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Do Corporate Values Matter to Workers?

Why companies should care about your values and you about theirs.

Key points

  • How can we know whether the ethical values bosses and employees say they have are the ones they *really* hold?
  • Employees who don’t share values with the company are more likely to be dissatisfied and leave.
  • Sharing similar values with your organization is good for you and good for the company.
Image by Erin Krupka
Turtle tracks going into the sea. The Galápagos Islands, Archipelago in Ecuador.
Source: Image by Erin Krupka

Our grandparents may not have received a glossy handout with a declaration of their company’s ethical standards as part of their onboarding process, but many of us today will. Corporate values play an important role in how businesses recruit and how workers evaluate employers.

But do they actually matter? For the bottom line? For employee turnover? For anything?

There are a couple of hurdles that make it hard to answer that question. One hurdle is identifying whether the real ethical values bosses and employees have are the same ones they say they have. A second is linking those real values to behavior and long-term outcomes in business settings.

How can we get truthful responses when asking about ethically sensitive behavior? Would executives be frank about the extent of their own rule-bending or non-compliance with company policy? Can we get truthful responses from employees if we ask them whether they think their employers have integrity and uphold the values they say they have?

In 2012, economics professor Stephen Burks and I adapted a game that allowed us to identify the ethical values held by employees and bosses and to connect those values to behavior. The Values Game overcomes hurdles like truthful reporting, fear, or retribution by using anonymity and asking participants to tell us about other people’s attitudes rather than their own.

The Values Game asks employees and bosses to read about a common ethical situation faced in their organization (for the 2012 study we developed the situations with organizational leadership). Their task is to rate the actions that the hypothetical person in the story could take.

But there’s a catch. Each player is told to guess how most of their colleagues would rate each action and, separately, how most of their bosses would rate each action. Because everyone is guessing how most other people would rate the action, we get a sense of what each respondent thinks the real ethical values are among their colleagues and among their bosses.

To give each person a reason to guess as best as they can, we pay them up to $250 if they correctly anticipate the most common rating. At the very end, we also ask them what they personally think (and of course they can lie or tell the truth about those questions).

Here is an abbreviated example for a financial advising company. You can try this:

David and Tonya are both advisors who talk sometimes. David tells Tonya that he has husband and wife clients who decided to purchase life insurance. They have been working together for several months and there were some tensions because the clients felt that the paperwork wasn’t moving fast enough. Now the paperwork is complete and the $400,000 check is signed. Getting ready to submit everything, David notices that both clients failed to put their initials on one line. He knows the clients are bothered by all the paperwork and he knows that the business will not be accepted by the home office without the initials. When Tonya asks what he did, David tells her that he was afraid the clients would walk away if he had to bother them again, so he initialed for them on the missing spot.

What should Tonya do in this situation?

(You can click this link to play the Values Game anonymously if you like.)

Back in 2012, using the responses from the Values Game, we found that there were situations where employees felt that their team’s values were different from their boss’ ethical values. For example, their team norm was to “do what it takes” to make the sale (like in the story with David). However, bosses said they valued doing things correctly over making the sale. We also found situations where individual employees personally did not share their team’s “do what it takes” values. Yet other employees indicated that they personally thought it was *very acceptable* and that Tonya should not report David.

In short, we were able to measure value misalignment.

Regardless of whether the misalignment was between the employee and their boss or whether the misalignment was because the respondent believed they had higher or lower ethical standards, we showed that there were real consequences to the company. When there is value misalignment, employees are much more likely to lie to their colleagues for a small profit, indicate higher dissatisfaction with working at the company, and are more likely to want to leave the company.

More recently, behavioral economics researcher Alexander Schneeberger and I show that moral value alignment really matters for groups that hope that members follow their rules. In the study, we manipulated the moral similarity between an individual and their group by assigning a person to either a group with which they shared moral values or one where they did not.

Our main finding: When people share moral values with their group, they are also willing to follow (even arbitrary) group rules. They even follow those rules when they come at a personal financial cost. But when they don’t share moral values with the group, then they are less likely to follow the group rules and less likely to sacrifice some personal financial gain to do so.

The implication for all of us working stiffs is that companies with values aligned with our own are going to be places where we want to work. It also means we are more likely to stay at those jobs and adhere to company policy, even if situations arise where we might be tempted to deviate from those policies. For this reason, figuring out what those values are is an important part of selecting the right place to work.

For leadership, it means that you want to spend some time communicating values to your employees and credibly adopting and demonstrating your commitment to those values. You will have happier employees and you won’t be managing as much turnover or risk exposure from non-compliance with company policy.

References

Burks, S. V., & Krupka, E. L. (2012). A multimethod approach to identifying norms and normative expectations within a corporate hierarchy: Evidence from the financial services industry. Management Science, 58(1), 203-217.

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