In Great Company

by Louis Carter

  Why Values Align Us

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  Jim Collins and Jerry Porras made the case in Built to Last that visionary companies live by a set of inherent core values that engage employees and create a sense of shared purpose beyond making money.6 Later, author Patrick Lencioni put a complementary stake in the ground, saying that core values “are the source of a company’s distinctiveness” and “need to be integrated into every employee-related process” from hiring to firing.7

  Ample additional research, including my own, corroborates their findings: value alignment is a core component of organizational success. I will get to the “how to align values” below; for now, let’s look at why. Why did values alignment land in the top five as an element of EC that puts people In Great Company? Three reasons.

  First, meaning really matters to people, and it keeps them connected to each other and the organization. Study after study shows that people want to join together to invest their time, effort, and intellect in something that is bigger than themselves.8 My own research shows that greater employee engagement and increased productivity are not based on bigger paychecks, off-site retreats, Ping-Pong tables, free lunches, or even additional paid leave. It’s deeper and more intrinsic ideals like alignment of values. Glassdoor reported similar findings. Based on a survey of 615,000 Glass- door users, “the top predictor of workplace satisfaction is not pay. It is the culture and values of the organization.”9

  Oftentimes, we connect the search for meaning at work with millennials. They move faster from company to company, embrace gig economy dynamics, and reportedly work for “purpose over paycheck.” But the truth is that the shared-values imperative is much larger than any single generation. According to research, 68 percent of us do not think businesses do enough to instill a sense of meaningful purpose in our work culture.10

  The bottom line is that all of us want to work for organizations we admire and respect and those that stand for the things that we believe in. Values run deep, and aligning them means more to us than almost anything else.

  Next, values alignment guides ethical decision-making. One of the first and easily the best-known example of a corporate credo or values-based mission statement is Johnson & Johnson’s. Created by former chairman Robert Wood Johnson in 1943, just before the company went public, the credo spells out the company’s responsibility to its customers, employees, communities, and shareholders. According to J&J’s website, the credo contains “the values that guide our decision-making” in a way that “challenges us to put the needs and well-being of the people we serve first.”11

  These promises could be seen as elegant but empty if J&J failed to live by those promises. But consider, for example, the decisive action taken by the company in 1982, in what proved to be their most public crisis to date—seven deaths over a period of several weeks in metropolitan Chicago as a result of criminal drug tampering and cyanide-laced capsules of Extra-Strength Tylenol. At the time, the Tylenol brand accounted for 17 percent of the company’s net income, and it was the drug maker’s bestselling product. Not only their reputation but also their business—not to mention the lives of their customers—hung in the balance during this dramatic time.

  True to its credo, J&J’s put consumers first in a way that no other company had before. Instead of delaying action or shifting blame, Chairman James Burke immediately and voluntarily pulled 31 million bottles of Tylenol from store shelves and spent $100 million on the initial recall and relaunch of Tylenol capsules in new tamperproof packaging. The fast and transparent handling of the tragic incident not only made it clear that the company made its most important decisions with its values credo in mind, but it also prompted a revolution in product safety standards. After that, tamperproof seals and enhanced security controls during manufacturing became the industry standard.12

  Burke was able to make difficult decisions quickly under incredible pressure because J&J’s values made it very clear what actions were required.

  Finally, values alignment matters because values themselves tap into what make us human: how we connect to each other. With social media and ever-present connectivity breaking down the walls between our personal and professional lives, it becomes less feasible to compartmentalize our belief systems and keep our values under wraps at work. If our organization acts unethically, it becomes a reflection on us. But if it goes the extra mile to honor customers, we instantly feel the halo effect.

  This—the human factor—brings together all three reasons values alignment ranks high as an element of being In Great Company. With artificial intelligence and machine learning trending as sources of future business and innovation, values like honesty, empathy, love, respect, and creativity mean more to people than ever, and organizations do well when they enshrine them as part of the values that they call their own. Whether for decision-making, crisis management, or creating meaning, values connect us to each other because they cut straight to the core of what makes us human.

  Why Values Alignment Is Elusive

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  Like many things, creating corporate values and building a workforce that is equipped to adopt and exhibit common core beliefs is easier said than done. In fact, based on all that I see every day in my work with organizations, companies seem to fall short at this tough task. And the research concurs. According to Gallup, only 27 percent of employees believe in their company values. The same study found that there is commonly a gap between a company’s desired culture and the culture employees actually experience.13 The effect is inconsistent decision-making and a disengaged workforce.

  Why is it so difficult to achieve the ideal I have been describing?

  One culprit is the fast pace of change. Unlike when Johnson & Johnson was established, today companies can be founded fast with a particular business objective, only to evolve quickly and become something altogether different. Changing to respond to opportunities as they arise is part of the start-up ethos. (Twitter started as a hub for podcasts before it became the master of microblogging, and Flickr was an online role-playing game before its founders made the shift to photo sharing.) Pivots are a means of survival for early-stage ventures, but these shifts in mission can make it more difficult to remain consistent and live by one set of core values.

  One could easily suggest that alignment of values is not a realistic or appropriate expectation for fast-growth companies. Yet, I would argue that creating consistency around core beliefs is necessary for every organization, regardless of the logistical challenges brought on by change. After all, while Silicon Valley is famous for business model innovation and venture capital, it is also notorious for the type of cultural transgressions that nearly brought down Uber in 2017.

  Similar to fast change, a second barrier to values alignment is short-term thinking. When organizations and executives bow to unrealistic pressure to perform, making decisions based purely on current quarterly earnings over sustainable objectives, enduring values are often brushed aside or forgotten. Enron is the textbook case. Although one of its corporate values was “Integrity: We work with customers and prospects openly, honestly, and sincerely,” the firm was nonetheless felled following a massive accounting scandal that sent executives to prison and caused the dissolution of its public accounting firm, Arthur Andersen.

  The last major barrier to values alignment is a lack of executive sponsorship and support. Low bandwidth leads well-intentioned leaders and midlevel managers to give short shift to this important driver of emotional connectedness. Many organizations take the time to craft values statements, but they fail to do the more difficult job of creating a culture that respects and lives by the ideals they set forth. This barrier becomes higher as organizations grow and values become diluted by size and scale and accountability breaks down. The consequence? When an organization touts a set of core values and then fails it live into them, the fallout is amplified.

  Take Wells Fargo, for example, whose original mission statement included the promise to do what’s r
ight for customers.14 But that idea was publicly called into question when a whistleblower forced the organization to admit that thousands of Wells Fargo employees had charged millions of customers fraudulent fees for bank accounts those customers had not authorized in order to meet unrealistic sales goals set forth by management. And if the actions themselves were not damaging enough, the fallout was amplified because the offense went against the organization’s publicly stated core values.

  As a milestone of being In Great Company, an organization’s core values can serve to make work more meaningful for employees, but only if they are aligned across the organization and everyone works together with them in mind.

  Alignment of Values: The Best Practices Playbook

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  Is there a secret sauce for values alignment? Zappos thinks so. The Las Vegas–based e-tailer is so confident about its ability to create a positive culture where core values cascade across the organization that the company built a business around teaching it to others. As part of that, companies from around the world attend a three-day boot camp about how Zappos’s 1,400 employees “live their 10 WOW values.” And why not? Zappos is a role model for how to infuse culture and unify an organization using core values.

  And there are other role models as well, spanning the spectrum of industries and types. Some are start-ups, and others are a few of the largest and most established companies in the world. In exploring the steps below, I will mention Zappos as well as some of the companies I’ve coached as they built a competency for values alignment. Above all, my intent here is to distill the basic building blocks, based on my research, so that any organization can create, sustain, and scale values alignment as part of the In Great Company ethos of success (Figure 5.1).

  FIGURE 5.1

  1. Make Values Meaningful and Memorable

  A main reason many of the companies I work with can’t earn a high score on the Emotional Connectedness Index (ECI) for values alignment is pretty simple: they don’t have explicit core values. At least not ones that resonate with employees and guide the organization in a way that enables them to be their best. Many wonder: “Do we even need to put a stake in the ground with a formal values statement? It is worth our time and effort with so many other pressing issues competing for our attention? Is this really important?”

  It is if you want to be In Great Company.

  Howard Behar put it this way: “At the beginning, I thought, ‘Well, it’s just a statement. How big could that be?’ But it was everything. . . . It’s been the glue that’s held us together and the driving force that defines who we are. . . . It was that way when we were starting out, and it hasn’t changed one bit.”

  Behar is talking about Starbucks’s core values. Johnson & Johnson has The Credo. Jim Collins talks about a BHAG: “Big Hairy Audacious Goal.” Innovation guru Salim Ismail refers to a MTP: “Massive Transformative Purpose.” Mission; purpose; values; raison d’être. Whatever you call it, I’m referring to an organization’s core aspiration. The shared rationale that gets every employee out of bed in the morning to collaborate with colleagues for another day.

  The title is unimportant. What really matters is that your core values are both meaningful and memorable.

  They need to be meaningful and memorable because they have a massive job to do. They guide people to act and inspire them to perform in a way that binds them to others in service of a higher purpose (above and beyond making money for the company). Whole Foods’s core values statement is deeply meaningful and memorable because of the words they chose: “With great courage, integrity, and love—we embrace our responsibility to co-create a world where each of us, our communities, and our planet can flourish. All the while, celebrating the sheer love and joy of food.”15 Not many corporate values contain the word “love,” not once but twice, and those that do send a message to employees about how they should feel about their work.

  Values statements that are meaningful and memorable demonstrate to employees and customers that the organization stands for more than any one product or service. Patagonia, for instance, has a mission statement that is more about preserving the environment than selling outdoor apparel. That sends a strong message to people who like to climb, hike, or surf: we stand for the same things that you do.

  Last, values statements that are meaningful and memorable align everyone in the organization around specific ideals. Johnson & Johnson’s credo says that the company is responsible first to its customers, then to its employees, the community, and the stockholders—in that order.16 That’s pretty specific. Core values need to unequivocally define what the organization stands for, and they need to aggressively inspire employees to not only comply to but also to come up with creative solutions, together with colleagues, that live into the ideals.

  In reality, creating core values that are meaningful and memorable is more about having the right mindset than following one perfect process. It starts with openness and honest self-reflection, and eventually it may look something like an iterative brainstorming session. For some, meaningful, memorable core values are dreamed up on day one by a few visionary founders, but more likely they emerge with help from people working across the organization at every level who can keep the following prescriptive principles in mind.

  Get Existential

  In order to engage the organization and bring people together, core values need to answer big-picture questions that cut to the heart of the matter: “Why are we here?” “What makes us special?” “Why should we [employees, customers, stakeholders] bother?” These and other fundamental questions connect back to a company’s larger purpose and help us create values that are magnanimous and motivating.

  Be Aspirational

  Core values can and should help leaders get a fix on the organization as they want it to be in the future, as opposed to describing exactly what it is right now. In other words, core values are as much a turnaround tool as they are a guide for decision-making in the present. When Steve Jobs rejoined Apple in 1997, the “Think Different” slogan was more than a marketing campaign, it was an aspirational phrase to challenge employees and remind them what Apple at its best was all about.

  Aspirational core values bring people together and actively mobilize them. And the ideas themselves should do most of the hard work, but the words themselves, as well, should be engaging, relatable, and active. Zappos’s first value, “Deliver WOW Through Service,” like their other nine values, is active, jargon free, and designed to excite.

  As part of that broader aspiration, meaningful core values don’t focus on any particular product or service. Touchstones that act as glue to hold the organization together are far less business specific, and instead they are timeless and inspirational. The vision at IKEA, for instance, is “To create a better everyday life for the many people.”

  Cocreate Core Values

  Starbucks’s employees helped create their core values. Likewise, Zappos founder Tony Hsieh included the entire company in the process. Why include more people in core values creation? So many reasons. Employees must embody core values (that’s values alignment) in order to help make any company truly great. With that, they are closest to customers and have the clearest ideas about what the market wants. Diverse perspectives yield greater creativity. And so on. The bottom line is that core values need to be shared by all employees, so everyone should take part in their creation is some way.

  Think Broadly About Audience

  Not all companies need core values with words like WOW or love. As active and aspirational as they need to be, they should also be appropriate and speak to employees and customers in a language that they can immediately understand. The Build-A-Bear company has six simple core values including “Di-bear-sity” and “Colla-bear-ate.” It doesn’t get much more culture specific than that.

  Core values should speak to multiple stakeholders. Johnson & Johnson, Warby Parker, and Wegmans, among many others, mention employees specifically in their core values. This pu
ts their commitment to people on record, and it serves to acknowledge the pay-it-forward principal: companies with a strong reputation as “best workplaces” are often exceptional at serving customers.

  2. Practice What You Promote

  Creating meaningful core values that permeate corporate cultures sets an organization up for sustainable success. That sounds like an easy win, but there’s a very big if inherent in this. Companies with clear core values are on the path to being In Great Company if they are insistent and consistent in how they exhibit their values in everything from daily decisions to strategy setting. Hollow core values create a demoralized workforce, while authentic, fully integrated values create emotional connectedness. It’s that simple.

  John Tu, CEO and cofounder of Kingston Technologies, the world’s largest independent manufacturer of flash memory products, told me that actively practicing the values you promote is about the small details as much as the big decisions. “Doing what you say you will at work and showing employees that you care,” he said, creates a bond between people and mobilizes them “to love coming to work every day.”17 It is all about being active and authentic. Kingston’s core values include “loyalty” and “investing in our employees,” among others.

  “You can put anything you want into writing and paint it on your conference room wall for people to look at,” he told me. “But that’s just propaganda. What’s important to us? Doing it. People need to witness core values in action.”