In Great Company

by Louis Carter

  Tu, a first-generation Chinese immigrant who believes deeply in the American dream and sharing his “luck and good fortune” with Kingston employees, walked the talk in a dramatic way in 1996 when he and his partner, David Sun, sold 80 percent of Kingston to the Japanese firm Softbank Corp. As part of that, they set aside $100 million in profits from the sale and awarded unprecedented bonuses to their American employees. In many cases, the bonuses ranged from $100,000 to $300,000.18

  Tu and Sun later bought the company back, and today the $6.5 billion business employs more than 3,000 people and has earned a place on Fortune’s “Best Companies to Work for in America” list in large part by authentically embodying their core values.

  Tu understands that it is impossible to achieve values alignment unless the organization walks the talk from the C suite down to the shop floor. Executive leaders set the tone, make the strategic decisions, and create a foundation for the corporate culture. Middle managers interact with employees and engage in performance management and planning. Employees and associates are often closest in proximity to customers and shape products and services accordingly. All of these activities, relationships, and interactions are ongoing opportunities to embody the company’s core ideals and exhibit values alignment in ways, like those that follow, that put your organization In Great Company.

  Overcommunicate Your Values

  When asked, 54 percent of employees say their company’s purpose is not clearly conveyed.19 Although it’s critical to get beyond talking to actually living them, employees should understand the core values and where they fit within the context of the company. Yet, none of us likes to sit through obligatory formal training sessions.

  Companies need to get creative, then, and experiment with better ways to explore shared values. Some organizations do this through informal coaching, while others try hands-on opportunities such as encouraging people to volunteer in the community with their colleagues during work hours. Life is Good, the Boston-based apparel company has effectively built their business around their primary core value: optimism. Not only are they known by employees to be a “glass half-full” company, but they also plaster optimistic drawings and saying across their popular T-shirts and baseball hats, and customers line up to buy them to be a part of the famously upbeat experience.

  Regardless of the program or process, the end result should be a clear understanding of the shape values take in the organization and the ways that people live them every day.

  Live by the Values You Promote

  The degree to which people believe their company lives the values it promotes is effectively proportionate to employee engagement and satisfaction.20 While there is no single best way for an organization and its leaders and employees to walk the talk, everyday behavior as well as big-picture decisions should distinctly reflect core values.

  Patagonia’s decision to print its “Don’t Buy This Jacket” ad was a clear value play, but so is its ongoing custom of encouraging employees to leave work during the day to surf or fish. Both moves embody the organization’s environmentalist vibe in support of minimalism and an appreciation of sustainable living and outdoor activities.

  Act with Empathy and Compassion

  Values mean something to people because they tap into our deep desire for higher-order ideas such as connection, compassion, and empathy. Acting on these deeper ideas and including them in your core values strengthen the connection between employees and the organization.

  Jeanette K. Winters, SVP and chief human resources officer at Igloo Products, told me about the efforts the organization took following Hurricane Harvey and its devastating effects on communities in the Houston area. Located in Katy, Texas, 30 miles due west from downtown Houston, several communities in Katy itself were left under water, and many areas were forced to evacuate. According to Winters, the families of 53 Igloo employees were very significantly affected by the hurricane, and 15 lost everything including their homes and cars. Igloo’s response? They not only spent a quarter of a million dollars to pay people for a week who could not come into work, but they also made food and supplies available and gave out 23,000 coolers to their associates and to local families that didn’t have electricity.21

  “These efforts to support families brought all of us closer together,” Winters said. “Leadership set the tone, and we answered that call to help each other. More than anything, I think it said something powerful to people about our values and the vision of the leaders here.”

  Lead by Example

  One common thread that cut across much of my research for In Great Company is this: leaders need to do what they say. Because core values are such a primary component of company culture, the example set by leaders—how they communicate and publicly embody values—may be the single most important element for creating trust and setting the company up for values alignment.

  3. Self-Select and Self-Correct

  Ever wonder why someone can be extremely successful in one organization, only to underperform in another, or vice versa? That is values alignment. You can train people for skills development and coach them to deepen their relationships . . . but values? They come from within. The best moments to consider values alignment and culture is during the hiring process. In my work with organizations, I’ve been a part of three hiring phases that are prime opportunities to actively influence values fit.

  The first is the recruiting phase. This is the initial opportunity for candidates to opt in or out based on their core values. It works best when companies lead with values in the marketplace and are crystal clear with recruiters in all written material designed to attract talent. This degree of transparency is far easier when an organization’s brand is well known for its culture. For instance, individuals who don’t want a culture based on meritocracy are unlikely to step forward for a job at GE, where meritocracy and commitment to personal excellence are clearly stated core values. Likewise, one look at Netflix recruiting materials and you’d know that they “keep only our highly effective people” and “focus on results over process.” That type of specificity and transparency allows people to self-select a culture that suits their needs and skip those that don’t resonate with their values.

  Next is the interviewing phase. This is when organizations get their first pass at assessing value fit. While many companies skew their interview process toward experience and skills over mindset and values, the calculus is shifting. Zappos, for one, skips the generic approach by crafting interview questions that screen for each of their core values. In Harvard Business Review, Zappos CEO Tony Hsieh said, “Be Humble is probably the core value that ends up affecting our hiring decisions the most.” He went on to say that they interview scores of experienced, smart, and talented people, but they always take a pass if the individual lacks humility. Hsieh said it’s all part of “protecting the company culture and sticking to our core values.”22

  Finally, there’s the onboarding phase. Onboarding is your first and best opportunity to formally teach and train employees about core values. If the recruiting process worked well, new hires will already be privy to these priorities. Still, at some organizations, onboarding presentations are the only time when a C-suite hire will be reading from the same slide deck as a summer intern—because the same core values apply to everyone.

  And onboarding doesn’t end after day one. At Jazz Pharmaceuticals, where core values are stated prominently in every offer letter, six-month anniversaries are a strategic inflection point and an opportunity to measure the success of every new hire. The metrics? Eric Fink, Jazz CHRO, told me, “First, we look at the Net Promotor Score—are they happy in their job and would they refer the company to a friend? Second, how are they performing against their objectives and specifically against values?” Fink told me that focusing on values from the beginning is important because “the success and happiness of our people are what makes us great.”23

  Putting values at the center of the hiring process requires resolve. As one founding C
EO told me, “We hire for ideal fit. That means we hire slow for culture, and we fire fast for the same reason.” The following are some of the ways to capture that ideal fit and focus on creating values alignment to be In Great Company.

  Prepare Candidates to Self-Select

  Give candidates clear guidance on corporate values to help them decide for themselves if it’s a good fit. Fink says that Jazz created a detailed values blueprint for recruits and new hires. “You have a choice about whom you’re employed with,” he said. “At Jazz, performance isn’t just about getting stuff done. It’s also about how you live our values each and every day. It’s important that people can relate to that.”

  Screen for Values

  People’s values preferences are not listed on their résumés. And often, it’s only top executives who undergo rigorous qualitative assessments and behavioral screening to isolate values strengths and offer a formal prediction about fit. But there are other ways to screen for values. For instance, inexpensive HR software can be customized to help assess candidates’ thinking and compatibility on core values. Similarly, algorithms are used more and more to screen candidates based on values and their chances for success.

  In addition, observing how candidates interact with each other can offer yet another valuable data point on fit. Alan Lewis, founder and chairman at Grand Circle Corporation, said, “Our process includes a group interview, in which multiple candidates interview for various open jobs at the same time. We observe candidates undertaking unique, and often quirky, challenges and interacting with each other. Candidates act out scenarios that show us whether or not they exhibit our core values—open and courageous communication, risk taking, speed, quality, teamwork, and thriving in change.”24

  Ask About Specific Situations

  One way to determine values fit is to ask candidates to tell a story or describe a specific situation in their past jobs that illustrates an affinity for the values you are promoting. This encourages them to dig deep and provide meaningful specifics. Another way is to present a situation in which relevant values come into play and ask how they would react. This tests their leadership instincts and shows how they might act under pressure. Regardless of the format, try to approach the values question from several different angles to see if a candidate has a consistent, authentic perspective.

  Consider the Level or Function of an Employee

  Although everyone needs to align around the same values, it is important to take job level or function into account to understand where values intersect with an individual’s everyday work. For instance, executives must be able lead with values in mind, whereas line workers interact with customers and make everyday decisions based on their understanding of how to apply the corporate values. In other words, alignment of values is critical at all levels, although perhaps for different reasons.

  4. Remember to Measure

  People know they are In Great Company when every employee is set up to contribute fully, regardless of job title, and they hold themselves and others accountable for results and objectives. When it comes to the numbers and other quantitative objectives, accountability has become seamless over the years with state-of-the-art sales tracking and performance management systems. But measuring values alignment is something altogether different and more difficult. Qualitative expectations are subjective, anecdotal, and traditionally relegated to the tail end of performance conversations.

  But more recently, with corporate culture understood to be a key driver of competitive advantage, greater attention and insistence has been dedicated to managing and tracking core values alignment. Tom Kolditz, retired brigadier general and head of behavioral science and leadership at West Point, said that the U.S. military is a longtime standard bearer for enforcing values alignment.

  “One of the fundamental roles of any leader preparing for combat, or anywhere in the military, is to enforce the value structure of the organization,” he said. “And when it comes to values, whether it is mutual respect, loyalty, or integrity, . . . we can never settle.”25

  Speaking about values in all organizations, not the military exclusively, Kolditz (currently executive director of the Doerr Institute for New Leaders at Rice University) went on to say, “You can negotiate on other things, but institutional values are not fungible.”

  His perspective is becoming ever more prevalent, as values-first companies like Netflix and Southwest Airlines reinforce and measure values alignment as part of 360-degree performance reviews, compensation conversations, promotion decisions, and exit interviews. Likewise, Novozymes, a Copenhagen-based biotechnology firm producing industrial enzymes used globally in everything from detergents and beer to fuel, has embedded measurement of its core value—sustainability—into nearly everything it does.

  Founded as a spinoff from the pharmaceutical company Novo Nordisk in 2000, Novozymes has positioned sustainability as the most visible offering in its value proposition, with three stated areas of strategic focus:

  1. Making the world aware of the sustainability benefits of biotechnology,

  2. Creating new business from sustainability, and

  3. Building sustainability capabilities across the organization to enable all employees to contribute.26

  As part of that, Novozymes’s leaders have developed a wide range of performance targets, with corresponding bonus and stock option programs for employees and management. According to Claus Stig Pedersen, head of corporate sustainability at Novozymes, one notable result of this effort at measurement was succeeding in decoupling growth in sales and profits from growth in energy, water consumption, and CO2 emissions. In other words, measuring for core values gave them multiple ways to measure success.

  Pedersen said their values-centric approach has enhanced their reputation among customers, partners, and even competitors. Even more, “the pride Novozymes’s employees feel from contributing to making a more sustainable world” is seen by executives as a major business benefit.

  In a business environment where companies compete to recruit and retain top talent, achieving values alignment through performance measurement tools, such as those that follow, can be invaluable for creating the emotional connectedness that keeps people engaged and performing their best.

  Keep Top Management Accountable

  Developing performance measurement systems that succeed from both a business and values perspective requires buy-in and ownership from top managers. For instance, Novozymes has a cross-functional corporate sustainability board. The board, chaired by Pedersen, has eight members, all senior leaders who head the company’s key functions, including business development, finance, production, marketing, and procurement. When senior leaders develop the company’s sustainability targets and programs, are responsible for implementing them, and are held accountable for their success, business and sustainability become linked from the top down.

  Create the Business Case

  How do you get executives who are driven by production and profit targets to tie performance measures to values? By making the business case. Whole Foods co-CEO John Mackey, for example, frequently articulates the business case for the organization’s values-driven business in his blog posts and interviews, as he did in this letter to stakeholders, where he wrote the following:

  We walk our talk when it comes to our core values. Our primary goal is to satisfy and delight our customers. Through constant experimentation and innovation, we are redefining the retail food marketplace and further differentiating our shopping experience from other food retailers. We continue to expand and adapt our product offering in ways that speak to our core customers and to our authenticity and leadership role within natural and organic products. . . . Our business model is very successful and continues to benefit all of our stakeholders. We are executing at a high level, continuing to produce higher sales growth, comparable store sales increases and sales per square foot than our public competitors.27

  Understanding the impact values have on business makes it
more feasible for everyone in the organization to find ways to factor them into performance management systems.

  Remember to Track the How

  A long-term perspective and a strategy that delivers sustained success requires going beyond quarterly earnings data. Leaders need to measure not only what was accomplished by people in any given time period but also how it was achieved. Author and hospitality entrepreneur Chip Conley put it this way: “You look at manager say, ‘Hey, great P&L’ or ‘Great cash flow statement,’ but if the way they got that was to fire half their staff, piss off customers, or charge them so much, that’s not a sustainable business strategy. Generally speaking, sometimes being able to measure relationships with customers, employees, or vendors is a better way to get a sense of the long-term sustainability of the effectiveness of a manager or leader.”28

  Jazz Pharmaceuticals, as well, redesigned its performance management system to include values alignment: “We want to be really transparent about this because, for us, what you achieve and how you achieve it are both equally important,” Fink told me.

  Measuring and managing for core values—including how things are accomplished—allows organizations to go deeper than numbers and collect many different types of data.

  Use Partners to Keep You Accountable

  Organizations that make customers and vendors a part of their values agenda are more likely to hold themselves accountable for delivering on their promises. Novozymes abides by this philosophy, which serves to underscore the company’s belief that achieving sustainable development requires collaboration between the public and private sectors. As part of their “Sustainable Energy for All” initiative, Novozymes’s customers reduced their CO2 emissions by a combined total of 60 million tons in 2014. Pedersen said that is equal to taking 25 million cars off the roads.