“Core Values” is one of those business terms that has been so overused and misunderstood that we often dismiss it. Jim Collins and Jerry Porras discussed core values in Built to Last, identifying that all great companies had a clear set of core values. In the years following their book, many companies developed and announced their core values with much fanfare, only to see little impact on the organization. They were not actually used for anything, and employees observed senior leaders not living the values or insisting on them in their people and organization. This debasement of values is unfortunate, because it represents a wasted opportunity to set a company apart and serve as a rallying point for employees.

Core values are a small set of essential and timeless guiding principles. They are what define your culture, and guide all of your actions. They are sacrosanct – they can never be compromised for convenience or short-term economic gain. It is better to have fewer than many – any more than about five is questionable. Core values need to be contrasted with some other types of values – aspirational values (ones we may want or need in the future but do not have now); permission-to-play values (minimum standards, everyone has them, motherhood and apple pie – my favorite of these is “Integrity”); and accidental values (common characteristics that are not truly core to the organization – they are more superficial).

Core values are discovered in the people currently in the organization. They should neither be developed by broad consensus (led by HR), nor imposed by a single leader. The best core values discovery processes involve the CEO, any other founders, and a few key employees.  One method of discovery is to imagine recreating your company on another planet, but you can only take five people. Discussing who you would take and what it is about them that you value can lead to discovery of what is truly core.

The only reason to develop a set of core values is if you actually intend to use them. How? First, to attract people to (and repel people from) your organization. Using a core values “speech” in your recruiting process can serve this purpose well. Second, to review, reward, recognize and (if necessary) fire people. One of my EOS clients fired someone who was doing their job very well, but was not living their core value of treating each other with respect. That sent an enormous message that these were real. On the other hand, keeping someone around who is not exhibiting one or more core values but is doing other parts of their job well (for example, a salesperson whose sales results are great) will quickly cause other employees to dismiss these as “just words”. Another poisonous situation is when a leader does not “walk the talk” (exhibit the core values).

In Good to Great, Jim Collins recommends that every organization needs to get the right people in the right seats on the bus. Who are the “right people”? Quite simply, they are people who exhibit your core values, regardless of their technical skills or experience. Core values and “right people” are more about “soft skills” (how people think, act and behave). The Entrepreneurial Operating System (EOS®) has a number of tools to help you get the right people in the right seats. More on that in a future article.

Note: Some of the concepts discussed in this article were taken from Patrick Lencioni’s article “Make Your Values Mean Something” in the July 2002 issue of Harvard Business Review.