Core values serve as the foundation of a company's culture and shape the way employees behave and make decisions. As a leader, it's essential to define and communicate the core values of your organization effectively to align your team and drive business success.
In the Harvard Business Review article "Make Your Values Mean Something," the author Patrick M. Lencioni argues that too many companies fall into the trap of creating vague and meaningless core values. To avoid this pitfall, leaders must take a strategic approach to designing core values that are relevant, inspiring, and actionable.
What is Organizational Culture?
Organizational culture refers to the shared beliefs, values, attitudes, behaviors, and practices that characterize an organization. It encompasses the way things are done within an organization, the ways employees interact with each other and with customers, and the way the organization approaches its mission and strategy. Organizational culture is often described as the "personality" of an organization, reflecting its unique identity and values.
Why is Organizational Culture Important?
Organizational culture has a profound impact on the success of an organization. A strong culture can motivate employees, align the team, and drive business success. It also helps to attract and retain top talent, foster innovation, and improve customer satisfaction. In addition, a strong culture can provide a competitive advantage and help organizations to weather challenging times.
A negative culture, on the other hand, can lead to low morale, high turnover, and poor performance. It can also create a toxic work environment that drives away top talent and creates a negative reputation for the organization.
How is Organizational Culture Developed?
Organizational culture is developed through a combination of actions, behaviors, and policies. The values and beliefs of the company's leaders are critical in shaping the culture, but it's also important to gather input from employees and involve them in shaping the culture. Companies can also use tools such as onboarding programs, employee engagement surveys, and performance management systems to help develop and reinforce the culture.
In addition, companies can create a culture that is aligned with their mission and values by establishing clear communication, creating opportunities for collaboration, and investing in employee development. The way companies approach decision-making, problem-solving, and conflict resolution also plays a critical role in shaping the culture.
Why We Need Core Values
Core values serve as a compass that helps organizations navigate challenges and make decisions. They provide a common understanding of what is important and a shared language that promotes consistency and alignment. When core values are lived out, they foster a sense of purpose, build trust, and promote employee engagement.
For employees, core values help define the culture and the type of work environment they will be in. They give employees a clear understanding of the expectations and how they are expected to behave. This clarity supports employee satisfaction and helps attract and retain top talent.
For customers, core values communicate the organization's priorities and provide a sense of trust in the brand. When customers know what a company stands for, they are more likely to choose that company over its competitors.
For the organization itself, core values help to create a consistent and sustainable culture. This consistency supports long-term business success and helps organizations to stay relevant in a rapidly changing world.
A Step-by-step Guide to Creating Core Values
Here's a step-by-step guide to help you create core values that truly matter for your organization:
- Start with a purpose. Ask yourself what your company stands for and what you want to achieve. This will give you a clear direction for designing values that align with your mission and vision.
- Engage your team. Encourage employees to share their perspectives and values. This will give you a better understanding of what's important to your team and help you create values that resonate with them.
- Identify values that make a difference. Choose values that are unique to your organization and make a real impact on the way you do business. These values should be meaningful, inspiring, and actionable.
- Make values actionable. Specify how each value should translate into day-to-day behavior and decision-making. This will give your values practical meaning and help employees understand how to put them into practice.
- Communicate values effectively. Ensure that your values are communicated clearly and consistently throughout your organization. Encourage open dialogue and provide opportunities for employees to ask questions and share feedback.
- Embed values in your company culture. Incorporate your values into your company culture by promoting them in your policies, procedures, and processes. Lead by example and reinforce your values through your actions and decisions.
When uncovering values, it's important for a leader to gather input from their team to ensure the values reflect the collective aspirations and priorities of the organization. Here are some questions a leader could ask their team to uncover values:
1. What are the beliefs and behaviors that you feel are most important in the workplace?
2. What do you think sets our company apart from others in the industry?
3. What do you feel are the biggest challenges we face as a team and what values could help us overcome them?
4. How do you believe our company could better serve our customers/clients?
5. What do you think are the things that make working here special or unique?
6. What values do you believe should guide our decision-making processes?
7. What are some of the things that you would like to see changed or improved about our company culture?
By asking these questions, you can gather valuable insights from your team and use that information to design core values that are meaningful, relevant, and actionable for the organization.
Designing core values that have real meaning is a strategic and intentional process. By following these steps, you can create values that inspire your team, align with your mission, and drive business success.
Recognize and reinforce your core values
Empower your teams to recognize and reinforce your company culture and values
The Do's and Don'ts of Designing Core Values
Designing core values can be a complex process, but by following these do's and don'ts, you can ensure that your values have real meaning and impact.
- Involve employees in the process of uncovering and defining core values
- Make sure the values reflect the collective aspirations and priorities of the organization
- Ensure the values are actionable and relevant to the organization's goals and strategy
- Clearly communicate the values to employees, customers, and other stakeholders
- Integrate the values into day-to-day decision-making and business practices
- Continuously evaluate and reinforce the values to ensure they remain relevant and meaningful
- Don't create core values simply because they are trendy or in vogue
- Don't design values that are vague, meaningless, or impossible to live up to
- Don't ignore the input of employees and other stakeholders in the design process
- Don't limit the values to just a few words or phrases; make sure they are meaningful and actionable
- Don't forget to enforce the values through consequences for non-compliance
- Don't neglect to revisit and revise the values as the organization evolves and changes.
By following these do's and don'ts, you can ensure that your core values are relevant, inspiring, and actionable, and have a real impact on the way your company does business.
Permission-to-Play Values vs. Core Values
When designing core values, it's essential to understand the difference between "permission-to-play" values and core values.
Permission-to-play values are the basic ethical and legal standards that all companies must adhere to. Examples include compliance with laws and regulations, respect for human rights, and fair treatment of employees. These values are often seen as table stakes - they are necessary for a company to participate in the market, but they do not distinguish the company from its competitors.
Examples of permission-to-play values:
Core values, on the other hand, are the unique values that define a company's identity and shape its culture. They go beyond the basic ethical and legal standards and reflect the company's purpose, personality, and priorities. Core values inspire employees, align the team, and drive business success.
Example of Core Values
- Disruptive thinking
- Customer obsession
- Creative problem-solving
- Bold experimentation
- Continuous learning
- Empathy and understanding
- Entrepreneurial spirit
- Radical transparency
- Social impact
- Passion for excellence
- Ethical decision-making
- User-experience focus
- Continuous improvement
- Agility and speed
- Data-driven insights
- Seizing opportunities
When designing core values, it's essential to focus on values that are relevant, inspiring, and actionable. Avoid creating vague or meaningless values that do not have a real impact on the way your company does business. By focusing on core values that are unique to your organization, you can create a culture that inspires employees, aligns the team, and drives business success.
Core values are the deeply ingrained principles that guide all of a company’s actions — Patrick M. Lencioni
Recognize and Reward Behaviors Aligned with Your Values
In order for core values to have a lasting impact on a company's culture, they need to be more than just words on a wall. Leaders must create systems and processes that reinforce and recognize behaviors aligned with the company's values.
Research shows that companies who regularly acknowledge and reward employees for exhibiting values-based behavior have a stronger culture and increased employee engagement. For example, a study conducted by the Institute for Corporate Productivity found that organizations with a strong culture of recognition had a 31% lower voluntary turnover rate compared to those without recognition programs.
One way to recognize and reward values-based behavior is through regular performance evaluations. During these evaluations, leaders can discuss specific instances where employees demonstrated the company's core values and provide meaningful and tangible rewards, such as bonuses or promotions, to reinforce these behaviors.
Another way to recognize values-based behavior is through a formal recognition program. This program can be as simple as a suggestion box where employees can nominate their peers for exhibiting values-based behavior, or a more structured program that provides regular rewards for values-based achievements. Recognition software, such as Happily.ai, can help.
Add Values to Your Performance Management
Measuring and including core values in performance management is critical for maintaining a strong culture and reinforcing values-based behavior. The first step in doing this is to clearly define each of the company's core values and what they look like in practice. This will ensure that everyone in the organization has a clear understanding of what behaviors are valued and expected.
Once the values are defined, leaders can use performance management processes, such as regular check-ins or performance evaluations, to measure and track values-based behavior. During these evaluations, leaders can ask employees specific questions related to the company's core values and provide feedback on areas for improvement.
In addition to including core values in performance evaluations, leaders can also incorporate values-based metrics into their overall performance management process. For example, a healthcare company might track patient satisfaction as a measure of their value of compassion, or a technology company might track the number of new ideas implemented as a measure of their value of innovation.
An ongoing process
Maintaining a strong culture and values requires ongoing evaluation and improvement. One way to do this is through regular "pulse checks," where leaders assess the current state of the company's culture and values.
The results of these pulse checks can be used to identify areas where the company's values are being effectively reinforced, as well as areas where improvements are needed. For example, a pulse check might reveal that employees feel that the company's value of teamwork is not being effectively recognized and reinforced, providing leaders with an opportunity to make changes to address this issue.
By conducting regular pulse checks, leaders can ensure that the company's culture and values remain strong and relevant, and that the company is able to continuously improve and adapt to changing circumstances. This will not only help to maintain a strong culture and values, but also to improve employee engagement and overall business performance.
Example: Core Values for a Startup Technology Company
A startup technology company that values continuous improvement and experimentation might have the following core values:
- Adaptability: We embrace change and are comfortable navigating uncertainty.
- Boldness: We take calculated risks and are not afraid to fail.
- Creativity: We encourage new ideas and find innovative solutions to problems.
- Growth: We continuously learn and strive to improve, both individually and collectively.
These values reflect the startup's drive to succeed in a rapidly changing industry. By embracing adaptability and boldness, the company is able to navigate uncertainty and pursue new opportunities. The emphasis on creativity and collaboration supports innovation, while the focus on growth reflects the company's commitment to continuous improvement
Example: Core Values for a Healthcare Company
A healthcare company focused on providing the best customer experiences might have the following core values:
- Compassion: We treat patients with kindness, empathy, and understanding.
- Excellence: We provide the highest quality of care and constantly strive to improve.
- Accessibility: We make healthcare services easy to understand and accessible to all.
- Innovation: We embrace new technologies and ideas to enhance patient experiences.
These values reflect the healthcare company's commitment to putting the patient first. By prioritizing compassion and excellence, the company creates a warm and supportive environment for patients. The emphasis on accessibility and teamwork ensures that patients receive the best possible care, while the focus on innovation drives the company to continuously improve.
Reinforce Core Values
Check out how companies use Happily to bring their core values to life in daily interactions.
Designing core values for an organization is a critical responsibility for company leaders. It's about more than just defining a set of words or phrases; it's about creating a framework for decision-making, guiding behavior, and shaping culture. Understanding the difference between permission-to-play values and core values is essential, as well as being authentic and aggressive in defining what truly matters to the organization.
Leaders must own the process of designing and implementing core values, and not delegate it to HR or another department. The values should be woven into every aspect of the organization, from recruitment and onboarding, to performance management and reward systems. When core values are meaningful, relevant, and actionable, they can drive positive change, foster a strong culture, and support business success.
In summary, leaders must take the time to thoughtfully design core values that reflect the organization's purpose, personality, and priorities. By doing so, they will create a strong foundation for culture, decision-making, and success that will endure over time.