How core values drive performance
As a senior sales officer charged with effecting business turnarounds for bankrupt private and pre-IPO companies, I witnessed firsthand the importance of core values. A strong set of core values is crucial to driving corporate performance, and without them, companies suffer.
Core values define company culture, which is a big part of why they’re so important to driving performance. We can represent the relationship this way:
core values > company culture > actions/performance
For any sales team, the primary objective is to predictably and consistently produce sales, within budget and in accordance with our forecasts. Core values, and the company culture they support, are the most important ingredient in achieving predictability and consistency in the actions that bring about the results we want.
Defining Core Values
Core values are simple action statements that express the business attributes management upholds and believes will lead the company to success. They are not vague proclamations such as “Do the right thing”—these can be interpreted at the whim of management depending on temporary conditions and motives. Core values should be specific and measurable. First, management should identify the desired attribute it wants to support; then, the core value can be determined from that starting point.
If, for example, management wants to emphasize financial responsibility, it would have core values that address how employees operate in regard to the finances of the company. Here are some examples:
- “Don’t run out of cash, no matter what.” This core value keeps employees focused on adhering to the expense budget.
- “Be careful: a little success can create a lot of overhead.” This core value keeps employees focused on not overly expanding their departments in good years when there is excess income, putting the company at risk in slow years. This often results in layoffs, which are to be avoided.
- “Throwing money at a problem doesn’t work.” This core value forces managers to think carefully through their plans to ensure a positive outcome within expense budget guidelines. It reminds them that throwing money at a problem almost never works, since it usually involves giving more funds to the people who created the problem in the first place.
If management believes that execution is a key to success, its core values would emphasize that the company values high performers. These core values might include the following:
- “Surround yourself with only high performers.” This core value keeps managers focused on excellence in hiring and managing employees.
- “Make it a challenge to get on board and difficult to leave.” This core value defines the way the company hires and manages people. If management hires only high performers, there will be few openings due to terminations for underperformance. And if we manage them well, they will not want to leave the company. The net result is a dedicated group of high performers.
If management values fairness—something every employee wants—this core value could apply: “Always do the right thing for customers, employees, and shareholders, and don’t take a position that favors one over the other.” This sends a strong message that one group will not benefit at the expense of another. For example, the company with this core value will not reduce sales commissions to shift dollars to management with higher bonuses or shareholders with higher dividends. This company will not increase prices to benefit shareholders at the expense of customers. No single action should be taken to benefit one group at the expense of another.