by Dr. Bettina Palazzo
A friend of mine recently said to me: “I never understood why companies publish value statements. I cannot imagine that this has any effect.”
If I look at many corporate values statements, I have to admit that he is right: empty word bubbles on glossy paper, that present an organization that does not exist in reality. Cliché values like teamwork and integrity are overused and do not specify what they really mean for that given company. In consequence, values statements like this cannot create any emotional appeal. And finally, very often nothing happens in the company after the value statement is published. It stays a dead piece of paper with no link to real-life behavior.
What a pity! What a waste of time and energy! I think this situation can be explained by the fact that companies tend to underestimate the complexity of managing values in a credible way and overestimate the power of publishing policies and written statements.
There are tons of studies which show that companies with a strong values-based culture are more successful because connecting your people to a purpose that goes beyond the profit motive is extremely powerful and motivating. Humans want to be part of something that is bigger than themselves, where they can have impact, appreciation and pursue common positive goals. Values can be like wings that lift us to do amazing things together.
So what do you need to do to avoid the 4 apocalyptic riders of bad value statements?
The 4 apocalyptic riders of value statements are:
1. Too general
2. Not authentic
3. No emotional appeal
4. No link to behavior
1. Make values specific to your company
The first step towards a values statement that works is putting extra effort into the choice and wording of values in order to develop values that are specific for the respective company.
Instead of simply picking the usual suspects of over-used values like the above (excellence, integrity, and communication) or the equally commonplace client orientation, teamwork or trust, you need to find out what really defines the culture of your organization. Choosing client orientation, teamwork and trust is the lazy way out. Nobody can be against them. All companies need client orientation, teamwork, and trust because without them they would soon be out of business.
You need to do some more heavy thinking and find out, for example:
- How do you serve your customers?
- How do you do it differently than your competition?
- What is unique about a clients’ experience with you?
A good example of specific values comes from Ikea. Their values are: Humbleness and willpower, leadership by example, daring to be different, togetherness and enthusiasm, cost consciousness, constant desire for renewal and accept and delegate responsibility. They have defined values that really fit their culture and could not be used by almost any other company.
2. Only authentic values are credible
The second step towards good value statements is ensuring that they are authentic. This is best achieved by developing them with a combination of a top-down and bottom-up approach. This helps to avoid the common pitfall of coming up with a list of unauthentic and unrealistic values that reflect the wishful thinking of top-management. In fact, it is often hard for the people at the top to know what the culture and climate of the rest of the company look like. In general, things tend to look rosier from the top.
Does that mean you should start with a couple of employee focus groups to come up with your new company values? That depends on your situation and your corporate culture. The danger of starting with a bottom-up development is the fact that you create expectations with coworkers that might get disappointed by the top management.
When I work with clients on value statements I usually like to start with a first input from the top management that is then specified and modified by a series of bottom-up workshops. In these workshops, we discuss questions like:
- “What do these values really mean to us?”
- “Could we do without this value?”
- “What are positive stories about this value?”
- “What do we still need to do to realize this value?”
With the material from these workshops, it is much easier to come up with a first draft for a value statement that is both authentic and specific. In addition, you gain employee buy-in from the very beginning.
3. Aim for the hearts
The third step toward good and credible value statements is making them emotionally appealing. The Bavarian Bank Sparda is a thought-provoking example of how to do this in a courageous and unusual way. Unlike most companies, they did not initiate their values management process with a top-down process but with a focus on the individual coworker. The bank’s visionary and charismatic CEO, Helmut Lind, wanted to change the bank by shifting everybody’s attention to the strengths of every coworker.
On a voluntary basis, coworkers filled out an online questionnaire and participated in workshops that helped them identify their natural talents. This created an enormous emotional traction, credibility, and trust because suddenly the men and women in the bank felt seen in their own special characteristical strengths. That’s a deep desire that every human has. It also became much easier to appreciate diversity, because the value of difference was made transparent in the workshops.
I am deeply impressed by this approach that really starts with the people in the company. On the basis of this appreciative process that emphasized the different strength of coworkers the next step was to look for agreement and unity: What should be the values that we all could agree to for our company?
Helmut Lind had the courage to give up his leadership control and put his trust into the collective intelligence of his people by giving them all a say in the development of the bank’s value statement. The fact that an amazing number of 74% of all coworkers volunteered to participate in the process, shows the high level of engagement the strength-focus process had created.
The values that were the result of this process were robust, credible and emotionally appealing. They were strong enough to enable the bank to decide not to invest, for example, in risky speculations into currencies or food because it contradicted their value of justice and sustainability. That would have been a contested strategy before the financial crises of 2008, a wise decision afterward. And while the banking sector, in general, did not do very well after 2008, Sparda Bank continued to be successful.
4. Link values to behavior
The fourth step towards a successful value statement is making a systematical and constant link to behavior and the management’s relentlessly communication about the values. We find a positive example of the constant implementation and communication of company values at the hotel chain Ritz-Carlton.
Their 12 service values all start with “I” – which expresses personal responsibility. The values are all very action oriented and specific for the hospitality business:
- I build strong relationships and create Ritz-Carlton guests for life.
- I am always responsive to the expressed and unexpressed wishes and needs of our guests.
- I am empowered to create unique, memorable and personal experiences for our guests.
- I understand my role in achieving the Key Success Factors, embracing Community Footprints and creating The Ritz-Carlton Mystique.
- I continuously seek opportunities to innovate and improve The Ritz-Carlton experience.
- I own and immediately resolve guest problems.
- I create a work environment of teamwork and lateral service so that the needs of our guests and each other are met.
- I have the opportunity to continuously learn and grow.
- I am involved in the planning of the work that affects me.
- I am proud of my professional appearance, language and behavior.
- I protect the privacy and security of our guests, my fellow employees and the company’s confidential information and assets.
- I am responsible for uncompromising levels of cleanliness and creating a safe and accident-free environment.
But their implementation and communication effort does not stop here: when recruiting new employees, the values fit is tested. Once hired, every new employee gets trained on these values for two days and has to present them by heart in front of their colleagues. In order to integrate the service values in the day-to-day work every morning in every Ritz-Carlton Hotel around the world, a 15-minute work meeting takes place: the round-up. During this meeting the priorities of the day get communicated, the service values get discussed and positive “wow” stories of exceptional examples of customer service are shared.
This is the Ritz-Carlton way of using the emotional power of storytelling. They also go one important step further: They empower their employees to deliver great service by granting every employee a discretionary spending of $2,000 (per incident) to satisfy a customer.
Sounds a bit extreme? Maybe… But Ritz-Carlton seems to be very successful with this highly structured approach for creating a values-oriented corporate culture: Employee turnover is at a very low 18% versus the industry average of 158%.
5. Leaders must relentlessly communicate and implement values
The fifth and final step towards an effective value statement is making everybody – and especially leaders – accountable for the consistent implementation and communication of values. The main responsibility for making a values statement fly, lies with managers, of course.
An inspiring example comes again from the CEO of Sparda Bank, Helmut Lind (yes, I admit it, I am a fan….). Since one of the company values is mindfulness, he is giving mindfulness seminars to his coworkers 24 days every year! That’s a great example of how you can continuously show your coworkers that you are serious about your company values.
Unfortunately, often the leadership of a company comes up with some fancy words and then expects that somehow magically their coworkers will adopt these values and use them as a guideline for their behavior, while top managers hide in the shadow. This is a very efficient way to quickly lose coworkers’ buy-in into the company values.
Somehow leaders seem to forget too easily that they are under constant observation by their coworkers. If their coworkers do not see that their managers fully embrace the company’s values, role-model them continuously, talk about them frequently and convincingly, everybody will forget about the values and follow the cues that the leaders’ actual behavior shows them.
In value management, actions speak louder than words. You cannot expect that your coworkers will embrace the value of reliability if you are, for example, notoriously late for meetings.
Furthermore, leaders need to step in if their coworkers disregard company values. If one of your company values is “Appreciation” and you have a manager who constantly mistreats his coworkers, you have to take action, even if this abusive manager happens to be economically successful or a friend of your boss. Holding others accountable for company values and role-modeling them should not only be done by managers but by everyone in the organization.
In conclusion, even though value statements at the first glance seem to belong in the soft, fluffy and everybody-knows-how-do-it category of management tools, they require, in fact, rigorous thinking, honest soul-searching, and consistent implementation and communication.
Everybody can come up with a list of nice-sounding company values. But if a value statement is not specific to the company’s culture, business model and strategy the value statement will not create positive effects like orientation and motivation for employees.
If value statements are not authentic, they will not be credible and will create more harm than good. At best, they will be quickly forgotten.
If company values are not emotionally appealing they will not win peoples’ hearts – which actually is the core aim of a value statement.
If company values are not constantly communicated and linked to behavior, nobody will take them seriously.
If managers are not shining examples of living and enforcing the company values, nobody else will do so.
So, yes, you should absolutely have company values and if done correctly your company will profit enormously from such a process, but you have to know that you will open a Pandora’s box if you do not do it with care, conviction, and authenticity.
Bettina Palazzo is as an award-winning researcher, consultant, and lecturer in business ethics. When she is not helping companies create an ethical culture, teaching at various Swiss universities or blogging about the leadership and culture dimension of compliance, she enjoys reading Italian novels that play in Rome or scouts out the most interesting locations and events in Lausanne.