An Expose on Corporate Values

Last week, I wrote about my indifference to Mission and Vision statements. Company values, on the other hand, are a different story. Values created authentically provide necessary guardrails for an organization. Unfortunately, designed poorly, values become misleading rubbish. This article offers a framework for thinking about this common strategic element.

What are corporate values? Values are guiding principles that companies use to help employees function together to achieve common goals. They are usually a series of single words followed up by short descriptions. Some examples are accountability, resourcefulness, integrity, loyalty, honesty, respect, servitude, and one of my favorites, swagger. Words that reflect the organization's culture and provide a work drum beat.

Values come in many shapes in sizes. Values can be backward or forward-looking. Values can be essential elements of a company's DNA and reflect the culture. Values can set the tone for current and future employees. And act as cues to improve decision-making. But more often than not, corporate values are words that don't gain much traction.

How are values created? Here is my take. For young companies, once critical mass (revenue or people) occurs, the organization may want to standardize the secret sauce that has led to its success - values are one corporate output. Often reflecting the founders, values are derived and iterated until an approved list aligns with leadership's view or direction. Then, the values are rolled out to the organization and either accepted or faded to the background. As companies grow, change leadership, evolve, and move into new markets, corporate values change along this journey to better reflect modern realities and personnel needs.

Below is a 2X2 matrix that helps frame this values discussion. Value Design references whether the team creating the values reflects on the company to date or is looking to the future to develop aspirational values. Sometimes values are hybrid, with a mix of retrospective and aspirational principles.

The vertical variable, employee belief, is what most companies miss or don't track. Employee belief is easy to check. Survey your employees anonymously, on a scale of 1 to 10, do they believe a particular value to be accurate within an organization. Employee belief is relatively low if the average is less than 5.

The four types of values.

1. Disconnected - A leader or leaders craft values based on their view of the organization. However, when surveyed, the employees don't believe in these values. This result hints at a disconnect between the leaders and employees. For example, the leadership thinks communication is a core value. But the reality is that all functions work in silos and don't communicate.
2. BS - The leadership has come up with aspirational values not grounded in the reality of the organization with no plan to move in the direction of said values. Employees have minimal to no buy-in. You see this sometimes when a new leader transports values from a different company with no strategy to implement.
3. Healthy - The organization develops values that align well with the current organization with employee buy-in. Employees incorporate these values in their performance reviews and strategies. This bucket is ideal and will attract new employees with similar values.
4. Believers - This is harder to pull off and often associated with a visionary leader—aspirational values tied to the company's direction. The difference from the above BS category includes leadership conviction, communication, and a roadmap. Employees believe in the plan and adapt. New employees attracted by these values accelerate the transformation. An example is Steve Jobs, who IMO willed Apple to match the values he believed would make it successful early on as a reflection of himself. I expect Elon is similar.

In practice, company values may fall in different buckets, which is okay. The idea is to improve the alignment of values within the organization and become more authentic. Organizations that treat values as interchangeable tools for short-term goals end up with terrible Glassdoor reviews, shakey credibility, and poor retention.

Keep it real, and values can be incredible assets for an organization. Thoughts?