Built on Values, Creating an Enviable Culture that Outperforms the Competition by Ann Rhoades
Recommendation
This essential, step-by-step guide to creating a values-based corporate culture remains as relevant and valuable today as when it first appeared in 2011. Ann Rhoades – a respected HR leader – provides insights from her experience in the executive suites and boardrooms of JetBlue, Southwest Airlines and Doubletree Hotels. Rhoades provides an insider’s blueprint for building and sustaining a values-based culture. Every leader, in HR or otherwise, should read and heed her advice.
Take-Aways
- Organizations differ and so must their cultures, but every great culture rests on values.
- Don’t adopt another firm’s culture.
- For successful culture change, consider your employees, and then align your corporate values and rewards.
- Determine your values and make them inviolable.
- Begin with values-based hiring, gradually, department by department.
- Create values metrics and align rewards with your values.
- Make sure leaders reinforce your corporate values.
- Relentlessly communicate your values, internally and externally.
- Keep improving. Never let up.
Build On Values Book Summary
Organizations differ and so must their cultures, but every great culture rests on values.
Leaders should help fashion the right culture for their firms. Culture depends on values, which reflect how you want employees to behave and how you want to shape perceptions of your firm. Your corporate values will attract or discourage new talent and customers.
Workplace cultures and subcultures manifest whether leaders influence them intentionally or not. A culture derives from integrating appropriate values into every decision and into the mechanisms through which the company recognizes and rewards achievement.
“A culture that works for you can only arise organically from the organization itself.”
Your culture may need repair if you have fallen behind your competitors, have high attrition, have employee or customer survey results that dropped significantly, have trust issues, or are successful but want to improve. Southwest and JetBlue, for example, built their outstanding cultures deliberately from the inception of their companies. Others, such as Loma Linda University Medical Center and Doubletree Hotels, rebuilt existing cultures around new values and gained performance improvements.
Don’t adopt another firm’s culture.
You cannot replicate another company’s culture. Strong leaders invite employees and customers to help shape their firms’ core values. They create a “Values Blueprint” (VB), a road map to guide cultural creation or transformation.
A successful culture attracts and retains A-level talent. For example, David Neeleman was a star as a Southwest Airlines executive, but an imperfect values match made his time there awkward. Neeleman left and founded two industry standouts, WestJet and JetBlue, where he helped fashion the organizational values from the beginning.
“The values that are right for your company depend on your competitive space, your product offerings, your target customers and many other factors unique to your company.”
Hire competent people whose personal values align with your corporate values – that is, your Values Blueprint. In combination with outstanding personnel practices, this almost guarantees that everyone in your workforce will shine, allowing you to field A-level talent for every aspect of your business – a huge competitive advantage. For example, the commitment Southwest Airlines made to hiring and retaining A-level talent helped it reach and remain at the pinnacle of its field for four decades, with the fewest employees per plane in its industry.
For successful culture change, consider your employees, and then align your corporate values and rewards.
To build a values-based culture:
- Create the environment – You can’t make culture happen or order people to live by your values. Everything you do – from leadership behaviors, actions and decisions to how you recognize, reward and promote employees – signals your values. Leaders create the right environment for co-created values to take root and for culture change to occur.
- Focus on employees first – Treat your people as you want them to treat your customers.
- Use your values as a guide – Most events, especially those involving customers, happen on the front lines, in real time. They usually involve your most junior employees. Strong, well-understood values act as a North Star. They help even the least-empowered employee make the right decisions.
- Align your incentives with your values – You get what you reward. Compensation, recognition, bonuses and other rewards signal your priorities to your employees. When people carry out the critical behaviors that support your values, recognize and reward them.
- Maintain your culture – After you build your values and change your culture, you can’t back off. Circumstances change, and so, eventually, must values. Keep improving, and guard against people who might revert to previous ways.
- Remain practical – Measure and quantify each value. Test each against its financial implications. Include the CFO in determining your values.
The few core values you choose – ideally, five to seven – help attract and keep the right people. When your values drive your unique culture, they provide an unassailable competitive advantage.
Determine your values and make them inviolable.
Good leaders model the behaviors they want workers to adopt. Executives, employees, contractors and even suppliers can diminish the credibility and effectiveness of your values if they violate them. Leaders can’t relax. Employees watch them and listen for signals and meaning. Every action, decision, gesture and word matters.
“Leaders cannot directly create culture. They can only create the environment in which a great (or lousy) culture will grow.”
Southwest Airlines has turned a profit every year. Founder Herb Kelleher and his team determined Southwest’s values early on, and those values have steered its culture and strategy ever since.
JetBlue CEO Dave Barger cut his pay in half in 2008 to help avoid layoffs. His company emerged from the financial crisis stronger than any other airline.
When expanding into Japan – where smoking inside restaurants was prevalent at the time – Starbucks stuck to its values and banned smoking. It expanded in Japan and thrived.
Create your unique Values Blueprint by placing your CEO, HR leader and select executives, managers and employees on a values committee of five to 30 people. This committee should assess and document your current culture by discussing its attributes, conducting interviews and focus groups, and looking at employee and customer survey results to craft a new, anonymous, values-based survey.
“Just as you would not build a house working off only an image in your head, you cannot build a lasting culture without a written Blueprint.”
The committee should analyze the data, identify the gaps, and draft, distribute, redraft and repeat its Value Blueprint. Gain buy-in on the final draft from senior leaders who must commit to living each value. This process should take about one month, resulting in a published VB that provides the necessary foundation for culture change.
Circulate the VB throughout the firm. Include the CEO and as many senior executives as possible to reach all the employees they can, in person and virtually, around the country or the world. Your committee should develop an implementation plan to begin revamping every consequential process and decision across the organization in accordance with your Values Blueprint.
Begin with values-based hiring, gradually, department by department.
You will spend more time and resources finding values-matched candidates, but your efforts will pay off over time. Find A-level employees by promoting your values across all job advertising. This will help attract the right people and discourage others. Have at least one A player – a peer – on your trained, experienced search team to ask values-based behavioral questions in interviews, using a standard interview guide for every candidate.
“If you do nothing else, do this. Behavioral-based interviewing based on values is the most powerful tool you have to fill your organization with high-performing people.”
For example, Loma Linda University Medical Center asked high performers to attach crucial attributes and behaviors to each of its values. When interviewing candidates, it specifically looked for those attributes, and designed the onboarding and development of new hires to strengthen their values orientation. Loma Linda adjusted employee rewards to encourage behaviors that reflect the company’s values.
Create values metrics and align rewards with your values.
Leaders should rely far less on their gut feelings and experience, and more on data and evidence. Create clear, simple measurements and metrics to gauge the application of your values. Relentlessly communicate the metrics that matter, assigning one per value. Create company-wide and team-specific scorecards employees can understand at a glance, and link rewards to those measurements. Apply simple, time-bound metrics to their work that you can change as your priorities shift.
“When you start measuring and rewarding the behaviors you want, based on your values, those behaviors will begin to arise out of the organization seemingly without direction.”
Adjust your rewards and benefits to give employees what they want, such as flexible work, time off and work-from-home options. Link executive and manager rewards to values-driven metrics. In a hospital, for example, you want to reduce errors that lead to patient harm and deaths, but don’t reward “fewer errors reported” or make shifts compete with each other. This will lead to employees reporting fewer errors, but not to fewer errors being made. Reward suggestions that might not only reduce errors but also reduce behaviors that lead to errors.
Consider adding an element of fun. For example, when a team earns a reward, have the group spin a prize wheel. They win what the pointer lands on, which should not include cash. Money is less effective than items and experiences, because people tend to lump cash with compensation and use it for mundane things. Experiences and worthwhile gift items create memories and positive associations.
“Being fair doesn’t always mean treating people equally. In the best organizations it means treating people according to what they contribute to corporate success.”
Encourage leaders and front-line managers to recognize people and appreciate them regularly, especially when they spot people behaving according to your values. Add peer recognition and peer involvement to performance reviews. Connect everything to your values, including hiring, rewards, extra benefits, pay, promotions and discipline. Give managers the leeway to reward better-performing employees with higher pay and to deal with low performers. All leaders should write frequent complimentary notes to employees, stop people to say thank you, and otherwise recognize employees who demonstrate the company’s values.
Make sure leaders reinforce your corporate values.
Chief executives should spend up to half of their time with their employees. They should attend every onboarding session, host regular celebrations, drop in on team meetings, tell stories that link to the firm’s values, ask questions, listen and even pitch in to do the work. Formal processes should allow any employee to make a constructive suggestion to the executive team and get a quick response.
If high performing employees intend to leave the firm, leaders should meet with them and do whatever possible to keep them. If that fails, accept only a “temporary resignation,” so the door stays open. Never treat an exiting employee badly.
“Live the values personally, and you are halfway there, because employees watch every move in the C-suite.”
When genuine leaders have an opportunity for big gains if they relax their values, they know to pass on such so-called gains. When times get tough, rather than shirking their values, good leaders reinforce them. If you constantly bolster the values in your blueprint, you embed them deeply throughout your organization.
Relentlessly communicate your values, internally and externally.
A JetBlue pilot guided a plane with a malfunctioning nose wheel to a perfect landing with no injuries. Talk show hosts wanted this hero as a guest, but the pilot refused, because the shows wouldn’t allow him to appear with his entire crew. His selfless, team-oriented actions spoke volumes about JetBlue’s values.
“Once you think you are communicating enough, go back and triple your effort.”
Leaders at all levels should reinforce values by communicating them constantly. Firms that over-communicate will outperform. People crave information and will fill in missing bits with conjecture. Create a communication plan to send a steady, consistent message about your values, have executives sign off and then execute it methodically through every layer of the organization. Use social media to ask customers for feedback and ideas. Build your values-based brand externally, and always tell the truth, even when mistakes occur.
Send messages and rewards home so employees’ families get the message. Empower employee influencers to spread the message to customers. Ask managers to embed values messages in their meetings. Create stories about employees living the organization’s values, and share them widely. Every employee should be able to list your values.
Keep improving. Never let up.
Avoid developing apathy or arrogance about your success. Implementing your VB takes effort, and maintaining it, even more.
“Your role as a leader is to continue to find ways to improve the customer, client, patient…and employee experience, while not letting success go to your head.”
Review your Values Blueprint annually to make sure your values align with your priorities and to gauge value penetration across the firm and beyond to your customers, contractors and other stakeholders.
About the Author
Ann Rhoades, the founder and president of People Ink, held executive level positions at Southwest Airlines, the Promus Hotel Company and JetBlue. Nancy Shepherdson is an author and journalist who writes about business, finance and self-improvement.