Value Based Leadership

Value based leadership is a system; it takes into consideration the whole organization. On this page we take a look at it from the perspective of the organizational core values.

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1) Definition:

Core values are the “sacred” core convictions that employees have about how they must behave themselves in the fulfillment of the organization’s mission.

2) What values are not:

Core values are not operating practices, business strategies, or cultural norms.

Core values per se are not the culture – they are part of the culture.

3) Values characteristics:

First characteristic: Core values don’t change.

Since values are a small system of timeless guiding principles, values should be unchanging – they are the enduring character of an organization.

Hence, a company should not change them in response to recent changes in the economy or to global market trends.

Second characteristic: The core values’ value is not in their intrinsic nature, but in their extrinsic value.

Their true value does not lie in which core values the organization has (it does not lie in their content), but rather, in how much the organization actually lives them (the genuineness and passion with which they are lived).

Their value lies in how purposefully consistent the corporate culture is.

Value based leadership is as much a management philosophy as it is an execution practice.

4) What values are for:

Core values guide behavior – they guide the behavior and the decision-making of the entire workforce on a daily basis.

5) What values need:

Core values – in order to be effective – need several things:

They need to be crystal-clearly understood, bought in, and embraced by the entire leadership team.

The entire leadership team must role model them in an ongoing basis.

The entire leadership team must communicate them in an ongoing basis – especially the top organization’s leader.

They need to be crystal-clearly understood, bought in, and embraced by the entire workforce.

In other words: Core values need to be behaved, embodied, and lived by everybody in the organization.

As stated above: their effectiveness lies in how much the organization actually lives them – their effectiveness lies in the genuineness and passion with which they are lived by the entire organization.

In one word: The corporate espoused core values and the actual every day enacted values by everybody inside the organization must be one and the same.

6) Typical mistake:

This is a most unfortunate mistake; nevertheless, it is a common one:

The senior management’s behavior is inconsistent with the core values.

What happens when the walk doesn’t match the talk? When core values are only espoused, they become the source of mistrust, cynicism, and low performance.

Value based leadership requires integrity.

7) How to create them:

There are two schools of thought here:

The first one argues that you must discover your company’s core values inside your organization to guarantee their legitimacy. Your values already exist inside your company – they are authentic – all you need to do is to unearth them.

They say that if you confuse values that you think your company ought to have – but doesn’t have – with your legitimate enacted current values, you would create cynicism in your organization.

The second school of thought contends that certain values help your organization’s performance more than others, and as such, you should change your company’s culture if necessary.

Culture change is no easy task, but it is well worth the effort – they claim.

John P. Kotter and James L. Heskett in “Corporate Culture and Performance” (Simon & Schuster, New York, NY: 1992) published the results of a study they made about the top performers across an 11-year span (in a field of 207 blue chip companies in 22 industries) in terms of annual growth in net income, average returns on invested capital, and appreciation in stock prices.

Among other findings, they discovered that the top performing organizations had in common these three core values:

- Fanatical attention to employees’ needs
- Fanatical attention to customers’ needs
- Fanatical attention to stockholders’ needs

Which school of thought should you follow? Which one makes the most sense to you? Value based leadership is about decisiveness, conviction, and execution – whatever path you decide to follow, focus on implementing it well.

8) Examples:

To see over 40 examples of corporate values, take a look at our “definition of values and examples” page.

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To keep on learning about the skills you need to lead the performance of your entire organization, go back to the previous page, or click here and continue reading in a sequential order.

To learn more about the skills you need to manage the performance of your direct reports, go to our Management Skills page.

If you would like your managers to learn about value based leadership through our speaking or consulting services, please click on this link.