Addressing the challenge of 80% turnover: Core Values

One significant challenge with building a business is people.  You are bringing together people with different backgrounds, different ways of working, and different priorities and putting them together to work on a project (your business). 

The problem is that when you bring a group of people together and they have nothing in common you create friction.  It turns into a bad marriage.  Well, worse it turns into many bad marriages: incompatible people trying to stick it out for the business or a paycheck.  

And that is inefficient.  

Just ask the kids.  

So as a result people get tired and leave, they search for something else.  And as business owners we wonder where all the good people are.  Why can’t we hire them?  Why don’t they stick around?  

Business owners then blame the candidates: “nobody sticks around anymore,” or my personal favorite: “millennials are .”

The vast majority of turnover failed delegation, and people who just don’t get work done problems have nothing to do with work ethic.  They are a result of values mismatch. 

The key to creating an organization where people want to work is to understand, communicate and hire people who share something.  That something is your core values.  

Notice that I didn’t write define your core values.  You can’t do that.  Core values exist whether you want them to or not.  They come from you and the people around you, those who stay with the organization.  

You observe your core values.  And when you write them down, express them and hire for them you begin to build a cohesive team that actually wants to work together.  

As a result, your core values help you stand out and differentiate in the eyes of employees, prospects and even your clients.  You start to attract people who are the right fit.  You will even attract clients who are the right fit, making the whole process of business management that much easier.  

So how do you identify core values

This is a very simple technique to get you started. 

Step one: Bring your leadership team together and ask yourselves what your core values are.  Ask yourself what you have to believe to work in your company.  What characteristics make a person successful? 

Step two: Write down a bunch of ideas.  Let this be a brainstorm with as little judgement as possible.   

Step three: Look at the ideas you wrote down and see what patterns emerge.  You will often find that there are groups of similar ideas that you can summarize with one word or phrase. 

Step four: Choose your top 5 or so values.  If you are an enterprise you can pick more, but for most businesses 3-5 is great.  

Once you have gone through these initial steps then the work of evaluating, refining and getting to the heart of the values begins. 

How to test and evaluate core values: 

First remove anything that is a “permission to play value.”  

Permission to play values are values that merely restate the rules of the game, that abide by play.  They are not different; they are not in any way unique.  

Sports is a great analogy here.  So, consider basketball.  The rules of the game are clear, and everybody lives by them: traveling, shot clocks, scoring, three points versus two points, fouls… you play by these rules or you don’t to play the game. 

In business these are things like: integrity, customer service, honesty, teamwork.  They are the basics to making your business work as a business. 

Core values determines who plays on your team.  Is it a team that works together and passes the ball?  Or is it a team of superstars who are just great at what they do but don’t work together.  How do they work as a team?  How do they support each other.  

These are core values.  And they have consequences.  A lot of people claim “transparency” as a core value.  Ray Dalio lives transparency: at his company every communication, conversation and meeting is made available to everyone in the company.  If you can’t live with that kind of transparency, you can’t work at Bridgewater. 

Your core values define how you work.  They will likely turn people away even as they attract the right people.  

If you start searching for company values you will find that a lot of big companies talk about permission to play values.  Why?  Because they can.  In truth, they haven’t given values much thought.  Large enterprises often publish permission to play values as their values.  These are meaningless and everyone knows they are meaningless.  

The core values exist they just aren’t expressed.  

Enron was built on integrity, publicly.  However, at Enron the core values were work hard, play hard, and something around doing what you had to do to deliver on your targets even if it meant lying, cheating and fraud.  

They didn’t write that on their website and most corporate giants don’t, but the values are there nonetheless. 

What do Core Values look like? 

Try to come up with something that is meaningful to you, that is descriptive and when taken together can only describe your company.  

Some values that we like are: 

  • We listen for the gold
  • No dry humping (no spammy sales)
  • Treat money like blood 
  • Have a warrior spirit (Southwest)
  • Create fun and a little weirdness (Zappos)
  • Embrace Ambiguity (Ideo)
  • Make Others Successful (Ideo)

Make them interesting and make them yours.  

Evaluate your values according to these three tests: 

  1. Would you choose this core value over money or new business?  Would you incur a cost to live it fully?
  2. Can you identify the opposite value?  This can help you identify overly broad or nebulous concepts because if a value doesn’t have an opposite then it isn’t really a value.  The opposite of honesty, for example, is dishonesty.  The opposite of frugality is spendthrift. 
  3. Can you imagine a version of your business existing without this value (or with the opposite value)?  I have worked with organizations that value teamwork highly (though we usually get more specific than teamwork), but there are organizations built around individual contributors that don’t work as a team.  

The Five Why’s Tool for Core values

Sometimes when developing core values, we get stuck on permission to play values or the things that we do in the organization.  Or even if they are not permitted to play, they are not unique enough to serve as a differentiator, they aren’t interesting.    

Download our Five Why’s tool here.

A great tool that we use to help flesh that out is to ask “Why?”  

Five Why’s is an analysis technique used to uncover the root cause of a problem.  After observing the problem, you ask why that observed thing happened.  If the answer is the root cause, great.  If not, you ask why again.  And you keep going until you get to a root cause. 

We use the same technique to understand core values.  If someone says that their core value is teamwork, we will ask “why.”  Why does teamwork matter?  The answer will suggest a new value.  If that is a good core value, great, if not we keep asking why, sometimes driving our clients crazy until we get to something interesting, meaningful and often times uncomfortable. 

Discomfort can be a good indicator that you have uncovered something important.  Often revealing a core value in a small company reveals something about the owner, manager or leader that feels a little hidden.  If you feel that, go there.  That is real.    

Core Value Assessment Tool

Once you have a set of values that you feel fit your business then you use these as a basis for hiring decisions.  Hire for values first and capabilities second: you can always teach people to do something differently.  You can’t teach people to BE different.  

Also evaluate the people in your team, do they live your values?  Do you have the right people working for your company?  Often this assessment just confirms what you already know, but it provides clarity around the why. 

We also recommend evaluating your suppliers and even your customers: the more you work with people whose value you share the easier managing your business will become.  

Use our Core Value Assessment tool to evaluate your team, prospects, and suppliers. 

The Power of Values

The key with core values is to understand what is important to you.  You can’t force them and you won’t create values that aren’t there.  But the more you solidify them, codify them, express them and build a business around them the easier your business will be to manage.  

This is how we take people from 80% turnover to 5% turnover.  There is no magic, just a bit of honest clarity. 


Mike Michalowicz: What Are Your Imutable Laws

Zappos Core Values

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