The most important stake that you'll drive into the ground in support of your company's foundation should be comprised of your core values. But what exactly are these core values, and when it comes to developing them, who precisely should they be created for?
The most important stake that you'll drive into the ground in support of your company's foundation should be comprised of your core values. But what exactly are these core values, and when it comes to developing them, who precisely should they be created for?
Rather than thinking of them as a client-facing marketing tool, your core values should be almost entirely “inward-focused,” meaning they should be designed to reinforce the internal principles that promote ethical business practices and consistent professionalism throughout your firm.
In this way, your core values are an aquifer through which each decision made by you or your associates can be vetted.
CORE VALUES AS A SALES TOOL
I've read dozens of books by giants of industry, men and women who almost always reference the importance of their companies' core values. These thought-leaders often use an entire chapter to articulate their own personal commitment to an honorable set of business practices.
In the shadow of these pronouncements, however, is the fact that these CEOs are strategically positioning their values as a marketing tool (to market either themselves, or their companies, or both). This is because establishing trust is important to both the creation and the maintenance of a positive brand. More subtly, perhaps—and this is especially true in the financial services sector, where compliance restrictions limit messaging—the publication of a company's core values is as close to traditional advertising as our industry's regulators will allow.
So then, what's wrong with utilizing core values as a marketing tool?
It begins with companies such as Enron and their 60-pages long Code of Ethics. For one thing, the stark contrast between Enron's outward, marketing-focused approach to core values, and the systemic impropriety of their actual internal culture, resulted in a massive increase in regulatory oversight for the rest of us.
In spite of the fact that a majority of the people who work in the financial services sector are both decent and hardworking, because of Enron, Bernie Madoff, WorldCom, and others, our industry has approval ratings that rival those of the United States Congress. Simply, much of the public is skeptical about what we do, and it's become substantially more time consuming and costly (because of regulation) for those of us who run our businesses honorably to achieve and maintain success.
Yet while massive scandals have damaged our profession, they have also given rise to the opportunity to set your company apart by implementing core values that not only emphasize professionalism, integrity and attention to detail, but which, by their existence, help to limit the possibility of internal impropriety at your firm.
REINFORCE, MEASURE, REWARD
Inward-focused core values—practiced by you and your team—naturally market and build your brand through client satisfaction and positive word of mouth. The process starts when you create a list of values that is a precise reflection of the basic principles (e.g. professional integrity, teamwork, community service) by which you want your company to operate.
Above all, the implementation of core values takes consistency. From the moment you interview a prospective associate, the process of instilling the values of your firm begins. Asking, for instance, “What does professional integrity mean to you?” not only allows you to gauge the applicant's definition, but unless their answer is identical to yours, you now have your first opportunity to convey what this means to your firm.
This is not to say that an internal focus means that actually publishing your core values isn't useful. No viable applicant should ever leave your office without a printed copy in hand, and every associate of your firm should have a similarly printed copy at their desk.
Reinforcing your core values can take almost any form. Formally, you can begin meetings by asking associates to define one of your company's principles. Informally, every interaction is an opportunity to reinforce a message. If “knowledge and expertise” is a core value, and you overhear an associate providing an exceptionally good answer to a client, don't let it pass without acknowledgement. You want associates thinking about the culture of the company as they make decisions, so that in time it becomes second nature.
Ultimately, it's about everyone understanding that your core values are a “thought-funnel” through which every professional decision and action needs to pass.
Measuring the effectiveness of your core values is often anecdotal. Clients appreciate exemplary service, and most will go out of their way to tell you if they've been treated well. For instance, a core value of professionalism should result in unsolicited praise from clients for associates on an ongoing basis.
Conversely, if your associates aren't getting praised by clients, you need to find out why.
Rewarding good performance should be a part of your business's culture, and exemplary performance stems, in part, from ingrained core values. Encourage associates to nominate coworkers who embody a particular value. Award gift cards, certificates, or even plaques, as everyone loves to be acknowledged, and a dogged adherence to the company core values has the multi-pronged effect of being great for your firm and terrific for the perception of our industry.
After all, we have a lot to overcome.
AN INTERNAL FOCUS LEADS THE WAY
Unfortunately, it's not uncommon for companies to go to the trouble of creating core values, but then to either never actually utilize them for their guiding principles, or to only use them for their outside marketing value. Core values are important to the success of any firm and are not merely words written on a page so you can check something off your to-do list. When it comes to building a solid practice, with hallmarks like integrity and professionalism—companies staffed with people who understand that there are no gray areas in our industry, and that mistakes of character, haste or omission can be costly, or worse—over the long haul, a company built upon a foundation of core values is the best bet to thrive.
Scott Hanson is a financial adviser with Hanson McClain Advisors.
