Key principles of values-based leadership (and what it can do for your business)

Good leadership is essential to successfully implementing your core values and building a strong organisational culture.

For many of today’s businesses, this means adopting the values-based leadership approach to align actions and decisions with personal values.

This approach is popular for creating guiding principles that reflect core values and beliefs. These principles then provide a framework for decision-making, developing employee behaviour and guiding the actions of leaders.

In this article, we’ll explore the meaning behind values-based leadership, its main principles and benefits, plus how to implement it in your organisation.

What is values-based leadership?

Values-based leadership is a leadership style that’s based on the values of both leaders and their teams. It’s also based on the philosophy that people motivate themselves by implementing their personal values in everyday life.

At its core, values-based leadership is about leading with a purpose and with a clear sense of what matters the most to you. In other words, it’s about being loyal to your beliefs and living by them both in your professional and personal life.

Businesses adopt this approach to improve their organisational culture, particularly for building an environment of trust and transparency, where everyone feels valued and respected. When companies effectively practice and embed their values into their culture, this builds authentic relationships with workers, ultimately leading to increased employee engagement and retention, as part of a positive workplace environment.

Moreover, values-based leadership can also help business owners and managers in the decision-making process. When a leader is clear about their values, it’s easier to weigh the pros and cons of different options and choose the one that aligns the most with those values. This can help ensure that decisions are made with the company’s mission statement and overall goals in mind. 

The key principles of values-based leadership

The concept behind values-based leadership is that an organisation based on shared values is more likely to be productive and flexible than one that works towards a goal that only some people care about.

To achieve this, a leader or manager should apply the following principles: 

1. Self-reflection

This is when leaders take the time to reflect on their decisions and motivations to reevaluate their choices, determine their purpose and find out what matters the most. This means questioning the “why” behind decisions, considering alternative approaches and understanding the consequences – both positive and negative – of those choices. As a result, leaders can understand themselves better, leading to more authentic leadership, stronger decision-making and the ability to guide their teams with greater clarity and confidence.

Effective self-reflection should start with gathering feedback from upper-level staff, team members and performance review reports. This ensures the leader can identify and address potential areas for improvement in engaging team members and decision-making.

2. A balanced perspective

This means looking at situations from different viewpoints to gain a better understanding and considering all sides and opinions with an open mind. 

Leaders who listen to all stakeholders and are open to diverse perspectives not only make better-informed decisions but are more transparent when they make the final decision. As a result, leaders will earn more respect from all company players, as they’ll know that their views have been acknowledged and understood.

3. True self-confidence

True self-confidence is about leaders understanding and accepting their strengths and weaknesses, as well as a willingness to develop or support areas that need improvement. This includes accepting the strengths of others that they lack themselves and seeing it as a positive contribution to the team rather than a reflection of their inadequacy.

Leaders who have the self-confidence to be open about their weaknesses and willing to seek help inspire their teams and foster a culture of authenticity and resilience. 

4. Genuine humility

Good leaders are humble and understand who they are and where they come from, including the belief that they’re no different from the people who work for them. It’s about ditching egotistical attitudes and understanding that every employee holds just as much value to the company as they do, regardless of their level or type of company culture.

Genuine humility helps leaders to keep life in perspective, especially when becoming successful in their careers. It also helps them to appreciate everyone in the organisation and create an inclusive environment that encourages collaboration and innovation.

How to implement values-based leadership

Now that you have an understanding of values-based leadership, its benefits and how it works, next is how you can implement it into your organisation. Whether you’re building your culture from the ground up or are changing your current one, here are steps you can take to effectively implement values-based leadership in your company.

• Lead by example

Leaders should reflect their professional values through their actions and encourage a shared purpose. For example, if “sustainability” is a core value, leaders should consider the environmental impact in their decision-making, such as choosing an eco-friendly supplier for product packaging.

Example: Toy company LEGO has made significant efforts in sustainability and reducing its environmental impact. It aims to reduce its greenhouse gas (GHG) emissions by 37% by 2032 and has introduced annual key performance indicators (KPIs) to engage employees in meeting these goals. Other companies that live by strong core values include Ben & Jerry’s and Starbucks.

• Foster a value-based culture

It’s important to remember that core values and culture are different concepts, even though they work closely together. A value-based culture is built around your core values that guide employee behaviour and decision-making. Aligning your values with your culture will give employees a sense of purpose, leading to better productivity overall.

Example: Global software company UiPath lists “humble”, “bold”, “immersed” and “fast” as its core values. Its culture aligns with these values by approaching work with humility, accelerating human achievement, taking risks and learning from mistakes. UiPath won the Best Company Award in 2022, made Business Insider’s top 25 list for best leadership, and was described as “living and breathing” the values on which it was founded.

• Practice servant leadership

This is a style of leadership that prioritises the success and wellbeing of others over personal gain or recognition. They believe in the power of their team and focus on member success over their own, in turn demonstrating a commitment to the growth and wellbeing of others and creating a culture of trust, cooperation and strong motivation.

Example: Courier company FedEx has a simple philosophy of “People – Service – Profit”. Its former CEO, Fred Smith, stated: “When people are placed first they will provide the highest possible service, and profits will follow.” This means that employees who trust its organisational goals and have a strong desire to contribute will ensure the company’s success.

• Follow the leader-as-a-coach model

Good leaders also act as valuable mentors or “coaches” for team members, developing employees as individuals while working together to achieve a common goal. The leader-as-a-coach model involves recognising a member’s strengths and weaknesses, one-to-one communication, evaluating work and providing feedback. This can help employees grow professionally and develop new skills, allows team members to think freely and make decisions towards their personal goals and contributes to a more positive company culture.

Example: Former COO of Facebook, Sheryl Sandberg, values mentorship and allowing team members to reach their full potential. Sandberg demonstrates a strong coaching leadership style by praising members who meet or exceed her expectations. She also provides feedback to help them achieve better results next time and uses the connection she has with her team to figure out and tackle any challenges or obstacles.

Conclusion

Good leadership is crucial for building a strong company culture and aligning actions with core values. 

Values-based leadership ensures effective decision-making, fosters trust and creates an inclusive environment where every opinion is valued. It’s about prioritising the company’s values in every decision, being open to diverse perspectives and mentoring employees for growth.