What Can a Lack of Values Cost Us?

The interaction we’ve had with Craig, Kim, and their team over the years since they bought their business has given us a ton of clarity for the critical role values can play in a business. That experience has also helped us develop a clearer picture of who we can best serve through the work we’re doing; if we don’t align with a client on values, the juice won’t likely be worth the squeeze for us or them! The biggest challenge, though, has been in determining where the rubber really meets the road with regards to a stated set of values in any organization.

Having just shared the growth Craig and Kim experienced in their business, and I’m convinced much of that ties directly to their emphasis on a clear set of values, we’ll look at some examples of what can happen when values aren’t modeled soon. Before doing that, I was hoping to offer some hard, statistically proven data for showing exactly what companies with clearly defined values yield through profitability increases. Unfortunately, that data is tough to locate - if it exists at all! For now, I’ll share how Curt Steinhorst closed his Forbes.com articled called “Rethinking the Value of Core Values ”:

“Core values have weight, especially when they’re truthful and focused on what matters to the community within the organization. If they’re hollow, corrupted, misguided, or pretentious, they carry with them a falsehood that can trap and divide an organization. But if they are drawn from and representative of the community they serve, they can have the strength of steel. Like any principle or strategy, core values are difficult to forge and take time to develop and cure; but once they’re well-formed, they sustain you through everything else.”

If my eyes weren’t playing tricks on me and that 50% increase in revenue that Craig and Kim experienced in just twenty-four months of owning their business really did have something to do with their closely held values, why couldn’t I find a mountain of data with detailed examples backing Steinhorst’s statement? I certainly agree with it! It may tie back to what Pat Lencioni shared in Harvard Business Review article called “Make Your Values Mean Something ” more than two decades ago:

“Given all the hard work that goes into developing and implementing a solid values system, most companies would probably prefer not to bother. And indeed they shouldn’t, because poorly implemented values can poison a company’s culture.”

Maybe, just maybe, the work I saw Craig and Kim do to embed a clear set of values into the culture of their new company isn’t something many other business owners or executives are willing to do… But why is that? Most of the studies I read as I attempted to find that hard data showed that around 80% of companies today have their core values detailed on their website. Let’s begin looking at what is quite likely the disconnect…

How Clear Is Clear Enough?

In my experience over the last two decades, I can’t point to a single company that I’ve worked for or with where no values were listed anywhere; in the employee handbook at a minimum, but often painted on the walls in prominent areas throughout the facility as well. With much of my experience with those organizations being involved in taking new employees through the orientation process, I had quite a bit of exposure to those values. Not only was I covering the high points of the policy manual, those sessions were typically held in a room with the values listed somewhere on the wall. And if not on the wall inside the room, they were definitely on a bulletin board just outside…

Even if we never worked together, or for the same companies, I have no doubt you can picture yourself in a setting like this as a new employee - or at least in a meeting room where you can clearly see the values listed. But how often did you hear anyone discuss those values after that initial orientation? And where else did you see the values referenced?

In an article from MITSloan Management Review called “When It Comes to Culture, Does Your Company Walk the Talk? ”, the authors open with this:

“When Johnson & Johnson’s CEO codified the company’s principles into a credo in 1943, corporate value statements were a novelty. Today they are ubiquitous among large corporations. In our study of nearly 700 large companies, we found that more than 80% published an official set of corporate values on their website. Senior leaders, in particular, love to talk about their company culture. Over the past three decades, more than three-quarters of CEOs interviewed in a major business magazine discussed their company’s culture or core values — even when not specifically asked about it. Corporate values statements are nearly universal, but do they matter? Critics dismiss them as cheap talk with no impact on employees’ day-to-day behavior.”

While I found several more sources sharing similar statistics for the frequency of having company core values posted for all to see, a direct correlation to how it impacted their revenue - as opposed to the remaining minority without clearly stated values - was nowhere to be found. To get a clear picture of what that lack of core values really costs, I believe our best bet would be to circle back to What’s KILLING Your Profitability? , because there’s sure to be a gap in leadership if we’re not at least upholding a set of core values.?

For now, let’s consider how so many companies could have their values listed on a website, in a handbook, and posted throughout their buildings with there still being room for critics to dismiss them. And if CEOs are speaking about their values so frequently, even without being asked to, I’d expect there to be substantial evidence showing the impact it has on their organizations’ bottom line! Shouldn’t that make any organizational values clear enough for everyone involved?

I believe there are several things driving this disconnect, providing the critics (and often the folks employed in those companies) with more than enough reason to blow the stated values off as cheap talk. Think about the latter first: how often is the CEO from one of those “large corporations” referenced in that study likely to interact with the minions? I mean, their employees… It’s one thing to pontificate for the media and Wall Street, but do you really think they’re singing the same song on the rare occasion they talk with someone on the front line? Now, the former… At least those values are listed in plenty of places so every employee can read them and all other levels of management can carry the torch - right? How often have you heard values discussed openly after the first day with a company (or the day an updated handbook is rolled out)? And where were the managers or supervisors in that process? If they were even in the room, I’d guess they weren’t the ones talking! Oh, and how much clarity were you given for what anything in that word salad actually meant - or looked like in practice??

The authors of the MITSloan article went on to say this, “Unfortunately, many organizations’ core values are so generic that they could easily serve as fodder for a Dilbert cartoon.” What a far too relevant statement…

Values Pushed to the Back Burner?

Before we dig into the challenges that come with “core values so generic that they could easily serve as fodder for a Dilbert cartoon,” and we’ll work through that in specific detail soon enough, we need to think about how that could ever be the case when “more than three-quarters of CEOs interviewed in a major business magazine discussed their company’s culture of core values - even when not specifically asked about it.” If it sounded like I was taking a shot at those CEOs for jumping on their soapbox for the media but not investing the time to share an articulate message with everyone in their organizations, it’s because I was! But I am willing to concede that not all of them make a conscious decision to shun their team members while puffing their chests out for the camera…

A reality that comes with accepting a leadership role - at any level in an organization - is that any spare time we may have had in a previous position is likely gone. There’s never a shortage of issues demanding our attention; some urgent because a ball was dropped and others less urgent but still absolutely critical within our scope of responsibility. With that in mind, I have no doubt that the CEOs of the large companies referenced in that MITSloan article interact with journalists, investors, and their board members far more than they’re able to speak face-to-face with the majority of the folks on their teams. I’ll go out on a limb here and bet that much personal interaction beyond their executive team members just doesn’t routinely fit into their schedules, and most of that is likely focused on whatever fire that needs doused on that particular day. I’d go so far as to guess that, even then, those core values that get attention (whether they’re asked about them or not) when speaking in a public forum are placed on the back burner at that point - if they’re still on the stove top at all! In reality, if that were you or me, wouldn’t we expect our executive team to be in lockstep with us on the values we’ve spoken about publicly and have printed on the walls and in our handbook? We certainly don’t have time to rehash those daily, especially not with the folks we’re counting on to lead their respective teams! Do we???

You likely sense a bit of sarcasm here, and you should. While I’m convinced that this is what goes through the mind of many a CEO, whether they’re heading up one of the large companies referenced in the article or running their own small business, this is all too often when even the simplest and most clearly stated values can begin to unravel. When we get consumed by the work that has to be addressed in the moment, allowing the urgent to take precedence over the important, or even worse, we assume everyone paid attention the one time we did talk about our values, we leave room for the even the best of our folks who may have actually paid attention initially (or even read the handbook) to form their own definition for what each core value looks like in practice. That may go OK in the short-term but it can result in devastating consequences as those definitions drift over time - so we’ll pick up there soon!