Is a value statement just more cynical hissings from the corporate snake pit? More business monkey spank double speak? Or is it a valuable tool to help shape culture and create a competitive advantage?
In my experience most value statements are confused in purpose and presentation. There real aim should be as a tool for internal decision making. This post looks at what’s wrong with most value statements and how they might be improved.
I once worked the bar at a pub in London where Big Stu, the large fat Scottish manager, made it very clear that we were at all times to fleece the lazy Southerners by attempting to serve them warm beer from the slops tray, plump up the bill by charging extra for things they hadn’t ordered, then give them the wrong change.
On the other hand if we were found with any tip money in our pockets we were told he would punch us in the face then throw us out. Fortunately this never happened (because we hid the tips in our socks).
OK so ‘The customer exists to be exploited’, ‘Honesty is for wimps’ and ‘Remember Culloden!’ are not values to be framed and put on the wall but at least you knew where you stood. There was at least no hypocrisy. In my experience nothing has staff looking at the classifieds faster than management saying one thing and doing another. Since you can’t have hypocrisy without having an explicit standard to fail against – we need to look at the matter of value statements.
Here's an example of an actual value statement here.
Communication: We have an obligation to communicate. Here, we take the time to talk with one another… and to listen. We believe that information is meant to move and that information moves people.
Respect: We treat others as we would like to be treated ourselves. We do not tolerate abusive or disrespectful treatment.
Integrity: We work with customers and prospects openly, honestly and sincerely. When we say we will do something, we will do it; when we say we cannot or will not do something, then we won’t do it.
Excellence: We are satisfied with nothing less than the very best in everything we do. We will continue to raise the bar for everyone. The great fun here will be for all of us to discover just how good we can really be.
Hard to complain about that. Maybe it even looks a bit like the one in your office. In fact it is from Enron Corporation which in the 1990s was once one of the most admired companies in the USA, with revenues of over $100 billion, until of course they imploded spectacularly after years of sustained accounting fraud and endemic corruption.
That's the problem with value statements. You’ve seen them gathering dust on office walls, you’ve seen them in company reports and when you read them don’t they nearly always seem marketing vapourware, either redundant or deficient?
I had given up on value statements as nasty pieces of politically correct corporate compliance until I recently spoke for a company that lived by them, and were adamant they were instrumental in improving their culture. So it seems to be worth taking a closer look.
For simplicity let’s put aside the potential gulf between how values are stated and how they are implemented. Let’s just look at the value statement itself and see if it makes any sense. First – a brief history.
The craze of publicly touting corporate values apparently began in the early 80s after the popular management book 'In Search of Excellence' identified 8 common attributes that 43 successful companies had in common. According to the author Tom Peters, successful companies lived by core values. This was reinforced by the 1994 Jim Collins best seller 'Built to Last', which came to the same conclusion. As a result managers in the free world felt compelled to scramble to come up with values of their own. Today 80% of Fortune 100 companies display their values publicly.
But what is a value?
The dictionary describes ‘value’ as the relative worth of something. So it’s what that the company believes is important about the way it operates. A value statement might be considered as Operating philosophies or principles that guide an organization’s internal conduct as well as its relationship with the external world – (‘A primer on corporate values’ O. Serrat)
There is a convention for the way that a value statement is presented – typically a list consisting of a headline word, then a line or two of explanation. Like this: RESPECT: We treat others the way that we like to be treated ourselves.
There is also a convention for what values appear in value statements. See the table below. A surprisingly few values appear in most value statements.
Frequency of Words Included in Corporate Value Statements
90% Ethical Behaviour and Integrity
88% Commitment to Customers
78% Commitment to Employees
76% Teamwork and Trust
69% Commitment to Shareholders
69% Honesty and Openness
65% Social Responsibility
50% Drive to Succeed
46% Environmental responsibility
41% Commitment to diversity
But looking at the list this seems to be quite a jumble. Some of these are about business ethics, about how the company plans to treat their customers, employees and shareholders, but also something of what they see as their strengths, or would like to have as a competency (‘innovation’, ‘adaptability’) as well as some input from the HR department (‘commitment to employees’ and ‘teamwork and trust’). Which brings us to the first problem with value statements – they are a muddle. Who is the value statement talking to and about what?
What are the objectives of the value statement?
Here is what one commentator says:
"In a globalizing world, meaningful values can, for example, instill a sense of identity and purpose in organizations; add spirit to the workplace; align and unify people; promote employee ownership; attract newcomers; create consistency; simplify decision making; energize endeavors; raise efficiency; hearten client trust, loyalty, and forgiveness for mistakes; build resilience to shocks; and contribute to society at large.- Serrat"
Contribute to society at large? Crikey! Pop a page of platitudes in your annual report and you have world peace! Is the value statement a cross between The Sermon on the Mount, and the Declaration of Independence? Can one document really have this many audiences and serve this many purposes. Actually I think it can – but not by stating empty moral aspirations.
Let’s clear up this issue about who the value statement is talking to. Is it an internal document that the public is being shown or is it primarily intended for the customer, and has been vetted and filtered by the marketing department? If it’s the latter then we have a problem, because saying it’s so doesn’t make it so.
Let me give an example to explain what I mean. Here is a line that often appears in a value statement ‘Integrity: We work with customers openly, honestly and sincerely.’ That makes sense only if you are saying to your staff we’re not going to wink and look away when you give the wrong change, otherwise there is no point shouting to the public that you’re honest. Either you are honest or you aren’t – but saying it doesn’t make it so.
By the time consumers are old enough to own a credit card they know a few things about marketing claims. They know that X-ray specs don’t actually see through clothes, Sea monkeys don’t look anything like they do in the cartoon, and the view from the ‘Garden Retreat room’ will be of the carpark.
As a customer I take your guarantees seriously. I take your legally binding commitments seriously. I do not take your marketing seriously. The more your value statement looks like it was written for the public rather than for your staff the more I deduct credibility points. The value statement must be an operational document for staff. Anything else is meaningless.
The 3 most common problems with Value statements
If you start from the idea of a value statement as a practical guide for staff then the typical value statement has a number of problems.
1. Don’t provide guidance when values conflict
The problem with values is that they conflict. Yet this conflict is not acknowledged nor is it made clear what to do when they conflict.
If a value statement says customers first, it must mean employees at least second.
This could be partly resolved by prioritising the list. But wouldn’t it be more fun to be explicit in the first place? How about:
‘Our customers come first – if that means our employees have to work late then so be it’
By the way, why is the number one value – ‘We exist to make a profit’, never seen in value statements?
2. Often too idealistic and impractical
Look at this value statement.
EXCELLENCE: We are satisfied with nothing less than the very best in everything we do.
You can’t be excellent at everything, there isn’t time. Some things have to be just good enough. So which things are we going to be excellent at first?
3. Often don’t contain enough detail to operationalise
Just claiming, for example, ‘integrity’ as a value, is very unhelpful. A behavior considered immoral by one person is another person’s acceptable commercial rough and tumble. The accompanying explanation needs to have some explicit guidance.
Towards Value statements 2.0 – the ‘How we need you to act to create value’ statement
Does a company need a document that tells employees how to act? Yes. But they don’t need to be told to play nicely with their co workers.
When I was working at a startup I would meet with the founder every day and we would repeat every day who the customer segment was, what our product was and wasn’t and what our priorities were. It was like reciting the Nicene Creed. This was useful, because it was tweaked so often. This process became a useful tool for reinforcing what we were trying to achieve and why and making sure that every piece of work fitted in to the big picture.
There is only one purpose for a value statement – as a tool for decision making for staff, where they should be placing their time and energy and how they should make trade-offs in ambiguous situations.
Rather than asking ‘How do we want the world to think we treat our staff and customers?’ Why not ask ‘What do we want our staff to be reminded of to help us all create value?’
From this point of view the value statement could include a variety of things – like the organisations’ priorities. It could encapsulate the key organisational learnings, it should refer to how the company makes its money and what the staff need to do keep it in business. It’s a reminder of the big picture.
As most companies even in the same industry serve different customers in different ways it is likely be highly individualistic.
How is it different from the mission statement? It think the mission statement should be paragraph one. Who the customer is and how the company creates value provides fantastic context for why staff need to act in certain ways.
Should the value statement include standards of behavior? Currently 90% of value statements include ‘Integrity’ – isn’t that redundant? My view is if it’s a problem put it in, if it’s part of your brand put it in. Otherwise leave the stuff about integrity in the employment contract – or at the very least make it a separate part of the value statement.
Example of Value Statements 2.0
Atlassian, one of Australia’s fastest growing and successful software companies, has very simple corporate values
Don’t #%& the customer
Create useful products that people lust after
Open company, No bullshit.
Apple has these
We believe that we’re on the face of the Earth to make great products.
We believe in the simple, not the complex.
We believe that we need to own and control the primary technologies behind the products we make.
We participate only in markets where we can make a significant contribution.
We believe in saying no to thousands of projects so that we can really focus on the few that are truly important and meaningful to us.
We believe in deep collaboration and cross-pollination of our groups, which allow us to innovate in a way that others cannot.
We don’t settle for anything less than excellence in every group in the company, and we have the self-honesty to admit when we’re wrong and the courage to change.
(in fact these statements were extracted from a speech from the CEO – Tim Cook. I’m not sure that Apple has a formal ‘value statement’)
In conclusion – first do no harm.
There are no value statement police, well actually there are – your customers and your staff. Your customers won’t be impressed if they detect that you are trying to hoodwink them with a laundry list of wooly feel-good moral aspirations and ‘hooray’ words like ‘communication’ and ‘respect’. Your staff won’t thank you if they think they are being held to a set of vague and unobtainable standards.
Instead you might want to consider taking a leaf out of the play book of Big Stu, the Scottish publican I worked for, and focus on providing a value statement that reminds staff of the stuff they need to know, and provides a tool for them to use to make decisions that add value to the company.