Does Articulating Your Corporate Values Matter?
Listing
your corporate values is not enough—companies need to wrestle with their
cultures to make a difference, distinguishing them from their peers and
updating them as they evolve.
Corporate
values are commonplace. They are stated on corporate literature and easily
found on company websites so that visitors can get a sense of what is important
to the organisation. Stating values is also a way to shape internal
stakeholders’ understanding of the company and an attempt to influence
their behaviours.
Although
the values stated may not actually reflect the real culture on the ground, they
do represent a “wish list” of what the company wants their culture to be and by
dint of drawing up a list, the firm can begin to understand the complexity of
its nature. This is especially true for global corporations with diversified
markets and products where defining core values can be a useful exercise in
clarifying what things are also core to the business.
So
does it really matter what list of values a company ends up with as long as
they can present “something” to the world? This was one of the questions
I was interested in answering in my paper “Evaluating espoused values: Does articulating values pay
off?”
co-authored with Karsten Jonsen, John Weeks and Tania Braga.
We
looked at Fortune 100 firms from 2005 to 2008 to determine which values were
espoused on their corporate websites; whether they differed from companies
within the same industry; and how they compared to the common values of
other Fortune 100 companies. We also examined whether any of this was
correlated with actual (financial) performance. Additionally, we were
interested in seeing whether companies changed their values over a period of
time and whether this had any effect on performance.
Be
bold, be different
What
we found was that of the 32 values listed, there was not an enormous difference
expressed across industries, but when companies did differentiate
themselves from their industry peers, it had a positive effect on their firm’s
performance. The implication being that when actively seeking some
uniqueness from the industry norm, even in how they shape their cultures, the
firms in question outperformed others in their industry.
What
seems to matter too is that companies who show more dynamism around their
values – those that change them over time – outperform firms who kept theirs
stable. We would argue that these firms are seen to be more actively
engaged in a conversation about “who” they are, what their culture is and in
which direction they are taking their business, precisely because they are
wrestling with their organisational culture, rigorously defining and
articulating it. In effect, “tweaking” their values shows that these companies
are actively trying to reform and improve themselves, which we believe is
connected to their financial performance.
Tune
into your culture
While
it isn’t common for companies to have exhaustive lists of values, what can be
seen from our findings is that those companies espousing “a few more” values
perform better than those espousing “a few less.”
However,
we need to be careful here, as it is obvious that simply creating a long list
of values won’t do much good, and could create some confusion. Rather, we
believe this somewhat strange result suggests that companies who do more than a
bare minimum in articulating their values may also be those that are more actively
wrestling with the complexity that is an organisation culture. Business
organisations are complex social groups, with many things that they would
consider important, core, and valuable to their functioning. It’s also likely
that not all of these values are in perfect harmony (“Stability” versus
“Innovation”), and so listing a bare minimum may reflect a lack of adequate
attention to the trade-offs inherent in any corporate culture. Grappling with
the full set of core corporate values probably reflects a greater willingness
to work through the tradeoffs.
So
the next time you come to updating your corporate website or annual report with
your core values, bear in mind the following three points:
1. Make the effort to
articulate (all) the things that are core to you, and deal with the potential
inconsistencies.
2. Try to differentiate
yourself from your marketplace—not just in your product qualities but also
cultural features.
3. Update your cultural values
as the organisation and its marketplace evolves.
A
wrestling match with your culture can be a valuable exercise and is the real
value behind espousing corporate values.
D. Charles Galunic is an INSEAD Professor of
Organisational Behaviour and The Aviva
Read more at http://knowledge.insead.edu/leadership-organisations/does-articulating-your-corporate-values-matter-4126#JwyzcDj3IBhcLGl1.99
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