Values, Culture, and the Bottom Line
“Culture eats strategy.” This maxim, attributed to management guru Peter Drucker, has become a widely accepted truth among leaders. Culture, along with the values that drive it, impacts everything, for good or for not-so-good. From selection and recruitment to retention of team members; in decisions about how and whether to grow and how to prioritize strategies, culture is primary to our success.
Culture is how we do things. We find it in both formal policies and practices and in informal behavior. It’s water we swim in, and it shapes the way we interact with one another, our customers, and everyone who touches the organization. It forges the lens through which we make decisions and spend resources. It reflects our priorities and determines what behaviors are rewarded, redirected, or ignored.
And it exists whether or not we pay attention to it.
Values drive the culture. Culture is the expression of the values of our organization. When we think of company values, words like “respect” and “innovation” come to mind. Proudly proclaimed on eye-catching posters on elevator walls, they undoubtedly serve as inspiration. But too often, the values on the wall are not consistently reflected in the everyday interactions or decisions of the organization. Instead, there may be values like “silo mentality” or “information-hoarding” at play. We may not think about those qualities as values, but they are. Limiting or potentially corrosive values can impact our cultural health and effectiveness in ways we may not intend or recognize.
Culture reflects our priorities and determines what behaviors are celebrated, rewarded, redirected, or ignored. So it’s important to be clear about the values we want to drive culture. Then organizations must intentionally promote and reward those values and check in periodically to identify and address areas of misalignment that can so easily arise.
Unhealthy cultures are expensive. Unintentional cultures are more likely to foster bureaucracy and confusion, wasting time and threatening the trust in relationships necessary for true collaboration and innovation. The are other hidden costs as well—and the numbers and facts behind them are stunning.
A high-pressured, stressful environment, for example, which many traditionalists believe creates higher performance, actually does the opposite. In 2015 Harvard Business Review article, authors Emma Seppälä and Kim Cameron cite a growing body of research on culture and performance in identify three key costs of a stressful, unhealthy culture:
- Team Member Stress-Related Health Issues
- Healthcare expenditures at high-pressure companies are nearly 50% greater than at other organizations.
- 60 – 80% of workplace accidents across a range of studies, were attributed to stress.
- Team Member Stress-Related Health Issues
- Cultures where stress is high have 7% higher absenteeism, 49% more accidents, 60% more errors and defects.
- In organizations with low employee engagement scores, they experienced 18% lower productivity, 16% lower profitability, 37% lower job growth, and 65% lower share price over time.
- Lack of Team Member Loyalty
- The turnover rates of organizations with stressful, unsupportive cultures see a turnover rate that’s 50% higher than organizations with healthier cultures.
The bottom line— it matters how we get there. As organizations, we get to define the criteria for success in organizational and individual performance. Culture-focused organizations understand that financial results are only part of the equation. As important, they measure values-consistency and culture-enhancing behavior as central components of job performance.
The beauty of this more holistic approach is that when we focus on culture, financial results tend to improve as well. Profits (or excess revenue over expenses for not-for-profits) are critical to survival and our ability to serve the people we serve. But if we’re getting to those results in a way that is inconsistent with the values we espouse, the short-term financial result can undermine much deeper long-term success. Meaningfully successful organizations achieve their goals in a way that honors the people and structure that helps us serve their customers.
Culture must be surfaced, measured, and managed. Culture itself is largely unseen unless we do the sometimes challenging work of self-examination. The culture model created by Edgar Schein, a former professor at MIT who largely founded the study of organizational culture, is often expressed as an iceberg, with only a small part of the culture visible at the surface. Fully understanding and positively shaping desired values and associated behaviors to create the cultural elements we want people experience is a process that takes ongoing commitment and consistency.
For a long time, it was difficult to measure culture. In the early 2000’s, Richard Barrett, author of The Values-Driven Organization, created a set of Cultural Transformation Tools to help organizations—and virtually any system, even countries—to identify the values driving their culture and get insight from the people in the system about what values they feel should be driving it. The Barrett Values Centre assessment tools and solutions have continued to evolve. In case study after case study, values assessment findings have correlated with other measures of organizational success. The results are simple and powerful, saving organizations time and money, increasing team member engagement, and helping them better realize their missions and serve the larger common good.
Culture happens. Shape it. Investing in culture makes sense. Goals like better retention of team members, enhanced innovation, more robust financial results are all evidence-based outcomes of a culture-focused organization. Involving team members at all levels in assessing and shaping culture and exceptions can have a profound effect on engagement. Even small changes can make a profound difference. The process starts with awareness and an openness to seeing ourselves and our organizations clearly. From that foundation, organizations can more deeply embody authenticity, alignment, and courage.