Values can create a lot of the culture of any organization, which ends up shaping most behavior, and behavior largely dictates how successful a company becomes.

But first of all, let’s go in depth as to the most important reason why leaders don’t invest in thinking through company values. Aren’t they just corporate mumbo jumbo? The answer is mainly yes. The simplest way to put it, is that most organizations (especially public companies) have perverse incentives to put the short term objectives of the organization first, mainly because of attempts by shareholders to continually put pressure on the board of directors, which then trickles down to executives and the rest of the organization on pushing up the stock price of the company. So when there’s enormous pressure to hit one KPI, it creates a tunnel vision effect, where things like organizational values fall by the wayside.

The second reason why leaders don’t invest in building their value set is that they don’t know how. There’s no exact blueprint for defining values for your organization. But this guide will hopefully shed some light on where to start and how to implement them into your organization. 

The last piece that most people miss with values is enforcement. It’s tricky because you can’t just tell people to “behave according to our values”. Micromanaging and can often end up belittling people.

Given all of these problems, why do values matter?

The main benefits of implementing company values

Here are the main reasons why implementing company values can be beneficial to your organization:

1. Attracting the right talent for your organization: With clearly defined values, you’ll quickly screen out people that don’t fit what you are looking for.
2. Uniformity on the things that count: Excessive homogeneity in behavior at an organization leads to group-think, which is often disastrous for organizations. However, you want people to be aligned and act with some of the same norms that you’d expect. For instance, you’re probably safe in implementing hard work as a value at an organization (with caveats that people need to take care of themselves). That’s a behavior that is similar between all individuals but won’t cause issues with group-think.
3. It makes personnel decisions easier:  When someone breaks a value that is worth taking action against, the process is easier for everyone involved. There’s no excuse for deviating from what’s generally accepted to be good behaviour.
4. Values scale well: if you’re growing your headcount quickly, you and your leaders will eventually have less of a relationship with employees. This is usually where the “DNA” of a company usually gets damaged or falls apart. So values are a way of making the company’s culture continue to exist

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The rules for creating and implementing values in your organization

Organizational values must come top-down, not the other way around

There’s an intuition that employees build values, and by extension the culture of an organization. People will be bought in if they think that the organization was “created by them”. This couldn’t be further from the truth.

First of all, if we assume that employees building values are a good thing, the vast majority of the company consists of good faith actors. Meaning that the people you hired have the best interests of the company in mind. This is something that is difficult, if not impossible to prove. It would require you to know everyone in the organization very well and understand their intentions. Simultaneously, if you’re a leader at an organization, everyone will explicitly want to make it seem like they have your best interests and the best interests of the organization in mind, especially when they meet with you face-to-face. Which makes it even harder to detect bad-faith actors.

Secondly, if employees create company values, it leads to value bloat. Since everyone has their own personal value set, the combined values of everyone at an organization ends up being a list that’s way too long. It’s similar to the process of diffusion of responsibility, where giving a lot of people accountability ends up making no one accountable.

Model any value you put forward

Anything you implement as a value at an organization is something you need to abide by yourself. People will not take it seriously unless they see leadership modelling it. Additionally, people model through osmosis, meaning that they copy the behaviours of leaders. So acting with values yourself is one of the only effective ways to enforce values at an organization.

Make sure your leadership team also embodies the values closely

Just like it’s important for you to embody values closely, it’s just as important for your leadership team to do so as well. Having even one leader not demonstrate your values is very consequential. It signals to everyone else that it is okay to not follow your organization’s values, which in turn gives everyone else a pass.

There are limits to what you can communicate in terms of what’s important, so choose carefully

Especially as an organization grows in size, it becomes more difficult to change things as a leader, because you need to align more and more people in the same direction. So language needs to be kept simple, unambiguous, and succinct. 

That’s why organizational values also need to be kept compact.

Examples of simple and effective organizational values

1. See Amazon’s leadership principles. This is the closest thing to Amazon’s values, and leaders are expected to embody them. Their principles are packed into just over 700 words and tilts the behaviour of hundreds of leaders effectively. Each principle has just a sentence or two describing what it means to be a leader.
2. See Netflix’s values: what’s interesting about Netflix is that they have a large emphasis on employee freedom and avoiding rules. Meaning they explicitly created rules about avoiding new ones from coming up.

Make it clear where trade-offs are being made

As Parker Conrad said, the best organizational values are the ones that require you to make trade-offs: 

“The best values are choices, and emphasize the tradeoff you’re willing to make. If someone else couldn’t reasonably adopt the opposite value (“stability over speed”) the value isn’t distinguishing – it’s a baseline expectation.”

– Parker Conrad

A great example of this is Facebook’s value “moves fast and break things”, which explicitly meant that they would be accelerating their technical debt by building new features quickly.

How to implement new values in a large organization

As an organization gets larger, it becomes difficult to implement new values. Writing essay-style communications with clarity on what changes and a nuanced position are a great way to implement them, since they can be distributed widely. An extreme case of this was Brian Armstrong’s message to the company about being mission-focused. His essay was considered very controversial at the time given the political climate and led to a portion of the company exiting. 

Conclusion

When implemented properly, having strong values in an organization can be incredibly beneficial. It helps you attract the right talent, and keeps everyone aligned, and in sync. Values must come from the founder of an organization and must be embodied by them fully. The same goes with the leadership team, in order for them to be taken seriously by the rest of the organization. Keeping messaging about values succinct makes it digestible by everyone at the company, and communications should also be kept succinct.