Organizational values can help tie thinking and culture to the company’s aspirations, explains Basil Read
Respect, integrity, communication and excellence were the aspirational values of the failed energy corporation Enron, while integrity, courage, innovation and collaboration were the lofty corporate values of Purdue Pharma, the purveyors of the addictive drug OxyContin. In teaching values-based leadership, I often use the stated values of companies like Enron and Purdue Pharma to make the point that if corporate values are not understood and embraced by all members of the organization, then they just become a bunch of words that take up space on breakroom bulletin boards and in corporate prospectuses.
All too often, the stated values of an organization are pushed aside in favor of unstated yet commonly held beliefs of how things are “really” done. These unstated rules of the road can lead to bad behaviors, which, in the extreme, are reflected in Enron’s practice of hiding toxic assets and Purdue Pharma’s aggressive push of a highly addictive drug.
While Enron and Purdue Pharma may be extreme examples of companies that don’t live up to their values, participants in my classes are quick to point out examples of values lapses in their own organizations. Surprisingly, this comes only after participants are reminded of what their company values are. In teaching values, I have found most executives, managers and employees can usually correctly state their organization’s mission and some can articulate the vision, but very few are able to list the company values, let alone state their meaning. In one large organization where I facilitated values discussions for several years, most leaders and employees could not identify the corporate values despite them being displayed on large, framed posters in the back of every classroom!
Why Organizational Values Are Important
According to the Society for Human Resource Management (SHRM), values outline “the core principles that guide and direct the organization and its culture … creating a moral compass for the organization and its employees.”1 Simply put, organizational values, when properly implemented and widely embraced, serve as the foundation of a desired culture. They become a common means of examining both organizational and individual decisions and actions – thus ensuring alignment of thinking and organizational culture to the company’s aspirations. Imagine what might have happened if leaders and employees at Purdue Pharma had asked, “How does our scheme of incentivizing doctors to prescribe higher doses of OxyContin align with our core value of integrity?”
Values are part of the business school trinity: vision, mission and values. The vision statement provides an aspirational objective towards a future state, while the mission (or purpose) statement is a clear indicator of what the organization does. Values are the behaviors that support the mission and fuel the vision. Taught in most MBA programs as the foundation for a successful organizational strategy, the practice of developing vision, mission and values statements took off in the 1990s. By 2008, Bain & Company found that 65% of some 10,000 companies surveyed had trinity statements in place.2 Today, it is safe to assume that hundreds of thousands of hours have been invested globally, by organizations large and small, in crafting vision, mission and values statements. Yet despite this significant investment of time and energy, many companies have stated values that are not well known or practiced by their managers and employees. These companies are missing an opportunity, as shared organizational values create culture, which in turn fuels employee behaviors that lead to organizational success or failure.
However, there is hope. While some companies have ignored their stated values, others have made their corporate values central to their operations. For example, one company that truly embraces its values is the online shoe retailer Zappos. The company’s 10 values form the basis of how employees interact with customers and their colleagues and serve as the foundation of a unique oath of employment.
- Deliver WOW Through Service
- Embrace and Drive Change
- Create Fun and A Little Weirdness
- Be Adventurous, Creative, and Open-Minded
- Pursue Growth and Learning
- Build Open and Honest Relationships with Communication
- Build a Positive Team and Family Spirit
- Do More with Less
- Be Passionate and Determined
- Be Humble
Even without knowing the underlying definitions, it is apparent how these values underpin the Zappos vision statement, “Delivering happiness to customers, employees, and vendors,” and the Zappos mission statement, “Provide the best customer service possible. Deliver WOW through service.” These values fueled a company that grew from $1.6 million in sales during its first year of operation to over $1 billion in annual revenues 10 years later. The Zappos story suggests that a well-crafted and fully embraced set of values can have a direct impact on a company’s return on investment (ROI).
Zappos is not alone. Other companies such as Airbnb, Southwest Airlines, and Starbucks have also enjoyed a high ROI that is, in part, the result of values that are embraced and modeled throughout the ranks. Bottom line: values describe a desired organizational culture; living them transforms that desire into reality.
Strategies for Values Alignment and Incorporation
1. Ensure shared meaning
Don’t assume that everyone has the same understanding. When you ask 10 people if they value family, most, if not all, will say yes. Yet if you ask the same group to describe how they value family, you’ll likely get 10 different answers. Therefore, to have organizational impact, values must be defined and understood by all members.
2. Personal and organizational values must be aligned
Stress is often the result of a values conflict. For example, if the organization values working overtime and an employee values time spent with family, there could be a values conflict. Similarly, a strong individualist may have difficulty embracing a company value of teamwork. A values alignment activity often helps workers develop strategies for dealing with or resolving values conflicts.
3. Reinforce desired behavior
In the press of everyday work, people can suppress organizational values in their quest to meet operational objectives. Posters are not enough. Frequent reminders from leaders and seasoned employees will result in better outcomes. Values should also be a routine part of performance discussions.
4. Look for areas of improvement
While reminders are helpful, direct participation reinforces desired behavior. A simple technique is to have team and group leaders ask their employees to identify which of the firm’s values is best embraced by the team/group and which ones need some work. Then create actionable steps to improve on the weakest value over a six-month period, with check-ins and celebrations along the way (repeat every six months).
5. Model desired behaviors
Leaders and employees must act in ways that are consistent with the organization’s values. While it is important for leaders to set a good example, employees must also model appropriate behavior. Many employees, especially those who are new to the organization, take their behavioral cues from co-workers.
6. Create benchmarks
Project proposals, courses of action, draft decisions, etc. should include a statement that describes how they are aligned with the organization’s values. This benchmarking reinforces the corporate values while simultaneously causing people to think critically before acting.
7. Encourage questions
Employees at all levels should be encouraged to ask how decisions, actions and behaviors that “seem off” align with one or more of the organizational values.
8. Reward desired behavior
Tie the company’s awards and rewards system to the organizational values. Personnel typically receive awards for furthering some aspect of the mission. In addition to praising them for their achievement, state how the person’s actions were consistent with or modeled your company’s values.
1SHRM (2020). What is the difference between mission, vision and values statements? Society for Human Resource Management. Retrieved from: https://www.shrm.org/resourcesandtools/tools-and-samples/hr-qa/pages/isthereadifferencebetweenacompany’smission,visionandvaluestatements.aspx
2Brudan, A. (2010). Vision statements as strategic management tools – Historical overview. Performance Magazine. Retrieved from: https://www.performancemagazine.org/vision-statements-as-strategic-management-tools-–-historical-overview/
3Lencioni, P. (2002). Make Your Values Mean Something. Harvard Business Review. https://hbr.org/2002/07/make-your-values-mean-something
4Purdue Pharma (2020). Purdue Pharma ethics statement. Retrieved from: http://www.purduepharma.com/about/ethics-and-compliance/purpose-statement-values/