How important are Values and Culture to Company Success?

No doubt your company like most today has a values statement. It may even be proudly hanging on the wall in the reception or foyer of your office premises for all to see. Does it have any impact on how your business performs – or are they simply empty words with little meaning?

As an exercise, try the following:

• Can you recall clearly what your company’s value are and what they mean?

• Do they influence the decisions you make and how you go about your day to day tasks at the office?

• Do they align with your personal values?

• Are they perceived as just empty words or rather as an anchor that defines the company’s culture and work ethic?

• Do they really matter?

Are corporate values and culture linked to business performance?

The unmistakable fact is, yes – and there is a wealth of empirical evidence to support this conclusion. As far back as 1963 Thomas Watson author of the book “A Business and Its Beliefs” noted the following:

“the real difference between success and failure in a corporation can very often be traced to the question of how the organisation brings out the great energies and talents of its people. What does it do to help these people find a common cause with each other? I think you’ll find that it owes its resilience not to its form of organisation or its administrative skills, but to the power of what we call beliefs and the appeal that these beliefs have for its people.”

Are these fifty year old words any less valid today? In an article published in the Australian Financial Review (May 5 2015) Warren Buffett – one of the world’s most successful businessmen – highlights his view on the importance of values and culture. He said:

“Culture is everything at Berkshire. Culture has to come from the top. It has to be consistent. It has to be part of the written communications and rewarded when followed and punished when not.”

Indeed Mr Buffett recognises that bringing together – not just talented people – but talented people united by a shared vision and values is the formula for success. His cognisance of this fact is seen in Berkshire’s effort to jealously guard and protect the “DNA” of the company by ensuring that their recruitment process focuses on candidate’s personal values and character qualities to ensure alignment with Berkshire’s values.

The culture of a company plays an enormous part in the success or otherwise of a corporate venture. Companies that have strong cultures that bring people together around a shared vision enjoy many benefits:

• Greater staff engagement and loyalty

• Reduced staff turnover

• Higher productivity

• Growth rates higher than peers in the sector

• Improved profitability.

Why is Alignment of Values so Important?

All of us, whether we are aware of them or not, have a value set that shapes who we are. “Our values comprise the things that are most important to us. They are deep seated, persuasive standards that influence almost every aspect of our lives: our moral judgements, our responses to others, our commitments to personal and organisational goals. Values constitute our personal bottom line.” (Posner, Kouzes & Schimdt, 1985)

James Clawson in his book “Level Three Leadership: Getting Below the Surface” makes a similar observation when he refers to people’s VABE’s – Values, Ambitions, Beliefs, Expectations. These intrinsic attributes differ from person to person and yet they have a profound effect on how they act. When someone joins a company he brings with him his unique value set. To quote James Clawson, “people keep bringing their hearts and their heads to work.”

However, if a company is able to achieve alignment between it’s vision and values with that of its staff, great things happen. People begin to recognise the opportunity to achieve a degree of personal fulfillment, to realise their VABE’s. Their job is no longer work – it’s a means to attain fulfillment and personal satisfaction. This is a recipe for success and a quantum leap toward the development of a high performing company.

The tone from the top is crucial.

Sadly in many companies today the importance of values alignment and culture is not widely recognised. Could you recall your company’s values? Even more importantly, is your company living the values? Few things are more damaging to corporate culture than when the leaders of a company espouse values and then choose to ignore them when they are not convenient.

Consider this simple example:

You are a Director or Senior Executive of a mining company flying to a mine site in the Pilbara (Northwest Australia). Your company espouses safety, this being a key value. As the plane taxis to the terminal the hostess requests all passengers to ‘please remain seated and to leave all mobile phones off until you are well inside the terminal’. However, rather than wait, you immediately turn your phone on to retrieve your emails – all your staff and others watch on. What message are you sending?

Such incongruence to espoused values creates dissonance. It says values are not important. It can alienate your staff and destroy culture.

To the contrary – as we have noted above – aligned values and strong corporate culture are vital to success and must be guarded. To quote Mr Buffett again, “culture has to come from the top. It has to be consistent.”

Create a genuine competitive advantage.

Creating a deeply held shared vision and values in a company could be one of the most potent elements of your strategy to drive you towards success in your business. When you bring together highly skilled people and engage their ‘hearts and minds’ in pursuit of a corporate vision that they personally believe in, you will unleash the full potential of your most valuable asset – your people.

Why not talk to us to see how we can help you improve the performance of your business.