Five steps to make Company Value Statements work

A friend of mine said recently to me:

“I never understood why companies publish value statements. I cannot imagine that this has any effect.”

If I look at many corporate values statements I have to admit that he is right: empty word bubbles on glossy paper, that present an organization that does not exist in reality. Cliché values like teamwork and integrity are overused and are not get specified what they really mean for that given company. In consequence values statements like this cannot create any emotional appeal. And finally, very often nothing happens in the company after the value statement is published. It stays a dead piece of paper with no link to real-life behavior.

What a pity! What a waste of time and energy! I think this situation can be explained by the fact that companies tend to underestimate the complexity of managing values in a credible way and overestimate the power of publishing policies and written statements.

There are tons of studies that show that companies with a strong values-based culture are more successful because connecting your people to a purpose that goes beyond the profit motive is extremely powerful and motivating. Humans want to be part of something that is bigger than themselves, where they can have impact, appreciation and pursue common positive goals. Values can be like wings that lift us to do amazing things together.

So what do you need to do to avoid the 4 apocalyptic riders of bad value statements?

The 4 apocalyptic  riders of value statements:

  • Too general
  • Not authentic
  • No emotional appeal
  • No link to behavior

1. Make values specific to your company

The first step towards a values statement that works is putting extra effort into the choice and wording of values in order to develop values that are specific for the respective company.

Instead of simply picking the usual suspects of over-used values like the above (excellence, integrity, and communication) or the equally commonplace client orientation, teamwork or trust, you need to find out what really defines the culture of your organization. Choosing client orientation, teamwork and trust is the lazy way out. Nobody can be against them. All companies need client orientation, teamwork, and trust because without them they would soon be out of business.

You need to do some more heavy thinking and find out how exactly e.g. do you serve your customers. How do you do it differently than your competition? What is unique about a clients’ experience with you?

A good example of specific values comes from Ikea. Their values are: Humbleness and willpower, leadership by example, daring to be different, togetherness and enthusiasm, cost consciousness, constant desire for renewal and accept and delegate responsibility. They have defined values that really fit their culture and could not be used by almost any other company.

2. Only authentic values are credible

The second step towards good value statements is ensuring that they are authentic. This is best achieved by developing them in a combination of a top-down and bottom-up approach. This helps to avoid the common pitfall of coming up with a list of unauthentic and unrealistic values that reflect the wishful thinking of top- management. In fact, it is often hard for the people at the top to know what the culture and climate of the rest of the company look like. In general things tend to look rosier from the top.

Does that mean you should start with a couple of employee focus groups to come up with your new company values? That depends on your situation and your corporate culture. The danger of starting with a bottom-up development is the fact that you create expectations with coworkers that might get disappointed by the top management.

When I work with clients on value statements I usually like to start with a first input from the top management that is then specified and modified by a series of bottom-up workshops. In these workshops, we discuss questions like:

“What do this values really mean to us?”

“Could we do without this value?”

“What are positive stories about this value?”

“What do we still need to do to realize this value?”

With the material from these workshops, it is much easier to come up with a first draft for a value statement that is both authentic and specific. In addition, you gain employee buy-in from the very beginning.

3. Aim for the hearts

The third step toward good and credible value statements is making them emotionally appealing. The Bavarian Bank Sparda is a thought-provoking example of how to do this in a courageous and unusual way. Unlike most companies, they did not initiate their values management process with a top-down process but with a focus on the individual coworker. The banks visionary and charismatic CEO, Helmut Lind, Sparda wanted to change the bank by shifting everybody’s attention to the strengths of every coworker.

On a voluntary basis, coworkers filled out an online questionnaire and participated in workshops that helped them identify their natural talents. This created an enormous emotional traction, credibility, and trust because suddenly the men and women in the bank felt seen in their own special characteristical strengths. A deep desire that every human has. It also became much easier to appreciate diversity, because the value of difference was made transparent in the workshops.

I am deeply impressed by this approach that really starts with the people in the company. On the basis of this appreciative process that emphasized the different strength of coworkers the next step was to look for agreement and unity: What should be the values that we all could agree to for our company?

Helmut Lind had the courage to give up his leadership control and put his trust into the collective intelligence of his people by giving them all a say in the development of the banks value statement. The fact that an amazing number of 74% of all coworkers volunteered to participate in the process, shows the high level of engagement the strength-focus process had created.

The values that were the result of this process were robust, credible and emotionally appealing. They were strong enough to enable the bank to decide not to invest in e.g. in risky speculations into currencies or food because it contradicted their value of justice and sustainability. A contested strategy before the financial crises of 2008, a wise decision afterward. And while the banking sector, in general, did not do very well after 2008, Sparda Bank continued to be successful.

4. Link values to behavior

The fourth step towards a successful value statement is making a systematical and constant link to behavior and the management’s relentlessly communication about the values.  We find a positive example of the constant implementation and communication of company values at the hotel chain Ritz-Carlton.
Their 12 service values all start with “I” which expresses personal responsibility and they are all very action oriented and specific for the hospitality business:

Service Values: I Am Proud To Be Ritz-Carlton

  1. I build strong relationships and create Ritz-Carlton guests for life.
  2. I am always responsive to the expressed and unexpressed wishes and needs of our guests.
  3. I am empowered to create unique, memorable and personal experiences for our guests.
  4. I understand my role in achieving the Key Success Factors, embracing Community Footprints and creating The Ritz-Carlton Mystique.
  5. I continuously seek opportunities to innovate and improve The Ritz-Carlton experience.
  6. I own and immediately resolve guest problems.
  7. I create a work environment of teamwork and lateral service so that the needs of our guests and each other are met.
  8. I have the opportunity to continuously learn and grow.
  9. I am involved in the planning of the work that affects me.
  10. I am proud of my professional appearance, language and behavior.
  11. I protect the privacy and security of our guests, my fellow employees and the company’s confidential information and assets.
  12. I am responsible for uncompromising levels of cleanliness and creating a safe and accident-free environment.

Source: http://www.ritzcarlton.com/en/about/gold-standards

But their implementation and communication effort does not stop here: already when recruiting new employees the values fit is tested. Once hired every new employee gets trained on these values for two days and has to present them by heart in front of their colleagues. In order to integrate the service values in the day-to-day work every morning in every Ritz-Carlton Hotel around the world, a 15-minute work meeting takes place: the round-up. During this meeting the priorities of the day get communicated, the service values get discussed and positive “wow” stories of exceptional examples of customer service are shared. This is the Ritz-Carlton way of using the emotional power of storytelling.

They also go one important step further: They empower their employees to deliver great service by granting every employee a discretionary spending of $2,000 (per incident) to satisfy a customer.

Sounds a bit extreme? Maybe… But Ritz-Carlton seems to be very successful with this highly structured approach for creating a values-oriented corporate culture: Employee turnover is at a very low – 18% versus the industry average of 158%.

5. Leaders must relentlessly communicate and implement values

The fifth and final step towards an effective value statement is making everybody – and especially leaders – accountable for the consistent implementation and communication of values.  The main responsibility for making a values statement fly, lies with managers, of course.

An inspiring example comes again from the CEO of Sparda Bank, Helmut Lind (yes, I admit it, I am a fan….). Since one of the company values is mindfulness, he is giving mindfulness seminars to his coworkers on 24 days every year! A great example of how you can continuously show your coworkers that you are serious about your company values.

Unfortunately, often the leadership of a company comes up with some fancy words and then expect that somehow magically their coworkers will adopt these values and use them as a guideline for their behavior, while top managers hide in the shadow. This is a very efficient way to quickly lose coworkers buy-in into the company values.

Somehow leaders seem to forget too easily that they are under constant observation by their coworkers. If their coworkers do not see that their managers fully embrace the companies values, role-model them continuously, talk about them frequently and convincingly, everybody will forget about the values and follow the cues that the leaders’ actual behavior shows them.

As always also in value management actions speak louder than words. You cannot expect that your coworkers will embrace the value of reliability if you are e.g. notoriously late for meetings.

Furthermore, leaders need to step in if their coworkers disregard company values.  If one of your company values is “Appreciation” and you have a manager who constantly mistreats his coworkers you have to take action, even if this abusive manager happens to be economically successful or a friend of your boss. But holding others accountable for company values and role-modeling them should not only be done by managers but by everyone in the organization.

Summary

In conclusion, even though value statements at the first glance seem to belong in the soft, fluffy and everybody-knows-how-do-it category of management tools, they require in fact rigorous thinking, honest soul-searching, and consistent implementation and communication.

Everybody can come up with a list of nice sounding company values. But if a value statement is not specific to the companies culture, business model and strategy the value statement will not create positive effects like orientation and motivation for employees.

If value statements are not authentic, they will not be credible and create more harm than good. At best, they will be quickly forgotten.

If company values are not emotionally appealing they will not win peoples’ hearts – which actually is the core aim of a value statement.

If company values are not constantly communicated and linked to behavior, nobody will take them seriously.

If managers are not shining examples of living and enforcing the company values, nobody else will do so.

So, yes, you should absolutely have company values and if done correctly your company will profit enormously from such a process, but you have to know that you will open a Pandora’s box if you do not do it with care, conviction, and authenticity.

Related links:

https://culture-officer.fr/5332

https://www.userlike.com/de/blog/unternehmenswerte

https://rctom.hbs.org/submission/the-ritz-carlton-ladies-and-gentlemen-serving-ladies-and-gentlemen/

https://enorm-magazin.de/ein-banker-geht-aufs-ganze

https://www.ecogood.org/de/gemeinwohl-bilanz/unternehmen/portrats-sparda-bank-muenchen-eg/

Prof.-Bettina-PalazzoAuthor: Dr. Bettina Palazzo, BSL Professor

Four Reasons why Corporate Value Statements don’t work

« Excellence », « integrity » and « communication » These seem to be the most popular buzzwords in corporate value statements.

I roll my eyes as soon as I see these values anywhere. Why? I will give you four reasons why they make me nervous:

1. One size does not fit all

First of all, values like excellence, integrity, and communication are way too generic. They could be adopted by any organization. Who would be against excellence, integrity, and communication? But are they really specific for the company and its culture or business model? Probably not! Excellence can mean many things to different people. It certainly makes a difference what we mean by excellence whether you are working in a bank or a hospital.
Integrity? It means that you always stick to your moral principles no matter what the benefit might be if you break the rules. This value, too, needs a lot of definition and soul searching before a group of people like a company can agree what it really means to them: When is a gift a bribe? How do we deal with confidential information?  Can I be friends with a supplier? Etc.

Pic Blog Corporate Values prt1 Yes, way too often value statement are empty word bubbles! Please avoid that. Photo by rawpixel on Unsplash 

 

2. The true colors are always shining through

Second, often companies succumb to the temptation to choose values that sound appealing but are too far away from their corporate reality and somehow hoping that the simple act of proclaiming that value it will become a reality in the organization. For example, when companies put “communication” in their value chart they wish to express with this value, which is not even a value but an activity, that they want everyone in the organization to cooperate effectively and openly with as little political power play as possible. Wishful thinking in many cases!  Of course, the people in the company know this and react with cynicism.

You cannot declare that your company cherishes collaboration, open communication, and teamwork when in reality your corporate culture is driven by fierce internal competition, politics and monetary incentives only. What we need is an inside-out approach. You have to do your internal cultural homework before you go into the world and brag about what a wonderful company you think you are.

Values statement will never work, if they are only the icing on the cake, they have to be the very foundation of a corporate culture. Within the icing-on-the-cake approach, the top management comes together and agrees on some fancy sounding words that are then communicated to the lower ranks. This does not work. It is like putting on makeup without washing your face. Or like learning some moves and gestures to appear more self-assured without doing the hard internal work of personal development.

France Telecom had to learn this the hard way in 2008, when they got hit by a series of over 30 employee suicides: victims stabbed themselves in the middle of company meetings, jumped out of the window at work and left goodbye letters that clearly stated that they killed themselves because of the pressures and fears at work. At that time France Telecom was in a difficult transition from a state-owned company to a player in the highly competitive and dynamic international telcom market and could not fire employees with a public servant status. Therefore, CEO Didier Lombard had introduced a merciless shake-out project that aimed at demoralizing employees in order to make them leave the company “voluntarily”.  As a reaction to the suicide series, Lombard said that this “fashion” of suicide should stop and that the media coverage created an effect of contagion. The waves of public outrage went high, Lombard had to leave and is still today on trial for harassment. Of course, at the same time, France Telecom had a value statement that said that the well-being of their employees was very important to them.

It is clear that after a disaster like that it will be very, very hard to ever make coworkers believe in the beautiful words of a value statement again. This is one point that is often ignored when companies initiate a value management project: If you screw it up, credibility is lost for a very long time, if not forever. At the same time, it is true that values can and should be aspirational. You can use values as part of a change program. But if you do that you have to make clear that you know that you are not quite there yet and prove that you have measures like training, organizational redesign or new performance standards in place to get there.

3. No Emotional appeal

Third, if values are too generic and unrealistic they do not create any genuine emotional response or connection for the men and women in a company who know the true colors of their organization all too well.  Of course, client orientation is important, but this is not a value that would deeply resonate with the hearts of employees. This is nothing that makes people get out of bed in the morning and go to work with joy and anticipation.

How can you make corporate values emotionally appealing? Not easy, but it helps to always start with a motivating overall purpose of the company that goes beyond the profit motive. Humans always yearn for meaning in their life. As philosopher and Holocaust survivor Viktor Fraenkel famously put it: “Life is never made unbearable by circumstances, but only by lack of meaning and purpose.”

This human desire for meaning is nicely illustrated by Harish Manwani’s (COO of Unilever) TED talk in which he tells the story of his first day at the company where his boss asked him why he was there. Manwani answered: “To sell lots of soap!” and his boss said: “No, to change peoples lives!”, because the original purpose of Unilever was to improve hygiene in order to help prevent contagious diseases. Clearly changing peoples lives is more emotionally appealing than selling lots of soap, right?

4. No link to everyday behavior

Forth, very often values statements are not linked to behavior. They get developed, glossy brochures rolled out, employees (maybe) read them, laugh bitterly because they are so unrealistic and cheesy and then they forget them because nothing happens that would link these values with the behavior of managers and employees. The mere proclamation of value buzz words will never, never, never influence people’s behavior. How people in an organization actually behave is the ultimate proof to the value pudding. Without this link to behavior, a value statement loses all credibility and disappoints all expectations that unavoidably come up when a company opens the value Pandora’s box.

And by the way, these three values, excellence, integrity, and communication were the corporate values of Enron. And we all know how this ended: In jail, bankruptcy, and shattered hopes. Somehow Enron had managed to win prizes for their value statement, but it definitely did not keep their top management from cooking the books and inciting their employees to cut-throat business behavior with the help of an inhumane incentive system.

In a nutshell, ever so often value statements do not go beyond orgies of humanistic prose in shiny brochures that nobody can take seriously. In extreme cases, they are a more or less random collection of buzzwords sound like this hilarious song by Weird Al: https://www.youtube.com/watch?v=GyV_UG60dD4

On the other side, of course, values are important for companies in our highly volatile, complex and ambiguous times. Old-school management that works with order and command is too rigid for this new fast-moving world. The younger generation of corporate coworkers is looking for more freedom, more fun, more autonomy and more purpose in their jobs. Here a corporate culture that is driven by values and a purpose that goes beyond simple profit maximization creates a positive appeal for future coworkers, higher levels of motivation with current coworkers and a more inspiring and more flexible way of decision making. Ideally, instead of applying rigid rulebooks, controls and processes, coworkers decide on the basis of common values.

So how can you come up with a value statement that will actually have these positive effects instead of creating cynicism and ridicule?

Stay tuned for my next blog post and on the five steps to make the value statements work.

Prof.-Bettina-PalazzoAuthor: Dr. Bettina Palazzo, BSL Professor

Appreciative Inquiry, Business Innovation and the SDGs – A winning combination

For the first time in September 2017 Business School Lausanne designed a case study course that used the UN Global Goals as a lens for students to take a step closer to business innovation in their community, exploring companies that are both profitable and doing good in the world.

In Part 1 of the course students needed to research a company they believe are doing work related to the SDGs. The students job was to help the company to uncover and reveal an important story that has happened to them related to a recent project where clearly “good for the world” was created, sometimes even unintentionally.

To find out whether their discovery was valid, they had a wealth of information available to them on the Aim2Flourish platform regarding the sustainable development goals and corporate innovation. Once a company and a contact person had been identified, students reached out through the power of our professional networks to connect, explain their intention, and set up an in-person interview with the specific business leader. The interview was prepared beforehand in class using the appreciative inquiry method. Based on the information interview and their additional research, students then wrote their stories and we went through a few rounds of revisions before submitting them to the AIM2Flourish platform. From the outset students knew they were part of a competition for the most innovative stories and that there was a possibility that their story would be chosen the following year as one of the best-of-the-best stories.

Early April I received a message from Aim2Flourish requesting confirmation that all the information in one of the stories written by a student was valid. I reached out to the company in question and liaised with the press department, made some modifications and on April 16, 2018  was advised that the story written by Karim Albekov had been awarded one of the 17 Flourish Prizes, based on the Promoting Gender Equity story he had written about the organization: IKEA.

This business’ story was selected as one of the 17 best stories exemplifying how business is a positive force for good and demonstrating progress towards the 17 UN Sustainable Development Goals (SDGs) published on the AIM2Flourish platform in 2018.

AIM2Flourish is a UN-supported global learning initiative where students discover and celebrate untold stories about business innovations for good, using the 17 SDGs as a lens. AIM2Flourish is an initiative of the Fowler Center for Business as an Agent of World Benefit at the Weatherhead School of Management – Case Western Reserve University.

Please join me in congratulating Karim Albekov for this excellent accomplishment and to all the other students who submitted their stories;  Alexandros Katsidonis,  Anna Iskanderova, Arsen Amanbayev, Lisa Foffano and Ana Cristina Junquira Ottoni. Give them all a big round of applause at graduation this summer for being the first to try and the first to succeed!

This year, Aim2Flourish will celebrate all of their 2018 Flourish Prize winners in a week-long, virtual celebration from May 7-11. During this time Aim2Flourish will host a global, multi-day celebration via our social channels on Facebook, Twitter, LinkedIn, Medium, and Zoom Video Conference with the hashtag #FlourishPrizes2018.

 

Author:

Nadene Canning, BSL Professor