The importance of core values
DURING the height of the pandemic in 2020, the MIT Sloan School of Management studied how corporate culture and values changed and impacted top US companies by examining employee perceptions. Researchers found out that average culture and values ratings across Culture 500 companies “spiked during the early months of the Covid-19 pandemic in the US (April-August 2020), and those five months occupy the top five spots in terms of average culture and values ratings for the preceding five years.”
This highlights the importance of communicating and reinforcing organizational core values in times of crisis and uncertainties. While we consider our current situation as “post-pandemic,” there are still many uncertainties and challenges such as hybrid work, tough business environments and the more recent phenomenon called “quiet quitting.” This is why organizations need to revisit their purpose, vision, mission and core values, and examine if these are still aligned to the changing environment.
At the core is the organization’s purpose: the “why.” It is a single statement that defines the reason your company exists beyond simply making a profit. It defines why employees, management and shareholders exist together beyond financial gain, like Microsoft’s “We believe in what people make possible.”
The next layers are the mission and vision statements. They define the “what” and “where,” respectively. The mission statement describes what the organization does and what product or service the business provides. A vision statement, meanwhile, describes where the organization wants to be in five to 10 years. The difference an organization’s members create in customers’ lives or the larger world ultimately realizes its purpose.
The core values define the “how” — how the organization can achieve its purpose, mission and vision, and how it can navigate through tough times and crucial decisions. Hence, core values need to be reinforced and lived by all members of an organization because they guide the behavior of employees towards excellence.
In our consulting practice, apart from revisiting and formulating the purpose, vision and mission, and core values of an organization, we emphasize to the business owner or CEO the need to communicate, reinforce, and practice core values across the organization.
The programmatic approach involves primarily defining the behavioral indicators that describe the value. For example, integrity is defined by being transparent, open and honest, among others, at all times. This ensures clarity on how to practice and live core values when faced with demanding situations.
The next phase is conducting values training among business leaders through workshops and role plays. The latter is especially important to demonstrate the application of behavioral indicators in specific and common workplace situations. Business leaders need to live and lead by example because employees always watch them.
Setting core values then failing to abide by them is worse than not establishing any at all.
The following phase is conducting values training among all employees, also through workshops and role plays. Again, specific situations are role played by employees to demonstrate how to apply and practice a core value in a workplace dilemma. Core values need to be translated into the local dialect or language for rank-and-file employees to learn them by heart.
The last phase involves sustaining programs to ensure that the core values are communicated to employees and that they live and practice them. This can be done through online tests that allow employees to read through sample situations and choose the course of action. Regular updates through email, chat and townhall meetings that convey the practice of core values are also effective as a sustaining program.
Core values do not only help the organization navigate through difficult times but also in guiding the employees to excellent performance. In the book Built to Last, authors James Collins and Jerry Porras said that based on their research, “purpose and values driven organizations outperformed the general market and comparison companies by 15:1 and 6:1, respectively.”
The author is the CEO of Hungry Workhorse Consulting, a digital and culture transformation consulting firm. He is fellow at the US-based Institute for Digital Transformation. He teaches strategic management in the MBA Program of De La Salle University. The author may be emailed at rey. lugtu@hungryworkhorse.com.