In his pioneering and most recent book, “The Advantage”, Patrick Lencioni explores “Organizational Health” as the most unexploited opportunity to make your company excel in today’s business environment and give you true competitive advantage. A key to understanding organizational health lies in clearly describing your organization’s values as these are critical to defining how a company’s employees must behave and what behaviors are not to be tolerated. Once established and communicated, these values make recruiting the right employees much, much easier. Additionally, these values can serve to attract the right customers, that is, customers that want to do business with your organization (and repel the wrong ones). Companies that are serious about their values find that the right customers start to seek them out.
All company decisions, policies, tactics and strategies must be congruent with these values. Yet many companies in determining their values end up with a long list of generic and uninspiring words and plaster them in their lobby for all to see – words like honesty, integrity, quality, innovation, customer service, work-life balance, environmental responsibility. The list goes on.
Lencioni points out that there a four different kinds of values. The most important of these are core values, those few – just two or three – behaviors that are inherent to the organization. These few values are the ones that “should guide every aspect of the organization, from hiring and firing, to strategy and performance management.” And they do not and should not change over time.
Other values include:
- Aspirational values – These are values that a company wishes or wants to have and management feels are needed for the success of the organization. Confusing aspirational with core values is a common mistake that leaders make.
- Permission-to-play values – These are the minimal behavioral standards required for an organization to compete. While they may be critically important, they do not distinguish the company from its competitors. Values like honesty, integrity and customer service fall into this catagory.
- Accidental values – These are traits that are evident in an organization, but have come about unintentionally over time, and do not necessarily serve the best interests of the organization. Accidental values “can prevent new ideas and people from flourishing in an organization…sometimes shutting out new perspectives and even potential customers.” Often these “values” are manifested in hiring practices where every new hire resembles all these others through a common demographic profile. This may work for Hooters, but be very cautious about letting such practices creep into your company.
To help distinguish a company’s core values from these other types of values, Lencioni suggests asking these questions.
- To identify aspirational values ask “Is this trait inherent and natural for us, and has it been apparent for a long time?” or “Is it something that we have to work hard to cultivate?”
- To identify permission-to-play values ask “Would our organization be able to credibly claim that we are more committed to this value than 99 percent of the companies in our industry?” If the answer is no, it still may be important to be used as a filter for hiring, but it is not core in that it does not set the organization apart or uniquely define it.
Once identified, your core values become the real building blocks of your company’s culture and operations. Every activity you undertake, every policy you make, every employee you hire, every tactic you employ and every strategy you develop must pass through the prism of your core values.
And finally, these few values must be clearly and repeatedly communicated throughout the organization so they become ingrained in your processes and your people. Do these things and you are on your way to organizational health and all the benefits and advantages that Lencioni ascribes to it!