I know what you are thinking. The last thing I am thinking about is our company culture. If it doesn’t bring in revenue or cut our burn, should we be focusing on it? Our culture right now has to be to work our asses off. In an early stage venture, you lack defined parameters for company behavior—including your own behavior. It is like driving on a road without a speed limit, stop lights or lane lines. Left to its own devices, or lacking the appropriate attention, you are actually enabling a corporate culture with negative undertones and a tolerance for unacceptable behavior. If you fail to set down your core values, you not only bear that risk but you are not taking advantage of something that can create a competitive advantage.

“Values can set a company apart from the competition by clarifying its identity and serving as a rallying point for employees.” 

The best companies develop core values that impact their company culture, brand, and business strategies — making them quite unique. Most entrepreneurs adopt the perspective that culture is a luxury rather than a critical foundational element of a strong company. Regardless of your stage, you must set core values that are non-negotiable. When your organization lacks guardrails and guidelines, which most early stage ventures do, you need to construct boundaries to guide behavior.

Your Values Must Be Real

Take a look at this list of corporate values: Communication. Respect. Integrity. Excellence. They sound pretty good, don’t they? Strong, concise, meaningful. Maybe they even resemble your own company’s values, the ones you spent so much time writing, debating, and revising. If so, you should be nervous. These are the corporate values of Enron, as stated in the company’s 2000 annual report. And as events have shown, they’re not meaningful; they’re meaningless.

Most values statements are bland, toothless, or just plain dishonest. And far from being harmless, they’re often highly destructive. Empty values create cynical and dispirited employees, alienate customers, and undermine managerial credibility. Values can set a company apart from the competition by clarifying its identity and serving as a rallying point for employees. But coming up with strong values—and sticking to them—requires real guts. If you’re not willing to accept the pain real values incur, don’t bother going to the trouble of formulating a values statement.

How to Create Values

There are several elements of creating culture with your values:

• Understand the Different Types of Values. It is important to understand the different types of values:
  • Core values are the deeply ingrained principles that guide all of a company’s actions. They serve as its cultural cornerstones. They are the source of a company’s distinctiveness and must be maintained at all costs.
  • Aspirational values are those that a company needs to succeed in the future but currently lacks. A company may need to develop a new value to support a new strategy, for example, or to meet the requirements of a changing market or industry. Aspirational values need to be carefully managed to ensure that they do not dilute the core.
  • Permission-to-play values simply reflect the minimum behavioral and social standards required of any employee. They tend not to vary much across companies, particularly those working in the same region or industry, which means that, by definition, they never really help distinguish a company from its competitors.
  • Accidental values arise spontaneously without being cultivated by leadership and take hold over time. They usually reflect the common interests or personalities of the organization’s employees. Accidental values can be good for a company, such as when they create an atmosphere of inclusivity.
• Be Authentic. Many companies view a values initiative in the same way they view a marketing launch: a onetime event measured by the initial attention it receives, not the authenticity of its content. This can undermine the credibility of an organization’s leaders. Put them on the walls. Put a “fine jar” in every room for every time they are violated. Make someone the “culture cop.” In the same way that a culture will develop negatively if no values are set, once you put in place some tools to make your values visible, they will quickly become second nature.
• Create a Process. Values initiatives have nothing to do with building consensus—they’re about imposing a set of fundamental beliefs on a broad group of people. The best values efforts are driven by small teams that include the CEO, any founders who are still with the company, and a handful of key employees. As for those employees who can’t embrace or embody these values, they might be a better fit at another company.
• Weave Core Values into Everything. If they’re going to really take hold in your organization, your core values need to be integrated into every employee-related process—hiring, performance management systems, criteria for promotions and rewards, and even dismissal policies. From the first interview to the last day of work, employees should be constantly reminded that core values form the basis for every decision the company makes. It’s been said that employees will not believe a message until they’ve heard it repeated by executives seven times.
• Enforce Them. Not setting values is one thing. Setting them and not enforcing them is another, and can be worse. This has two elements. First, without a zero tolerance policy, and follow through, you undermine both your values and your leadership. The rank and file lose faith in their leaders not only when rules aren’t enforced, but when they are enforced selectively and favor a particular individual. Your enforcement of these values should set an example of the integrity and consistency you expect from your team. Second, make sure that there are no exceptions for you or other senior leaders. In fact, you should be the first one to step up, acknowledge mistakes, and face the consequences. So set your values and enforce them, and you will be on your way to a culture people are proud to be a part of.

Living by stated corporate values is difficult. After all, it’s much harder to be clear and unapologetic for what you stand for than to cave in to politically correct pressures. And for organizations trying to repair the damage caused by bad values programs, the work is even harder. But if you are willing to devote your time and energy to creating an authentic values statement, there’s a good chance that the resulting values will stand your company in far better stead than your competitors.