Are your corporate values doing more harm than good?
Take a look at this list of corporate values: Communication. Respect. Integrity. Excellence.
They sound pretty good, don’t they? Like a business that you can trust….
Except these are the corporate values of Enron, as stated in their 2000 annual report. And as history has shown, they’re pretty meaningless. The Enron Corporation was an American energy, commodities, and services company who filed for bankruptcy in December 2001. At the time it was revealed that Enron's reported financial condition was sustained by an institutionalised, systematic, and creatively planned accounting fraud, referred to since as the Enron scandal.
The Enron scandal became synonymous with corporate fraud and corruption. It brought scrutiny upon the accounting practices and activities of many other corporations in the United States and led to the introduction of stricter financial reporting regulations in the US. The impact didn’t stop there, as well as key senior figures from the Enron Executive Board serving prison time, there were ripples across the business world when Enron’s accounting firm and main auditor was dissolved.
The business issue with hollow values
Whilst this could be seen as an extreme case, Enron is far from the only company with a set of values that ring hollow when put to the test.
MIT SMR/Glassdoor Culture 500 is an annual index and research project that uses over 1.4 million employee reviews to analyse culture in leading companies. In the 2020 annual index the study’s authors compiled the corporate values of 562 firms and compared them to more than a million Glassdoor reviews, using a machine learning algorithm to parse the reviews. What they found was startling “The analysis reveals that there is no correlation between the cultural values a company emphasises in its published statements and how well the company lives up to those values in the eyes of employees. All of the correlations between official and actual values were very weak, and four of the nine — collaboration, customer orientation, execution, and diversity — were negatively correlated.” Sloan Review 2020
What is a value gap?
Corporate values statements are commonplace and research supports the view that they have little to no impact on employees’ day-to-day behaviour. Empty values alienate customers, create demotivated employees and undermine trust and credibility. When you don’t live up to the standards you set in place and the values you claim to hold dear you create a values gap. This gap is the difference between what a company’s leadership says they value and the actual lived experience of their employees.
Where does the value gap come from?
Leaders who see their organisation as rosier and more inclusive than their employees.
A belief that words can shape culture without doing the hard work with a focus on organisational systems.
The damage leaders can cause when going into self protection mode.
Values can shape organisational behaviour but only if they are approached in a more thoughtful and systematic way.
What happens when an organisation commits to its values?
Airbnb, the rising star of the hospitality industry, shows what happens when you build an organisation around a set of bespoke values. You won’t find anything as mundane as “accountability” or “integrity” in Airbnb’s company charter. When he co-founded the company, CEO Brian Chesky established the following set of core values;
Champion the mission
Be a host
Start multiple businesses
Embrace the adventure
Airbnb live their values by providing each host with safety guidelines and advice and regular reminders. Airbnb wants their hosts to provide a consistent accommodation experience which is no mean feat considering its accommodation is made up of millions of privately owned homes, hotels, apartments and alternative dwellings. To inspire its business partners and help them to aspire to the company’s values Airbnb asks its host to sign up to a code of practice, a culture and an ethos that is highly specific.
“Culture is a thousand things, a thousand times. It’s living the core values when you hire; when you write an email; when you are working on a project…We have the power, by living the values, to build the culture. We also have the power, by breaking the values, to fuck up the culture. Each one of us has this opportunity, this burden. Why is culture so important to a business? Here is a simple way to frame it. The stronger the culture, the less corporate process a company needs. When the culture is strong, you can trust everyone to do the right thing. People can be independent and autonomous. They can be entrepreneurial.” Brian Chesky, CEO of Airbnb
How do we close the value gap?
Leaders must be willing to challenge their experience - Don’t just live in an echo chamber of direct reports and peers. Listen to what everyone has to say - exit interviews, surveys, shadowing programmes, reverse mentoring, employee boards. Then act on what listening tells you - you said we did.
Move the bad actors on - Don't expect your employees to hold leaders to account. When you spot bad actors, take effective and swift action to address the issue.
Have a process for when your values are violated and see it through - What happens when we don't follow our values? What are the consequences? Make sure that everyone knows and understands the expectations and that there is visible recourse for when it happens.
Challenge and reward based on values - How do you recognise and reward behaviour that chimes with your values and that which goes against it?
Let process grow from culture - Promote and foster processes that grow from trust rather than rules. Support employees to hold each other accountable and support one another developing a culture of psychological safety and trust. In their book, Corporate Cultures: The Rites and Rituals of Corporate Life, Terrence Deal and Allan Kennedy noted “If employees know what their company stands for, if they know what standards they are to uphold, then they are much more likely to make decisions that will support those standards. They are also more likely to feel as if they are an important part of the organisation. They are motivated because life in the company has meaning for them.”
Values tell your employees, customers, and clients what your organisation stands for and what makes it different. Values can foster collaboration and leverage teamwork, uniting teams with a common goal and purpose. Organisations that don’t commit to or stand by their values can see rising turnover, poor staff retention, low morale and flagging productivity and innovation. Whereas organisations with strong and clearly defined values naturally draw and retain employees who are more likely to uphold those values.
Are you an organisation committed to delivering a positive workplace experience? Are you passionate about your organisational values and creating a culture where your team can thrive, innovate and lead with excitement and enthusiasm? Coaching, mentoring and training can be great ways to achieve this and can also help your leaders create a culture where your values are seen and felt everyday by every person.