company values

Company Values: The Foundation of Effective Hiring

When it comes to hiring new employees, a bad hire can cost you up to five times the employee’s annual salary. Poor hiring choices set Zappos back $100 million, which is why the company began offering people money to quit. When Amazon bought Zappos, it adopted the “Pay to Quit” policy. Zappos and Amazon want to weed out the employees who are just there for the money—employees who don’t share the company values.

It’s tempting to hire people based on their credentials, status, and achievements. Nothing says “sure thing” like a proven track record, right? Wrong, because the technically qualified candidate can be a bad hire. They could be ready to move on the minute they get a better offer.

Interpersonal skills, values, and cultural fit often are the best predictors of how long an employee will stick around. To find long-term, quality employees, let your company values lead the way.

Cultural Fit and Company Values   

Without a clear identification of company values, the phrase “cultural fit” rings hollow. You must define what type of culture you want to take part in. Primarily, people want a culture of respect and trust between employees and management. In fact when it comes to job satisfaction for Millennials, 67 percent identified respectful treatment as the top factor, with trust coming in second.

This comes at a time when 80 percent of companies worldwide hire employees based on cultural fit. Yet, only about 45 percent of Millennials are satisfied with their jobs. There’s something askew here.

Look at it this way: if somebody hires you because they feel you fit the culture, yet you discover they don’t have respect for who you are as an individual, and supervisors don’t necessarily respect your ideas, will you want to keep working there?

It turns out that, for many organizations, cultural fit is not about a match with organizational values. Rather, it’s about how much the gatekeepers like the applicants—how they feel about them personally. And that’s wrong, because it’s too subjective. Other decision makers on the team might not share the gatekeeper’s personal preferences.

Any self-respecting organization will list respect for individuals as a primary value. Identifying your organization’s values helps you find candidates who share these values. You’ll eliminate hiring bias, and mutual respect between employees and managers will be a big part of your culture.

How to Be Values-Based

One example of a values-based organization is FM Global, a leading commercial property insurance company. FM Global saw a 93 percent employee retention rate in 2014, and its average employee tenure is an impressive 13 years. President and CEO Thomas A. Lawson identifies employee loyalty as one of the main reasons FM Global’s client retention rate is 95 percent.

Lawson highlights three values to ingrain in your cultural ethos:

  • Loyalty | Fill positions that aren’t entry-level by promoting from within
  • Freedom | FM Global promotes freedom by offering full tuition reimbursement for any learning related to its “unique mission”
  • Respect | Treat others how you want to be treated, give credit where it’s due, and have frequent employee appreciation events; use respectful language

Focusing on Values

When you interview candidates for new openings, find ways to gauge how much they value traits like loyalty, freedom and respect. You can even have them rate the traits on a scale. Ask them to identify a time when they were loyal, for example.

Focusing on freedom as a value with job candidates is a little bit tougher, because most everyone values freedom. The key is to determine what they do with freedom. Ask open-ended questions (questions that don’t have a yes or no answer) and see how comfortable the candidates are expressing themselves freely. Give them a chance to get creative by presenting a unique scenario and see how they run with it. Talk with them about how your company values freedom and see if their eyes light up.

You can also ask candidates about a time when someone they know made a mistake, and how the candidate reacted. This will help you understand how much they value respect. We all want people to respect us even when we make a mistake, because we all make mistakes. Listen carefully to their response. Even tone of voice can tell you whether they’re disdainful or respectful.

The Value of Diversity

Diversity is another part of respect for people as a primary value. In other words, if you respect people, you understand that people who aren’t like you can be of great value to your culture.

In a study from the Kellogg School of Management, diverse groups outperformed more homogenous groups. This wasn’t just because members of diverse groups brought different ideas to the fore. Actually, diversity creates awkwardness. According to Kellogg’s Katherine Phillips, “The need to diffuse this tension leads to better group problem solving.” She goes on, “It’s kind of surprising how difficult it is for people to actually see the benefit of the conversations they are having in a diverse setting.”

New ideas come up in diverse workgroups, and not just from newcomers. Conflict and differences of opinion get cognitive juices flowing. People are able to voice thoughts that were previously latent, and they come up with innovative solutions to problems as a group.

Women are a minority in business leadership—60 percent of firms don’t have a woman on the board. Yet there are plenty of statistics that speak to the efficacy of diversifying your leadership team by hiring women. Companies with the most female board members outperform companies with the fewest by 66 percent. Women rank higher than men on 12 out of 16 leadership competencies, and have a higher propensity for “outside the box” thinking, according to Harvard Business Review.

The Diversity Research Network carried out a study of diversity and business performance in which they examined four different firms. For one financial services firm with a big focus on diversity as a core value, an “integration-and-learning” approach contributed to “sustained benefits” from both racial and gender diversity.

The Value of Integration

The integration-and-learning perspective is one in which, “The insights, skills and experiences employees have developed as members of various cultural identity groups are potentially valuable resources that the work group can use to rethink its primary tasks, and redefine its markets, products, strategies and business practices in ways that will advance its mission.”

In other words, this perspective is about valuing the cultural backgrounds of each individual. Culture stems from both an individual’s racial identity and the group they identify with. People from different cultures have diverse knowledge and skills—they may know languages other than English, and they’re familiar with different perspectives and customs. The firm used employees’ varying skillsets and knowledge-points to improve innovation and performance, which helped grow portfolios at various branches.

The un-named firm is highly respected in its industry for diversity policies and strategies, and is highly successful, with a global reach. At the top, senior managers develop, “a formal diversity plan for linking diversity to education, recruiting, succession planning, career development, and business growth.” Diversity plans work their way down and impact the entire organization.

It’s About Values and Strategy

Ultimately, your values-based organization will find success in identifying its company values with precision. Integrate your values strategically throughout the entire organization. So, hire people who stand out as representative of your values, and promote those who excel at putting them into action. You’ll become known a place people want to work, thrive, and make a difference.



Daniel Matthews is a freelance writer and introvert who specializes in careful analysis, communication, and culture. A firm believer in the power of the written word, his mission is to help people think differently about the world, but he's also a firm believer in not taking himself too seriously.

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