can be difficult for boards and management to objectively see something they are implicitly part of.
Stating the beliefs or aims which guide someone’s (or multiple “someones”) actions is not something you create – it is something you uncover. You do not deduce it by looking at the external environment. You understand it by looking inside yourself / your organisation.
Aha, The Corporate Credo
However, corporate values can triumph when people get them right. This begins with knowing where values fit into organisations.
Truly great companies understand the difference between what should never change and what should be open for change, between what is genuinely sacred and what is not. This rare ability to manage continuity and change – requires a consciously practiced discipline called AdaptAbility, that I have written about elsewhere.
Values; when correctly uncovered and authentically articulated, are fundamentally policy statements. However, values are only one piece of a four-piece policy jigsaw puzzle that is generally missing or poorly assembled in most organisations.
The board (rather than management) is ultimately responsible for decoding each of these four critical governance pieces of the policy framework that collectively capture express the core ideology of an organisation. This core ideology defines the enduring character of an organisation – a consistent identity that transcends product or market life cycles, technological breakthroughs, management fads and individual leaders. In fact, the most lasting and significant contribution of those who build visionary companies is the core ideology.
“Companies that enjoy enduring success have core values and a core purpose that remain fixed while their business strategies and practices endlessly adapt to a changing world.”
– James C. Collins and Jerry I. Porras
Decoding And Encoding Core Values In An Organisation
In essence, values are beliefs about the world and what’s important in life.
Explicitly understanding and articulating your values helps you use them to make better choices in business and life – both consciously and unconsciously.
The greatest mistake I’ve found boards and managers make in working on their corporate values is choosing the wrong process. Despite good intentions, they choose an analytical approach, like using a structured 360-degree profiling tool to dissect their values. They attempt to fit their organisation into a model of constrained value clusters.
Decoding core values is an individual, creative process rather than an analytical process. A one-size-fits-all approach is simply insufficient for the complexities of the task at hand. When you discover your core values, you deepen your understanding of who you are. This reinforces why you behave the way you do. When this translates to more consistent behaviour; throughout an organisation and across the passage of time, it builds the primary capital of commerce – trust.
“Values are like fingerprints. Nobody’s are the same, but you leave them all over everything you do.”
– Elvis Presley
Strategically, values influence four important areas:
- Relationships – the social license an enterprise has to operate
- Reputation – the equity and positioning of the organisation’s brand/s
- Decision Making – consistently making wise strategic choices
- Growth – the capacity of an organisation to align its intention and attention
Organisations that understand their values can do something that their competitors can’t – they can engage in values-driven management improvement efforts. Some of these include:
- Training staff in values
- Appraising executives and staff on their adherence to values
- Settings performance goals that are aligned with values
Ultimately, the value of knowing your values is realised in a range of tangible business outcomes. Some examples include:
- Improved employee retention and recruitment (engagement scores)
- Enhanced customer loyalty (customer satisfaction scores)
- Reduced incidence of fraudulent employee activity
One well known company that is publicly using their values to help enliven their business by enriching their culture is Netflix – see https://jobs.netflix.com/culture.
The public will remain suspicious until corporations both understand and can demonstrate that they are committed to using values to create real value for their stakeholders.
Ultimately, harnessing the value of values comes from living your values.
“I hear and I forget. I see and I remember. I do and I understand.”
Business leaders need to move from talking about values and viewing them defensively to embracing them as a catalyst for driving corporate performance and change.
What you do matters, but why you do it matters much more.
Article: The Value Of Corporate Values
Article: Building Your Company’s Vision
Harvard Business Review, September-October 1996
Course: The Value Of Knowing Your Values
Example: Netflix Culture
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