by Dr. Donald N. Sweet
Core values can put dollars on your bottom line! However, many of us have only paid lip service to core values in our businesses. Of course they’re important but there are so many more immediate things that need to be addressed. Sound familiar? I know I’ve had those thoughts in my businesses.
During those times, I was where what Stephen Covey calls the first quadrant of time management: the important and urgent quadrant, or quadrant 1. This is also known as fire-fighting. Core values work are in what Covey calls quadrant 2, important but not urgent.
You’ll recall Covey instructs us that the best way to stop all the fire-fighting is by spending some time on things that are important before they become urgent. Why would core values ever become urgent? They inform most all our decisions, even if we don’t know it. Our firm’s culture is shaped by them, even when they aren’t written down.
How can that happen, you ask? Every firm that doesn’t have written and communicated core values has implied values. Furthermore those values are interpreted differently by employees, customers, vendors and partners. Sounds like chaos, doesn’t it? That’s what quadrant 1, fire-fighting, often looks like.
Core values are quadrant 2 material. They are a small set of timeless guiding principles. Core values require no external justification; they have intrinsic value and importance to those inside the organization. They are the bedrock of company culture. If you don’t have core values written down and communicated there is a decision vacuum in the firm.
Core values inform who to hire: people who share the firm’s values. Who to fire: employees, vendors or customers, when your core values are violated. They also tell you when you need to take a financial hit for adhering to your values. Some of you will remember Johnson & Johnson’s decision to remove Tylenol from all retail shelves in the ‘80s. That cost them millions but it was the right decision and prompted by their core values.
Ralph Larsen, former CEO of Johnson & Johnson stated that, “The core values embodied in our credo might be a competitive advantage, but that is not why we have them. We have them because they define for us what we stand for, and we would hold them even if they became a competitive disadvantage in certain situations.”
In a recent HBR.org post by Rosanna M. Fiske titled “The Business of Communicating Values”, Ms. Fiske commented that the recent high profile scandals have made it clear that many businesses do not properly or openly communicate their values. That has both direct and indirect effects on their firm. This could be avoided, but not without some heavy lifting.
Having core values requires that they be communicated and lived by the leadership team on a daily basis. This is truly a quadrant 2 activity. When line people need to make a difficult decision on the spot, the core values they have learned and lived with will often point the way. Everyone in the firm has a clear basis for making difficult decisions.
When used as an integral part of the hiring practice they improve our probabilities of making the right hires. Everyone knows the enormous cost of mis-hires , starting with time and money spent hiring to training time and costs, to the agony of finally letting the mis-hire go, only to begin the process again. How much time and money is lost? Dr. Brad Smart estimates the cost of a mis-hire is between six and twenty-seven times their salary depending on their level in the organization.
Most of us have been down this path. Not only is it costly, it’s painful. Painful for us and our organizations. Using our core values as one of our filters can eliminate those candidates that just won’t fit in to our culture and our way of looking at the business world. Of course that doesn’t mean we just want to hire “yes” people, we don’t. But we do want people who share our values. There’s a big difference.
Teams that have the same values work better together. One of my mentors used to say that he would take a team that worked well together over a team of superstars any day. Employees feel better about coming to work when there is a shared culture. When we work well together we are more effective and take care of the customer better. At the end of the day, core values provide the foundation upon which to build a strong, profitable and vibrant company.