Explainers

Why Organizations Don’t Live up to Their Values (and How to Fix It)

The difference between what a company’s leadership say they value, and the lived experience of their employees is the “Values Gap,” and has real financial and ethical implications for organizations.

If you had a big outdoor event coming up and wanted to ensure favorable weather, imagine what would happen if you wrote down words and phrases that described your preferred climate in big, bold letters and placed them outside in full view of nature. 

“Sunny.” “Warm but cool in the shade.” “Dear God, anything but humid.”

It’d be a pretty futile effort, but potentially just as effective as writing down your company values, if a recent study featured in the MIT Sloan Management Review is accurate.

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 emphasizes 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.”

This is The Values Gap–the difference between what a company’s leadership say they value, and the lived experience of their employees. Recent poster-children for the gap include Everlane (who championed “radical transparency” while hiding harassment, unethical practices, and union busting), The Wing (which promoted intersectional feminism in their values yet reportedly created a hostile work environment for women of color), and The Ellen Show (which stood for fun while allegedly subjecting staffers to sexual harassment and belittlement).

Where does the gap come from?

  • Hierarchies obscure reality. Our own research found that with every step up in seniority, staff saw their organization as rosier and more inclusive than those below them. As leaders, we simply see less (and as work has gone remote for most workers, it’s possible this has gotten worse).
  • Company culture is approached as a branding exercise. Leaders obsess over the words written down as their values (and often pay handsome sums to slick marketers to write those words for them) yet routinely end up with toothless and milquetoast platitudes such as “integrity,” cringe-inducing and confusing one-liners like “We are fun-gineers!” or overly aspirational claims of making the world a better place. Behind these failures is the flawed belief that culture can be copywritten into being. Just like the weather, organizational culture is a complex system, and its behavior is not governed by taglines. Culture cannot be shaped without a focus on organizational systems.
  • Leadership prerogative. Every single leader in a culture is that culture’s mascot to the people working for them–which means that no amount of pretty words and polished swag can undo the damage a single leader can cause. But cultures tend to be self-protecting, and as leaders have more influence, they are less likely to be removed.
  • Growth at all costs. While Wells Fargo was defrauding their customers by creating fake accounts under their name, “ethics” was one of their corporate values emblazoned on their walls and in their corporate materials. Volkswagen too claimed “ethics” as a core value as it sold “clean diesels” that were designed to cheat government emission tests and polluted our air. Both of those companies yoked their middle managers to impossible revenue goals and rushed timelines and actively looked the other way when they violated not only their values, but basic morals in pursuit of those goals. Due to those values violations, both of these companies have paid billions of dollars in fines, legal fees, and valuation plunges. 

While it’s easy to pummel company values like a piñata, even the researchers behind the aforementioned study don’t think it’s a wasted effort. Values can be effective at shaping organizational behavior, but only if approached in a much more thoughtful, deliberative, and systemic way.

Consider these ways to close The Values Gap for your people:

  • Walk a mile in someone else’s inbox. As leaders, challenge your experience of the organization by establishing deep and meaningful relationships with people other than your direct reports and peers. Yes, survey your staff regularly. Yes, conduct exit interviews. But also build an architecture for listening. Develop shadowing programs, reverse mentoring, and even a shadow board of employees. And then, of course, take action. Listening is essential, but without action, resentment and cynicism will accrue within your workforce.
  • Oust your bad actors now. A rising tide of employee activism has been purging truly bad actors, but don’t pass the buck and expect your people to hold your fellow leaders accountable. It’s irresponsible and it’s expensive when you lose your best people, pay out settlements, and fight unending PR fires.
  • Define culture as a shared contract. At NOBL, we’ve developed a Culture Contract to codify organizational values. This contract not only spells out values, but it explicitly names the cost of those values (e.g. ethics even at the cost of profits) and perhaps most importantly, it outlines a process for dealing with values violations. 
  • Actively admonish and reward behaviors based on your values. When we interviewed product managers at Amazon for our article on their planning process, they told us that your career could be quickly derailed if you were called out for not being customer obsessed enough in a meeting. At Zappos the same is true, but they also have custom tchotchkes to hand out when someone is recognized as living the organization’s values. Brian Chesky, founder of Airbnb, put it simply, “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.” To shape the complex systems of work, we must be conscious and vigilant to our values.

Published August 2, 2020

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