Core Values as Behavioral Guardrails

Core Values, which articulate a company’s culture, are demonstrated by senior executives every day and are day-to-day behavioral guidelines for all employees. They reflect the analytical and operational behaviors that achieve the company’s strategy.

It’s hard to find companies without an altruistic-sounding set of Core Values. But how many companies can say that more than half the employees remember them, let alone live by them? How many companies have very similar Core Values that are borrowed from others? Truth is Core Values are rarely part of the operational DNA of company cultures and this is especially true among small- and mid-sized companies. Companies should spend less time on the optics of Core Values and waste less energy on using them for internal and external marketing.

What Are Core Values?

Simplistically, it is the articulation of company culture. Core Values dictate day-to-day behaviors of all employees in a company. If adhered to appropriately, these behaviors will aid in achieving the company’s strategy and financial goals. The behaviors should be highly valued by all stakeholders – customers, vendors, investors, senior executives, and other employees.

What Constitute The “Right” Core Values?

1: Alignment with Corporate Strategy

The company’s market position, the type of customers targeted, and the buyer roles at target customers effectively drive many of the day-to-day behaviors required from employees and leaders. Core Values should comprehensively cover every single trait that customers, vendors, and partners value the most. Essentially, these behaviors should align with customers’ buying Decision Drivers and internal capabilities necessary to develop offerings that meet their needs. For example: If a company offers a peripheral product and targets very large companies as customers, this means that Core Values should include the top traits that are valued by and are directly observable to such customers.

2: Alignment with desired operational culture

To execute on a company’s corporate strategy, day-to-day internal behaviors of all employees need to align with the operational expectations set forth by senior executives. Core Values should articulate this prioritized set of internal expectations. No company can be good at everything. Senior executives must choose the specific set of traits that Frontline ‘Variable’ Resources should demonstrate when executing operational processes and Overhead ‘Fixed’ Resources must focus on when owning and executing strategic initiatives. This alignment between behavioral expectations and operational needs is critical for the company to achieve its corporate strategy and financial goals.

3: Core Values are actionable for all employees

Every single employee in the company should read, understand, and live by the Core Values without ambiguity or interpretive differences. Every item included in the Core Values should have a detailed articulation that communicate what to do and what not to do.

Core Values are not meant for customers, partners, or vendors. Writing Core Values to communicate a differentiating message to external parties is a common pitfall. Much of the impact that Core Values can have on the culture will be lost in marketing wordsmithing. Customers and vendors only care about the behaviors demonstrated by the company; they don’t read Core Values before they decide to do business.

Seamlessly reflect the modus operandi of senior executives

Core Values require role models to demonstrate the true essence of every theme. A set of words and explanations will never be enough to engrain the spirit of Core Values into the company’s DNA. Senior executives are these role models. Every aspect of desired behaviors should be the natural state where senior executives operate every single minute.

If Core Values do not reflect the natural day-to-day behaviors of senior executives, they just become words on a plaque. The broader team will not have leaders to look up to and learn what good looks like. The misalignment between senior executives’ natural instincts and documented Core Values will then likely result in hiring and promotion decisions that elevate employees that do not truly represent the essence of the Core Values. This further devalues its effectiveness.

All in all, when all four criteria listed above are met, Core Values become aligned with the strategic, operational, and cultural needs of the company and can be used as guardrails to live by.

Approach To Define Core Values

First, Core Values articulate the company culture. Developing company culture is the most important task of top three or four senior executives. Culture is not Human Resources’ responsibility. Culture is a vaccine formulated, tested, iterated, and prescribed by senior executives; HR’s only involvement is to administer it as prescribed. That’s the who.

Second, the process to define Core Values should not be democratic. It is the senior executives’ decision and articulation based on an adequate set of market and internal assessments. Likely pitfalls that companies fall into start with asking the question:

What do you think Core Values should be?

Core Values are not meant to be an average of any group’s opinions – not the senior executives’; not remaining employees’. Even creating a perception that opinions matter opens a path to potential downfall in adoption. Taking the pulse of all employees and using it as the answer is a much easier and low risk path (from a personal risk perspective) to defining Core Values. However, companies are unlikely to arrive at the right behaviors that will help win their market. Remember, companies aren’t democracies.

Core Values are meant to objectively align the company’s operations with behaviors necessary to meet overall goals. Although a standard approach is not necessary, senior executives must leverage at least the considerations below in an objective manner to arrive at the right Core Values:

  1. Optimal market positioning based on feedback from customers, vendors, and partners
  2. Objective assessment of company’s commercial and product strengths and weaknesses
  3. Company’s strategic plan to differentiate and win the market
  4. Internal operational behaviors necessary to achieve strategy
  5. Senior executives’ day-to-day operational behaviors that employees can model

We can think about Core Value determination approach as a ‘values funnel’, similar to a sales opportunity funnel. Essentially, all the preferences of external stakeholders become the superset of all values a company should consider and narrow it down to a manageable set of values based on the company’s chosen strategy and operational plan to achieve that strategy. The most important filter at the bottom of the funnel is the alignment between behaviors senior executives can demonstrate on a day-to-day basis and the operational behaviors that are required to achieve company’s strategy.

The worst-case scenario involves situations where day-to-day behaviors that senior executives are capable of demonstrating do not adequately cover the values necessary to achieve the company strategy (top two layers of the funnel). This is where a company’s board comes in. The board has the responsibility to be aware of gaps between the senior executives’ capabilities and cultural aspects necessary to achieve the company strategy.

That’s the how.

Operationalization Of Core Values

Core Values are simply the articulation of company culture. Taking Core Values from paper to practice is not trivial – it touches every aspect of managing the organization. Every one of the following aspects should reflect the expectations set by Core Values:

Injecting the essence of Core Values into the areas above requires meticulous approach definition and execution. Top three or four senior executives are accountable for developing the approach and managing execution.

Core Values offer companies a powerful tool to frame and communicate behavioral expectations for all employees. Embracing those objectively-framed behaviors will drive achievement of individual performance goals and company-level strategy and financial goals.

Published By

John Oommen

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