The importance of core values
DURING the height of the pandemic in 2020, the MIT Sloan School of Management studied how corporate culture and values changed and impacted the top companies in the US by examining employee perception. The researchers found out that average culture and values rating across the Culture 500 companies (those winning during the pandemic) “spiked during the early months of the COVID-19 pandemic in the US (April-August 2020), and those five months occupy the top five spots in terms of average culture and values ratings for the preceding five years.”
This highlights the importance of communicating and reinforcing organizational core values in times of crisis and uncertainties. While we consider our current situation as “post-pandemic,” there are still many uncertainties and challenges organizations face such as hybrid work, tough business environment, and the more recent phenomenon called “quiet quitting.”
This is why organizations need to revisit its purpose, vision, mission, and core values and examine if they are still aligned to the changing environment.
At the core is the organization’s purpose — the “why.” It a single statement that defines the reason your company exists — beyond simply making a profit. It defines why employees, management, and shareholders exist together beyond financial gain, like Microsoft’s purpose statement, “We believe in what people make possible.”
The next layers are the mission and vision statements. They define the “what” and “where,” respectively. The mission statement describes what the organization does, and what product or service does the business provide. A vision statement, on the other hand, describes where the organization wants to go in five to ten years; and the difference organization members create in the customers’ lives or the larger world when the organization ultimately realize its purpose.
The core values define the “how” — how can the organization achieve its purpose, mission, and vision, and how it can navigate through tough times and crucial decision. Hence, core values need to be reinforced and lived by all organization members, because they guide the behavior of employees towards excellence.
It our consulting practice, apart from revisiting and formulating the purpose, vision, and mission, and core values of the organization, we emphasize to the business owner or CEO the need to communicate, reinforce, and practice the core values among all organization members.
The programmatic approach involves primarily defining the behavioral indicators that describe the value. For example, the core value Integrity is defined by behavioral indicators such as being transparent, open, and honest at all times. This ensures clarity on how to practice and live the core values when faced with demanding situations.
The next phase is conducting values training among business leaders through workshops and role plays. The latter is especially important to demonstrate the application of behavioral indicators in specific and common situations encountered in the workplace. The business leaders need to live and lead by example because employees always watch them. Setting core values, and then failing to abide by them, is worse than not establishing core values at all.
The following phase is conducting values training among all employees, through workshops, and role plays. Again, specific situations are role-played by employees to demonstrate how to apply and practice the core value in a workplace dilemma. Core values need to be translated to the local dialect or language for rank-and-file employees to learn the core values by heart.
The last phase involves sustaining programs to ensure that the core values are communicated to the employees and that they live and practice them. This can be done though online tests that allow employees to read through sample situations and choose the course of action that applies the value. Regular communication updates through e-mail, chat, and townhall meetings that convey the practice of the core values are also effective as a sustaining program.
The core values do not only help the organization navigate through difficult times, but also in guiding the employees to excellent performance. In the book of Jim Collin, Build to Last, the authors cited their research that showed “purpose and values driven organizations outperformed the general market and comparison companies by 15:1 and 6:1, respectively.”
Corporate values guide in the collective behavior of people in any organization.
Reynaldo C. Lugtu, Jr. is the CEO of Hungry Workhorse Consulting, a digital and culture transformation consulting firm. He is the chairman of the Information and Communication Technology Committee of the Financial Executives Institute of the Philippines (FINEX). He is fellow at the US-based Institute for Digital Transformation. He teaches strategic management in the MBA Program of De La Salle University. The author may be e-mailed at rey.lugtu@hungryworkhorse.com
