If every one of your employees can’t recite your values statement by heart and explain how it applies to their job, you are missing out on a powerful tool that could help your company improve efficiency, morale and reduce risk.

A well-written and well-implemented values statement is one of the most important weapons in your business arsenal, yet many companies either don’t have one or don’t use the one they have to maximum benefit, says Dr. Christopher Bauer, a psychologist, trainer, speaker, and consultant on ethics.

In an interview with i-Sight (now Case IQ), Dr. Bauer outlined three ways an effective values statement improves business.

Increase Efficiency

“Anything you can do to get everyone on the same page in terms of what’s important obviously provides a huge amount of efficiency to the organization,” says Dr. Bauer.

A good values statement ensures that everyone knows why they’re there, and what they should be doing and thinking about. Implemented well and built over time into the fabric of an organization, an effective values statement streamlines the business and focuses management, leadership, customer service, etc, and fine tunes the brand, he says.

RELATED: How to Write a Company Values Statement

Help Drive a Culture of Ethics

A well-written values statement gives your employees values on which to base their behavior. “There’s an instant and very direct tie-in between a values statement and organizational ethics,” says Dr. Bauer. These values are reflected in the way your employees are filtering decisions in their day-to-day tasks, he stresses.

If the values statement is clearly understood to promote an ethical culture in the organization and employees understand how this relates to them and specifically to their jobs, they will behave in an ethical fashion at work.

RELATED: 6 Core Values Exercises for Defining Your Company's Ethics Culture

Reduce Risk

“When people know what’s expected, and that is trained and persistently reinforced, I think you also get employees at all levels of organizations who are able to spot when other employees, colleagues, coworkers or supervisors are edging off track,” says Dr. Bauer. This puts them in a position to implement appropriate communication, training or coaching.

“It not only creates efficiencies, but helps reduce inappropriate behavior, reducing the risk of not just people who aren’t keeping their eye on the organizational prize in terms of priorities,” he says, “but people who are doing things that are simply inappropriate.”

If coworkers are helping to curb behavior that is inconsistent with your values statement, they could be saving the company from legal, financial or reputational trouble too, points out Dr. Bauer.

“You’re really, covertly - or maybe not - training employees how to catch those problems early on and deal with them in an appropriate way,” says Dr. Bauer. “That has potentially a huge bottom-line impact, not only through improved morale… but also by simply reducing more tawdry financial risks like fines, shutdowns and jail time... And I think all of those far reaching benefits can derive quite directly from a well-developed, well-implemented values statement.”