As businesses respond to society’s demand for authenticity, companies recognize the power of demonstrating core values
By: Jenna Lang Warford
Far from being harmless, as some executives assume, they’re often highly destructive. Empty values statements create cynical and dispirited employees, alienate customers, and undermine managerial credibility.
— Patrick M. Lencioni, author of The Five Dysfunctions of a Team
62% of consumers say purchasing decisions are influenced by a company’s ethical values and authenticity.
— Accenture Strategy
Fifty percent of consumers say that the pandemic has caused them to rethink their personal purpose and reevaluate what’s important to them in life, according to the 14th annual Accenture Strategy Global Consumer Pulse Research survey. Additionally, 42 percent say the pandemic made them realize they need to focus on others more than themselves. The result? Sixty-three percent are buying goods and services from companies that reflect their personal values and beliefs, and fully 47 percent have stopped doing business with a company as a result of its actions.
The survey, which included more than 25,000 consumers across 22 countries, with follow-up focus groups in five countries, makes it clear that consumers want more than transactional relationships—they value a company’s stance and are interested in aligning with businesses that share their values. According to the research, 62 percent of consumers say purchasing decisions are influenced by a company’s ethical values and authenticity.
Core Values Impact Profitability
Kantar Consulting’s Purpose 2020 report revealed that brands with a high sense of purpose have experienced a brand valuation increase of 175 percent over the past 12 years, compared to the median growth rate of 86 percent and the 70 percent growth rate for brands with a low sense of purpose.
Tyler Whitehead, CEO of Arbonne, has noticed that the company’s B Corp status and core values have created a two-way street. Customers are often attracted to its values and stances, and “when we do attract those who might not be a good fit, whether customer or consultant, they deselect out over time. Our values attract people with similar values, and that’s the way we like it. We don’t intend to attract or be everything to all people.”
Jack Fallon, founder and CEO of Total Life Changes (TLC), says he believes that consumer impact often begins through the distributor base, so his company’s daily broadcasts to the field always include a discussion of one of its core values, helping drive home who the company is and what the home office wants to be to the field and the customer. “We do ‘Jack and John’ (a broadcast) every day at 2 p.m. Eastern, a condensed version of Fun Friday, and we talk about a core value every day—we even have them listed on the labels of products.”
Creating Effective Core Values
Core values statements rose in popularity when Jim Collins and Jerry Porras published Built to Last. The book, which said that many of the best companies adhered to a set of principles, called “core values,” led to proactive executives mandating creations of these statements.
In an article for Harvard Business Review, organizational management expert and best-selling author Patrick M. Lencioni says, ”Most values statements are bland, toothless, or just plain dishonest. And far from being harmless, as some executives assume, they’re often highly destructive. Empty values statements create cynical and dispirited employees, alienate customers, and undermine managerial credibility.”
He says core values statements tend to be generic, citing “honesty, integrity, and trust,” but the most effective core value statements are specific to the company and its culture.
Nancy Bogart, founder and CEO of Jordan Essentials, was inspired by friend and mentor Joan Hartel Cabral to solidify her company’s core values. Working with her management team, they expressed the company’s unique values, including:
- Be a learner.
- Love what you do and have fun.
- Pay it forward.
- Uplift others with words, deeds, and actions.
Jordan Essentials lists a total of 10 core values, which Bogart acknowledges is quite a few, but she felt that was required to fully express what the company wants to be. “Something I wanted when we designed them was to use them to call each other out. For example, if we’re having some issues or we’re not speaking positive words of encouragement and maybe complaining to somebody, we can use these to bring us right back to center. We also use it with the field, to keep the main thing the main thing.” By using her management team to help craft their core values statement, she knew they would reflect what the company actually was and wanted to be.
Fallon brought in a local firm’s expert to help TLC solidify its core values. “He basically went through the whole building, talking to everyone. We have 500 employees, so he lived with us for maybe six months. When he presented them, they just needed a few modifications.”
Is It a Core Value or Not?
Collins and Porras described a core value as being inherent and sacrosanct; they can never be compromised, either for convenience or short-term economic gain. Being inherent, these values already exist within the company and must simply be identified. Values that are desired, but not yet inherent, are aspirational values and shouldn’t be included in a company’s value statement, but instead should be strategized and then stated as a goal with measurable steps to attain.
Likewise, if a core value utilizes a rare skill, it may need to be taught as part of onboarding a new employee. For example, Intel has a core value of risk-taking by challenging the status quo and engaging in constructive confrontation aspects of its culture. Employees are pushed to embrace this value, and during orientation new employees are taught this delicate art as well as the skill of releasing the hard feelings that may naturally occur.
Employees can easily identify a company that isn’t living up to its stated values. In ihire.com’s 2020 Core Values in the Workplace survey of 183 active and passive job seekers, more than 75 percent of respondents said it is “very important” to work for a company with a set of core values. And, while 62 percent of organizations have a set of core values, nearly 16 percent of employees don’t think their employer upholds them.
Arbonne’s Whitehead says that it’s important for a company to be able to address incongruity in policy and core values. ”A good example is from a year ago, when we had an option where we could have people come back and make those requirements (of working onsite.) We talked through it with our employees, we made the adjustment, we announced it. And then we got more feedback from our employees about some of the mandates, if you will, that didn’t seem to conform to those values. They called us to account for it and said, ‘Hey, look, that sounds great. And we understand it from an efficiency, or from a profit, perspective. But it seems wrong to us based on this value.’ So we went back and had that dialogue.
“It’s one of those situations where it’s sensitive for managers because they’ve committed to and communicated something, and then you get feedback that doesn’t sound like we thought it would. That gives us an opportunity to say, ‘Okay, do we really walk the walk and reevaluate, or do we just stick with the program that was launched?’ And in this case management and the executives came back and said, ‘Hey, we’re recommending we relook at this.’ And we did. We made a revision, and the employees felt the trust in that relationship building, because we were still having a conversation.”
Utilizing the Core Values
Whitehead says that putting a value first may also impact profit margins. “We’re very concerned about types of packaging material, for example; we strive to create the most environmentally sustainable packaging—and sourcing and ingredients—that are available.” That core value result, he says, is that “everybody doesn’t necessarily get rich or is living their best Instagram life. We want people to be fulfilled, be satisfied, and know that service orientation is work, it’s effort, and it’s not easy; it’s not a flashy thing.” But that core value is part of the company’s long-term proposition and brings a comfort and trust level from a customer perspective.
TLC uses its core values statement both internally and in the field. “It helps us make decisions: What are the right things to do? Which option stays by the core values?” Fallon says.
“One of our core values is ‘We don’t do what’s easy. We do what’s right.’ So a lot of companies are just raising their rates. Maybe they’re not necessarily affected that greatly, but it’s accepted that they raise the rates; so they’re just raising the rates instead of looking for another way to possibly offset that inflation.
“I think it can be so easy to just throw it back on our customers and distributors and say, ‘Rates are going up, just turn on the news and you’ll know why: inflation.’ And here’s the thing, if you’re trying to find other areas to compensate for the inflation rates rather than just raising prices, that takes time and effort. But that’s where our core values came in for us. It’s easy to press a button and add five bucks to everything, right?”
Fallon says that is when his corporate team comes together to do the right thing to save money without passing the burden to customers and the field.
Keeping those values in focus helps keep the company on course too. “If they’re just in the drawer collecting dust, so to speak, they’re not helping. So we have them all over all of our offices around the world,” he says.
Jordan Essentials has their core values posted all over the building as well, including “the time clock and company bathrooms,” Bogart says, laughing.
But more than inspiring signage, Bogart says her company’s core values statement guides decisions on a daily basis. “I use it as a compass, back to my true north by asking, ‘Is this empowering? Is it encouraging? Is this doing to somebody else that I want to have done to myself?’ ”
Core Values Have Internal Impact
Bogart has found that Jordan Essentials’ core values, formally established about six years ago, impact not only who its customers are, but also which employees are hired or stay for the long haul. “We put the 10 core values in every job description. We’ll get people referred to us for different positions. And they’ll say, ‘My friend was telling me about your core values.’ ”
Employees who live those values are celebrated, Bogart says. “We’re expanding more in the Hispanic market and Mexico. We’re all celebrating the fact that a staff member is taking night classes to advance his linguistics because he’s a ‘lifelong learner;’ one of our core values.”
Whitehead found that utilizing Arbonne’s core values as a guide can also help leaders navigate polarizing topics. “We had a lot of conversations with the field regarding some hot topics and the way someone might express a value in terms of integrity or diversity. One expression might be different than another expression of it. So we did some training and discussions with leaders around that to make sure that we’re consistently aligning. I ended up sending out what I call the manifesto on our values and our focus, regarding the unity around an alignment of what we share in common, which was an effort to help people not become distracted by polarizing opinions about a particular way to express a value, but to know that we all share the same value.”
Forward-thinking direct selling companies, especially those with their eyes on Gen Z, would do well to identify their core values and state them publicly. Because, much like the millennials, Gen Z tends to have a strong sense of purpose and feel connected to causes. More importantly, 69 percent think brands should help them achieve their goals, according to PSFK, a research firm that utilizes a professional-grade platform designed specifically for retail.
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