Core Values, by Richard Nelson.

The editorial from Issue Five of our newsletter.

Core values or guiding principles are now a common part of the organisational landscape, yet we frequently find that managers and employees are sceptical about their purpose and utility. When asked why, they reply that the values seem unrelated to other parts of the business or what they are expected to do. Another observation is that the values seem at odds with the actual practice of top management.

So what should values do in a 21st century organisation? Primarily, values need to clearly support the organisation’s purpose and direction and articulate how the organisation will conduct its business. They must give an indication of how the business will relate to its stakeholders: customers, employees, shareholders, suppliers and the communities in which the business operates.

Values indicate the behaviour that can be expected from an organisation, the style of operating and the beliefs of the leadership. They need to underpin the governance of the organisation and the brand identity. Given the diverse nature of organisations, there are many examples - some values will focus people on the goals of the business e.g. profit driven, sales driven or service orientation, whilst others will emphasise the nature of the enterprise; professional, integrity, inventive, creative and open.

We have found two major problems with the way values are developed. Firstly, there has not been any diagnosis into those currently prevalent within the business, so the actual practices that are demonstrated by managers and employees can be vastly different from those suggested by the values. It is critical to have a clear diagnosis of current reality and in particular an understanding of the strengths that have made the organisation successful. People will relate to values derived from positive characteristics they know. They are then more likely to commit to new aspirational values. Secondly, the values must be defined in detail - single words are inadequate. The definitions need to explain purpose and align with the culture of the business.

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