Every company has values, but why?

by Feb 14, 2023Business, Culture, Decision Making, HR

Why does every company have a set of values? Most companies display their values in the lobby, on the break room walls, and even on the back of business cards. You’ll also see them listed on a CEO’s PowerPoint slide when they’re speaking to their team.

But this invites a big question: Why do you have values in the first place?

The uncomfortable truth is that while everyone creates a set of values, most people don’t understand why they need them. They are an integral part of your company’s operating system. They are essential to how you run your business. And if you don’t have an established set of values, you might put your company in peril in certain circumstances.

When Standard Doesn’t Apply

Companies sometimes rely on standard operating procedures, or SOPs, to help map out what employees should do in different situations. You can think of it as human software. Standard operating procedures are super helpful when the situation is predictable or well-defined.

A great example is McDonald’s. Employees have rules they can look up for everything from unloading a truck to cleaning the bathroom and making French fries. An SOP defines everything possible that happens in the restaurant. This includes what the manager should do when the roof air conditioning unit breaks down.

But most businesses don’t have that level of a controlled environment. There are things that you can’t map out in an SOP and times when the variables mean the SOP no longer applies.

In some cases, a leader might be there to guide them through the situation. But what if you’re not standing over their shoulder? How do people know what to do without a leader or an SOP?

The white space between the SOPs is where values come into play. They become the operating system that tells people what to do when there is no other clear guidance available. They are the rules when there aren’t rules.

Acting on Values

The customer is always right. Speed is important. Be the lowest-cost provider. Embrace the golden rule by treating everyone the way you want to be treated. These all could be examples of values inside a business. Now think about how any of these might influence an employee’s action in trying to solve a problem.

A classic example is the retailer Nordstrom. One of their values is: “To serve the customer better, to be relevant in their lives, and to form relationships that last a lifetime.”

Nordstrom’s value is not transactional; they want to build customers for life. And to do that, they want to empower their employees to make decisions and take action in ways that create those long-standing relationships. Employees are essentially encouraged to do anything to keep that customer–even if it means doing something crazy. There sure isn’t a rule book for that.

A few examples of how this value has played out include Nordstrom employees agreeing to accept a product return for a product they did not sell at the store. Or, even more bonkers, when an employee ran out to another store to buy a customer a pair of shoes they needed for a wedding because Nordstrom’s did not have what the customer required.

No rulebook tells that employee to go and do that for the customer. But it was the company’s values that empowered the employee to act that way on behalf of their customer. Because they lived and performed on the values, their actions became legendary within the company.

Going Beyond the Rulebook

The real value of having a set of rules inside your business is that it gives your employees guidelines to make decisions and act when the rulebook and SOPs don’t apply. That’s why they’re part of your organizational operating system.

So, when you think about your set of values, consider that. What would happen if all of your employees behaved in a way aligned with your values all the time?

If your answer is “It would be pretty cool,” you probably have the correct values on your wall. If you have a different reply, your values might need some work.