Why Define Company Values?

Carter Cleveland
Oct 19, 2015 4:00AM

A company’s Vision and Mission define where your company is going, e.g. “Our vision is a world where art is as popular as music” and “Our mission is to make all art freely accessible to anyone with an Internet connection.

Values define how you get there, e.g. “Openness.

In the same way that defining your visual identity and branding is a critical foundation for any product or communication you put out to the world, defining your values becomes the foundation for your company culture, guiding the decisions you make, and the people you hire.

You may be asking yourself, things have been going well so far—why define values in the first place?

Undefined values can lead to compounding culture debt 

If you’re writing code for a personal project, initially you don’t need to worry about variable naming conventions, documentation, or writing tests. However as more engineers start to join your project, and the number of projects you work on multiplies, it becomes increasingly critical for everyone to be thoughtful and consistent in these choices, otherwise technical debt starts accruing exponentially and productivity drops just as fast.

Or consider the difference between one person keeping track of their personal books, versus building a communal library that can serve many people via shared protocols and infrastructure.

Similarly, when a company is small, the high degree of interaction between team members allows people to make decisions efficiently and consistently without having values defined. But as a company starts to grow, communication overhead and reaching alignment around decision-making and hiring becomes increasingly challenging. Delegating responsibility becomes more difficult because managers lack confidence that their reports will know to do things “The Right Way.”

Without common principles guiding decision making, management is more likely to instead implement top-down policies. The cycle begins slowly and is easy to justify “it’s time to grow up and implement sensible policies–we can’t have people showing up to the office after 10am.” However these well-intentioned policies make it harder to attract and retain top talent that thrives on freedom and responsibility, which in turn leads to lower performance provoking even more rigid top-down control from disappointed management and sending a once thriving startup into a death spiral of bureaucracy and mediocrity. In his book Delivering Happiness, Tony Hsieh describes this happening at one of his early companies where he went from being extremely passionate about the business to eventually not wanting to come into the office anymore.

Defined values lead to greater empowerment

Instead of constantly developing top-down policies to manage performance, a one-time investment in carefully defining core values creates a platform to empower employees to make decisions more efficiently and autonomously.

For example, in many companies the decision to open-source company code requires a top-down evaluation process, which at best takes up a lot of energy for everyone involved and at worst discourages engineers from open-sourcing anything in the first place. There is no one correct stance to have on Open Source–it will vary for each company depending on their goals and culture. At Artsy, our “Openness” value guided us towards an open source by default policy that empowers engineers to make the decision to open source code autonomously and discuss with their lead only if they think there is significant business risk. Such a policy is not for every company and there are pros and cons, but by deciding that Artsy fundamentally stands for Openness, we’ve replaced constant top down evaluation with a principle that empowers distributed decision making, leading to more freedom and responsibility for employees, more high quality code shared with the community, and less communication overhead for the whole team.

Conversely, a company could decide that they fundamentally value “Secrecy” and therefore engineers should not waste energy trying to open source code unless there is a strong business case to be made. Different values will drive very different results, but by having them fundamentally defined people have the context they need to make more decisions autonomously with less communication overhead. Whereas undefined values mean these questions need to be constantly reevaluated, and without guidance individuals become reliant on slow and top down decision making to get anything done.

Defined values reduce the risk of unconscious bias

Startups commonly discuss the concept of culture fit when evaluating performance or who to hire. It’s generally accepted that it’s important to look beyond someone’s individual performance and consider their impact on the rest of the team they’ll be working with, often described as someone’s “culture fit” with a team. However, if undefined, the expression “culture fit” will at best lead to inconsistent hiring decisions, and at worst “culture fit” may become a cover for unconscious biases to affect decision making. As research into unconscious bias shows, humans are naturally biased towards certain groups, and without guidance, individuals tend to interpret “culture fit” as someone that is similar to them or a group they have affinity for, leading to sub-optimal hiring decisions and less diverse teams.

At Artsy we define “culture fit” based 100% on someone’s affinity for Artsy’s vision and values. This clarity also allows us to be more conscious of when our reaction to someone is not related to our values or their ability to perform in their role e.g. “This person loves the same football team as everyone else at the office, I think they’d be an amazing fit” versus a reaction more clearly tied to our values e.g. “References described how open X was to receiving feedback and how they would always share their opinions openly and directly even in tough situations” which is more clearly aligned Artsy’s “Openness” value.

Of course, even defining culture fit 100% based on values always leaves them open to individual interpretation and bias. Instead of looking for a silver bullet solution to unconscious bias or eliminating any subjective evaluation of someone’s impact on company culture, a well defined values system (in conjunction with unconscious bias training) empowers people with the self-awareness and clarity to reduce unconscious bias and make better hiring decisions for their teams.

Values are your brand

Externally, your values form the foundation of your brand and public identity, impacting business partnerships, fundraising, and guiding your marketing and communications.

By having values written down and bought into by the whole company, they become a common touchstone that every employee can speak to with less top down oversight, empowering employees to communicate with external parties more freely and authentically.

In summary

Well-defined values protect a company from compounding culture debt, enable more efficient decision-making, reduce risk of unconscious bias in hiring, and empower team members to make decisions and communicate more autonomously.

To use a practical example of success, a well-defined system of values means that someone from your company could start a new office in a new city, and you’d be confident that 1 year later the people who work there, the office environment, and the local marketing and PR efforts would all be aligned with your company’s core values—even with that office operating autonomously from the rest of the organization.

Carter Cleveland