Values, when practiced by all employees, define a consistent customer experience in action. Values lay out the rules of the game that are being played by employees and observed by customers.

This chapter shows how to define and inculcate customer, employee, and owner-focused values at all levels of the organization.

Values are the noncompromisables that define the organization. They attempt to define what is acceptable and what is not. They are the in-bounds or fair play area of your business world.

A story that comes to mind that demonstrates values in an organization is often told by my friend, Frank Maguire. Frank worked for Kentucky Fried Chicken at the time that it was sold to Hublein, the food giant. Frank worked personally with Colonel Sanders, who had a strong set of values—values that enabled him and his organization to pioneer in the fast food franchising business.

At the time of this story, the Colonel had sold his company, and the new president had taken over. As is often the case, there is a conflict of cultures and of personal management styles during the transition.

One day, Frank was in a meeting of about 30 people, including the new president. The meeting was to evaluate the new company's desire to save money by making the gravy from water rather than milk.

The Colonel saw that there was a meeting and came in uninvited and sat down next to Frank. Immediately he asked, “What're they talk'n 'bout Frank?”

“Colonel, they're thinking about making the gravy out of water instead of milk. They've conducted taste tests with more than 300 people, and the customers couldn't tell the difference. They figure it will save about three cents a serving and save hundreds of thousands of dollars.”

After hearing this, the Colonel shouted without hesitation, “Don't mess with ma gravy.”

The new president saw this as an opportunity to demonstrate who was in charge. “Colonel,” he said, “whether you like it or not, we're going to make the gravy out of water. We've done the research. Customers can't tell the difference, and we're in this business to make money, and water gravy will make us more money. End of argument.”

Colonel Sanders glared at the new president while tapping his fingers on the desktop. Then, without comment, he got up and bolted for the door.

“Where are you going, Colonel?” the president asked.

“Goin' on the Johnny Carson show. …Tell 'em this shit ain't fit to eat,” he replied over his shoulder as he left the room.

Needless to say, they didn't change the gravy formula, at least then.

This is a good example of values in action. The Colonel didn't spend one second on whether or not it was a good idea to make gravy from water. He spent just a brief time figuring out how to stop the insane breaking of his core value about product quality.

This is the nature of values. Like a football player stepping out of bounds, the only question is whether or not he stepped out, not whether it was OK to step out. If he did, the play is over. There is no debate.

As mentioned, UPS washes every truck every day whether it needs it or not. A core value of UPS is cleanliness. This value is printed in its policy book, but, like all solid values, it is lived in action. In most UPS facilities, you could literally drop a hamburger on the truck floor, pick it up, and eat it without thinking twice.

As a manager, I remember going to operating centers and asking the manager to take me out to his personal car. When he did, I would ask him to open his trunk. If the trunk was filthy and/or unorganized, I would give the manager a speech about the value as lived in his mind. “If you don't live it personally, you really don't believe, value, or live the value. It is not important to you personally if you don't demonstrate it in everything you do, and your people will pick up that it's not important.”

Once, I called a long-time friend who was a UPS district manager (local vice president). I asked him what he was doing, and he was sitting in an operating center watching the center manager mop the truck floor by hand.

My friend had arrived, and the center manager had committed a Value Violation by enabling the appearance of his center to become sloppy. To drive the point home, my friend ordered him to get out the mop and bucket and mop it by hand. It took him most of the day, but that was the last time my friend had to make the point.

UPS doesn't call it a Value Violation, but it does enforce its values.

Another of the UPS values is “a fair day's work for a fair day's pay.” UPS automatically invited the union wherever it went during its high geographic growth period of the 60s and 70s. When negotiating contracts, it would rarely quibble about hourly pay, but would go to the wall on working conditions that would prevent high performance for that hourly pay.

Its major indicator of success is cost per package. Cost per hour was far less important. UPS would pay more per hour if it could get more packages delivered in an hour—at least enough to offset the increase in cost per hour.

Finally, after decades of measuring performance, it now pays its drivers by the load. UPS may dispatch an 8.5-hour load and pay the driver 8.5 hours for the day. If it takes the driver 7 hours, he or she just got a raise. If the driver wants to take it a bit easier, he or she takes a per-hour pay cut. Either way, the company owners get “a fair day's work for a fair day's pay.”

Another UPS value is consistent and reliable service. Rather than measure service as a goal, it looks at it as a value. You must deliver all your packages each and every day. If you cannot, you report it as essentially a Value Violation rather than a measure of success.

Probably the best example of a values-driven company is Larson-Juhl, the leader in the picture-moulding and accessories marketplace. It has six values:

What makes Larson-Juhl unique is the company's way of inculcating its values. Its values are far less specific and therefore require interpretation, action, and discussion at all levels in order to be lived. When joining the company, each employee (Larson-Juhl calls them team members) is given a plastic card with the values printed on it.

Often, during the employment interview, the manager interviewing will hand the potential employee the values card, explain the importance of the company's values, and ask the applicant to describe what a particular value means to him or her. This enables the interviewer to determine, to some extent, the cultural fit.

Larson-Juhl has 22 distribution centers with sales, warehousing, and delivery team members. In addition, manufacturing, customer service, and administrative teams participate in the values program so that nearly every employee is involved.

In order to drive the values home, the company offers a Gold Values award to the top three teams each year (Gold, Silver, and Bronze). This is not a trivial award. A typical team might have 15 employees who share a $35,000 prize. Each team member receives a gold medal and the opportunity to select and vote on a local charity to give $15,000 to. Far greater than the financial award is the pride that is instilled in the winning team.

The winning team must demonstrate its rigid adherence to all of the values. The selection process is quite subjective with top company executives visiting the finalists and making their choice based on their interpretation of how well the values are being lived.

Various team leaders applied all kinds of techniques to win the award. In one center, they got enough cars and excitement to take all employees to visit the last year's winner to discuss what the winning team members did and duplicate their experience. There are some very interesting stories of team members getting together and envisioning that they won the Gold Values award.

In one case, team members were asked to envision the day of notification. They could hear the phone ring and the excitement in the manager's voice nearly a year before the winning team was selected. During the ensuing year, they often came back to that vision and discussed how well they were doing toward achieving the vision.

In one center, the manager held a values session each week for several months. He would ask employees to pick a value and give several examples of how they lived that value and what it meant to them. Some of the presentations were nothing short of inspiring to all of the team members in their group.

Quality is a key issue for the company. You can imagine a valuable piece of artwork or picture encased in a costly frame with a flaw in the moulding. This was unacceptable in the Larson-Juhl values scheme. One of the warehouse operations was called chops. Customers (frame shops) would order the moulding cut to specification, and the chops section would cut the miter for each of the four frame pieces.

The cut had to be precisely measured and cut to perfection. Even a slight splinter would spoil the final appearance. Achieving this level of perfection was a very difficult challenge. Order entry had to get the order precisely right, the warehouse had to pick the right moulding, the saw operator had to make the cut absolutely accurate, and the final packaging and delivery had to complete the transaction—all with absolute perfection.

In one of the warehousing teams, every team member had two jobs. One was the job the team member was hired to do, and one was to add extra value to the operation.

For example, a warehouse person whose job was to fill orders might have the job of heading a committee on waste removal. One of the team members who worked in the moulding chops department in this center was in charge of the quality committee—a core value team.

The committee met each week and applied the normal quality-circle techniques and got the quality to a reasonable level, but not good enough for its quality chairman. He wanted perfection. He went back in time, on his own time, to look at his quality day by day for a year.

He was attending college at night and noticed that when he had an exam, his quality suffered. As a result, he began to tell his inspector to be extra careful on days when he had an exam that night.

He learned a very interesting truth. When he was aware of the problem enough to tell his inspector, his quality went up even on days with the exam. Just the awareness and expression of a potential problem corrected the problem. He found that, as he expressed his concern about quality, he was more focused and careful than he would normally be.

Paddi Lund's eight-person dental practice also developed a strong set of values. Paddi calls these values the Courtesy System. These are eight values that are directed at having people work together congruently. They are simple, but profound, values when carried out.

For example, when you want something from another, say please. When you get it, say thank you. Never talk about someone who is not present unless you speak as if that person was present and use his or her name in every sentence.

Although these are simple values that work well in any workgroup, it is very interesting to go into a workgroup that is not using them and observe the behavior. Chapter 15 discusses this value system in more detail.

At Federal Express, the values were expressed as People, Service, Profit with core values coming out of each piece of this core philosophy.

For example, on the People value, a Guarantee of Fair Treatment (GFT) policy and process was developed. Basically, this said that employees had the right to be heard if they felt they were treated unfairly in any way.

A no-layoff policy was developed and has been followed even in very hard times by the company. This basically said that People were more important than, at least, short-term Profits. Profits would not be gained at the expense of the employees. In the beginning when the volume wasn't there, pilots would work in the hub, sell, and even manage stations rather than be furloughed.

So, the development and inculcating of values is the second step in building the success structure. Values simply communicate the sense of principles and rules that the corporate leader would instill if he or she was present in every operation. Values, as vision, generally reflect the values of the organization's leader. These two tasks in building the success structure (vision and values) cannot be delegated.