Bring up the idea of core values and reactions ranges from, “This flaky stuff isn’t important to our business,” all the way to, “Our success is dependent on them.” So are they important? Do they matter? In a word…absolutely.I believe that the building blocks of any company is its core ideology, which in turn is comprised of two parts – Purpose and Core Values. These are the foundations upon which an organization of any size can lay down its path from “good” to “great.” They are lenses that can be used to guide decisions, people, what to do and what not to do.
Every company, and every person, has a purpose.
And every company, and every person, has core values.
Whether they know it or not, they exist. They likely just haven’t been articulated.
What is your Purpose?
Reflecting back to my earlier post about Purpose, it is the difference you are making in the world, it inspires you and your team, it propels you to work around obstacles.
It’s beyond making money.
It’s the soul of your organization.
It answers these questions:
“Why do we exist?”
“What would happen if we went away?”
“Why do I devote my creative energies here?”
What are Core Values?
Core Values are simply a handful of unbreakable rules that your company has in place and lives by regularly. They guide how people behave, and dictate what is acceptable and what is not.
If Purpose is the soul or spirit of an organization, Core Values are its DNA.
An executive had just become a new father and he wanting to be prepared for the arrival of his daughter, he attended a parent effectiveness training class to sharpen his parenting skills. Inspired by what he learned, he came in one morning and explained to his co-workers that parenting was very similar to being a great leader – it only required three simple actions:
- Have a handful of rules. (Not too many.)
- Share and repeat them often. (Regularly.)
- Live by them yourself. (Model them.)
The simplicity of this perspective is illustrates the importance and worth of Core Values.
It’s important to note that Core Values are not who you want to be. They are who you are today. Far too often, companies post Core Values on their web sites and throughout their offices, but then behave quite differently. This is hypocrisy! It will off team members and create a chasm of credibility between leadership and team members.
Why are Core Values important?
I could try to convince you of the benefits to company culture and how they can be used to find and keep the best people. But I’ll save that for a later post. The reality is, having a strong set of Core Values leads to stronger financial growth. It’s as simple as that.
James L. Heskett notes in, The Culture Cycle…
Effective culture can account for 20% to 30% of the differential in corporate performance when compared with “culturally unremarkable” competitors.
In their landmark study, Corporate Culture and Performance, John Kotter and James Heskett documented the financial results of 207 companies across 22 different industries over an eleven-year period. What they found is that companies with strong adaptive cultures based on shared values…
…grew revenue 4 times faster (682% growth vs. 166%).
…saw employment growth that was 7 times higher. (282% vs. 36%).
…stock prices that grew 12 greater (901% vs. 74%).
…achieved profit performance 750 higher (756% vs. 1%).
While this study was based in the United States and involved companies that were publicly listed, it serves as an amazing example of the power of Core Values. If large companies can benefit by have a strong set of values to live by, why can’t you?