Purpose and Values

Most values exercises produce a list of pleasant words that nobody can recall by Friday. Integrity. Excellence. Teamwork. They go on the wall, and then the business carries on making decisions on the basis of whatever is most urgent.

The test of a value is not whether you like the sound of it. It is what happened the last time holding it cost you money. If nothing comes to mind, you have written an aspiration, not a value.

What the model is

Purpose is what the business is for. Not a slogan, and not necessarily noble. "To fund a decent life for my family and employ twenty people well" is a perfectly serious purpose. It just has to be true, and it has to be yours rather than the one you think you should have.

Values are the handful of rules you keep when keeping them is expensive. That last clause is the whole model. Anything you abandon the moment it costs you a client, a deadline or an argument was a preference.

A quick test for purpose: would it still be true if the business doubled, and would it still be true if it halved? If the answer changes with the turnover, you have written a target rather than a purpose. Targets are useful. They are just not the thing that tells you what to do when two good options point in different directions.

Underneath both sits behaviour, and underneath that sits evidence. The direction runs both ways. You set purpose and values from the top down, and you verify them from the bottom up. Where the two disagree, believe the evidence, because that is what everybody else in the business is doing.

Why it matters to an owner

A value you actually enforce is a decision rule, and a decision rule removes a whole category of decisions from your week. If "we do not take work we cannot deliver well" is real, you stop debating every stretched enquiry. You have already decided. That is worth hours, and it is worth more than the hours because it stops the slow drip of decisions that contradict each other.

It matters for hiring, too. Skills you can assess in an afternoon. Values you find out about in month four, usually in the way someone treats a supplier or handles a mistake they could have hidden. If you cannot state what you will not tolerate, you cannot recruit for it, and you certainly cannot performance manage against it.

And it matters because culture is not what you announce. It is the worst behaviour you walk past. The team is watching what happens to the person who bills badly and hits target, and reading your values off that, not off the wall.

A worked example

Illustrative. Take an agency owner turning over £900k with "we do right by our people" on the website. A client on a £5,000 a month retainer is abusive to the account team: weekend demands, changed briefs, a designer in tears twice.

The owner keeps the client for eleven months, because £60,000 a year is £60,000 a year. In month nine the account manager resigns. In month twelve a designer follows. Both cite the same client in their exit conversations.

Now the arithmetic, illustratively. That retainer runs at a 20 per cent net margin, so it contributed roughly £12,000 a year of profit. Replacing two people on £35,000 each cost recruitment fees of around 15 per cent, so £10,500, plus perhaps three months apiece before the replacements were productive. The value was not expensive to keep. It was expensive to break, and the bill arrived a year late in a different line of the accounts.

The version where the value is real is unglamorous. In month two the owner has a direct conversation with the client about how the team is spoken to, sets a condition, and resigns the account in month three when nothing changes. He loses £12,000 of profit and keeps two people who together bill six figures, plus the credibility to ask the team for something difficult later.

How to apply it this week

1. Write down four values, then hunt for evidence. For each one, find a decision from the last quarter that proves it. A client you turned down, a person you promoted, an invoice you did not send. No evidence, no value.
2. Apply the cost test. Name the last time each value cost you money, time or a relationship. If a value has never cost you anything, you have not been tested on it yet, and you should assume you do not hold it.
3. Rewrite each one as a rule. Not "integrity", but "we tell the client about our mistake before they find it". A value written as an adjective cannot be broken. A value written as a rule can, which is what makes it useful.
4. Give each rule a hiring question and a firing line. One question you will ask at interview to test for it, and one behaviour that means someone cannot stay. If you would not actually let someone go over it, cross it off the list.
5. Audit the diary and the bank statement. Three months of both. Where your time and your money went is your real value set, whatever the wall says. Sit with the gap before you try to close it.
6. Name the one you have been breaking. Tell the team which value you have not been living up to and what you are changing. Nothing makes values real faster than the owner going first.

The mistake most owners make

The common mistake is choosing values whose opposite is absurd. Nobody advertises dishonesty or shoddy work, which means integrity and excellence tell your team nothing and cannot guide a single decision. A real value has a genuine, defensible opposite that other good businesses have chosen. "We answer the phone to a human" is a value, because plenty of decent firms decide otherwise. "We are honest" is a claim about hygiene.

The second mistake is treating this as a marketing exercise. Values written for the website are optimised to attract, so they end up describing the business you would like people to think you run. Values written as a filter are optimised to exclude, and they cost you work, applicants and occasionally a friendship. Only the second sort changes anything.

The third is having too many. Eight values is a list nobody can use under pressure. Three or four that you would actually enforce beat a page of them.

The questions to sit with

• Out of 10, how confident are you that your team would list the same values you would, without looking them up?
• What did you tolerate last quarter that you would have to say was a value in practice, whether or not you would write it down?
• Which client or member of staff are you keeping for the money, against something you say you believe?
• If the business had to shrink by a third, what would you protect first, and what does that tell you about what it is for?

This work sits at the front of Owner Foundations, in the Purpose & Values session, because almost every later decision runs through it. Strategy, pricing, hiring and the answer to a bad client all get easier when you have decided in advance what you will not do for money.