Posted on Oct 16, 2015

The Problem of No Stated Values

Lucy Kellaway is a columnist and associate editor at the Financial Times. She wrote a thought-provoking piece about corporate values, titled: Hands up if you can say what your company’s values are.

After playing a backhanded trick to prove most employees don’t know their company’s stated values, Kellaway then highlights how the values at her own company have no relevance to her job.

Kellaway concludes that having stated values is useless, and attempts to prove that “valueless” companies outperform companies with stated values.

While I can chuckle at her dry sense of humor (as the Brits are so skilled at), I feel the need to address her negative assessment of corporate values, and dispute her conclusion.

Why Employees Don’t Know Their Values

In Kellaway’s little values identification test, I’m not surprised that only five out of 24 employees correctly identified their company’s values. As Kellaway highlights from a PR Company’s report of the FTSE 100 (the largest companies listed on the London Stock Exchange), most companies share a common set of values, which makes it difficult to identify the values that belong to each company.

Interestingly, Kellaway reports the top three common values are Integrity, Respect and Innovation. This aligns well with my research findings for the Fortune 500, with the top three being Integrity, Respect, and Excellence (I show Innovation as being #6 most common value).

To validate Kellaway’s point, I compiled a set of values from seven companies listed on the Fortune 500. See if you can match up the company with the correct set of values*:

Do you find this difficult? I doubt many employees at these companies could do it either. The list of values are all so…. common.

Here’s the problem: What’s missing are differentiating values – those values that are unique, relevant, and sustainable for each company. These are values that set strategic direction and create competitive advantage.

But just because employees don’t know their company’s values doesn’t reduce the importance of having stated values.

The Problem of No Stated Values

While Kellaway refers to the common values as “duds” (suggesting it’s meaningless to highlight Integrity, Respect and Innovation as values), she correctly identifies the main issue with most stated values: it’s not clear what employees are to be doing (behavior) that support the values.

Sadly, this is still an issue for many companies and needs to be addressed if values are to have a positive impact.

However, in his bestseller book Good to Great, author Jim Collins clearly articulates a key attribute of what he termed “Great” organizations, those companies that consistently performed far above their competition. Collins writes:

“Core Values are essential for enduring greatness, but it doesn’t seem to matter what those core values are. The point is not what core values you have, but that you have core values at all, that you know what they are, that you build them explicitly into the organization, and that you preserve them over time.”

Now, this is where it gets interesting….

Based on a simple analysis of the FTSE 100, Kellaway argues that the 17 companies without any stated values performed better than the 83 companies that did have stated values. She believes having values is a negative asset.

But I think her assessment is full of holes.

Firstly, even if a company has no stated values, they still display their values in their decisions and actions. In other words, employees know what’s important at a company regardless of whether or not values are formalized, written down, and articulated.

This also applies in a negative way for companies with stated values. For example, if ‘quality’ is a stated value, but everyday decisions and actions do not support this value, then the truth will be that quality is not important at this company.

Secondly, Kellaway’s assessment was based on comparing companies that published values on their website to those that did not. Yet, in my research I found many companies with stated values that did not post them on their website. In fact, one-third of all Fortune 500 companies do not publish their values on their websites. I had to really dig to find them in various documents, from Code of Conduct documents, to corporate Annual Reports, to Corporate Sustainability Reports.

Therefore, it’s wrong to assess corporate performance on whether or not values are publicly listed on a website. Instead, a company’s success is more likely to be determined on whether its leaders – and employees – behave in a consistent and predictable manner that is aligned with what matters most to their customers.