Business Values Lead to Profits? Let's Prove It
There's a lot of talk over the last few years about the importance of purpose and values in business. Tying people to a company purpose higher than just the day-to-day job, and having a set of values to they live by every day. Is it the right thing to do? I doubt anyone would really disagree with that notion. But is it good for business or just a plaque on the wall? That's a more difficult question.
Early in my business career, I didn't really connect with the importance of a company mission, vision, or values. I just wanted to figure out how to grow my business. That was hard enough.
Then I saw the light and had an epiphany. At some point more than 15 years ago we defined our company purpose and core values, those behaviors that would never change no matter what else changes in our business. I started to hear employees talking about these core values in meetings and using them to guide important business decisions. That's when I realized that a code of ethics means everything to our business.
Here's how purpose and values have an impact:
They plot your team's course.
When your employees know that you and the company stand for something special, they connect to a purpose larger than the task at hand. They all want to row in the same direction--and they know what that direction is.
They define decision-making.
You, your managers, and employees make important decisions every day. If you all apply the filter of your core values to these decisions, you'll know you're on the right path. Not all decisions are correct, but they are made with the same purpose.
They resolve conflict.
I tell our employees that as long as they live by core values every day, they will be successful at the company. This common helps eliminate differing mindsets, and breaks down silos.
They lead to increased profitability.
Purpose and values lead to employee loyalty and happiness. Happy employees lead to customer loyalty. Customer loyalty drives profit. And customers will pay more for a company that exhibits a purpose larger than a product.
Okay, at this point you may be asking: "I get those first three points, but how can you prove that running a business this way is more profitable? How do you know there is a financial return on values?"
Fair enough. In reality, I haven't uncovered a ton of research that critically examines and proves a connection between values and profitability, beyond the 2007 book Firms of Endearment. And while many of us intuitively know that it works, it would be powerful to have data to support the notion and quiet the detractors.
That's why the Small Giants Community, a small business organization I co-founded, is partnering with the Center For Values-Driven Leadership at Benedictine University in Chicago, and in August is launching a three-year, evidence-based research project to examine the connection between values and culture and company profits. The study will include comprehensive case studies of more than 30 small and medium companies throughout the U.S. and will survey hundreds more, and hopefully further investigate this topic.
To learn more or get involved, click here.