7 Steps for Defining Your Organization's Core Values

Here are seven specific steps for defining your organization's core values . Step One: Form a Planning Team

A planning team comprised of the senior-most leaders of the organization should tackle the job of defining the core values. After all, they're the senior stewards of the enterprise. The CEO or top leader needs to be a part of the planning team. His or her strong participation is crucial, given that the results will define priorities and performance measures for the company. If he or she chooses not to actively take part, it's a sure sign that it will be an empty exercise.

Step Two: Reflect on the Core Values

Members of the planning team should think about and answer the question: What activities are essential for our organization's success? List some suggested core values and then detail some of the activities and behaviors that are essential to support it. For example, for the core value of financial sustainability, supporting behaviors might be "we keep our prices competitive" or "we maintain good access to credit." Generate a list of core values and cluster the supporting behaviors.

Step Three: Identify Areas of Concern

Members of the planning team should discuss their draft versions of core values and flag any areas of potential concern or conflict between the values. Talk about cases where these conflicts have occurred.

For example, a planning team member might say: "We currently don't measure customer satisfaction in any rigorous, systematic way. To do so will be expensive. We assume it will pay off in increased customers and higher sales per customer. Those assumptions are untested. And it will put pressure on our other core values."

Another planning team member might say: "It is not clear to me that protecting the environment is a core value. It is not entirely within our span of control. There are things we may need to do that would conflict with this value. I want to explore how this would affect our decisions."

Step Four: Distinguish the Core Values

These are great starting points for lively discussions about what is and what is not a core value. I've found that it's useful to distinguish between "core values" and "key values," where key values refer to activities that are important, but not as important as the core values. If it comes down to a conflict, core values "trump" key values.

In some cases, for example, investing in innovation may be a key value, not a core value. Or environmental protection may be a key value, not a core value. Ask the team to describe examples of decisions where the tension between these values has surfaced - or will surface in the future. Ask people to tell stories of when these values were compromised. Ask the group to discuss two or three current or future scenarios that might challenge the values, and discuss how they might respond. During this exercise, remind people that the core values are evolving at this stage. Ask how they might refine the core values in light of these discussions.

During these talks, conflicts between personal and organizational values often emerge. Individual members of the team may hold certain personal values very dear - such as community involvement or civic leadership. In each case, remind people to take a stewardship perspective. Ask them: What is the position of the organization? What is essential from the organization's perspective? Don't let people off the hook. Make sure they confront this distinction and are willing to accept their responsibility as stewards of the organization.

Step Five: Link Behaviors to the Core Values

Once you've identified your core values, it's important to list all the behaviors that support them in the form of "we statements." In the example on the next page, you can see how one company translated its core value of customer satisfaction into "we statements." You can also see how they translated it into an internal survey - with the aim of trying to assess how well they were upholding each "we statement."

As you go through this process, inevitably someone will ask: "How many ‘we statements' do we need?" The answer is: "As many as there are behaviors that support the core value." Typically, there will be at least five and as many as 15 "we statements" for each core value.

One note: You'll find yourself tempted to use the words "quality" and "excellence" in your "we statements," as in: "We maintain quality customer service." There's a problem with this. Every single core value should be focused on quality or excellence. My suggestion is to find more specific words to describe the behavior, such as: "We maintain a level of customer service that delights our customers each and every time." And don't, by any means, create separate core values for "quality" or "excellence." Those words aren't specific enough.

Step Six: Define How to Measure the Core Values

By this point, you should have honed your list of core values. Now it's time to define how you'll measure them. This is a critical part of building a strong strategic framework. Your core values should be tied to a performance scorecard that contains both metrics (what you'll measure) and targets (the desired level).

For example, customer satisfaction can be measured by asking customers to rate your products or services. Reliability can be measured by the percentage of defects. Integrity can be measured by asking people (your employees, your customers, your shareholders) what they think.

Once you've defined your scorecard, waste no time in starting to implement it. This is the most important thing that leaders can do to align everyone in the organization around the core values. High-performing companies regularly measure their core values and regularly share the results with their employees - and then engage them in discussions about how to improve.

Step Seven: Communicate the Core Values

Once the core values are defined, it's important to engage managers and employees in understanding them. This will build buy-in. It will also give you an opportunity to communicate what you're doing and why. People need to hear that you are intent on building a values-based, performance driven organization.

This education process should be conceived as a campaign designed to accomplish three things: 1) engage people, 2) stimulate additional discussion and brainstorming, and 3) communicate how the core values will be measured. This takes time and energy. But it's well worth it. People should be encouraged to fully discuss and understand the values. Not everyone will get it at first - but that's okay. The CEO or top leader needs to be fully involved in the education process. His or her leadership in the process is symbolically crucial and the catalyst needed to build ownership of the values at each level.

For example, a financial services company in Los Angeles came up with three core values: Purpose, People and Passion. Each of these was tied to "we statements." The CEO spent several months communicating these core values, making sure people understood their importance and that they were integrated into everything the company did. Over time, the recruitment of new employees, new employee orientations, performance appraisals, and employee satisfaction surveys all were tied to the core values of Purpose, People and Passion.

As you're educating people about the core values, make it a big deal. You can translate them into banners, post them in meeting rooms, and incorporate them on your website. In one case, the CEO had a new sign erected in front of the headquarters with the core values emblazoned on it. The day the sign was unveiled, he stood at the entrance, shook every employee's hand, gave them a matching lapel pin, and said: "These are our values: Wear them with pride." But that's not enough.

Through trial and error, I've discovered that four conversations are necessary to ensure employees truly feel aligned with - and committed to - their organization's core values. The first conversation is about how each person interprets the core values. You begin by handing people a copy of the core values and then asking a simple a question: "Would you agree that these are the things most essential to our organization's success?"

This conversation enables people to discover their common ground - and areas of disagreement. The disagreement is healthy and critical, for it furnishes an opportunity for important dialogue and a chance for people to discover a deeper connection to the value than first appeared. The danger is not that people won't unite around the core values; it's that they will unite too quickly, thus avoiding the tough conversations that build understanding and trust.

The second conversation explores the difference between organizational core values and personal core values. This discussion is best handled by asking people to respond to: "What's most important to you, personally? How does it tie to the organization's core values?" This conversation enables people to articulate their own values (often for the first time). It gives people a chance to know one another, to appreciate their differences, and to reflect on the fact that their differences are born of deeply held beliefs. For example, an employee of a large retail chain said his greatest passion was painting natural landscapes. He then pointed out that his love of painting shared a surprising connection with excellent customer service. "You have to find hidden delight in each and every encounter," he said.

The third conversation is about applying the organization's values to real cases. It's constructive to look back at times when the organization was not true to its values. Without casting blame, people can ask what happened. Looking forward, they can anticipate scenarios in which the values might again be challenged.

This conversation can begin by asking: "Looking at how we've defined the organization's core values, think of a time when we did not uphold these. What happened? How did we make decisions that led us to that point? What could we do differently in the future in our communication and decision making to forestall it from happening again?"

The final conversation has to do with translating the core values into performance objectives at each level of the organization. People need to discuss the core values scorecard and how they can help make sure the targets are achieved.


Eric Douglas works closely with high-level leaders to move their businesses and organizations toward higher levels of success. Eric is the senior partner and founder of Leading Resources Inc., a consulting firm that focuses on developing high-performing organizations. He specializes in helping clients achieve strategic clarity, manage change effectively, and build a strong leadership culture.

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