Nowhere is talk cheaper in business than when it comes to the typical organization's stated Mission and Values. Most people, including the leaders, couldn't tell you the Mission and Values unless they dig up a copy of the employee handbook. Invariably, this disregard comes back as a bite on the butt.

The University of Louisville is playing fast and loose with Mission failure when it rehired its dishonored former football coach Bobby Petrino. I am not going to dwell on Petrino's failings, which are well documented. It includes everything from alleged links to recruiting violations to infidelity to misuse of funds (to hire his mistress at the University of Arkansas) to alleged organizational ineffectiveness discovered after he leaves any job. On the other hand, as a head coach he does win football games, which seems to be at the top of the University of Louisville's tunnel vision priority list.

With this decision, the leadership at Louisville has made it known that it will sacrifice its principles of conduct and belief for short-term gain that has nothing to do with its own stated Mission. The problem here is not Bobby Petrino. After all, he is simply fulfilling a basic law of economics in which people always act in their own best interest. No, what we have here at Louisville is a classic failure of organizational leadership. There is a lesson in this failure for all who make a decision to invest in organizations, whether it's a donation to a nonprofit or buying stock in a Fortune 100 company.

One thing the University of Louisville gets credit for is transparency. It has gone to great lengths to post its organizational processes and work online. Its Mission Statement, which should be no longer than a dozen words so as to guide staff every day as they go about their business, is a 73-word monstrosity. It's filled with a lot of buzzwords -- "premier," "nationally recognized," "excellence," "collaboration" – but not the word football or even athletics. I will state without fear of contradiction that not one of the organization's nearly 7,000 faculty and staff could tell you the Mission from their heart, which makes it useless.

Let's move on to their "Code of Conduct & Related Policies." It's a lot to remember too, but here are a few sections relevant to this discussion that apply to "any individual employed by the University, using University resources or facilities, or receiving funds administered by the University... volunteers and other representatives when speaking or acting on behalf of the University":

  • Honesty and rigor in all pursuits
  • Dedication to preparing students for what the future has to offer
  • Professionalism in our interactions
  • Accountability for resources and relationships
  • Transparency and integrity in decision-making
  • Act according to the highest ethical and professional standards of conduct
  • Be personally accountable for individual actions

There's more -- including some interesting reading in the university's Compliance Plan -- but you get the idea. For the sake of argument, we could assume the university leadership did not consider the Code of Conduct would not apply to the head football coach's actions in former jobs. But a further search reveals the leadership has thought about this issue. It's "Vision Statement" notes: "Athletic's compliance has been a concern not only at Penn State, but at the University of North Carolina, Ohio State, Tennessee, Southern California, and at other big-name programs."

Any organization that ignores its own Mission statement, Code of Conduct, and Vision Statement is asking for trouble. Maybe Petrino is a changed man, but the leadership at the University of Louisville is risking much to make this colossal exception to its own stated values. The least of which is alienating a highly educated workforce, which includes those at its world-class medical center. If Petrino does stumble – if he even loses his temper -- the university is risking a class-action lawsuit from its staff for violating its own policies.

Jim Collins has written several books demonstrating the empirical relationship between values-based leadership and the success of publicly owned companies. In his book Great By Choice, he noted of 10Xers leaders (companies that beat their industry indexes in earnings by 10 times) like Herb Kelleher at Southwest Airlines (NYSE: LUV) and Peter Lewis of Progressive Insurance: "Both...were nonconformists in the best sense. They started with values, purpose, and long-term goals and severe performance standards, and they had the fanatic discipline to adhere to them."

The landscape is littered with companies who acted as though their Mission Statement and Values were just a bunch of happy talk, rather than a key ingredient to success. Smart employees and smart investors seek those organizations and companies that hold everyone accountable to a great set of core values.

Fool contributor John Mitchell has no position in any stocks mentioned and has never attended The University of Louisville. He is longtime executive leader, including CEO. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.