Outperforming Leaders Use Core Values to Win

Core Values
THE BIG IDEA: When executed well, core values provide an unparalleled competitive advantage for leaders because they define a specific set of idealized behaviors they want their people to uphold.


If you could wave a wand and magically have all of your employees behaving in certain ways, how would you want them to behave?

It’s easy to get frustrated when an employee is behaving in a manner that doesn’t support the organization—arriving late to meetings, speaking over others, or making rash decisions.

When you observe a negative behavior, you can try to correct it by calling the recalcitrant into your office and giving him or her feedback.

For this approach to be effective, the feedback needs to be well-timed (right when the undesirable behavior occurs) and consistent (more than once).

Humans don’t change their behaviors too readily or quickly. Conditioning new behaviors takes time, consistency, and patience.

How to Improve Employee Behavior

While its beneficial to train your leaders to become effective in-house coaches, when you’re heading an organization with thousands of people, the feedback approach alone cannot foster the behavioral changes you seek on a company-wide scale.

The alternative approach, used by a minute number of extraordinary business leaders, is to determine, in advance, the idealized behaviors they want their employees to embody. Then, to encapsulate these behaviors into a set of core values that permeates throughout their organization.

Now, any company can put together a list of values.

Enron, for example, listed core values in their 2000 annual report including “Respect: We treat others as we would like to be treated” and “Integrity: We work with customers and prospects openly, honestly, and sincerely.”

Obviously, listing a set of values isn’t enough.

The Behaviors and Skills Your Organization Values

Core values answers the question, “What does our business stand for?”

More than anything else, what your business stands for is defined by the actions and behaviors of your people.

The actual values of an organization are determined mainly by where it invests its resources and how its employees behave, not what the leader says or what’s posted on a company website.

Businesses that use core values to build extraordinary organizations—like Zappos, Southwest Airlines, and Netflix—take their values very seriously.

Netflix CEO Reed Hastings explains, “Actual company values are the behaviors and skills that are valued in fellow employees.”

Businesses that consciously cultivate their culture hire and promote employees who demonstrate their established set of core values. They train and enforce these idealized behaviors at every turn.

Core Values Require Specificity

To be able to hire, train, and promote employees based on a set of values, your core values need to be specific so they can be measurable.

Enron’s lofty value of integrity and its brief description sounds nice, but could a manager easily evaluate if an employee was working with customers “openly, honestly, and sincerely”? (And what about open, honest, and sincere communication within the organization? Clearly, that wasn’t valued at Enron either.)

In contrast, look at Netflix’s core value of honesty, a value similar to integrity. For Hasting’s organization, honesty means:

“You are known for candor and directness.”

“You are non-political when you disagree with others.”

“You only say things about fellow employees you will say to their face.”

“You are quick to admit mistakes.”

Can you see how these definitions make it easy for leaders to evaluate their employees and potential hires?

Core Values are the CEO’s Responsibility (Not HR’s)

Ultimately, businesses that use core values to create a unique corporate culture have leaders who embody the very same values they want their people to emulate.

Humans learn best through observing behavior, not words.

If a leader isn’t conducting herself with integrity, for example, you can be certain that the employees aren’t going to go out of their way to do so either. Research shows that employees are seven times more likely to demonstrate loyalty to leaders they believe have high integrity than to those they do not.

This suggests that chief executives must be clear on two things.

First, they must know what behaviors are necessary to move their organization towards their inspiring vision. Second, they must resolve to live these behaviors, to the best of their ability, each and every day.

This is not a small commitment. Could this explain why so few organizations succeed in creating thriving cultures with engaged employees?

SIDEBAR: Will Your Core Values Hold?

Here’s a quick checklist to test the integrity of your core values:

  1. Does each value speak to at least one desired behavior?
  2. Will each value help you make decisions (especially the difficult ones)?
  3. Are your core values memorable? Will every team member be able to encode them in their minds?
  4. Does each value represent distinct elements of your overall culture?
  5. Will you be willing to uphold these values 50 years from now?
  6. Are your values congruent with the behavior of your leadership team? Are these values BS-tested? Will an employee be able to observe hypocrisy?
  7. Can your organization hold up these values in stressful and difficult situations (like increased competition, product recall, stock devaluation, or downsizing)?
  8. Are you willing to defend these values unequivocally? That is, does each value permeate through the entire organization?

For concise instructions on how to discover your core values, click here.

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