Why are values important for a company?

Updated: Jan 20

This article is the first in a series all about organizational values. This piece covers the importance of values, and the following articles explore the role they play more deeply, and include a worksheet on how to implement them in your organization.


Values clarify the identity of a company - they are its internal compass, both in the way they approach their customers (why would one choose to buy from them), and their employees (why would one choose to work for them). In an HBR article Jim Collins and Jerry I. Porras wrote in 1996, they found that companies with enduring success, such as Johnson & Johnson, Procter & Gamble, and Sony, are those that have core values and a core purpose that are both fixed, as they evolve and adapt their business strategies to an ever-changing world. Twenty five years later, companies are spending lots of effort and resources to establish and clarify their values, with curated words and statements included in both their external and internal communications. In this article series, we dive deep into the role of values in organizations, from why they matter to how you can implement them.


Culture, Values, & Remote Work

In remote and distributed settings, employees do not have access to some (or most) of the workplace cues they would usually count on to learn how to interact with one another. Clearly defined values are an explicit way for employees to know how they are expected to behave, talk to one another, and better integrate into the workplace culture. As a matter of fact, by implying which behaviors are celebrated, and which are not, values act as the foundation of an organization’s culture, alongside its shared beliefs.


According to Patrick Lencioni, company values are “the deeply ingrained principles that guide all of a company’s actions”, which then would serve as the cultural cornerstones of the organization. The importance of a salient company culture is well known. Aside from setting what is expected from employees in a company, it leads to the recruitment of people who would fit well in the organization, and increases the retention of employees who can truly grow with the company.


Can values drive engagement and productivity?

According to Olivier Serrat, values can enhance a company’s innovation, productivity, and credibility, while providing a sustainable competitive advantage, and there are studies that have found positive correlations between having organizational values and firm profitability. Highly engaged teams are 21% more productive as per Gallup, so it is not surprising to see a correlation between a strong set of values, employee engagement, and productivity: when employees know what values and principles to follow and to base their decisions on, they can get recognition and satisfaction from their work more easily.



What your values say about your company

Having clear values, and explicitly espousing and embodying them communicates a company’s trustworthiness and integrity to the world. Unsurprisingly, research has shown a strong positive relationship between an organization’s reputation and its culture. However, some questions can be raised about whether values need to be fixed, or if they should flow organically, to always align with a company’s actions. Jim Collins and Jerry I. Porras argue that values need to be fixed, but not everyone shares the same principles, and some companies update their values to fit the current times’ needs. Google is one example of this: Every year, they revisit their core values, which they wrote more than a decade ago, to make sure their current actions align with the statements. One of their current stated values is “You can make money without doing evil”, and under it they explain how they make their revenue.


As Peter Drucker once said, “Culture eats strategy for breakfast”.

For a company to truly succeed among its competitors, it needs a strong and genuine set of values with a workforce that embodies and lives out these values. At Cosmic Centaurs, we work with organizations to help them establish and communicate their values - you can read more about it here. You can read the second part of the series about how uncover your organization's values here, and we will be publishing the third part soon. Stay up to date and sign up to our newsletter here for the latest update and insights from Cosmic Centaurs.