A business that operates without company values is like a ship sailing the open seas without a compass. It’s not assured of the way or the destination. But what exactly are company values?

Company values are the guiding principles and basic beliefs that help company workers to function as a unit and work toward a common goal.

Well-defined company values underpin the company’s vision, shape its culture, and act as a guideline for decision-making. When company values are honored by all employees, the whole business becomes streamlined toward the same goals.

Importantly, company values create purpose and meaning for employees, fostering team building and loyalty in the workplace. These factors are highly valued by top talent with, 46% of job seekers saying company culture very important when choosing a company to apply to.

A LinkedIn survey that looked at what it takes to attract and retain top talent, found that company culture is the most important factor, with 79% of professionals saying they would not work at a leading company if it meant they had to tolerate a bad workplace culture. In fact, 65% would accept lower pay, and 26% would forfeit a fancy title rather than work for a place with a poor workplace environment.

Why Company Values are Important

1. Clear company values help to minimise mistakes

When employees have a clear understanding of the company values, they know exactly what the company stands for and that gives them clear guidance on how to perform their work in all circumstances, including problematic interactions with customers. They are not likely to do or say something that might jeopardise the company as they share the company values.

In fact, in difficult times like we are experiencing now, when so much is uncertain and unpredictable, well-defined company values can be an invaluable guideline for employees.

2. Clear company values foster employee engagement

Shared company values build trust. When employees understand the company values and how they originated, they feel part of the big picture and that helps them to be more motivated and engaged.

Engaged employees are the ones that a company can count on. They will work to achieve company goals and also understand their own role in the company’s success.

Employee engagement is highly desirable. Engaged employees, according to Gallup, ‘’are involved in, enthusiastic about and committed to their work and workplace’’.

High staff engagement levels are a significant contributor to company success. According to research, most managers (71%) at large companies acknowledge high employee engagement as an important factor in their company’s success.

3. Company values differentiate your brand

Core values that are communicated effectively make it clear to clients and potential customers what the company stands for. Company values give your brand context. For example, a core value that says: “We source only sustainably’’ says volumes about a brand.

A brand that’s identified with meaningful company values can be a competitive advantage, attracting clients and customers that align with your values, which, in turn, can lead to strong business relationships.

4. Company values are valuable recruiting and retention tools

Companies can appeal to today’s professionals by communicating a clear set of values. However, businesses must make sure they live up to their values. Values by themselves won’t attract top talent.

Professionals looking to change companies, consult current company employees and sites like Glassdoor or Job Monster for reviews of companies to find out what employees say about working at a company and whether they live by their declared values.

According to the above-mentioned LinkedIn survey, values are amongst the most important factors top talent consider when looking for work. It’s so important that 70% of them are prepared to take a pay cut to work for a company that has a mission and values that align with their own. What’s more, 39% of professionals would resign if they were asked to do something that would face them with a moral or ethical dilemma.

5. Company values help with growth and stability

When employees are engaged and understand the end goal based on the core values, productivity increases. According to a report by Consulting firm Bain & Company, an engaged employee is 44% more productive than a satisfied one. An employee who feels inspired at work is nearly 125% more productive than a satisfied one.

A survey by Imperative found that 58% of companies with a clearly articulated and understood purpose experienced growth of more than 10% compared to companies that don’t put much emphasis on purpose.

And with growth comes greater stability that fuels the success of the organisation.

6. Company values strengthen marketing communication

When everybody in the company understands and aligns with the company values, it’s easier for the marketing department to clearly communicate to clients, customers, and potential customers what the company stands for. Over time, consistent company communication can build invaluable brand recognition.

7. Company values promote fair business practices

At best, corporate values that are strictly adhered to can promote fair business practices. Large corporations, and businesses in general, have been known to do whatever it takes to increase revenue.  This can put the entire company, its employees, and in many cases, the natural and social environment in jeopardy, causing irreparable reputational damage.

Dubious business practices could be kept in check if a company abides by ethical core values in all its activities.

The Problem with Company Values

While the benefits of company values are clear, they often fail. Enron famously had ‘’integrity’’ as the top value of their company core values and look what happened there. Having a list of impressive values in itself is meaningless.

The Harvard Business Review puts it like this: “Most values statements are bland, toothless, or just plain dishonest. And far from being harmless, as some executives assume, they’re often highly destructive. Empty values statements create cynical and dispirited employees, alienate customers, and undermine managerial credibility.’’

The writer continues to explain that many core values are just an aspiration – something the company strives for, but not something it actively lives by. The writer mentions the case of a CEO of a Fortune 500 networking company that said “A sense of urgency” was one of his firm’s core values. When asked if his employees always met their deadlines, he said no - they were very complacent, so the firm decided to make urgency a core value.  

Clearly, urgency is not a core value for this company; it’s a practice the company aims for.

Too often organisational values are just another thing on a list of things to get done. This becomes clear when you ask employees what the company values are and you get answers like, “I’m not sure. It’s something about innovation and diversity”. “I know there are five, but I don’t know what they are.”  “Mm, I missed that training…”

Another problem with corporate values is the words chosen to represent the company’s values. Words like innovation, diversity, and equality are great, but do they tell employees what to do, or how to behave? Values are meaningless if they are not translated into behaviors. For instance, what behavior would illustrate that a company values diversity? Each value must be clearly defined and communicated to everyone in the workplace.

Defining Your Company Values

Most company leaders say their values emerged pretty organically as they built their company with a few initial co-founders and employees. The company was able to survive and flourish exactly because the initial workers worked and behaved in certain ways. Those behaviors then became the core values of the business.

So, here follows an outline of how to define your company values.

1. The starting point is to identify five people in the company that have demonstrated stellar behavior that has contributed to the success of the business. With these people, think about what has brought you where you are and what will take you where you want to go.
2. Think about behaviors. What behaviors do stellar employees exhibit? Write down everything that the team comes up with and then rank the list in order of effectiveness. Choose the top four or five as your core values.
3. It’s essential to keep the list short. Experts advise that it’s easier for employees to focus on and internalise two to four critical core values.
4. When you’ve come up with your list of behaviors or characteristics, explain in an easy-to-understand sentence exactly what each means for your business. Innovation can mean a myriad different things in different contexts.
5. Don’t be vague. Your values should be easy for your employees to relate to and memorise. Don’t use corporate jargon that may sound impressive but doesn’t resonate with your workforce.
6. It should be clear how your values relate to your company’s mission and what it offers.
7. Remember to address the ‘why’ of what you are doing. As Simon Sinek famously said in his much-viewed TED Talk: those CEOs who know why they are doing what they are doing, have the companies that last longer and outperform their competition.

Examples of Great Company Values

Marriott

Marriott International, one of the world’s most successful hoteliers with more than 6,000 properties worldwide, has a reputation for being a good company to work for. The company has a short list of well-defined core values, which are self-explanatory and easy to remember.

• Put people first
• Pursue excellence
• Act with integrity
• Embrace change
• Serve our world

Virgin

Richard Branson’s group of more than 40 companies on five continents has always been a pioneering brand in a league of its own. The company is defined by its unique values.

• Insatiable curiosity
• Smart disruption
• Straight up
• Heartfelt service
• Delightfully surprising
• Red hot relevance

This is a company that not only knows the ‘why’, but states it proudly: “Virgin’s purpose is to change business for good and it is the very reason we exist. It is the lens through which we make all our decisions.” The company sees its values as that which keep its people, products and partners on the right path toward achieving its purpose.

Nike

Nike has a simple and inspirational mission statement:

Bring Inspiration And Innovation To Every Athlete In The World.

If You Have A Body, You Are An Athlete.

The company’s core values are striking and unforgettable:

• We dare to design the future of sport
• A team that’s empowered, diverse and inclusive
• The world is our community
• A fair sustainable future for every athlete

Communicating Your Company Values

Apart from announcing the company values and having them available in prominent places in the workplace and on the company website, there are many other ways to communicate the importance of company values to employees.

Make company values integral to the entire employee lifecycle

Throughout recruitment, onboarding, development and training, work performance, and the exit process, the company values must guide all interactions with candidates and employees.

Demonstrate that values guide decision-making

Company values should act as a guideline for decision-making. Business leaders can demonstrate this by referencing the particular values they base their decisions on. Managers and other leaders can show how the company values guide their work and decisions. It’s important for employees to see that leaders’ decisions align with company values, otherwise morale suffers and employees begin to distrust the leadership.

Communicate adherence to values through actions

The best way for company leaders to communicate the significance of company values is to live by them publicly. Not just by often referring to them, but by actively demonstrating values through actions. For instance, if excellent customer service is a core value, then a senior company employee should not walk past a customer waiting to be served.

Create a values-based awards program

Successful companies reward employees for exhibiting behaviors that align with the company’s core values. Publicly recognizing an employee for demonstrating ’’integrity’’ demonstrates to all employees that integrity is a valued attribute.

Rewarding employees for behavior that embodies corporate values, help to ingrain the values deep into the corporate culture. According to research, employees feel more enabled and empowered to succeed, and more committed to an organisation that has a strategic recognition program connected to corporate values.

Celebrate value-driven actions that happen outside the company

Employees often indulge in activities outside work that demonstrate company values. These activities can be celebrated as an example of company values in action. An employee that does volunteer work in the local community and works for a company that’s committed to social upliftment is an excellent example. The company’s leadership can highlight the volunteer efforts of such employees and point out that it’s an example of the company values in action.

Company values are the underlying principles that guide a business and its employees. These principles guide how a company interacts with employees, clients, customers, and other shareholders. Values shape the why of a company and lay the foundation for employee empowerment and company success.

About Ros

Rosalind Cardinal is the Managing Director of Shaping Change, a consultancy specialising in improving business outcomes by developing individuals, teams and organisations.

Ros is a globally awarded facilitator and leadership coach, with a career in the Human Resources and Organisational Development field spanning more than 25 years. Ros' expertise spans leadership development, organisational culture, team building, change and transition management, emotional intelligence, organisational behaviour, employee engagement, strategic direction and management.

Ros is accredited in over 20 psychometrics and diagnostic tools, covering leadership behaviour, organisational culture, emotional intelligence, competencies, and more.

Ros is a Certified Member of the Australian Human Resources Institute, a member of the Australian Institute of Training and Development a Professional Member of the Australian Association for Psychological Type, and a member of the Australian Institute of Company Directors. She holds a Graduate Diploma in Human Resources and is studying for a Diploma of Neuroscience.

In addition to Ros’ own blog, she is a regular contributing writer for Leaders in Heels, “Thrive”, and “People Development” Magazine.

Ros is a 2020 Telstra Business Women's Awards Finalist. Shaping Change was a finalist in the 2015, 2016, 2017, 2018 and 2019 Small Business Champions Awards, and Ros was a winner in the 2015 Australian Edupreneur Awards. In 2016, 2017, and again in 2018, Ros was awarded Leadership Coach of the Year – Australia by Corporate LiveWire in their Global Innovation and Excellence Awards. In 2016 Ros released her bestselling and award nominated book “The Resilient Employee: The essential guide to coping with change and thriving in today’s workplace”.