Building a Values-Driven Organization

If there is one thing that companies are learning in the current economic crisis, it is the importance of resilience – the ability to withstand and overcome business, economic, and societal shocks. The most resilient companies display the following characteristics:

• A shared set of values
• A commitment to the common good
• A high level of staff engagement, and
• A shared vision of the future

These are qualities that lead to internal cohesion. What the current crisis is showing us is that organizations that are strong on the inside are also strong on the outside. Being strong on the inside means having a values-driven core culture and a highly aligned and effective leadership team.

What are Values, and Why are They Important?

Values are deeply held principles that drive people’s behaviors. Organizations express their values through their working culture, and research strongly link financial performance with the alignment of organizational operating values and employees’ personal values. Who you are and what you stand for has become just as important as the quality of your products and services.

In Corporate Culture and Performance, John P. Kotter and James L. Heskett reveal that companies with strong adaptive cultures based on shared values outperform other companies significantly. During an eleven-year period, companies emphasizing all stakeholders grew four-times faster than companies that did not. Their job creation rates were seven times higher, stock prices grew 12 times faster, and profit performance was 750 times higher than companies that did not have shared values and adaptive cultures.

In Built to Last, Jim Collins and Jerry Porras note that over several decades companies that consistently focused on building strong corporate cultures outperformed companies that did not by a factor of six and outperformed the general stock market by a factor of 15.

John P. Kotter and James L. Heskett, Corporate Culture and Performance, (New York: The Free Press) 1992
James C. Collins and Jerry I. Porras, Built to Last, Successful Habits of Visionary Conies (New York: Harper Collins) 1994.
Source: Email correspondence with Richard Barrett, January 6, 2009.