Company Values Are Who You Hire, Reward, and Fire

Recently, I was working with the TeamFirst team to help them establish their company values. After my first ad hoc attempt to describe what makes good company values, what was produced looked a lot more like a mix of operating principles and OKRs. I realized TeamFirst had fallen into the same trap I’ve seen many companies fall into and I had not properly explained the difference between all of these concepts. So I figured this week I would spend the time to properly explain my thoughts on the difference between all these terms – company values, operating principles, and OKRs. What each is meant for and how you too can come up with good values for your own company.

TL;DR

Company values = who you hire, reward, and fire

Operating principles = Given left or right, how do you pick? 

OKRs = What is our current theory of success?

What are Company Values?

Ultimately, a company is made of people. It starts with the founders, but eventually founders hire employees and those employees hire other employees. Even if a company only ever publishes a product and customers never interact with your employees directly, how those employees create and operate your product will affect how customers perceive your company. 

So who works at your company ultimately defines your company. So having a rubric about who you hire (and maybe more importantly who you fire) is extremely important. Hiring for skills is one part of that rubric, but given two candidates with similar qualifications, how do you choose the one that will ultimately be a better expression of your company? This is where company values come into play. 

Often companies have a “culture fit” interview. But the problem with “culture fit” as a rubric is that every employee has their own version of what “culture fit” means to them. At its worst, “culture fit” type interviews subtly push the organization to hire more of the same type of people it already has (people naturally like people that think/act/look like themselves). This hurts the organization's diversity of thought and ultimately will hurt the organization's performance in the long run. 

But this is where one can leverage their company values to create a more objective rubric to hire with. “How aligned is this candidate to our company values?” or “In their interview how did they exhibit value X?” or even asking a candidate to tell you a story of “how they demonstrated value Y in the past” are all better questions to ask as part of candidate selection. These are more objective questions that are less susceptible to bias from the interviewer. These are also great questions to ask about existing employees during a performance evaluation. Company values should not just be enforced during hiring, but reinforced constantly. During annual performance reviews, monthly all-hands, or just in the moment praise, “Wow, that was an excellent example of value Z!” Company values should be brought up so often that every employee should be able to recite them by heart.

Good vs bad company values

First off, the number one mistake I see companies make when it comes to company values is having them be generic good traits. “Integrity”, for example, is a horrible company value. It may be a good baseline requirement, but it's not unique to your company or culture. What company in the world can operate if their employees don’t have integrity? Your company values should be unique to you and the culture you either have today or want to have in the future.

A good litmus test for a company value is, “Would the opposite of this value be a good value at a different company?” For example, Facebook for a long time had the value of “move fast and break things”. They wanted to prioritize employees who were willing to take risks and create a culture where failed experiments weren’t punished. That worked for Facebook at the time, but one could imagine the opposite value, “measure twice, cut once” would be a great value at a medical instruments company. There, having employees moving fast and breaking things could mean people die. Instead, that company needs to prioritize employees who are methodical in their thinking and extremely careful in the way they conduct experiments. While the values may be opposite, they are both great for their respective companies.

The other thing you want your values to do is turn off a percentage of your potential candidates. Not everyone is a great fit for your company, nor is your company a great fit for every person. And that’s good and how it should be. Your values should have enough “bite” to them that they turn off the candidates you don’t want to bother even interviewing while attracting the type of employees you want working for you. For example, at my previous company, Lattice, we had the value “Ship, shipmate, self”. Meaning, you put the company first, then your teammates, then finally yourself. Some folks may bristle at the idea of working for a company that explicitly calls out putting the company before themselves. But there are other companies that would better fit for those that react that way. We wanted to attract the type of people that were more missionary than mercenary that would read that value and think that that’s the kind of place for them.

Finally, while nothing is permanent in work (or life), your company values should be able to last your organization years, not months. Unless your company is going through a major cultural shift, there should be little reason to change your company values. If your values seem to just be “meeting the moment” or reacting to a specific situation, it may be a sign to revisit them and pick something more substantial and authentic to your culture.

How to choose your company values?

If you are picking your company values for the first time, or this article has inspired you to revisit the values you already have, you may be asking yourself how you even come up with these unique, compelling, and somewhat controversial values yourself. To get there, let's first talk about what not to do. 

When we decided to first set company values at Lattice, we did it by getting every employee involved. We gathered everyone at the time (around 15 people) and had everyone write down their top three personal values on index cards. We then collected those cards and grouped them into common themes. We then turned those themes into our first set of company values. And those values ended up being horrible. Not only did they feel generic, but they did not actually resonate with any of the employees, and not a single person in the company could recite them (including us, the founders). It turns out that trying to be inclusive and getting everyone involved in the process means your values become the lowest common denominator between everyone. The opposite of what this article pointed out makes for good company values. Instead, your values should come from two sources – the founders and your best employees. 

For better or worse, much of your company culture is going to be set by the founders early on. The founders have a ton of influence on who is hired and how things are done in the early stages of the company. This high degree of influence becomes the initial company culture. When translating the founders’ traits into company values, try to think about what makes your founders different. What is their special way of thinking or acting that you want to multiply and reinforce across all employees? The same goes for your best employees. Not all employees in your organization act or perform the same. As a founder, you probably have an intuitive understanding of which of your employees are the most representative of the culture you want. What makes them different from your other employees? What do they say or do that makes them stand out in your mind? Distill those traits into values, and hopefully you can start to spread what they say or do to the rest of your employee base.

Finally, keep the number of company values to a minimum. The more values you have, the weaker they make each other. At Lattice, after our first set of disastrous company values, we looked at traits we had as founders as well as our best employees and came up with 4 values. “Ship, shipmate, self”, “Chop wood, carry water”, “Clear eyes”, and “What’s next?”. These lasted the entire time I was CTO – from around 30 employees to roughly 450 when I left. While their nuance in meaning changed over time as the company grew, the values themselves did not. We used them in every hiring decision, performance review, one-on-one, and company shoutouts. They were integral to our culture, and I would often give an hour-long talk about our values to every new class of incoming employees.

Operating Principles & OKRs

This article has gotten a bit long – it turns out I have a lot to say about company values – so I will save Operating Principles & OKRs for next week's article. Stay tuned for part 2 very soon!