Managing By Values

Many years ago, I heard John Naisbitt give a speech on his book Reinventing the Corporation and was intrigued by a concept he called “Fortunate 500” companies. We all know about Fortune 500 companies that are ranked on revenue, profits, and market value. But John defined Fortunate 500 companies as organizations measured by the quality of service available to customers and the quality of life accessible to its employees.

Over the next few years, I worked with several people to put a process to this idea. The result was the book I coauthored with Michael O’Connor, Managing By Values. The three elements of the Managing By Values process are:

  1. Identify your core values
  2. Communicate the core values
  3. Align the values to your business practices

The most important part of this process is to decide what is most important to your company. Once you gain that clarity and define your core values, you must constantly communicate them to your employees. Use the values as a guidebook for how you make decisions and operate on a daily basis to show employees that you are completely committed to them. And make sure that your internal business practices are aligned with your values so individuals and teams can function easily and not hit road blocks because an internal process doesn’t support the values.

When you manage by values, you’ll have delighted customers who keep coming back, inspired employees who give their best each day, owners who enjoy profits made in an ethically fair manner, and suppliers, vendors and distributors who thrive on the mutual trust and respect they feel toward your company.

We certainly found this to be true during the economic downturn of 2008-2009. It became clear to us in February 2009 that we would probably fall, at a minimum, 20 percent short of our revenue goals for the year. The first thought of some was that we would need to downsize—get rid of some of our people. While that would be legal, we didn’t think it was consistent with the rank-ordered values we had at the time. Our #1 value was Ethics—doing the right thing, followed by Relationships—gaining mutual trust and respect with our people, customers, and suppliers; followed by Success—running a profitable, well-run organization. To us, downsizing would focus on our #3 value but miss doing the right thing and damage our relationships with our people. As a result, we involved everyone at an all-company meeting and together figured out how to cut costs with a minimum impact on people’s lives.

Fortunate 500 is a clever play on words but it is actually a very powerful concept—and perhaps even more important now than it was when I first heard about it. Today people, especially millennials entering the workforce, want to know that their work is worthwhile and they are contributing to a bigger cause. If employees share the common values of a company, they can achieve extraordinary results that give their organization a competitive edge.

Walk Your Talk

A few weeks ago, my blog focused on leading by values and the importance of communicating your organizational values clearly and constantly. Another critical element for leaders to practice is what I call walking your talk. Leaders must make every effort to become living symbols of their organization’s value system. Walking your talk means that your company values act as a set of guidelines for decision making, problem solving, and general day-to-day business operations.

For this process to work, you need a method of identifying gaps between values and behaviors. One way is to describe what the current situation is and what you want the desired situation to be, and to document action steps for making the change. Let me share an example from our own company.

We used to have a conflict at the end of each month among our sales, accounting, and shipping departments. One day, we brought representatives from each department together to discuss the issue in a fact-finding meeting. What we learned was very interesting.

The cause of the problem was a compensation policy stating that a sale couldn’t be credited to a sales person’s goal until the product had been shipped and billed. Since every sales person received bonuses based on monthly performance, they wanted every order fulfilled by the last day of the month—even the last-minute orders. This put extreme pressure on the shipping and accounting departments. In fact, in some cases people in those departments were working twelve-hour days at month end.

When everybody put the issues and their personal perspectives on the table and began to work on solutions, it actually became quite easy to eliminate the pressure caused by this policy. The group worked together to develop a new solution for dealing with the end-of-the-month workload crunch. And our corporate values provided the framework for the team to work together when solving the issue.

It would have been easy to continue to recognize the revenue at the expense of the people. However, Relationships was a corporate value—and making some people work twelve-hour days wasn’t honoring that value. Our leaders and teams walked their talk and restructured the process to honor both regular working hours and sales goals. The solution recognized the importance of both people and results.

Ignoring this issue would have put corporate values at risk—but using the values to solve the problem fortified their importance.

Think about situations that need to be improved in your organization. Then use your values to drive conversations and do the right thing. Leading by values is a continuous journey—and it is never too late to start walking your talk.

Leading by Values

I write and speak a lot about the importance of having strong corporate values. I believe when a company is truly leading by its values, there is only one boss—the values.

In light of this, I challenge you to think about something:  Are you truly leading by your values?

Now, don’t worry, I’m not underestimating your own personal importance as a leader in an organization. I’m asking you to consider whether your organization’s values are ingrained in such a way that they provide guidelines for daily communication, decision making, and problem solving. Do your people use the values consistently to make decisions for the good of the whole organization instead of for one department or individual? Do your people participate in valuable, honest discussions because they know they are operating in a safe environment? Do your people take pride not only in the organization as a whole, but also in their role in the company? Do your people consider the company values to be actual rules of operation, not just suggestions?

One way to ensure that your core values serve your organization well is to communicate them to people clearly and constantly. We recently revised our values at The Ken Blanchard Companies in a collaborative process that invited participation from every person. The values were defined, approved, and announced at an all company meeting.  A dedicated team developed a plan to roll out the values to our people over a period of several months by focusing on one value each month. This helped everyone develop a deeper understanding of each value so that they were able to incorporate the behaviors of the values into their daily actions.

The team used standard communication methods such as creating posters for office walls, plaques for every person’s desk, a document that listed each value along with examples of congruent and incongruent behaviors, and a Facebook group. But they didn’t stop there—they took the launch much further. For example, one of our values is Focus and Clarity. The team arranged for all-company webinars that detailed how to set clear goals and focus on goal achievement.  Then they held an activity where people could learn archery. Believe me, when you are aiming an arrow at a target, you experience the importance of focus and clarity! Each month, creative activities like these have provided a different way for people to embed the respective value into their own belief system.

I encourage you to consider how your company values are communicated to your people. Are they buried away in a manual—or are they a part of everyday conversations, decision making, problem solving, and planning? Leading by values means stating and restating your organization’s values until they become second nature. This creates a secure, nurturing work environment where people thrive—and where values rule.

What Great Leaders Know and Do: It’s All About the Values

Business teamI’ve enjoyed telling you about the elements of the SERVE model from the first book I wrote with Mark Miller, The Secret: What Great Leaders Know and Do. Before I explain the final element, let’s review the first four, which I’ve shared over the past several weeks.

The S in the SERVE model stands for See the Future and points out the importance of having a compelling vision for the future. The first E in the model stands for Engage and Develop Others and focuses on hiring the right people for the right roles and investing in their development. The R stands for Reinvent Continuously and refers to personal reinvention, system and process reinvention, and structural reinvention. And the V in the SERVE model stands for Value Results and Relationships. For many years, leaders thought they had to choose between people and results, but in fact both elements are critical for long-term success.

The final E in the SERVE model stands for Embody the Values. Effective leadership is built on trust. Although there are many ways to build trust, I believe the easiest way is to live consistently by your values. Leaders must establish, articulate, and enforce the core values of their organization. More important, they must model the behaviors that support the values. For example, let’s say being customer focused is your number one value. If you make decisions and take actions that negatively impact the customer experience, you are not embodying that value. This gives people a reason not to trust you, which negatively impacts your effectiveness as a leader. If your decisions and actions always place the customer experience first, you’ll not only honor the values but also build trust with your team.

Remember to walk your talk to build and maintain the trust of your people. When you embody the values, you help shape the organization’s culture. When you don’t, you can damage your own leadership—and the organization.

Are you ready to start working on ways to Embody the Values? Ask yourself these questions:

  • How can I integrate our core organizational values into the way my team operates?
  • What are some ways I can communicate our values to my team over the next thirty days?
  • How can I create greater personal alignment with our values on a daily basis?
  •  How can I recognize and reward people who actively embody the values?

Establishing a leadership culture in an organization takes time and involves continuous, focused work. It starts by establishing an agreed upon leadership point of view. The elements of the SERVE model are a great place for that conversation to begin. Teach the common point of view to all current and emerging leaders. Practice it. Measure it. And model it. And remember—a servant leadership culture begins with you. Good luck on your journey, and let me hear about your progress!

 

The Power of Clear Values and a Trusting Environment

bigstock-Core-Values-Concept-53563306I’ve talked often of the importance that values play in achieving your corporate vision. Your purpose as an organization tells you where you want to go as a company, but values tell you how you are going to get there.  Clearly defined values provide guidelines for how to make daily decisions that impact your future success—or failure.

I recently had the chance to hear Stephen M.R. Covey talk about the impact that the lack of trust has on all of us, and I realized something: there is another layer of underlying behavior that impacts our ability to live by our values. Trust and values actually work hand in hand to create a strong company. Continue reading