Organizational Values: Definition, Purpose & Lots of Examples
Organizational values impact every aspect of a company – how it does business, how it makes decisions, how it treats its employees and customers. Let’s have a look at what organizational values are, what their purpose is, some examples, and finally, how to define and live by your organizational values.
What are organizational values?
Put simply, organizational values are the guiding principles that provide an organization with purpose and direction. They help companies manage their interactions with both customers and employees.
As video conferencing company Whereby puts it: “Our values ensure that every decision, from all-hands meetings and events to quarterly feedback and reviews, are made with our shared values in mind.”
What is the purpose of organizational values?
Let’s stick with Whereby to illustrate the purpose of organizational values. When it comes to their organizational culture and values, Whereby has defined what they call the Whereby ETHOS.
This is what the acronym stands for:
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- Ethically ambitious: Our ethical commitments are continuous and tangible. We strive to be a company that raises the bar and makes its people proud.
- Trust trust: We trust by default. This means assuming best intentions and giving people space and freedom from day one, not asking them to earn it.
- Human first: We consider the whole human, beyond any one goal or moment. Doing so helps us support each other, and our customers, more meaningfully.
- Outwit and outgrit: To create serious change, we have to dig deeper and think smarter. Grit, resilience and creativity are the hallmarks of the underestimated.
- Selfishly diverse: Embracing diversity is a moral duty, but it’s also smart. We want the full spectrum of talent in our team. Every perspective strengthens us.
Organizational values help a company:
Differentiate itself from its competitors
Your company values distinguish you from other companies in the eyes of your customers, business partners, employees, and candidates. As such, they are an important part of your company culture, oftentimes also described as the personality of your organization.
Guide its employees in their decision-making
Values can provide a clear guide to your employees as to how to act in various situations in your company.
If we look at the Whereby values, their ‘Trust trust’ is a good example of this. People should be trusted from day one and they don’t need to earn that trust. As they put it themselves, ‘people start with a full tank of trust, this means trusting their expertise and skills, their judgment, and their intentions.’
This can be particularly relevant for managers when they welcome new hires to the team.
Boost its chances of attracting, recruiting, and retaining top talent
Candidates are attracted to values they identify with. Clearly defined organizational values that are reflected in your employer branding efforts and throughout your recruiting process helps in ensuring a so-called culture fit.
This fit goes both ways; as a company, you can assess whether or not a candidate would match your culture and as an applicant, you can do the same thing.
As a result, a certain level of self-selection will take place on the candidates’ side and some people will decide that your company isn’t for them.
In a recent episode of our AIHR podcast All About HR, we talked about the importance of hiring against your company values with Anna Buber-Farovich, Chief People & Culture Officer at Australian-based fintech company Zip.Co.
There are two main things to take away from that part of our conversation:
- For fast-growing scale-ups, your company values can be the thing that brings in top talent, especially since you won’t always be able to compete with the ‘big guys’ on things like comp & ben.
- Being (brutally) honest about your values and how you live them in your work environment is important. There is no company that is for everyone, so you may as well acknowledge that from the beginning.
Be more likely to attract customers with the same values
Sometimes stats speak louder than words. When it comes to people’s values and purchasing preferences this definitely seems to be the case.
71% of consumers prefer buying from brands that share their values and ideologies. For Millennials, value alignment is even more important, 83% stress this and keep this in mind when they choose a brand to purchase products or services from.
An often-cited example here is Nike. In 2018, the company took a stance when it decided to feature Colin Kaepernick in its 30th-anniversary campaign.
In short, Kaepernick, an NFL player, decided to kneel during the national anthem at the start of a game to protest against injustice and police brutality. By featuring him in its campaign, Nike made clear what it stands for as a company. While the stock price fell (initially) and people burned their Nike gear live on social media, many others became loyal customers because they shared the same values.
Inform its business strategy
Just like your core values guide your employees in their decision-making, they also provide guidance when it comes to the direction in which you want to go as a company. Ultimately, this contributes to the business success of your organization.
An example from Whereby: “Our values help us pinpoint tools that help us outwit and outgrit to make our work better – whether that’s more efficient, more human, or more accurate. They also help us decide if platforms, tools, and partners align with our goals.”
Boost employee engagement and motivation
The Employee Happiness Model defines 15 universal factors of employee engagement and happiness.
The model consists of 4 pillars: the Organization, the People, the Job, and the Well-being. Each pillar is made up of several key drivers.
An important driver in the ‘Organization pillar’ is the company’s vision and values. There are several elements that positively impact employee engagement in this regard:
- Understanding vision & values
- Identification with values
- Behavior that is in line with values gets acknowledged
In other words, when the company really lives by its values and these values resonate with employees, people are more intrinsically motivated at work.
Organizational values examples
We’ve already given a few examples of organizational values coming from Whereby and Nike. But there are so many others. And while values are unique to every organization, there are a couple of themes they often revolve around, such as:
Here’s a small sample of organizational values from well-know companies.
Netflix is known to truly live and breathe its organizational values (you can take a look at their culture deck here if you like). As such, the company reinforces its values in hiring, 360 reviews, comp reviews, etc.
Here’s an example of what that looks like when it comes to, for instance, high performance. At Netflix, they want stars in every position. To ensure this, managers use the so-called Keepers Test.
In short, this means that they ask themselves which of their people they would fight for hard to keep if they told them they would leave – a practice that is in line with both the company’s ‘courage’ and ‘honesty’ values.
The same thing goes for employees, they are encouraged to (be brave and) ask their manager from time to time how hard they would fight to keep them at Netflix.
Another great example comes from social media management tool company Buffer.
Buffer has 10 core values, including one that is called ‘Default to Transparency’. In order to try and live up to this particular value, they have made several things completely transparent:
- All their code is open source
- Their product roadmap
- All their diversity and inclusion data is open sourced
Defining and living by your organizational values
For this section, let’s have a look at examples of how we do things at AIHR as well as other companies to illustrate the process of defining and living by your organizational values.
Here are seven questions to ask yourself and things to remember when defining your organization’s values.
1. What’s the purpose of your organization?
Once you know your organization’s mission and vision, it becomes easier to define the values that will help you achieve your goals.
For us at AIHR, we are on a mission to continuously educate a community of 100,000 HR professionals by 2025.
In order to achieve our mission, we defined five values that we believe will help us get there – more on those below.
2. How do you want the world to see you?
This comes down to what matters most to you as an organization. How do you want your customers, employees, candidates, suppliers, and other stakeholders to see your organization?
To figure that out, it can be helpful to start by asking your current workforce what they feel are core values of your company that are already in place.
At Buffer, they sent out a simple survey to their people to formalize what was already there. You can see what their survey looked like here.
3. How are these values going to shape and be embedded in your organization’s processes?
Organizational values are the guiding principles of how your organization operates. But how does this look in practice?
Our friends over at Whereby describe how they apply their ETHOS when developing their internal processes and tools:
“We launched our Progression Framework earlier this year to align the entire team on levels, skill sets, values, and more. Tools designed to guide team members through this process map to our values, helping team members assess their own performance and goals. And being transparent with our reviews ensures each and every team member understands where they’re at currently and what it takes to progress in their career at Whereby.”
4. What behaviors will represent your values?
To make sure your core values come to life, it’s important to think about them in terms of workplace behaviors.
At AIHR, we’ve been having a series of values workshops recently with the entire company. Each workshop evolved around one of our core values: Hunger to Grow, Excellence, Power of Data, Trust, and Ownership.
In small groups of around six people we’d discuss the following questions regarding a particular value:
- What does this value mean to you?
- What are examples of behavior that demonstrate this?
- How can we, as AIHR, encourage this behavior?
Doing this kind of exercise is a great way to:
- Get employee input and create a very rich definition of what each core value means
- Recognize and appreciate people in the organization who already live the company values and share real-life examples
- Collectively think about how the company can encourage the embodiment of the organizational values (in that regard employee recognition plays an important role)
5. How are you going to communicate your organizational values?
Once you’ve defined your values, you need to make sure you communicate them both internally and externally. How are you going to do this? And how are you going to make sure they’re not just empty words written on a (virtual) wall?
There are various ways to go about this. For now, we’ll stick to a few examples of how to go about internal communication.
A simple yet effective way to continuously highlight your company values is to briefly mention them in your company or team meetings.
This can, for instance, be a company stand-up in which a few employees that showed, in the case of AIHR, great Ownership or Hunger to Grow are being praised.
Another way to communicate about your organizational values can be in the form of peer recognition; employees and managers complimenting each other for a job well done, for truly living by one or more of the company values, etc.
Peer recognition and appreciation can come in many forms, both on- and offline. But linking it to something visible – like a virtual badge, award or a physical post-it note or even a postcard – has the advantage of people actually seeing your values being ‘alive’ inside the organization.
6. How are you going to formalize your values?
Communicating about your values and formalizing them are two things that go hand in hand. One way to do this is in a concise values statement.
Another interesting way to formalize your values – and encourage your employees to live by them – is to performance manage against them.
This is something we talked about with Anna Buber during the conversation mentioned earlier. At Zip.Co, employee performance is assessed based on the ‘How’ and the ‘What’.
The ‘What’ represents 50% and is about what you’ve done: the number of sales you made, the code you wrote, etc.
The ‘How’ represents the other 50% and is about how you work; how you’ve changed the game, how you’ve supported your colleagues, or how you owned a problem.
7. Remember that values are constantly evolving
As we saw in the Buffer example, organizational values are always evolving. Just like the environment in which your business operates, the people who work for your company, and your organization itself.
Therefore, it’s good to keep a pulse on your core values. Take time to regularly reflect on them and collect feedback from your employees – and perhaps other stakeholders too.
Changes in your organizational values can be subtle. Buffer, for instance, initially had ‘Communicate with clarity’ on their list of organizational values.
After their company-wide effort to review the company values, this became: ‘Have a bias towards clarity’ because that better reflected the organization’s direction and what they wanted to achieve at that point in time.
On a final note
Organizational values can be a great way to give your organization and the people in it purpose and direction. When defining them, try to gather as much feedback as possible from your people and bear in mind that your values will continue to develop over time.
And don’t forget the fun part! Determine how, together with your employees, you are going to bring those values to life in your (HR) processes.