By Dave Ulrich, HR guru, a professor at the Ross School of Business, University of Michigan, and partner at the RBL Group
In the past 20 years, almost every organization large or small, domestic or global has crafted a set of values. These often represent core beliefs and shape daily behaviours of leaders. They underlie a code of conduct and form the basis for an organization’s culture. Some criticize and simultaneously praise values statements because they create or expose leadership hypocrisy where leaders’ actions do not reflect the stated values.
I suggest that the ultimate value of values is not just shaping leadership behaviour, but shaping the right leadership behaviour. The value of values starts by defining the value of values.
Value focuses outside; values come from within. Value emphasizes what others get from our efforts; values emphasize who we are. Value can be created through innovation and hard work; values are inherited and may be honed through self-awareness and experience. Value can be measured by impact; values are measured by the strength of our character. Value derives from the worth of our work to stakeholders; values reflect the worth of our work to us.
There are three steps to fully creating value from values.
Step 1: Ask target customers: “Are these the values you want us to have?”
If value is defined by the receiver, it is helpful to know if an organization’s values resonate with top customers. We suggest that sales and marketing segment key customers who are high buyers of products and services sold by your organization, but low volume with your firm. Customer share that is the percentage of customer purchase from the firm can mean more than overall market share as it focuses on which customers matter most. It is helpful to ask these customers if your firm’s values matter to them? Generally, with values like innovation, collaboration, service and respect, the answer is “yes”. But in one case, the firm’s primary value was “to be the most profitable in the industry” and the customer said this was not what mattered to them. Customer value begins with customers being part of defining desired values.
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Step 2: Ask target customers: “What do we have to do to live these values better than our competitor?”
Ask customers to operationalize the values. Too often, desired leadership behaviours come from our own expectations. My favourite example comes from those who travel extensively. Imagine, you show up at a nice hotel. The bellman grabs your bag and takes it to your room. Is this a reflection of the value “good service?” I ask this question to many business leaders and about 20% agree, proactive bellmen taking care of luggage means “good service”, but 80% consider this intrusive and not good service. This simplistic example can be expanded to target customers. When they participate in and operationalize the behaviours from the espoused values, they help you know what they expect from you. This dialogue helps become specific about the value of values from a customer point of view.
Step 3: Ask target customers: “When we live the behaviours you specified, will you buy more from us?”
With the goal of customer share, customers can be asked what it would take to increase their share. And customer share will quickly lead to sustained profitability. If their answer to this question is “no”, it is useful to start over at question one and define the values that matter most to them. If their answer is “yes”, it is an opportunity to show customers a commitment to serve them.
Value statements make core beliefs more explicit. But when values become the basis of customer discussions and commitments, the value of values increases dramatically. When HR professionals partner with sales and marketing in these discussions, customer share may rise and sustainable value is created. This is an example of “outside in” work that defines effective organizations not just by what is done, but how it adds value to key stakeholders.