Values as foundation: the role of values in leadership and organizations

Core values were originally intended to provide a standard that would guide the thinking and actions of all employees — from mailroom clerks to executives.

Core values became popular at many organizations during the 1970s, very likely in response to revelations of widespread corruption in business and politics, and as a result of the social upheavals of the 1960s. Three decades later, almost every organization has established a set of core values, but few organizations link them in a real way to their strategy or long-term success. Moreover, many leaders who speak of the importance of their organizations' core values fail to model them or ensure that others do.

Organizations need to place a greater significance on their core values, and commit to practicing them in their day-to-day interactions with employees and clients. Core values can positively influence the way business is conducted, from ensuring more appropriate hiring choices to facilitating the implementation of strategic direction.

While solid core values can last a long time, leaders may want to reevaluate their relevance in the wake of significant societal, economic, or industrial developments. Regardless of the changes that are made, however, the organization's core values should continue to reflect a commitment to doing business and achieving success ethically.

Is "doing good" still on the agenda?

In September 2003, the marketing department of a distinguished university's business school hosted a conference on corporate social responsibility. Much of the conference's agenda focused on using and promoting social responsibility to increase profits; the case for simply "doing good" as a reflection of an organization's core values was noticeably absent from the discussion.

Core values: A brief history

While the core values concept had been around for years, it didn't become an organizational mainstay until the mid-1970s. The emergence of core values may have been in response to the anti-establishment, anti-government movement and social protests of the 1960s, or to what was viewed as a lack of business ethics in American society; the news was filled with stories about Watergate, illegal contributions to Nixon's reelection effort, American corporations bribing foreign officials to secure defense contracts, and multinational corporations marketing their products unethically in the Third World.

The current state of affairs

Today, the organizations that haven't developed a set of core values are few and far between. It's not uncommon for companies to print their core values on wallet-sized cards for employees, or to adorn their hallways and lobbies with "Our Values" plaques. Ironically, while the popularity of core values has increased dramatically over the last 30 years, their importance and relevance to organizational functioning has diminished; too many organizations treated core values as a fad instead of an integral ingredient to the success of their day-to-day operations and their longer-term strategy.

On average, only about 30% of an organization's employees can list most or all of their core values. When asked about the importance of core values to the organization, many people are at a loss. They refer to Enron and Tyco as examples of what can happen to companies that ignore their values, and are then surprised to learn that these and other corporations accused of criminal misconduct had espoused a set of core values. The Enrons and Tycos of the world make the strongest case possible for developing core values if they're not already in place, and promoting them if they are.

It takes more than lip service

While not having clearly defined and integrated core values leaves the door wide open for any kind of behavior, just adopting them doesn't guarantee a standard of conduct of which an organization can be proud. Many leaders identify and announce their organizations' core values but don't behave in a fashion that reflects them. They say, "This is what we stand for, and this is how we'll behave in the course of doing business." But what they really mean is, "Do as I say, not as I do." This double standard is one of the leading causes of cynicism and discontent in organizations today.

Core values were originally intended to provide a standard that would guide the thinking and actions of all employees — from mailroom clerks to executives. Among early adopters (Hewlett Packard, for example), the founders of the organization often introduced and promoted a set of core values that reflected the way they thought business should be conducted. Although some people believe core values won't be considered part of the fabric of the organization if the current leaders weren't the ones who established them, values that originated with the company's founders — when properly modeled and reinforced — can actually live on in organizations through many subsequent generations of leaders.

Whom are you inviting into your house?

Hiring practices present a tangible application of core values. Many companies bemoan the cost of turnover, but few analyze 'integrity of fit' of candidates during the recruiting process. A hiring manager equipped with the tools to assess the consonance of the candidate's and the organization's values will make a much better choice than the manager considering credentials alone. Integrity of fit decreases the likelihood of friction between the employee and the organization, limits the need for time-consuming and costly employee-relations work, and reduces turnover.

Let core values set the course

Core values also play an important role in setting organizational direction. In conjunction with mission and vision, values help form an organization's identity and culture.

Leaders have plenty of opportunities to be inclusive and egalitarian, but when it comes to setting the example for what success looks like in an organization, all eyes are on them and they need to deliver. Leaders must create, communicate, and demonstrate a set of behaviors by which business will be conducted. Delegating this responsibility is tantamount to abdicating part of their leadership role and sending the message that they're unwilling to be held accountable for their behavior. The best leaders are the ones who are acutely aware of the importance of demonstrating the organization's values in all their interactions. Their behaviors, on display for everyone, become the models that others emulate.

Values guide decision making

Clearly defined values can provide critical decision-making assistance, particularly for mid-level leaders whose decisions are often scrutinized, second-guessed, and held up by senior stakeholders. But if the organization's values reflect its best interests, anyone at any level will be able to justify his or her decisions as long as they align with the organization's values.

Your values separate you from your competition

Values also relate closely to organizational strategy — the plan leaders put in place to achieve their mission. As leadership teams assess past successes and evaluate the need for adjustments to their strategy, they ask questions like, "What is our competition doing about this? What are the political ramifications of that move? Is this the most profitable or expedient way to get this done?" The question more leaders should be asking is, "How can we do this in a way that's consistent with our core values?"

In conclusion

While core values that truly reflect the best leadership has to offer can and should last a long time, they are not immutable; industries and societies evolve, and the changes they undergo may require leaders to reevaluate their organizations' values. Whatever changes are made to the core values, it's critical that they represent a commitment to conducting business and achieving success ethically. And when leadership teams embark on journeys of honest self-exploration, it's their behaviors, not their organizations' core values, that are most likely to change.