Employee engagement is crucial to your organization’s long-term success. According to research firm Gallup, a highly engaged workforce can increase profitability by 21 percent.
One way to drive engagement is by implementing core values—fundamental beliefs that guide and shape workplace behaviors, decision-making, and culture. According to global software-as-a-service platform Fond, just one in 10 human resources leaders believe that 80 percent or more of their company’s employees can recite its core values, making it crucial to ensure you define and communicate yours.
If you want to implement core values in the workplace effectively, here’s a breakdown of what they are and why they’re essential to strategy execution.
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DOWNLOAD NOWWhat Are Core Values?
Nearly every company has core values. According to the online course Strategy Execution, core values communicate your business’s larger purpose and inspire and guide employee behavior.
“You may think of them as little more than window dressing or ticking a box without much real impact on the business,” says Harvard Business School Professor Robert Simons, who teaches the online course Strategy Execution. “But I've learned that the best companies—the ones that are most competitive and lead their industries decade after decade—put enormous emphasis on their core values and beliefs.”
Examples of core values include:
Core values are central to one of business strategy’s four Ps: Strategy as perspective, which considers your organization’s larger mission and purpose to inspire pride in employees.
“Defining strategy as perspective is a critical task that sets an overarching direction for the business,” Simons says in Strategy Execution. “It's a lens by which everyone in the business looks for new opportunities and understands how to conduct themselves.”
Personal vs. Company Core Values
While core values in the workplace are similar to personal values, it’s important to understand how they differ.
Personal values influence your motivations in and outside of work. For example, buying ethically sourced goods and services is a choice you might make based on valuing fairness and sustainability.
Your company’s core values are shared, predetermined values that directly correlate with its strategy. Ideally, they create a positive environment with everyone working toward the same business goals and objectives.
Related: 7 Ways to Empower Your Employees
Why Core Values Are Important in Strategy Execution
Core values are vital to strategy execution because they guide your organization and employees’ behavior.
For one, they’re effective for attracting new talent. Data from cloud software company Qualtrics shows that over half of U.S. employees choose to work at organizations based on their core values. By establishing and communicating your company’s core values, you can attract the right people and gain employee buy-in for strategic initiatives. In addition, core values can ensure employees understand how to operate and behave to support your business strategy.
“I've been a great believer in values through my entire CEO career because I believe values, mission, and strategy are the most important boundaries you put into an organization,” says former Adidas CEO Kasper Rorsted in Strategy Execution. “It defines a framework on how you operate and how you behave.”
To reap core values’ benefits, here’s how to implement them in the workplace.
How to Implement Core Values in the Workplace
1. Define Your Organization’s Core Values
Defining what’s important to your organization is the first step to implementing core values in the workplace.
“It's not enough just to put nice words on paper,” Simons says in Strategy Execution. “Effective core values possess two attributes. First, they inspire people; they make every employee in the company proud of where they work. Second, effective core values provide guidance on how to make tough decisions.”
One company that clearly defines its core values is Starbucks. Its mission statement includes the following:
- Inclusion
- Sustainability
- Community
- Training and development
Starbucks treats those values as guiding principles throughout its business strategy. For example, to promote employee training, the company offers robust professional development and education programs.
By defining your organization’s values, you can enable your team to foster a workplace culture that reflects and embodies them.
2. Prioritize Constituents
One of core values’ most important attributes is that they can help employees prioritize constituents—especially when making difficult decisions.
“The best companies use their values as the foundation to communicate to everyone in their organization whose interests should come first when people are faced with tough choices,” Simons says in Strategy Execution.
In the course, Simons highlights Southwest Airlines as a company that prioritizes employees in strategic decision-making. To avoid firing employees to save its bottom line, the company has cut executives’ bonuses, closed airline routes, and reduced discretionary funds.
“Southwest believes if the company treats its employees well, the employees will treat their customers well,” Simons says, “and this will lead to increased business and profits.”
Not every organization puts employees first though. The most effective way to determine which constituent your company’s core values should prioritize is by thinking critically about how you intend to create value.
Related: How Do Businesses Create Value for Stakeholders?
3. Connect Value Creation
Beyond determining which constituents to prioritize, considering value creation can help create a community that supports your organization’s ideals.
In Strategy Execution, David Rodriguez, global chief human resources officer at Marriott, talks about his experience linking value creation to his company’s core values—inspiring employees to go above and beyond for guests.
“For us at Marriott, success is all about the degree to which our associates are literally inspired to create great experiences for others,” Rodriguez says.
Through initiatives like Heart of the House and the Take Care Relief Fund, Marriott creates a sense of community and belonging for employees—its most important asset.
In doing so, the company enables employees to embody its core values. This nurtures employee satisfaction and helps enhance the customer experience—emphasizing the connection between valuing employees and delivering exceptional service.
Related: A Beginner's Guide to Value-Based Strategy
4. Analyze and Improve
It’s critical to constantly analyze your company’s core values to ensure they aid your organization’s success. Doing so also allows you to identify improvements that could have major impacts.
Factors to consider include:
- Employee engagement: Gather feedback from employees of all levels to understand how well your existing values align with their experiences and aspirations.
- Leadership alignment: Ensure leaders actively support your company’s core values by assessing how they influence decision-making processes and leadership actions.
- Industry relevance: Evaluate whether your values are relevant to the evolving industry landscape and societal changes.
Microsoft exemplifies how crucial this step can be. For decades, the company was known for its competitive culture. However, it became stagnant after years without innovation and pressure from competitors like Amazon and Google.
Under the leadership of Satya Nadella, who became CEO in 2014, the company reevaluated its core values and experienced a significant cultural shift. Nadella found that diffusing fear of making mistakes—through core values like empathy—encouraged employees to embrace a growth mindset and learn from failure.
Through initiatives such as One Week—an annual event where employees develop new ideas and collaborate on projects—Microsoft has driven innovation, a value central to its mission.
5. Communicate Consistently
Once you embed your organization's core values in its goals and business strategy, you must communicate and solidify them in your workplace culture. You can do so using beliefs systems—sets of organizational definitions that you communicate and reinforce to provide direction.
Beliefs systems commonly take the form of:
- Credos
- Mission statements
- Statements of core values
Communicating core values should also go beyond documentation. For example, in Strategy Execution, Rorsted says he provided consistent guidance to his team on how Adidas’ core values should dictate daily operations.
“In order to ensure our values are well understood, they're very often incorporated—if not always—in almost all the town hall meetings or management conversations we have,” Rorsted says.
Rorsted also built core values into the company’s compensation system, providing an additional way to evaluate how employees embody and support them.
Put Your Core Values into Practice
Core values aren’t just organizational fluff—they provide substance to your business strategy and help employees effectively participate in its execution.
By enrolling in an online course, such as Strategy Execution, you can discover how core values have benefitted real businesses and learn how to implement them in the workplace.
Do you want to evaluate the effectiveness of your organization’s core values? Explore Strategy Execution—one of our online strategy courses—and download our e-book to learn more about the strategy process.
