Principal and Founder of Activate Group, Inc.
If you study any organization that exemplifies sustained superior performance, you will find a remarkable culture, one defined and constructed around the core values institutionalized by its executive team. In other words, the core values, when practiced on a daily basis, help top companies become more successful than their competition. While it is true that you need products or services to make money, the prevailing attitudes and behaviors that characterize your people are what fuel success.
It takes discipline and diligence to create a culture. Core values are reflected in how you make decisions around:
- People (hiring, compensation, retention, benefits, promotion, demotion, firing)
- Customers (acquisition, retention, pricing, concessions, product changes, service, types)
- Vendors (selection, retention, proper controls, exclusivity, rotation)
- Products (quality, price, consistency, innovation, competition)
- Growth (mergers, markets, consistency, speed)
- Costs (controls, policies, discipline)
The number one reason core values do not get ingrained in many businesses is that their senior executives do not live them. If the top three or four executives (e.g. CEO, president, COO and CFO) are not role models, it is not likely that the rest of their employees will consistently exhibit the company’s stated core values. Typically, the organization is a mirror image of the foundation of values established by these top executives. So if you as an executive do not like what you see in terms of behaviors from your team, you can be sure that you need to change your own behavior before you will see changes in your people.
A Case in Point – “XYZ Company”
XYZ Company underperformed against its competition in terms of growth and believed it could have grown 10 percent annually. In fact it grew only four percent over each of the last several years. Its curse was that its performance level provided an adequate income for its main shareholders. What it did not want to address was what everyone who visited the company could see.
XYZ Company had approximately one billion dollars in sales. I met with the senior management team to understand the circumstances faced by the company. They were looking for a company to provide training for their sales organization, which was comprised of approximately 150 people. As I asked more questions, it became clear that their real concern was how to get more sales, not training and development.
The facts where alarming. I found that the company did not have clear action plans to achieve their goals, many of which conflicted with each other. They did not fire non-performers. Managers did not feel they had enough authority so they did not feel responsible for their results. Hiring policies were inconsistent, compensation and performance were not adequately supporting each other, and I could go on. Then I asked the magic question, “What are your company’s core values?”
First silence followed, then the obligatory, “Well, everyone knows what our values are. They are clear!” After a two and a half hour meeting with some key leaders, the president had to face the hard truth that there was no clarity and that leadership never defined and implemented core values to make the company great.
What they actually had were unwritten core values that were unflattering:
Mediocrity. Sales personnel and management did not work as hard as they could or try to be the best. Some divisions routinely lowered prices because they believed that was the only way to make the sale. In others they did not aggressively seek new business and waited for opportunities to present themselves.
No Accountability. If people did not hit their sales targets, it really did not matter, particularly if they had been with the company a number of years. They were just “forgiven” and still paid handsomely. If you far exceeded others, your income did not reflect it, so why bother.
Mistrust. The organization did not follow through on initiatives. They talked big and acted small. Consequently, when they said they wanted to create change, nobody took them seriously.
Disrespect. Senior management began initiatives only to have the CEO usurp them. Further, the CEO and president did things that sent signals indicating that they did not believe in their management team.
Loyalty. This was the only discernable good value in the company. However, it was being misused. As long as you spoke well about the company, did what you were told, and maintained the status quo, you would have a job for life. This would be great if the few people at the top had every answer (they did not) and if the company was achieving its potential (it was not). So the value was working against the company.
Find Your Core Values
This does not need to be a long exercise, and copying someone else’s values is not recommended. Typically, a good facilitator can bring together and help the senior management team discover its core values within one to four hours, depending on how large the group. It can be fun, and it is critical to really understanding what is important to driving your company’s vision. I say “discover” because core values already exist. They are not manufactured. CEOs cannot act as if they want to be the best if they really believe “good” is enough. No one can become a person that is always learning new things if they have not picked up a book or gone to a seminar in the last five years. It will never be core.
As demonstrated above, if you do not plan to instill your core values, they will happen anyways, and the results can be devastating. When it comes to a company’s culture, the longer you wait to define and instill the right core values in your organization, the harder it will be to achieve your ideal culture and thus maximize performance.
Here is an example of the core values of a client whose is expected to grow over 100 percent this year in the US, Canada, Latin America and Caribbean:
- Follow through consistently.
- Keep learning.
- Act like an owner.
- Support each other.
Implementation of Core Values
Once you have developed your values, it is imperative to execute them through spaced repetition and consistency. This is the most difficult and important part of forming your culture. Everything we have learned in life we have learned through spaced repetition. Think about how you learned the multiplication tables. Indeed, this is the method the advertising world uses to imprint the messages they want us to receive. Likewise, an organization must develop a system for all employees to regularly hear, see and act the company values.
In Mastering the Rockefeller Habits, Verne Harnish does an excellent job of identifying how to institutionalize core values into your organization in the the chapter “Mastering the Use of Core Values.” Mr. Harnish has put together the following checklist to make sure that you do not have a gap in building core values into your business. If you have not read this book and want to accelerate the growth of your business, I highly recommend it!
Storytelling. Everybody enjoys a good story, and many great leaders have taught through parable or storytelling. Identify some “legends” and current stories that demonstrate each value. Stories can provide explanations for any core values that might seem unusual or cryptic on their own.
Recruitment and Selection. Design your interview questions and assessments to test a candidate’s alignment with your core values. Then, rate the person in terms of their perceived alignment with each core value. Your goal, after all, is to make sure your new hires fit in to your organization’s culture.
Orientation. Once hired, your new employee must be brought into the culture. Like many social organization initiations, orientation (you do have one?) is when you can inculcate the company’s core values. Consider organizing your orientation around the teaching of your core values.
Performance Appraisal and Handbooks. Core values should provide the framework on which you build your performance appraisal system. With a little creativity, any performance measure can be linked with a core value. In addition, organize your employee handbook into sections around each core value.
Recognition and Reward. Organize your recognition and reward categories around your core values. You also gain a new source of corporate stories and legends each time a reward or recognition is given that highlights a core value.
Newsletters. Why struggle to come up with a catchy title for a newsletter when some word or phrase from your core values will do beautifully? Highlight a core value with each issue, incorporating stories — yes, more stories — about people putting these core values to work for the betterment of the company.
Themes. Use your core values to bring attention to your corporate improvement efforts. Milliken, the textile manufacturer, takes one of their six core values and makes it the theme for the quarter, asking all employees to focus on ways to improve the company around the theme. The Ritz-Carlton chain goes to the other extreme and highlights worldwide one “rule” everyday. In either case, establish a rhythm that keeps the core values top-of-mind in a repetitive fashion.
Everyday Management. I’ve found that managers and CEOs can repeat core values almost endlessly without it seeming ridiculous — so long as the core values they’re using truly are relevant and meaningful to their employees. When you make a decision, relate it to a value. When you reprimand or praise, refer to a value. When customer issues arise, by all means, compare the situation to the ideal represented by the value. Small as these actions may sound, they probably do more than any of the aforementioned strategies for bringing core values alive in your organization.
As mentioned at the start, if you study any organization that exemplifies sustained superior performance, you will find a remarkable culture. This culture is defined by the core values that are established by the leadership. Once you have defined your core values, the hardest work begins. While it is important to know what your values are, it is equally important to institutionalize these values.