By Willard Hanson Posted 10/07/2020 in BUSINESS
The term “core values” has come into common use in today’s business world and it is a valuable concept for every business. Core values are the central principles, beliefs, or philosophies that shape a company’s actions, guide decision-making, and create its culture. They help an organization work effectively as a team towards common goals. They are not a rambling list of virtues but should represent a company’s highest principles and most important driving forces. As Tony Hsieh, entrepreneur and CEO of Zappos said, “Your personal core values define who you are, and a company’s core values ultimately define the company’s character and brand. For individuals, character is destiny. For organizations, culture is destiny.”
Why it is Important to Define Core Values?
It might be said that core values act as a “guiding light” for an organization regarding what things are most important and how the organization should act. Core values help companies:
- Clarify the identity of the company and educate clients and potential customers about what the company stands for.
- Make better decisions by setting standards of judgment.
- Recruit and retain employees.
- Attract customers, vendors, investors, and financial partners.
- Unite and motivate an organization in working toward common goals.
- Navigate through difficulties.
- Remain accountable to commitments.
- Serve customers better.
It is reported that more than 50 percent of business executives agree that corporate culture built on core values influences creativity, productivity, profitability, growth rates, and firm value.
How Many Core Values Should a Company Have and What are They?
First, there is no established “rule” about how many core values a company should have. The most important factors are that they are authentic, understood, and embraced by the organization, and are lived-by, not hung on an office wall. Some people suggest that six or seven values are a good target, but the number, content, and structure that are used vary widely. For example:
- Google has a list of 10 values.
- Amazon uses a list of 14 leadership principles.
- Nike uses a mission statement and four supporting values.
- Netflix defines 10 company values.
- Uber uses eight company values and calls them “cultural norms.”
- Microsoft has six core company values.
Some common company values are:
- Commitment to Customers
- Continuous learning
- Constant improvement
Companies making strong statements about the importance of good core values are:
- Wholefoods: “To ensure long-term success and long-term employee retention, it’s critical you create—and live-by—certain non-negotiable company values.”
- Google: “Ultimately, a core value doesn’t have much power if your company can’t list intentional, calculated decisions it’s made to put values ahead of profit.”
- Netflix: “Our core philosophy is people over process. With this approach, we are a more flexible, fun, stimulating, creative, collaborative, and successful organization.”
- KPMG: “Our values create a sense of identity within the KPMG organization, which is a network of member firms in 152 countries. They define what we stand for and how we do things.”
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With this diversity of approach, the number of values, and content, creating a set of core values must be customized, approached thoughtfully, and tailored to each organization. It should embrace and express what is unique to the organization. As Elvis Presley (yes, that Elvis) said, “Values are like fingerprints. Nobody’s are the same, but you leave them all over everything you do.”
Four key elements stand out as essential to formulating company core values statements:
- Start with a company vision statement—what role or impact will a company have on the world? The company’s values are the principles that support this vision.
- Keep the company values unique, not a “vanilla list” of broad aspirations and qualities and not simply a great sounding and sweeping statement.
- Make the values simple to understand and remember. A short bullet-point list of single-sentence principles will be more functionally valuable than paragraphs of philosophies.
- Make your values dynamic over time by constantly reviewing them for current relevance and value.
How to Develop Core Values
Here is a suggested process for developing core values:
- Establish a working plan including why you want to do this, what you expect from the process, who will be included, what steps will be taken, what timeline will be followed, and how the core values will be used and communicated.
- Begin a process of discovery that could be comprised of interviews with team members, small discussion groups, workshops, or team member surveys, depending on the size and dispersion of the total workforce. This can identify what employees feel the company’s values are and how they see them in practice. Leaders should also separately identify what they feel the company’s values are and what values are desired for the company. The process can also include some brainstorming time to identify what values are desired.
- With the initial process of discovery complete, the input can be distilled into themes and common groupings and ranked according to the frequency of feedback.
- A small group should then create a draft values statement for circulation and further feedback. A process of draft reviews and revisions should proceed until it appears that consensus is being reached.
- A final form that has been carefully polished and approved by senior management should be presented or “unveiled” to the organization (with thanks for all who participated.) All team members should be asked to “own” the values.
- The core values statement should be “embedded” in the organization and consistently referred-to so that it becomes a living and vital statement of important principles.
How to Keep and Reinforce Core Values
For core values to have a positive impact on a business, they must be exposed, referred-to, and used consistently. They can be applied in the following ways:
- Leaders lead. Leaders lead the way by living the values as an example to the organization.
- Decision-making. Hold up actions against the core values “measuring stick.”
- Use core values statements in interviews to ensure that candidates embody and can embrace the company’s values.
- Teach and train core values to new team members.
- Team engagement. Regularly discuss and reflect on core values and how they guide the actions of individuals and the company.
- Employees should know all of the Core Values. If none of your employee’s can remember them all you have too many.
- Learning and development. Apply the company’s values to all aspects of organizational development.
- Teach and reinforce the values in all communications. Make sure internal and external communications are in complete alignment with the values.
- Recognize and reward employees who exemplify aspects of the core values.
- Performance evaluation. Weave the values into the performance evaluation process and terminate people who violate core values.
Mistakes Companies Make with Core Values
Simply having core values is not a magical path to business success. Here are mistakes that can be made that undercut the many benefits of having them:
- Only the leaders write the values, so there is a lack of broad inclusion in the process.
- The values are not authentic, not true to actual behaviors and philosophies of the company.
- The values are vague and poorly defined.
- It is just a “laundry list,” a long list of items that has no power to motivate.
- No one knows them (so how could they be helpful?)
- They are not prioritized.
- If the leaders claim to embrace the values and then act in ways that are contrary to them, the entire concept fails, and the motivation and trust evaporates that should go with powerful core values.
Every business wants to succeed and each company constantly looks for ways to be more competitive. What can be more compelling and differentiating than harnessing the unique characteristics of a business to guide and motivate behaviors by using the “guiding light” of well-developed core values? As lawyer Chris Hansik said about his business, “Our mission and core values drive our culture and are the foundation of our practice. We measure each decision against these standards.”