The Value of Company Values


Respect. Integrity. Excellence. Honesty. Trust. Commitment. These are just a few of the most common company values in 2021. They sound great, right? Unfortunately, many companies have wasted millions of dollars and countless hours of time agonizing over the wording of statements inscribed on plaques and hung on walls. 

It appears that to many, there is an implicit hope that when people (ahem… managers) see or hear these great words, they will exhibit great behavior. Unfortunately, this is not how company values work. Rarely (aka: never) will the writing on the wall alone depict the behavior of company leadership. Let’s look at a prime example. You may have heard of a little company called Enron. 

Before its eventual collapse in 2001, Enron’s company values boasted ethics and integrity. They showed off their good deeds in the community and professed esteemed character in executive leadership. Enron spent a fortune “packaging” their feel-good messaging while today many of their top executives either have been indicted or are in jail. 

The endless barrage of ethical breaches, scandals, billion-dollar fines, lawsuits, and criminal convictions of executives have become distressingly familiar.  The culture of corporate America has most of American’s cynical of towards any declaration of company values. 

Actions Speak Louder Than Words 

Corporate coaches Marshall Goldsmith and Howard Morgan, completed a study of more than 11,000 managers in eight major corporations. They found that companies that do the best job of living up to their values recognize that the real cause of success — or failure — is always the people, not the words. 

Rather than wasting time on reinventing words about desired behavior, companies should focus on the behavior itself. Actions will say much more to employees and customers about your values than the actual words on the wall. Even without an official company values statement, your employees and customers know what you value. Goldsmith said, “If our actions are wise, no one will care if the words on the wall are not perfect. If our actions are foolish, the wonderful words posted on the wall will only make us look more ridiculous.”

Starting at the Top

The number one corporate value claimed by 89 percent of companies that have a written statement, is ethical conduct. Still, scandals are more common than ever with company giants like Enron, WorldCom, Tyco and more having extensively unethical skeletons in their very large closets. These endless news stories lead to a widespread cynicism towards business corporate values overall. 

The answer here seems to lie at the very top of the organization. Perhaps the most important job of the CEO is to be an example, supporter, and proclaimer of company values. Research shows the behavior of the CEO to be the most important element for reinforcing company values in all industries and all companies of all sizes. In fact, eighty-five percent of survey respondents say their companies rely on explicit CEO support to reinforce values. Over 75 percent say CEO support is one of the “most effective” practices for reinforcing the company’s ability to act on its values. 

Values in Action

Today’s most successful companies are going well beyond simply displaying values statements. When behavior is in line with company values, the benefits transcend legal and regulatory compliance. This method of values-driven management makes key changes in two main areas: relationships and reputation. Despite these two areas being somewhat intangible, they can make a huge difference to the bottom line. It is the brand marketing, corporate reputation, relationships with supplies, customers, and employees that are all strongly affected by values (or the lack thereof). 

Putting values into actions that change company culture, increase success, and drive change can be difficult. The following list includes many common practices companies use to put their values into action: 

  • Making values publicly known by using value statements in marketing. 
  • Providing value training to staff on a regular basis. 
  • Appraising executives and staff on their adherence to values.
  • Hiring organizational experts to help address how values affect performance. 
  • Using company values as a basis for performance reviews. 
  • Explicit support of company values by senior leadership. 

Practice Makes Perfect 

Despite the perceived benefits of company values, implementation is not always easy. It’s much harder to be clear and unapologetic for what you stand for than to cave into politically correct pressures to please your current audience. 

In an article entitled Make Your Values Mean Something in the Harvard Business Review, Patrick Lencioni said the following: 

“Values can set a company apart from the competition by clarifying its identity and serving as a rallying point for employees. But coming up with strong values—and sticking to them—requires real guts. Indeed, an organization considering a values initiative must first come to terms with the fact that, when properly practiced, values inflict pain. They make some employees feel like outcasts. They limit an organization’s strategic and operational freedom and constrain the behavior of its people. They leave executives open to heavy criticism for even minor violations. And they demand constant vigilance.” 

Still, the impact of values on long-term success in both reputation and relationships is clear. If you have the fortitude to see it through, values can change the trajectory of your success. If you are willing to devote your time and energy to reinforcing, supporting, and adapting authentic values your results will be far better than Enron’s. It is time to move from talking about company values and writing them down, to actually putting them into action, defending them, and embracing them to drive real change. 

Sources:

https://www.strategy-business.com

https://hbr.org

https://www.forbes.com