Values and Procedures: Why You Need Both

Every company has both values and procedures. Yet we don’t always think of these as key elements–the yin-and-yang–of how our businesses operate. But that’s exactly what they are.

Let me explain.

We’ll start with procedures. These are the rules that we put in place to let people know how we expect them to behave in certain structured circumstances. I like to call these “human software,” because they lay out the prescribed behaviors that we expect people to follow. Think standard operating procedures like you’d find in a manual. What happens, for instance, when a customer drops off a rental car? There’s a procedure you want your employees to follow each time that happens. Another great example is McDonald’s. You can expect almost the same experience at any restaurant no matter where you go in the world. Trust me, I’ve been to McDonald’s restaurants in 12 countries. Other than some tweaks to the menu to serve local tastes, it’s the same experience every time. That’s because McDonald’s has amazing control over its procedures. Employees know what to do when customers order food.

But what happens in a business where everything isn’t as predictable as ordering hamburgers? In most businesses, you’re not going to be able to script out the procedures to every imagined–or unimagined–event that might come to pass in a given day. So, what do you do then? That’s where values come into play.

Most businesses have a set of values. They might even be printed on posters hanging in the lunchroom or on the back of business cards. But I’ll encourage you to look deeper at your values and the critical role they play in the operating system of your business. Your values are what guide your employees’ actions when something happens that you don’t have a procedure for occurs.  Ultimately, values will guide people to make a correct decision when there is no one else around and the rulebook doesn’t apply.

A great example comes from Stew Leonard’s, the supermarket chain headquartered in Connecticut, that is famous for its value that “the customer is always right.” That value then guides the company’s employees to act in even the foggiest of situations. I wrote about an older female customer who claimed she had lost an expensive pen somewhere in the store while she was shopping in my book, “Great CEOs are Lazy“. An employee hunted all over and came up empty-handed: he couldn’t find her pen anywhere. But rather than turn her away empty-handed–or worse, accuse her of making up the story–the employee grabbed a $50 pen from a shelf and gave it to the customer, no questions asked. He didn’t run it up the chain of command for approval either. He knew he was empowered to do whatever he thought he needed to take care of that customer, with a goal of turning that person (and anyone they gave a referral to) into a customer for life.

Another example along these lines is the Ritz Carlton. I remember a time when, while staying at one of their locations, I got lost trying to find the gym. As I stumbled around, I stopped and asked a housekeeper for directions. Rather than just telling me where the gym was, the housekeeper stopped what she was doing and escorted me personally to the gym–where she then brought me a towel and a bottle of water. One of the hotel’s core values is, “Ladies and Gentlemen serving Ladies and Gentlemen”. And this was a prime example of an employee living that value through her actions when there was no procedure to tell her what to do.

So that’s why you need both procedures and values in your business: procedures for when you know what’s going to happen, and values for when something happens beyond the daily routine. In the end, you need them both to run a great company.