As a Founder or a CEO, your job is to build a company that creates sustained value for its employees, customers and stakeholders. Essential to this is defining and living by a set of core values. Why? Because core values breed competitive advantage and sustained value. How? Core values are the foundation of culture, behavioral norms, and decision making in the company. Strong cultures help recruiting and retention, in both good times and in bad. Shared behavioral norms lead to more efficient execution. A common decision making framework allows the company to decentralize and scale faster.
When I founded Adchemy in November 2004, I knew that a fundamental task would be to create a set of core values with my team that would be central to everything we do: They would govern how we work with each other; how we would deal with conflict; who we would recruit and promote; and how we would make investment decisions.
Adchemy’s six core values are:
- Play to win… as a team
- Dare to Simplify
- Be Long-Term Greedy
- Decide with Data
- Learn. Then Teach
- Never Compromise Integrity
In addition to quantifiable performance objectives, everyone at Adchemy is tasked to embody these values. Today i believe our culture is our most strategic asset. How did we establish this, and how do we keep it alive despite doubling our headcount year over year?
1. UNEARTH YOUR VALUES
Early on, we had everyone in the company spend a few weeks hammering out our values. We didn’t have marketing write them or look up values books to see what Edison or Rockefeller might have written. We all had a keen sense of what was important to us, what kind of company we wanted to build, and what types of people we wanted to work with. We used an consultant to guide our thinking and came up with our values to govern all aspects of Adchemy from building products to selling to customers to running financials. The entire team took ownership since these were their values as much as mine. As a result, what we ended up with rings incredibly true.
Some rules of thumb: Take a stand. Don’t waffle. Don’t try to please or appease. This will mean some people will not fit your culture and your values. This is a good thing.
2. BROADCAST YOUR VALUES
Values are useless if they only sit behind the CEO’s desk or buried in Powerpoint presentations from HR. Make your values visible. Hold people accountable from your board members to your most junior employees. If your summer intern can embody your values, you know you have succeeded.
We market our values just as much as we market our products. They are broadcast on our Web site, across the walls of our offices. We live them day in and day out. I tell the company that if they don’t find me living by a value, they have an obligation to tell me so.
3. HIRE YOUR VALUES
If you don’t make values integral to the hiring process, all is for naught – your values and culture get diluted by the vagaries of hiring.
Most of my time in interviews is spent assessing whether the candidate is a good fit with our values. Of course, you still need to screen for competence. But competence alone necessary but not sufficient.
Once you start explicitly looking for values in your hiring process, a virtuous cycle starts –prospects who share the same values become more interested in the company, and those who don’t share the same values tend to self-select out.
4. REWARD YOUR VALUES
Measure and reward what you want. In annual performance reviews we rate people on “performance against objectives” and “behavior against values”. We weigh both equally. Many people question how we would objectively rate behavior against values. There is always judgment involved, but that’s ok. It is the measuring and the discussion that is important, not whether you got an 8.2 or a 8.7 out of 10. And we celebrate values-performance: we announce “Living our Values” awards at monthly all hands meetings, and at this year’s holiday party, we awarded employees who had exemplified a company value throughout the year. In all cases, recipients are peer nominated.
Now for the hard part. You cannot tolerate behavior that violates core values, regardless of the performance of the individual or their seniority. As difficult as this might be, you need to take steps to ensure that individual changes their behavior or is asked to leave.
Murthy Nukala is currently the founder and CEO of Adchemy, a web marketing company. Previously he was founder and CEO of Digital Jones, a startup focused on guided selling solutions. Digital Jones was acquired by Shopping.com, where Murthy served as senior vice president for enterprise products before launching Adchemy.