Organizational Values: Building Culture with Data

Organizational values play a vital role in shaping company culture, guiding decision-making, and fostering trust and credibility. As a result, values have significant impact in driving ethical behavior and overall performance within organizations.

But measuring employees' adherence to values can be a challenging task. When possible, professionals should use empirical approaches to better measure adherence to values and to evaluate employees' alignment with organizational principles.

Organizational Values and their Importance

Organizational values are the guiding principles and beliefs that shape the culture and behavior of an organization. They define the organization's identity and serve as a compass for decision-making and actions. They include the fundamental beliefs that guide employees' behavior, shape the organization's relationships with stakeholders, and drive its overall mission and vision.

Some organizations choose character principles to serve as organizational values, such as the following:

• Integrity: A commitment to honesty, ethical behavior, and accountability in all dealings.

• Innovation: A culture that encourages creativity, improvement, and progress.

• Respect: Treating all individuals with dignity, and acknowledging the diversity and worth of every employee.

• Teamwork: The belief that collaboration and cooperation are essential for achieving common goals.

• Excellence: Striving for high performance and exceptional service quality.

• Customer Focus: Ensuring that all decisions and actions are based on customer needs and satisfaction.

These values may be communicated through a company's policies, procedures, and actions, and they can have a significant impact on how the organization is perceived by its employees, customers, and the public.

An organization's leaders play a crucial role in embodying values and demonstrating them through their behaviors and decisions. Deloitte’s publication titled Tone at the top: The First ingredient in a world class ethics and compliance program describes the critical roles played by the board of directors, CEO, and chief compliance officer (CCO) in establishing and sustaining a culture of integrity through practices like recruiting and screening, reward systems, and employee exit processes.

A well-defined set of organizational values can foster a positive work environment, enhance employee morale, improve job satisfaction, and contribute to the overall success of the organization.

Examples of Companies Known for their Values

Some organizations are known for their demonstrated commitment to organizational values.

Google's organizational values were encapsulated in a famous motto, "Don't be evil" which was originally written as a small note on a whiteboard by an engineer who was concerned about approaches for monetizing search results. Google embraced the motto and communicated this value in its S-1 filing with the SEC. The company tried to embody this value through initiatives aimed at enhancing access to information, like Google Scholar for academic research, and investing in renewable energy sources to offset its environmental impact

Patagonia is well-known for its strong commitment to environmental sustainability and ethical business practices. Since 1985, the company has pledged 1% of its sales to environmental causes, uses recycled materials in many of its products, and encourages customers to repair their gear rather than buying new.

Johnson & Johnson has a documented "Credo" value statement that puts the needs and well-being of the people they serve first. Their commitment was famously exemplified in 1982 when the company swiftly responded to Tylenol cyanide poisoning cases by removing over 31 million bottles of Tylenol in a national recall. The costly decision demonstrated its priority of customer safety over near-term profits.

Empirical Measurement of Adherence to Values

Measuring employees' adherence to organizational values can be challenging for a number of reasons. Values are often abstract and can be subjectively interpreted. What one person sees as a display of integrity or teamwork might not be perceived the same way by another person.

Many values, such as respect, empathy, or innovation, represent attitudes and mindsets rather than concrete actions that can easily be measured. While you can measure the results of innovative thinking, like new patents or successful products, it's harder to measure the innovative thinking process itself.

For these reasons, companies may need to use a combination of qualitative and quantitative methods, direct observations, feedback from peers and supervisors, and self-reporting to assess employees' adherence to organizational values. This process should be handled carefully, transparently, and with regular communication and feedback, to ensure it is fair and meaningful.

Integrating values in action into performance evaluations can provide a holistic assessment of employees' alignment with the organization's values. Additionally, encouraging employees to self-assess their alignment with values as part of the performance evaluation process can foster introspection and personal accountability.

If performance evaluations will include a measurement of adherence to values, then incorporating values into job descriptions will help set performance expectations. Managers should also communicate how individuals demonstrate values in their daily work, as such behavioral observations and feedback provide further evidence of an organization’s commitment to upholding values.

Often, performance evaluations are directly related to salary increases, bonuses, promotions, and other incentive structures. Recognizing and rewarding employees who consistently exhibit values through outcomes of the evaluations or through other activities could reinforce the importance of values-driven behavior.

Additional input could be incorporated along with the performance evaluation cycle to inform and support evaluation discussions by gathering feedback from peers, subordinates, and superiors. Anonymous surveys or structured feedback sessions would allow individuals to share their observations and experiences regarding their colleagues' demonstration of organizational values.

To ensure the successful integration of values measurement in performance evaluations, organizations may consider offering training programs that reinforce values and equipping employees with the necessary skills to exhibit those values. Investing in employees' professional growth enhances their ability to align their actions with organizational values.

Using Data to Build Culture

With empirical data from performance evaluations, self-assessments, performance metrics, surveys, and other sources, accountants and analysts can take a multi-faceted approach to building and monitoring values-based culture, utilizing both quantitative and qualitative data.

The analysis of this data would depend on the data's structure. For quantitative data (like performance metrics), analysts might use statistical analysis to identify trends over time or correlations between adherence to company values and outcomes like job performance, customer satisfaction, or team cohesion.

For qualitative data (like feedback from surveys or reviews), thematic analysis could be used to identify common themes related to the organization's values. This might involve coding the data based on keywords or concepts related to the values, then categorizing these codes to identify patterns.

Analysts should consider limitations to the data and contextual factors when performing analysis. For example, bias can influence survey responses, and observed behaviors might not fully capture adherence to the company values. Additionally, changes in the company's culture or external environment may be relevant to the analysis.

Discrepancies or areas of alignment between different data sources may provide their own valuable insights.

Further Reading

Additional materials on the importance of organizational values and strategies for building and measuring values-based culture include the following:

• "Built to Last: Successful Habits of Visionary Companies" by Jim Collins and Jerry I. Porras: This book examines companies with enduring success and explores the role of core values in shaping their long-term performance. Collins also describes the importance of finding people who hold your organization’s values, rather than attempting to convince people to share an organization’s values.

• “Traction: Get a Grip on Your Business” by Gino Wickman: This book provides a description of how to incorporate values into the performance evaluations process. The author describes using a matrix tool that he calls the People Analyzer, wherein employees are scored using values.

• "Reinventing Organizations" by Frederic Laloux: This book explores new paradigms of organizational design and highlights the importance of values-driven cultures in creating successful and innovative organizations. In a related video, Laloux describes documenting ground rules as a method of supporting a culture of wholeness.

• The Denison Organizational Culture Survey developed by Dr. Daniel Denison: This survey assesses organizational culture and provides a framework for understanding the impact of culture on organizational performance.

Conclusion

Measuring adherence to values through empirical means is crucial for fostering a values-driven culture and aligning employees' behavior with organizational principles.

By supporting procedures for incorporating values into performance evaluations, assessing job-related behaviors, and gathering feedback, accountants can support the evaluation of employees' adherence and enable organizations to reinforce their core values and drive sustainable success.