If you take a look across most organizations values statements, you will come across words such as Communication, Respect, Integrity and Excellence. They describe these as ‘Core Values’ of the organization, but are they really? Enron was one of the largest energy companies in the world and had been named “America’s most innovative company” for six consecutive years by Fortune magazine. However, the Enron financial scandal in 2001 continues to be studied to date as a classical case of unprecedented failure in its values system. It is indeed paradoxical that Enron’s annual report of year 2000 described the following to be its core values;
· Communication – We have an obligation to communicate
· Respect – We treat others as we would like to be treated
· Integrity – We work with customers and prospects openly, honestly, and sincerely
· Excellence– We are satisfied with nothing less than the very best in everything we do
The brutal reality is that an empty values statement creates cynical and dispirited employees, alienates customers, undermines managerial credibility and ultimately poisons the organization culture. If this is the attendant risk that comes with having in place a documented values statement, then why do organization leaders put so much work into developing them in the first place? Is it because they believe they have to? The mad hype to develop values statements can be traced back to 1994 when the authors of the book Built to Last made the case that many of the best companies adhered to a set of principles called core values, provoking organization leaders to conjure up some core values of their own.
Lencioni (2002) asserts that 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 freedoms and constrain the behavior of its people. They leave executives open to heavy criticism for even minor violations. And they demand constant vigilance. Consequently, if organization leaders are not willing to accept the pain real values incur, they are better off not going to the trouble of formulating a values statement. Lencioni (2002) goes on to articulate the four different types of values that organization leaders confuse in the process of developing a values statement. He opines that the confusion can be disastrous to the organization’s success.
· Core values are the deeply ingrained principles that guide all of a company’s actions; they serve as its cultural cornerstones. They are inherent and sacrosanct and can never be compromised, either for convenience or short-term economic gain. If for instance, an organization states that one of its core values is Integrity but unethical concerns are prevalent in its workplace and the leadership team is therefore championing change to sustain ethical practices, then Integrity is not a core value of the organization. Rather, it is an aspirational value.
· Aspirational values are those that a company needs to succeed in the future but currently lacks. An organization that observes extreme hard work and dedication as a core value but desires to promote work-life balance as an aspirational value may end up confusing its employees. An organization can have both core and aspirational values but must be carefully to avoid confusion and conflict between the two.
· Permission-to-play values simply reflect the minimum behavioral and social standards required of any employee. They tend not to vary much across companies. The value of Integrity is primarily a permission-to-play value. It is unimaginable to picture a sustainably successful organization that has no intentions of conducting its affairs with Integrity. Organizations that fail at whichever level to uphold the value of Integrity cannot qualify to include it in the list of core values. However, they may classify it as an aspirational value if they desire to achieve uncompromised Integrity.
· Accidental values arise spontaneously without being cultivated by leadership and take hold over time. They usually reflect the common interests or personalities of the organization’s employees. An organization’s leadership must be conscious of the existence and influence of accidental values and make the necessary adjustments.
A values initiative must be aggressively authentic, sincere and meaningfully differentiate the organization from competitors. While the cliché core value words such as integrity, teamwork, ethics, quality, customer satisfaction, and innovation are inarguably good qualities, such terms hardly provide a distinct blueprint for employee behavior.
A values initiative must also avoid the need for employee approval through consensus building, much the same way strategic decisions such as market entry are not run through all employees before adoption. Values initiatives should be about imposing a set of fundamental, strategically sound beliefs on a broad group of people. Why? Employees come and go and input from all employees is not equally valuable.
Lastly, core values should be woven into every activity of the organization, from hiring methods, performance management systems, criteria for promotions and rewards, and even dismissal policies. From the first interview to the last day of work, employees should be constantly reminded that core values form the basis for every decision the organization makes. Misalignment between core values and organizational culture can void any desired, positive affect from stating the core values.