Contributed by Aaron Fairchild, CEO of Green Canopy Inc.
According to 2013 research published by Luigi Guiso, Paolo Sapienza and Luigi Zingales, The Value of Corporate Culture, 85% of S&P 500 companies have at least one section of their website dedicated to -- what they call -- “corporate culture” i.e. principals and values that should inform the behavior of the firm’s employees. Values are important to promote and advertise on corporate websites and reports, because it is imperative for companies to manage their image. External stakeholders expect companies to have thought about their values and publicly acknowledge them. The act of creating and promoting values can help assure external and internal stakeholders that the company has a higher degree of integrity and is guided to conduct their business in a way that is consistent with and based on their stated values.
Start with Intention
I recently spoke with the CEO of a publicly traded bank who was extremely proud of his employees for going through the process to create and document their values. They were, “developed by a group of really passionate employees that love this organization and only want the best for the bank, our employees and our customers.” Their guiding philosophy relating to their values are stated as, “Our Core Values encourage us to act in a manner that “wows” others and provide us with the opportunity to guide our actions that allow us to become who we want to be. We take pride in our Core Values and strive to live them each day.” This is an example that provides insight into great intentions and proactive leadership. However, when I asked him, “What does the bank do to ‘strive to live them each day’?” he floundered. Wasn’t it enough to go through the process to create their values and then promote them both externally and internally?
Learn from Employee Perception
This is a great place to start. But organizations that want to leverage the power of corporate culture to increase productivity and returns need to do more.
The Guiso, et al. study also uncovered some additional, interesting facts regarding advertised values. Notably, the value most commonly exploited by the S&P 500 companies was “Innovation” followed by “Integrity” and “Respect”. When the researchers attempted “…to correlate the frequency and prominence of these values to measures of short and long term performance,” they “...fail[ed] to find any significant correlation.” Basically they found that advertised values are not a great indicator of corporate and employee performance. Perhaps that is because it is easy to state your values, so everyone does.
Another point to note in the research is the concept of perceived value. The study found that if the employees of the company perceive management to have a high level of integrity, there was a positive correlation, and good outcomes in terms of higher productivity, profitability, and the ability of the company to attract talent. In other words it isn’t enough to create and promote values, they had to be perceived and held within the employee base of the organization.
So how do we know if a company’s stated values are not just something that they claim to be true, but are indeed perceived and held by the employees of the company?
A few clues to consider in your evaluation process:
I am sure you can think of many more “sniff tests”. The fact that anyone can truth-test stated values should give employees, investors, and customers alike a leg up in identifying if a company is truly anchored by its values (which correlates to performance and profitability) or if their stated values are just the lip service of corporate collateral created in the back halls of the Marketing Department.
The Green Canopy blog is written by our CEO and Culture Curator, Aaron Fairchild, as well as our staff and a few very special guests.