A long, long time ago…

Picture this: A ragtag band of medieval infantrymen huddles in the meager shelter afforded by a stony outcrop at the edge of a forest of birch and oak. It’s early November, and the bare trees offer little resistance to the cold North wind, which slices through the soldiers’ threadbare clothes. They are battle-weary, hungry and their wages are many weeks overdue.

A knight rides up and addresses them. “Men!” he cries, “The enemy has been sighted barely two miles from here. We must defend this position at all costs. Arise and follow me!”

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There is a tendency, when we talk about an organization's core values, to transport ourselves mentally into the realm of morality, ethics and humanism. We expect to see values like integrity, ethics, caring for society, and humanity trumpeted from the highest heights and endorsed by the leadership team, who implore us to believe that these organizational values are more important than short-term profits. Terms like ethical leadership and values-based leadership surreptitiously reinforce this perspective. It allows us, as observers, to beat the moral drum, while wagging our fingers accusingly at executives, who, we strongly suspect, are only in it for the money.

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The challenge for management in modern business is not to reduce or eliminate complexity, but to find ways to thrive in an ever-changing, complex world – a world where creativity and innovation are the fuel of success. Management can no longer afford to regard change as an ‘episodic interruption’. Instead, it should be viewed as an ongoing imperative.

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When strategy and culture are misaligned, implementation – even ‘by edict’ – is generally ineffective. However, when strategy is aligned with the organization’s authentic values, implementation follows naturally. This presentation outlines the practical steps that you can take to align your strategy with the values embedded in your organization’s culture. A real-life case study shows how, when values align with strategy, employees come forward with solutions that management could never have envisaged, while misalignment between values and strategy leads inexorably to the demise of the strategy.

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Drucker said "Culture eats strategy for lunch", implying that even the best strategies will fail unless supported by the organization’s culture. And since culture is the manifestation of the organization’s values, beliefs and collective behaviors, it follows that the successful implementation of any strategy depends, at least in part, on its alignment with the values that are actually in play. If your strategy is aligned with values that are merely aspirational, it is doomed to fail at the first hurdle.

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If organizational values are ever to receive the attention they deserve from senior management, it is critical that the topic become less ‘rarefied’ and more practical and accessible to the average businessperson.

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When it comes to organizational values, it seems that integrity is the poster child, the go-to, the motherhood and apple pie, the essential ingredient. In a recent study conducted by Consilient Inc., integrity was found to be included in the core value statements and codes of conduct of about two-thirds of the world’s leading organizations. One has to ask why? What is it about integrity that makes it so prominent in the common language of business?

The Oxford dictionary defines integrity as: “The quality of being honest and having strong moral principles”. The online Business dictionary says integrity is: “Strict adherence to a moral code, reflected in transparent honesty and complete harmony in what one thinks, says, and does”. Our study confirms that organizations mention honesty in conjunction with integrity roughly half the time, so it’s clear that integrity is most commonly associated with honesty. But the story goes much deeper than that. In fact, unpacking some of the semantics underpinning integrity may cause you to see this apparently overused value in a new light.

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General Motors’ ignition switch problem has resulted in anywhere between 13 and 300 deaths – depending on which source proves to be accurate – and a recall of more than 2.6 million vehicles. It took more than 11 years for the organization to take the necessary action to fix the problem, according to a report issued by Anton Valukas, the former US Attorney charged with investigating the issue.
The Valukas Report identifies aspects of the corporate culture that prevented the issue from escalating to higher levels of management, including, an unwillingness to raise problems for fear that it may delay the launch of a vehicle, a fear of reprisals against employees that raise safety issues, a devotion to cost control that “permeates the fabric of the whole culture”, and the lack of accountability – referred to as the ‘GM salute’.

Core Values and Culture

An organization’s core values should be the foundation of its culture. In the case of GM, it is clear that the values embedded in the organization are not the same as their stated core values. At the very least, they violated their stated values of ‘safety’, ‘accountability’, ‘quality’, and ‘customer focus’. One could also argue that they violated a few more too.

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The values which organizations claim to espouse bear little relationship to those expe­rienced by their constituents. This emerges from research conducted by Consilient Inc. in 2014. An examination of the core values and codes of conduct of 225 major organizations showed that Integrity, Innovation, Respect, Teamwork and Quality were the most frequently claimed values. No surprises there.

However, a subsequent survey of North Amer­ican employees and customers produced a very different picture, pointing to a significant disconnect between claim and practice. The values that organizations are most often perceived to embrace are Compliance, Confi­dentiality, Safety, Security and Wealth creation. Conversely, the values that are most often thought to be disregarded are Openness, Employee empowerment, Gratitude, Caring for employees and Humility.

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A report released by the Hay Group in 2013 predicts that voluntary employee turnover is set to rise sharply as the world’s economies return to growth. In North America, the report forecasts average turnover of 23% for the five years from 2013 to 2018. Given that this is more than two-and-a-half times the 2011 voluntary separation figure of 9% reported by SHRM, the term ‘sharp rise’ seems somehow inadequate.

So what do these figures mean for employers? To answer this, let’s try to figure out how much it would cost to lose nearly a quarter of the workforce in a single year. Estimates of the cost to replace an employee vary widely depending on sector, skills, seniority and experience but it is generally accepted to lie somewhere between 20% and 150% of annual salary. A good, conservative figure would be 50%...

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Infographics

How Organizational Values Affect US Employee Turnover

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How Organizational Values Affect Canadian Employee Turnover

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Claimed Versus Perceived Values

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Walmart Values Effect

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