CHAPTER 2 VALUES

“It Ain’t What You Do (It’s the Way That You Do It)”

The Fun Boy Three and Bananarama 1982¹

Core values are traits or qualities that represent deeply held beliefs. They reflect what is important to us, and what motivates us. In an organization, values define what it stands for and how it is seen and experienced by all stakeholders (customers, employees, service partners, suppliers and communities).

Values act as guiding principles – as a behavioural and decisionmaking compass.² In an organization, values (explicit or implicit) guide everyone on a daily basis. They are the foundation for the way things work, providing the basis of the corporate culture.

For individuals, as well as organizations, values sit at the gateway between our inner and outer worlds. They describe what is fundamentally important and meaningful to us and directly relate to sense of purpose and to our needs as individuals to survive and thrive.

Richard Barrett and colleagues differentiate between positive values and potentially limiting values.³ Honesty, trust and accountability are positive values, whereas blame, revenge and manipulation are potentially limiting. Positive values are described as virtues and are strengths that we can draw on to build resources and resourcefulness. Potentially limiting values are fear-based, evoked when our concerns for ourselves get in the way. In this chapter, we focus on positive values.

“Values are the ideals that give meaning to our lives that are reflected through the priorities we choose and that we act on consistently and repeatedly”.

Brian Hall⁴

In 2010, Reed Hastings, CEO of Netflix,⁵ made public a 126-slide presentation on how Netflix maintains a culture of innovation. Their core values are prominent on their website⁶ with clearly defined behaviours and skills. They are serious about their values as core to the company’s culture of innovation. Netflix enables employees to embody the values explicitly at work. The presentation went viral.

Following financial scandal in 2012, Antony Jenkins took over as CEO at Barclays in August of that year. In January 2013 he announced that bonuses and performance would be assessed against a new “Purpose and Values” blueprint. In a company-wide letter to staff, Jenkins unveiled his plan to implement five core values in a cross-business code, named “Purpose for Barclays”. The five values were respect, integrity, service, excellence and stewardship.

Jenkins wrote: “I have no doubt that the overwhelming majority of you, no matter in which area of the business or country you work, will enthusiastically support this move. But there might be some who do not feel they can fully buy in to an approach which so squarely links performance to the upholding of our values.”

“My message to those people is simple: Barclays is not the place for you. The rules have changed. You will not feel comfortable at Barclays and, to be frank, we will not feel comfortable with you as colleagues.” ⁷

Values are moving from a PR exercise to become the guiding compass. We invite you to take the whole business of values, and the values of your organization, a lot more seriously. A public commitment is a commendable start but it then requires rigorous follow through and, for Barclays, time will be the judge of what has been started.

Values are fundamental; some might call them ethics, others might see values as “how we do things around here”; both are right.

In reality, values often exist implicitly, outside formal organization processes and, mostly, under the radar of awareness. The commonly adopted behaviour of people in an organization is a representation of the values and creates the culture, the “felt experience” that stakeholders have. Values impact how the very best thought-out rational processes actually operate in practice. This organization culture is powerful, as Ivan Misner, quoting Peter Drucker reminds us, “Culture will always eat strategy for breakfast”.⁸

Awareness of values at an individual level is a starting point to selfinsight and understanding.

Awareness of values at an organizational level helps employees and organizations to more easily navigate the complex ambiguous nature of today’s business environment.

Articulating core beliefs, traditions and “the way we do things around here” through an explicit set of core values opens things up, empowers employees to make decisions without reference to their line manager for tiny details, enables ideas to flow freely and creativity and innovation to take place.⁹ Shared and explicit values offer a level of consistency of experience and engagement that is aligned on a site-by-site, national and global level.

There are simple ways to help people and organizations start to understand their values¹⁰ (see Chapter 6, Identify for more).

In summary, people are shaped by what they care about, and where given a choice, will engage in activities that enable them to survive and thrive in any situation.¹¹ We can live core values to good effect. We can use them to provide:

•     a reference for decision making

•     clarity and increased awareness about individual behaviours (self and others)

•     an unambiguous environment for new employees to start off on the right track

•     stories to build the heritage and folklore of the organization

•     consistency – viewed from within or from the outside

“Without exception, the dominance and coherence of culture proved to be an essential quality of the excellent companies [we identified] … the stronger the culture and the more it was directed toward the marketplace, the less need was there for policy manuals, organization charts, or detailed procedure and rules.”

Tom Peters and Robert Waterman¹²

HARNESSING THE VALUE OF CORE VALUES

Ken Blanchard and Phil Hodges¹³ estimate that fewer than 10% of organizations have clear, written values and many take the work on values no further than words. To impact, core values need to extend into the day-to-day fabric of the organization and be a reference for decisions and behaviours at all levels, influencing people daily… And, yes – that means you!

Those in different places in an organization see evidence of culture and values differently. For example, those at the top rate tangible KPIs (key performance indicators) as demonstrative of organizational culture (e.g. financial performance, competitive compensation); those lower down rate their personal experience as important evidence of “values” (e.g. open communication, employee recognition, access to leaders).¹⁴ Both are forms of evidence.

How do you make sure that your stakeholders’ experience of your organizational values is explicit and aligned from the boardroom to the front line?

The tone is set by every employee, not just those at the top of the pile. Those at the top model what is important, and are particularly visible in everything that they do – people take notice of how they behave. Yet, wherever you are, you have influence on those around you.

An organization is a system of loosely connected individuals, and, as Antony Jenkins so eloquently highlighted, if you can’t personally sign up and “live” the values of the company you are working for, then what are you doing there? The organization is only as good as each of the component parts.

As individuals, we need to turn the lens inwardly if the organization is going to behave in line with core values. What are you doing? If you don’t behave as if the core values matter, then others won’t either. For values to be really cemented in the organization’s culture, everyone must be held accountable for living and demonstrating the values in their dayto-day actions. Embedding values is a challenge.¹⁵ 31Practices offers a methodology to enable this.

For organizations, identifying values is just the first step. It is not enough. Wellwritten values without good execution will not prevent Enron-sized disasters.¹⁶ Enron’s explicit value statements of respect, integrity, communication and excellence masked the real and self-defeating culture at work.

In our own work, we often notice very limited attention paid to values when we first visit organizations. At a recent visit to a pharmaceuticals organization, the values that adorned the lobby were discussed as part of the proposed learning and development strategy. The HR Director responded that sadly, the values were enshrined on the walls of the lobby and in marketing materials, but were not explicitly built into the way things were done. Had we stopped to ask employees about the company’s values, they would have in all likelihood struggled to remember them. They would have been even more pushed to explain what the values meant to them as part of their daily life at work.

Enron would be in good company today. Many leadership surveys see corporate values as rhetoric rather than reality,¹⁷ with most employees unaware of their organization’s values.¹⁸ And yet, most employees see the potential benefits of having a set of values in the first place,¹⁹ especially if the consequences of living and failing to live the core values are explicitly aligned.

“In the wake of the banking crisis and other corporate scandals, now more than ever, organizational values should be at the forefront of business leaders’ minds”.

Peter Cheese²⁰

Two stories here share the impact of core values – when they are harnessed and when their value is ignored.

The story of Zappos

Founded in 1999, Zappos demonstrates strong values-based leadership. Starting as an online footwear business focusing on customer service, Zappos grew from $1.6 million in sales in 2000 to over $1 billion by 2009. Zappos was sold to Amazon for a reported $1.2 billion in 2009. At the point of sale, Zappos’ range included: handbags, eyewear, clothing, watches, and children’s merchandise.

CEO Tony Hsieh, commenting on this shift, noted: “Back in 2003, we thought of ourselves as a shoe company that offered great service. Today, we really think of the Zappos brand as about great service, and we just happen to sell shoes.”²¹

Resisting the idea of values for as long as possible, believing they were “very corporate”, Tony Hsieh admits he’s “just glad that an employee finally convinced me that it was necessary to come up with core values – essentially, a formalized definition of our culture – in order for us to continue to scale and grow. I only wish we had done it sooner.”²² Hiring / firing decisions were the crux around which Zappos’ core values were crafted, enabling a clear articulation of what was REALLY important when it came down to it. If employees were not prepared to hire and fire on the basis of the values, then they were not considered as core.

Core values inform fundamental decisions and behaviours. New hires are asked to sign an official commitment to Zappos’ core values right from the recruitment and induction phases of employment.

The story of News of the World

News of the World was a national newspaper published in the United Kingdom from 1843 to 2011; at one time the biggest-selling Englishlanguage newspaper in the world, selling nearly 3 million copies a week in October 2010.

Its reputation was for exposing the wrongdoings of national or local celebrities, by setting up insiders and journalists in disguise to provide either video or photographic evidence. The newspaper took on the mantle of a trusted people’s champion – the nation’s newspaper fighting “little people’s” battles against the large, rich and powerful.

From 2006, allegations of phone hacking were rumoured. The company is believed to have hacked the phones of citizens, celebrities, and even the British Royal Family to gain inside information. The scandal started to unwind during the case of a murdered child and deepened when the paper was alleged to have hacked into the phones of families of British service personnel killed in action.

Rather than the people’s champion, the newspaper was seen to have turned against the ordinary people – soldiers’ widows, bereaved parents – and looked much more like the cynical corrupt elite they claimed to expose. There was a deep sense of betrayal that such a significant and trusted “people’s newspaper” could allow this to happen. Major advertisers withdrew advertising.

A “whatever it takes” culture had grown and spread at the paper, resulting in the extreme measures taken by employees to deliver results. Carl Bernstein²³ asserts, “Reporters and editors do not routinely break the law, bribe policemen, wiretap, and generally conduct themselves like thugs unless it is a matter of recognized and understood policy.”

The public backlash and loss of revenue led to News International announcing the closure of the newspaper in July 2011. A 170-year-old business and one of the most successful newspapers in the world ended with the associated financial and personal costs, with senior executives facing trial for breaches of privacy, bribery of officials in public office and obstruction of justice.

The lived values of an organization have a huge impact on reputation and business outcomes. It’s also possible to delude yourself and your organization that you’re fine, all is well. The way powerful and intelligent people deliberately set aside crucial facts and turn a blind eye to fatal errors and frauds is explored in the book Wilful Blindness by Margaret Heffernan.²⁴ But where actions cut across the beliefs and traditions expected by core communities of stakeholders, standards expected in the profession and the ethical standards and practice embedded in different legal systems, disaster can be a very real outcome for all involved.

SO WHAT?

“I am able to control only that which I am aware of. That which I am unaware of controls me.”

Sir John Whitmore²⁵

Looking from the best case to the worst case, you can see for yourself the way you can harness core values for good, or ignore core values at your peril. The key factor common to companies that have delivered sustained high performance – at the top of their market for 100 years or more – is a base of values that was strong enough to provide the employees of the company with a common bond – a purpose beyond profit.²⁶

In 2001, Eric Flamholtz²⁷ discovered a strong positive correlation between cultural agreement (a proxy for values or cultural alignment) and the company’s EBIT (Earnings Before Interest and Taxes). He concludes: “Organizational culture does have an impact on financial performance. It provides additional evidence of the significant role of corporate culture not only in overall organizational effectiveness, but also in the so-called “bottom line.”

The power of living values is described by David MacLeod, Chair of the UK Government-sponsored Employee Engagement Task Force and non-executive director of the Ministry of Justice in the UK. He comments: “All organizations have some values on the wall. What we found was that when those values were different from what colleagues and bosses do, that brings distrust. When they align, then it creates trust.”²⁸

The changing landscape for business and organizations will arguably bring the importance of values into even sharper focus.

The internet and social media have brought greater transparency than ever before. As a direct result, authenticity is and will continue to be increasingly important. Some years ago, it was perhaps possible for organizations to invest in marketing and PR to tell the story they wanted others to hear, but now it is becoming increasingly difficult to tell a story that is far from the reality. Organizations are no longer what they say they are but what others say they are.

Ultimately, aligned organizational values are a key to an organization achieving its purpose.

VALUES AND 31PRACTICES?

The purpose of 31Practices is to enable organizations (and people representing these organizations) to reconnect with what is at the core, and live these core values on a daily basis. The approach facilitates authenticity and improves people’s sense of well-being with the resulting positive impact on performance that you would expect.

The importance of the people who represent an organization has increased significantly. The general shift from a product-based reputation to an experience-based reputation has resulted in people’s perception of an organization being based on their personal experience of those representing the organization. Similarly, employee perception of their own organization is based on their personal experience of how they are treated and how they see colleagues behaving.

For organisations to state their core values is a waste of time unless employees understand what values mean in their day-to-day activities and understand how values can change their daily decisions.²⁹

31Practices provides a framework to enable employees to practise behaviours directly linked to the core values every day.

EXERCISE: EXPLORING YOUR ORGANIZATIONAL VALUES

Here we share two simple exercises that can give you some insight into your organizational values.