Myth: Your Organizational Values Can't Hurt you
This is a myth we are quick to bust for our clients.
In business school and in leadership development training, we are taught that values are always good and helpful. That they only make our organizations better.
It’s not true.
Your organizational values can absolutely hurt your ability to recruit and retain employees, attract and keep clients, and even prevent you from achieving your organization’s mission.
But we’ve found that when you choose the right values for your company, and implement them correctly, many of your most pesky organizational challenges are resolved or prevented altogether.
But don’t take my word for it! Get the details and decide for yourself.
Tate discussed organizational values with the hosts of Inspired Insights, a podcast by TruPay.
Bryan Gorman and Geoff McCuen asked Tate about the types of organizational values, whether they matter, and how Stokefire’s methodology helps organizations establish and implement values so that you get the full benefit from your values.
I pulled highlights from their conversation, and lightly edited for clarity.
You’ve been doing this [values work] for years. In that time, have you found one organizational value that you've run into more than any other?
Well, the answer is yes. Particularly in organizations where it's got no chance of being true. Any guesses what it might be?
Hmm. A value that they don't hold true, right? I'm such a cynic. I'm thinking like honesty or integrity.
There you go! Ding Ding Ding!
Really, that's it? All right. Integrity!
As a guy who makes his living helping organizations establish structural integrity, this is a pretty disheartening thing for me. But before I get to that, I should point out that other consultancies have also done work in this space trying to figure out what organizations claim. In addition to integrity, I do see many more overused. Teamwork, customer focus, excellence, respect.
There's all sorts of problems with these values that show up on just about everyone's printed Value List. One of the biggest problems is that these things just aren't true. The last time I looked over half of Fortune 500 companies claimed integrity as a value, which is astounding to me.
A couple decades back the number seven company on the Fortune 500 list published their values in their annual report and had them written on their walls. Those values were, ‘integrity, respect, excellence.’ That company was Enron.
For those that aren't old enough to remember, Enron falsified their earnings as they tried to increase their stock price, big scandal led to the biggest bankruptcy in history at the time. Since then, I think there's been seven or eight companies that have had bigger bankruptcies and scandals. Half of those companies also claimed integrity as a value.
So there’s just a huge disconnect. You've got people manipulating stock prices while also claiming, 'Hey, everything here is aboveboard. We're committed to it. It's all about being good.' But the people who work at the companies know better. It's horrible for the company cultures.
So for the moment, not that I personally believe this, but let me just ask. Is it possible that some of that is just a lack of understanding of what integrity really means? Do you think maybe they're holding to what they thought it meant or was it just a total whitewash?
There is some of that. I spend a lot of time talking with folks and asking questions of organizations that say integrity is a core value. If you sit the executives down and ask them to write down what integrity means in their organization, you get 10 executives, you will have like 15 to 20 different definitions that come out of it.
So yes, that's a problem. People think, 'People who ascribe to my value set have integrity.' We define it for ourselves. In most organizations that I've encountered the organizations themselves likely choose it with good intention. It's just that nobody did the work of defining it specifically for that organization while then applying it top to bottom in the organization while explaining, 'Okay, we believe in integrity. This is how integrity impacts the benefits package that we offer and why we offer those things. This is how it impacts our sales process and why we approach it in this way. Our pricing...'
Everything in the organization needs to be linked to the value set. Integrity in particular because integrity, among the many dictionary definitions, is like 'whole, not missing any pieces,' 'operating efficiently,' 'healthy.' You get all of this stuff. And then you look at the organizations that claim it and they're just a mess.
You gave us the throwback reference to Enron, which then in my old brain took me back to the movie Wall Street and the classic quote from the character Gordon Gekko when he says, 'Greed, for lack of a better word, is good.' And he then goes into why and it all just came to, 'How did you define it?' When we were getting ready to talk with you today about values, I wondered how much of the problem revolves around the definition?
A huge amount of it. It is the start of the problems. You can't create programs that embrace it if nobody can agree on what it is.
Going back to Enron, they had company values and those clearly didn't do much for them. But why have organizational values at all? Why would an organization want to have them? And then a follow up to that would be, what are they supposed to do for us?
Value sets... integrity, respect, excellence, innovation, whatever it is, they can do amazing things. They can attract employees who believe in and find that important. And if you do those things, if they're real, it gets them to stay. Same goes for your customers. If people can see themselves in your real-world values, they are incredibly loyal as employees, as investors, as funders, board members, everybody! If they can see their idealized selves in the organization that you have, they will never leave. So that's one.
If you're mission driven, which Stokefire will only work with mission driven organizations, a value set keeps you on the path to mission fulfillment. Think of your organization as a bridge that takes you from wherever you were to wherever you want to be. That destination is your mission. Your values are the guardrails that make sure you don't take a hard right halfway across the bridge. They are there to make sure you're going to get where you want to go.
The most important though, is that values, when fully load tested and applied across the organization, help everyone at the organization figure out what the right thing to do is in almost every situation. How you hire, how you onboard, manage performance, run your meetings, what benefits you offer, how you establish and run your diversity and inclusion programs. It's all values driven, all of it!
And when you don't do that, when you claim values that clearly aren't aligned with the way that you run your business, you'll find yourself losing employees. Clients abandon you. Morale drops. It might not happen on day one, but it absolutely will happen.
So a strange question just popped into my head then. Would you be better off to not espouse values that you're not going to adhere to? Rather than list the ones you really would? Even if they're mediocre? Would you be better off to not even say what they were?
This is something that I talk with organizations about regularly. I feel what you're saying there. There are reasons and places to share your values. I actually believe that your advertising is not a great one.
Are you listening, Subaru?
[laughs] Well, with particular kinds of value sets, it's not good. If your value set is unique, powerful, provable, and you are doing something that no one else in your market is doing or going to lengths that nobody else is? That is something you communicate, but you don't talk about, 'these are our values.' You talk about what it is that your values have compelled you to do.
Alright, good on you Subaru! You're back up there.
It needs to be astounding, amazing, impactful. If it's just, 'we're honest.' If it's just saying honesty is a core value... look, if that is your core value, if your bar is that low… why are you bragging about it? I mean, we should be able to assume that you're not going to hire people who lie. So don't shout your values. Show them. Prove them.
What do companies that do this well have in place? Tate, I'm looking at my computer here and we have our values listed out as a background to our computers, right on the screen. We can see them every day, we know what they are. Is it as simple as that? As simple as making them visible so employees can see what they are and kind of live them out? I mean, do people have regular meetings around them and discuss them, or what are some best practices that you've seen in organizations that are like, 'Hey, they're doing this right.'?
Making them visible is a good first step.
In a lot of companies, as soon as they set their values they plaster the walls with posters, inspirational posters, stuff like that. Yes, it's a first step. The issue is that organizations stop at that oftentimes. It's like, 'This is what you should find important.' But, if they're important, they should be a large part of performance reviews at the organization, for instance. Not just having the boss review and evaluate the performance of the people who report to them, but asking the people who report to them, 'Are you seeing these qualities from me?' A 360 degree kind of review. And also having everyone at the organization asking and answering, 'Am I seeing these values permeated throughout the organization? And if I'm not, where are the gaps so that we can fill them?'
If you launch your values and you do this process, even if you only start with the posters on the wall, you will find yourself being pushed internally to start implementing changes to the way that you operate to make this thing real. But if you never ask the question, you'll never get beyond the poster. And, that can be really damaging.
I have been around prior to getting into what I'm doing now. I've worked with organizations... let's see if I can lightly fictionalize this so that it doesn't get me in trouble... Let's say there is a pizza delivery service that delivers to specifically hazardous areas like offices that are in hazmat zones. And the organization touts, 'Our people are number one there our biggest concern, it's all about supporting our people.' They brought me in, and as part of my process I asked for all of their benefits information, their employee handbooks, etc. I start reading through it and, buried halfway through the Benefits Handbook, it says, 'We have this incredible health care program. You have to work here for a year before you're eligible.' And the impact of that decision, which they acknowledged was a cost saving decision, completely invalidated everything they said in their hiring process.
They had implemented this about seven years before I came in, and one of the things they asked me to figure out is why everybody in their organization had either been there for about eight years, or they'd been there for less than six months. They were so used to saying all this stuff that, to the people who had been there forever, nothing seemed to have changed. But they weren't even paying attention to the fact that they abandoned their values for anyone who wasn't already part of the club.
So the value wasn't people, it was tenure.
It turned into that. Yeah.
That's interesting, because intuitively it seems like some values are going to have more impact because of the terms. 'Precision' might feel more powerful than 'competence,' or saying, 'we value people rather than tenure,' sounds a lot more humane. Do you find that there are different kinds of values that can explain that? Or that they should be pulling those words from a different pool?
Leaders tend to think that all values do come from the same pool, that they're equal when they're not. It causes some of the biggest problems, because there are multiple kinds of values. There are at least four different kinds of values that are in play here, and each one is used differently. I think the most obvious one is a Genuine Core Value. This is a deeply ingrained principle that guides everything your organization says and does. These are the things that tend to come from the original founders of the organization, and are something that's deeply meaningful for them. And they're so important that, as they are setting up the company, they sort of infuse them into everything without necessarily even thinking about it. I remember growing up hearing about the HP Way, Hewlett Packard. That's still there! It's how they operate. It's a reflection of the founding group.
I'm glad you just said that without even thinking about it. Because as you started to talk about this answer, my first thought was that you may hold values and be ingrained in them and you don't even realize. You've either never had someone point it out to you or you’ve not done a deep dive of self analysis. So, I'm glad to hear that you've just said that. Some of the most deeply held values probably don't make the list.
Yes. Sometimes they're stated, sometimes they're not. There's a slightly different perspective on it. Generally not something the founder brings in but that happens otherwise, Evolutionary Values.
These are not things that you're consciously doing or trying to put into the organization, but they happen based on the people you hire, the culture that's created by them, and the leaders. It can be good or bad. It could be great! For example, if your team has this reputation for, 'It doesn't matter what the problem is. We have it. We're going to handle this. We've got it.' Even though it's not a written value, every time a new problem pops up it's, 'How are we going to fix it? Because we're absolutely going to.' That is healthy. But, I've had clients that had turnover problems that were so bad that people at the organization, when talking about new hires, dehumanized them. Basically just saying that nobody who ever applies is above excrement.
An Evolutionary Value can also be created by something like everybody who's hired fits a particular mold. Maybe they've got a particular attitude, a way they dress, a way they look. It could even involve race or gender. It's not written down, but it becomes a value.
And then one of the other two types of values is Aspirational Values. I actually think that when organizations are using ‘integrity’ it's more in an aspirational sense. We aim to be this. But they don't say that. So, when they say, 'integrity is a core value,' or, 'integrity is our main focus,' ...when they miss, when their entire culture is based on exploitation or something like that is happening, it comes across as they're lying. Which destroys the whole concept of integrity in the first place.
Unless an organization makes clear that this value is an aspiration, it damages the company and it destroys morale. When your organization is out there saying this and the employees are sitting at their desk going, 'They promised us raises, which we didn't get. They said we have unlimited vacation and I was just told I can't have any for the next three months.' Your employees almost always know and your clients usually figure it out.
The last type of values, and this is one that's really annoying, is choosing Minimum Viable Values. If you didn't have a particular quality, let's say honesty, if somebody in a workforce for one of your competitors did not exhibit this quality, would they still be employable? If everybody in your industry would fire somebody for dishonesty, why are you proudly proclaiming it as something that you have? Minimum Viable basically means it should be assumed by everybody. 'We're honest,' 'we're trustworthy,' 'we're transparent,' 'we're good at what we do.' Just stating that ‘quality’ is important or that ‘customer service’ is important is a Minimum Viable Value.
If you're going to say something that's kind of ridiculous, the only way it really works is to change it from a Minimum Viable Value into something that is astronomical. Zappos was really good at this back in the day. Fifteen or twenty years back, whether you ordered something through a catalog, online, or in a store, if you wanted to return it you had to ship it somewhere other than the store, at your own cost, pay a restocking fee, and even then they might not take it back. Zappos was the first major brand that went out and said, 'It's on us. Don't like it? Fine. Even if you wore it three or four times fine, send it back. Our cost, no restocking fee, get something else you know you like.' That was unheard of at the time and it completely changed the US shopping culture. It made it so that sellers couldn't make people go through all of these hoops.
So, does Stokefire offer assessments? Or, how do you help a company find out what their values actually are? Not aspirational like you said. How do you know what they really are?
Yes, we do offer assessments. We started out as that was the only thing that we did. We learned pretty darn quickly that organizational leaders tend not to like everybody hearing about all of the areas that organization is screwing things up. And that's kind of what our assessments do. They find the disconnects between your stated values and beliefs, the stuff that you say, and the stuff that you do. We've got this incredible tool that finds organizational disconnects. It also establishes where things are in alignment, but the things that really jump out are the inconsistencies.
Findings from our assessment invariably mean that you've got a lot of work to do as an executive. If you don't have a solid relationship with your senior leadership team, it's like the emperor's new clothes. Suddenly all of you are standing naked in front of each other going, 'What do we do now that we realize we've missed stuff?' It helps you see things that are supposed to be invisible. So yes, we offer it.
Because of the resistance to that very situation, we don't promote our assessment as a standalone. We have a system that we bring in place to help organizations build structural integrity. We do begin with the assessment, but we don't bash you over the head with it at that point. We start with it and then we bring in best practices to implement your values into your organization. A year later we do the assessment again, and that's where we come in with really heavy levels of detail and say, 'Okay, so here's where you were a year ago. Here's how things have improved.' That's the conversation that executives can get behind.
We give them a chance to do it right. And then we help them see the progress. We built this system because it is an overwhelmingly intense situation when you're given that 30-page report of all the ways stuff's going wrong. It can feel hopeless. So rather than focus there, we focus on looking at what you've done.
You just gave that picture of the leadership group all standing around, realizing that this is something that probably needs a leader. So who in the organization really should be the one that drives the value discussion?
I'm on an HR podcast, so...
That is the right answer by the way!
I might end up getting some hate mail from this...
[jokingly] The opinions of Tate Linden are not necessarily the opinions of this show!
HR is incredibly valuable. There are benefits to giving this to HR. It's incredible for employee engagement if you are feeling like your employees are disengaged and don't see themselves in the organization. If you give it to HR, this can bring people together and make them feel heard.
The challenge is that HR does not have the power to do a whole bunch of stuff that's necessary to execute on the values. It's an operational issue. It's a senior executive issue. Giving it to HR means they've got to delegate upwards in order to get the policies changed. They could probably handle the hiring and the onboarding side of things, but how the finance teams run, how you negotiate your contracts, all of that, HR can't touch it. Also, if the C-suite does not embrace these values as their own it's not going to work. They're not going to care about it, they're not going to push it.
So, if the goal is to create engagement, HR is the right place. If the goal is to have a deeply implemented strategy that differentiates your organization and creates strategic opportunity for the organization and its leaders to actually get to mission fulfillment, it's got to be in the C-suite. Now, there are ways to do this that deeply involve the HR group and the employees, and it's my belief that that's a step you need to take, but it's time consuming.
What you need to do is give the employees, likely through HR, the ability to be heard when you are establishing the values. We ask three things that we think are critical. Step one, 'What are the individual driving values for the people who work for your organization themselves?' Then we ask about your organization on a daily basis when you're in your office doing your job. 'What do you see reflected back at you from the organization? What values are coming to you, not being emanated from you, that guide what you do and see each day in the office?' And then the last one is connecting with the mission of the organization. 'If you were to to develop an organization to hit this mission, what values do you believe you would rely on to get there?'
What our process does is create a roadmap for the executive team to make their decisions. It allows the executives to understand the direction that the organization itself and the people who work for it are heading and what they see as critically important.
When you come up with your value set for the organization you have the ability to link it back to what you've heard. It’s not the executive team saying, 'These are what the values are, dammit! Don't question me.' It's, 'This is what we heard and here is how we're implementing this.' It connects the people who work there to the direction you are trying to establish strategically for your organization.
So yes, led by senior leadership, but they can't do it in a vacuum. HR needs to, at minimum, support. Clearly I'm not a big fan of just sending it down to HR to do something like a democratic vote because you're going to end up somehow with Boaty McBoatface. Which isn't, as far as I can tell, a value. While you might come up with a value set, the connection between leadership and the employees will be lost in that process.
Tate, you've mentioned several organizations and I'm thinking of one in my head too, but if an organization that you really admire has a great value set, why can't you just copy that? I'm thinking of the Las Vegas Raiders' commitment to excellence. That was their value. Why can't we just copy that or make that our own as an organization?
Very little prevents you from doing something like that, at least procedurally. But you can't patent it. You might be able to trademark it or copyright it, but it won't work well. A ton of small businesses do this. They Google something they're like, 'What values does Patagonia have.' Or Chick-fil-A or whatever, insert name here. And they just start scanning for what looks good and they pick that. Even if it is an exceptionally effective value set for that organization, the fact is that they are in a different environment than you are. Even if they're in the same industry, and especially in that case, you don't want to copy their value set because all you're doing is ensuring that you're going to have a competitor for everything you do. And you won't be able to differentiate from them.
If it's a successful organization you're copying, you're gonna get a very tiny fraction of that business, if any at all. You have different leaders, different people, likely different geographic and competitive concerns. So the reasons why they are using the values don't apply to you. You have a different situation. It doesn't work. And because it's not native to you, it ends up turning into just some words on a business card. It never actually means anything. It's a potentially weak-to-moderate sales tool, and nothing else.
It ends up ultimately harming organizations more than it helps them. For organizations that just copy it and put it on that card, they are at risk of turnover and client loss. When they do convince somebody to come work for them and it comes time that the employee gets a competitive offer from another employer, that employee is going to say that none of your values are real. Your clients are going to say you weren't honest about what features were in your products. You don't get to keep that employee and client because you copied and pasted from somebody else. If they genuinely want those values, they're going to be more inclined to figure out where those values actually are. Then what? I've never seen copy/paste work.
We do talk executive leadership through this. We ask about what organizations you admire and why. And we talk about how you could execute and what that might look like at your organization. If you want to do the copy/paste thing, don't copy their values lock stock. Instead, figure out what it is about the organization, what it is they're doing, what it is that they clearly believe that's making them successful and stand out. Then figure out how you can make that real genuine for your own organization in your own way. Instead of just slapping it on the card, putting some posters up, and saying this is us.
Load-testing your values allows you to see exactly how they are functioning for your organization.
Mission-driven organizations get sidetracked and sidelined when they allow the wrong values to pull them off track. They waste resources, damage their ability to achieve their mission, and sometime even hurt the people they seek to help.
We built a workshop for senior leaders to load test your values and ensure that you not only have the right values, but you’re are getting the full leveraged benefits that your values have to offer your operations, culture, and mission!
There are a few times when it’s most critical to load test your values. Those include, when you’re concerned about employee attraction and retention, are recovering from a crisis or risky situation, or just came through the Stokefire assessment.
Get more info about our values load testing process here!
You can listen to the entirety of this interview with Tate Linden.