Most hospitals have a formal statement of values (if they don't, they should), but few use that statement as a source of operational effectiveness and competitive advantage. All hospitals can take a lesson from Auto-Owners Insurance Company on using a values statement to build a culture of ownership.

Auto-Owners is a 95-year-old property, casualty and life insurance company headquartered in Lansing, Mich. It is a Fortune 500 company with more than 3,700 associates and nearly $5 billion in annual revenues. The company markets its products and supports its policyholders through a network of 37,500 independent insurance agents in 26 states.

The company is remarkably successful. Its productivity per employee is twice the industry average, while its employee turnover is half the industry average. It has grown steadily and weathered every economic storm of the past century without ever having to resort to layoffs. It consistently earns superior ratings for financial stability from the A.M. Best rating agency, has been rated for the past three years by J.D. Power as having the nation's highest customer satisfaction for claims processing, and received the prestigious Dale Carnegie Training Leadership Award in 2009. In the years I've worked with Auto-Owners, I've met associates and agents who are third-generation company loyalists.

If you ask any of the company's senior executives for the secret to Auto-Owners' success, they inevitably will point to a steadfast commitment to values. Auto-Owners has 10 core values:

  • Honesty
  • Hard work
  • Prudence
  • Loyalty
  • The team
  • Relationships
  • Opportunities for Associates
  • The customer
  • Stability and Consistency
  • Profit

The way the company has inculcated these values into every crevice of its operations provides seven important lessons for hospitals.

Lesson 1: Walk the talk. Having a statement of values and not honoring those values is worse than not stating them at all. Enron's values statement included the word "integrity," but that's all it was—a word. Every associate at Auto-Owners knows that honesty is first among its 10 core values and that the company has a zero-tolerance policy for dishonesty. And they know that if they all act on the first nine core values, Number 10—profit—will take care of itself. I've heard several stories of Auto-Owners managers sending associates home to write an essay on changes they will make to more consistently live the company's values—an exercise that can be far more effective than the traditional disciplinary counseling session.

Lesson 2: Make your values authentic. When the Auto-Owners leadership team crafted a statement of values seven years ago, they started with the question, "What values have defined our company over the past 90 years?" not "What values do our customers expect to see posted on our walls?" Too many corporate values statements, including those of many hospitals, read like they've been written by a consulting firm for a generic organization, or like they've been force-fit into a cute acronym like "I CARE" rather than being a real reflection of the organization's purpose, personality and priorities.

Like Auto-Owners, Zappos has 10 core values (which they say put the "zap" into Zappos). Zappos is a classic entrepreneurial success story, having gone from start-up, online shoe store to billion-dollar retail juggernaut in less than 10 years. Values like "create fun and a little weirdness" and "be humble" clearly were not written by an outside consultant. As CEO Tony Hsieh describes in his book Delivering Happiness, coming up with those 10 core values was a yearlong process that involved almost everyone in the company. The values are now a part of Zappos' corporate DNA.

Lesson 3: Use values as the foundation for corporate culture. The Auto-Owners leadership team deliberatively included "stability and consistency" in the statement of values rather than "growth." To be sure, the company has grown, but it has done so at a carefully controlled pace, assuring that it never jeopardizes the way the culture honors teamwork, relationships and superior customer service. You can visit any one of the company's regional offices and within minutes know that you are in an Auto-Owners facility, largely because it has honored stable and consistent growth over growth for its own sake, and this is reflected in the subculture of every regional office.

Lesson 4: Values should drive business priorities. A statement of core values can be a vital source of competitive advantage for recruiting and retaining both employees and customers. One of the best-known corporate values statements is the "J&J Credo" of Johnson & Johnson, which guided the company's response to the Tylenol poisoning crisis of 1982. Today, the company's website proclaims: "Our credo is more than just a moral compass. We believe it's a recipe for business success."

Auto-Owners has double the productivity of the industry average because hard work isn't just an expectation—it's a core value. The company has half the turnover of the industry average because its personnel policy creates opportunities for associates (the company almost exclusively promotes from within) and promotes loyalty (more than one associate has told me how they remember being asked to move their start date up a week so they would be eligible for the annual Christmas bonus).

Columbus Regional Hospital in Indiana is another example of an organization that operates according to its values. It has been recognized for having one of the top leadership teams in the country. In the summer of 2008, the hospital suddenly was evacuated as a result of a flash flood and remained closed for five months. During that time, hospital leaders were guided by its eight core values, which include ownership and valuing the workforce. They decided to keep every employee on the payroll during the reconstruction, at a cost of more than $40 million. Although headhunters descended on the community to lure away the hospital's best people, not only did it retain its workforce almost entirely intact, it established and staffed a new hospitalist program when there was no hospital in which to practice.

Lesson 5: Insist that people know your values and the associated expectations. In my presentations, I ask for a show of hands from people who can, without looking at their business cards, tell me the core values of their hospital. In a typical audience, only about one in 10 will raise their hands. I have the same experience visiting individual hospitals; it is a rare organization where every employee can tell me the values of their hospital, much less what those values mean in terms of attitudinal and behavioral expectations.

This would not be an issue at Auto-Owners, where it is expected that everyone will know all 10 values along with the expectations that are created by those values. Over the years, I've randomly asked hundreds of Auto-Owners associates to tell me what the company's values are, and almost everyone gets all 10 (and if they don't, someone in the next cubicle will tell them which ones they've left out). If your people don't know your values by heart, how can you be certain that those values are being reflected in the way they treat patients and each other?

Every hospital, either explicitly or implicitly, will claim such qualities as integrity and respect as core values. Yet, I've never seen a hospital that doesn't have an active rumor mill, which is a fundamentally dishonest and disrespectful practice. If a hospital truly is serious about these values, its culture would be intolerant of gossip and rumor-mongering; people would learn to confront these negative behaviors constructively, the way we not so long ago taught people to confront someone who was about to light a cigarette.

Lesson 6: Start at the beginning. The recruiting video on the Auto-Owners website focuses on the company's 10 core values (so does the video on the Zappos website). Both companies emphasize their commitment to those values during new employee orientation. Jim Collins, author of Good to Great, says that creating a great organization requires getting the right people on the bus. One of the best ways to make sure you are getting the right people on the bus and preventing the wrong people from getting on the bus, is to ask them to read and sign your hospital statement of values—ideally, including an outline of the concomitant behavioral expectations—even before they are allowed to interview for the job.

Lesson 7: Teach the skills of values-based leadership. Knowing that the only way someone can achieve a successful career at Auto-Owners Insurance is by living its values, then-chairman and CEO Roger Looyenga wrote a book called Take the Stairs (I was a coauthor) that outlines the five steps to a successful career with the company:

  • Develop your personal strength and character.
  • Make the right choices.
  • Work with the team.
  • Be a servant and make a contribution.
  • Become a leader.


Copies of the book were given to every associate and agent, and continue to be given to every new associate during orientation. An organization-specific book that's been written by a leader who himself has "taken the stairs" can be far more influential than a generic how-to book.

In recent years, hospitals have studied Disney, Ritz-Carlton and other companies famous for customer service excellence and have adapted their strategies to enhance patient-centered care. In the same way, health care leaders should expand their benchmarking horizons to learn about the strategic value of values from companies like Auto-Owners Insurance.

Joe Tye, M.H.A., M.B.A., is the CEO of Values Coach Inc., a consulting and training firm in Solon, Iowa. He is also a member of Speakers Express.

The opinions expressed by authors do not necessarily reflect the policy of Health Forum Inc. or the American Hospital Association.