Monday 3 January 2022 11:00
Integrity, communication, respect, and excellence. These were the values of a company that, in 2001, Fortune magazine named "America's Most Innovative Company" for the sixth time in a row. In that same year, amid the discovery of massive and sustained accountancy fraud, their share price collapsed. In December, they filed for bankruptcy. That company was Enron.
The story of Enron demonstrates it's not enough to write down some pleasant-sounding values and put them on your website. The values of an organisation are reflected by the everyday actions of everyone from the CEO to the interns.
At a previous company, I was heavily involved in the process of trying to set company values. We did better than Enron -- to the best of my knowledge, nobody committed fraud -- but I'm also not sure that we used them as effectively as we'd hoped. In any case, I thought it might useful to write down some things that I would have found helpful at the start of the process, both from that experience and from trying to influence culture more generally throughout my career.
The usual caveats of this just being my extremely biased opinion based on my limited experience apply.
What do you mean by values?
When people talk about company values, they normally mean one of two things:
Principles that are intrinsically good. We should stick to our principles, even if it hurts our profits.
Company-wide practices or mindsets that help us accomplish the goals of the company.
Neither one of these is necessarily better than the other, but they are different. My suggestion would be to keep the two lists separate since you'll want to treat them differently.
For instance, consider the value "Never make a sale that doesn't benefit the customer". What's the rationale for this value?
If it's a principle, then the point is that you'd rather go out of business than make money getting people to buy something that doesn't actually help them.
If it's the second type of value, then the rationale might be that such customers are unlikely to be happy in the long-term, and unhappy customers will cause reputational damage.
Now suppose you could find a way to persuade customers that there was benefit even when there isn't, or you discover that there's little risk of unhappy customers complaining prominently enough for any reputation damage to affect profits.
How you react to this new information depends on what type of value you have. In the first case, the new information is irrelevant. It changes nothing about the fundamental principle. In the second case, though, there's a logical argument to be made that the company's approach should be changed.
Being unambiguous about what type of values you're setting will help both in writing them, and in making decisions based on those values.
How specific should the values be?
Good values should guide decision-making and behaviour in an organisation. Most company's values are so vague as to be useless. For instance, if you have a company value of "communication", what's the situation where the value of "communication" prompts someone to behave differently? Don't all companies value communication, or at least claim to?
There's a few potential solutions to this.
The first is to give examples and tell unexpected stories. Nordstrom, the American retailer, explains their culture by telling the story of the Nordie who ironed a shirt for a customer who had a meeting in the afternoon, the Nordie who gift-wrapped presents bought at another retailer, the Nordie who refunded tyre chains -- even though Nordstrom don't sell tyre chains.
Nordstrom could have just said "We value customer service", but what retailer wouldn't say that? The concreteness and unexpectedness of the stories act as a jolt. If you heard them on your first day, it's much more likely to stick in your mind and actually affect how you do your job.
The second potential solution is to make the values themselves more specific. For instance, I gave an example above of "Never make a sale that doesn't benefit the customer". That's a value that's tied to how to make a specific decision: before somebody makes a sale, they should be asking themselves this question.
You won't be able to enumerate all of the values needed to cover every specific decision in the company, but that's okay: values are there to guide, not to direct every last decision. So long as the values are encouraging the behaviour you want to see, then they're doing their job. When someone needs to make a decision, there may not be a directly applicable value, but values can still set the tone, or have second-order effects that influence the decision.
The third potential solution is to describe the tension between values, and how to resolve them. The Agile Manifesto is an example of this:
We are uncovering better ways of developing software by doing it and helping others do it. Through this work we have come to value:
- Individuals and interactions over processes and tools
- Working software over comprehensive documentation
- Customer collaboration over contract negotiation
- Responding to change over following a plan
That is, while there is value in the items on the right, we value the items on the left more.
In other words, you can describe what you value and what you're willing to give up to get it.
If I had to pluck a number out of the air, I'd say something like three to five. From experience, that gives a nice balance between being memorable and capturing the important aspects of the culture. But I also would happily have fewer or more if I thought doing so was better in a given context.
Other things being equal, fewer values is better. A shorter list is easier to remember, and more likely to be used. On the other hand, being explicit about culture is often useful, especially for new employees.
Values don't need to be comprehensive, but there's also a tension in acting as a codification of the culture you want to have or retain. Do you need to codify a value if everybody in the company already follows it? Including the value might not change current behaviour, but it might preserve it.
If there's some component of your company culture that you consider vital, it should be reflected in the values. Equally, if there's something in your values that you don't think will actually influence the culture in a positive way, get rid of it.
How are you actually going to use the values?
One of the biggest risks is that you go through a process of setting values for the company, and then they live in some document on Google Drive that only gets looked at once a quarter.
For values to be useful, people need to remember them, and they need to use them. The goal is to actually live the values: having a written list of values is just a tool.
For making ideas memorable, I recommend reading Made to Stick by Chip and Dan Heath (from which I stole the Nordstrom stories from earlier -- concrete, unexpected stories are a good place to start).
As for using them: be explicit about when you expect or intend to use the values. Are they something you bring up in all one-to-ones across the company? When planning? In retrospectives?
Speaking of retrospectives: the philosophy of incremental improvement is a familiar one in the context of writing code or creating products, but perhaps less so for company culture. Yet those same forces of risk and uncertainty are at play. So, don't feel like you have to get your values right on the first go. Evaluate them as you go along. Do they still feel right? Are they encouraging the right behaviour? Are they actually being used? Is there anything you want to add, change or remove? Don't let the written values drift apart from reality.
Is writing down company values worth it?
Maybe. I think writing down company values and sticking them in a drawer never to be used, with ever-increasing dissonance between written and lived company values, is worse than not bothering with them in the first place.
However, your organisation will develop its own values and its own culture over time, regardless of what you do. Being explicit about those values, and trying to gently steer them in a positive direction seems worth a little effort.