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Three Types of Values by Francis Miller

Values are a bit like gravity, invisible to the eye but exerting a powerful influence. Values identify what's important to a business, both with regard to goals and how it operates, and they will have an impact on the thoughts and activities of you and your staff.

There tends to be a great deal of confusion about values so I have tried to provide in this newsletter a simple but effective approach to identifying them and using them to make your business more successful.

Values are short descriptions (they can range from one or two words through to a sentence) that either describe what is important about your objectives or describe the principles which lie behind a business's actual and desired behavior.

One reason that people get confused about values is that they don't realise that there are actually three different categories of values in business. These categories are:

- end-state values
- instrumental values
- ethical values

It's also important to realise that there is a crucial distinction between espoused values and values that are actually acted upon. Everyone has come across businesses that have great sounding values that aren't put into practice. Doing this means that your employees, customers and suppliers will just get cynical about your business.

Below you will find a description of each of the different categories and some questions you can ask to identify your values.

End-state values

End state values describe what is important to you about what you want to achieve and therefore can have a fundamental effect on the business's goals. You will have implicitly identified many of them when working on your vision and mission. However looking at them explicitly and what they mean in practice has the benefit of:

a) checking whether you've missed out any values that may need to be incorporated into your vision and mission.

b) checking whether there is any conflict between what you regard as important and the results that your vision is intended to deliver. For example, if wealth is an important value for you but your vision isn't going to deliver that, then you may need to rethink your vision.

c) giving you the chance to examine your values more deeply. By asking of each one, 'why is this value important to me?', you will discover more about your motivation and possibly discover that some aren't as important to you as you believed.

Examples of end-state values might include wealth, growth, enjoyment, social contribution, environmental protection and product/service quality. What these values mean in practice will vary from person to person.

End-state value questions

1) what is important to me about what I want to achieve?

2) what do these values mean in practice? How will I know I have achieved them?

3) why are each of my values important to me?

4) is there any conflict between my values and my vision and mission?

Instrumental Values

Your instrumental values describe key principles which need to become integral to the business's operations if it is to succeed. Examples could include:

- creativity
- innovation
- teamwork
- using state-of-the-art technology
- flexibility
- job satisfaction
- efficiency
- environmental protection (this can be as much a instrumental value as an end-state value)
- being customer-centred

Identifying them as instrumental values means that:

- you have singled them out as being important to the development of your business
- you are committing yourself to putting them into practice
- you want them to become part of the business's culture and so part of all staff decision-making

Once you have identified your instrumental values, you need to decide how to communicate them and how they can be operationalised so that they are not just words.

For example, if you have identified creativity as an important value, you will have to decide how it can be put into practice. This could involve issues such as:

- how to get staff to become more creative
- whether you need to start employing different types of people
- whether you need to alter incentive policies to reward staff for being more creative

If you have previously identified some instrumental values, it can be very useful to assess how much they have already been incorporated into your business's operations.

It can also be revealing to look at how people behave within the business and find out what values are implicit in what they do or what they don't do. For example, if you've not developed any new products, services or new ways of operating your business for a while, innovation can't be said to be one of your actual values however much it may be an espoused value.

Instrumental Value Questions

1) what values need to become key to the business if it is to succeed?

2) what needs to be done to put these values into practice?

3) how well have your existing instrumental values been incorporated into how the business operates?

4) what values are implicit within the activities and behaviour of your staff and are these helpful to the business?

Ethical Values

A few years ago, some people would have dismissed ethical values as a luxury. However the demise of Enron and Arthur Andersen has shown that an ethical deficit can be just as devastating as serious cash flow problems. Therefore it's vital that a business is crystal clear about what its ethical values are.

Ethical values describe what you believe is the right way for people in your business to behave. Honesty and integrity are two common ethical values.

As with instrumental values, it is important to ensure that ethical values are not just espoused but become central to your business's culture and that everyone is clear about what these values mean in practice.

It can also be useful to check whether there are any existing ethical problems in the business at the moment.

Ethical value questions

1) what are the ethical values that should be central in all your business's activities?

2) are there any areas in the business where people aren't upholding these values at the moment?

3) are people clear about what these values mean in practice?

You cannot get away from values. Even if you don't know what your business's values are, they will still be operating in the background with positive or negative effects. By identifying them you can begin to take more control.

Developing your values is just a small part of your internal business plan. For a comprehensive guide to writing your plan, purchase the Internal Business Plan Manual

© Francis Miller 2001-2007