September 7, 2020
A recent study reveals that the organizational culture of many companies does not fit with their 'official' values.
Edgar Schein, author of the book Organization Culture & Leadership and a reference in the field of organizational culture, defines it as “a pattern of shared basic assumptions that the group learned as it solved its problems of external adaptation and internal integration, that has worked well enough to be considered valid and, therefore, to be taught to new members as the correct way to perceive, think, and feel in relation to those problems.”
The organizational culture is, therefore, a “pattern” that guides the actions, decisions, and behaviors of the members of the organization, helps the company to differentiate itself from its competition, determines some of the qualities it seeks in its new employees, and generates trust among its stakeholders (customers, suppliers, community …), who thanks to this pattern know what to expect when they interact with the people who work for the company.
Besides, that the members of an organization share a series of beliefs and values is useful in a context in which companies need agility since it enables people to act with a greater level of autonomy, without having to wait for their boss to tell them the correct way to do things. That is why many companies include the alignment of their people with their organizational values among the topics they cover in their evaluation and feedback processes.
But still, the alignment of employees’ behaviors around a set of beliefs or values also has its drawbacks, especially when the culture of the company is too strong. As we discussed in a previous article, in addition to making it difficult for people from different cultural heritages to integrate into a shared project, an overly strong corporate culture may constrain the cognitive diversity of its members and, consequently, the collective intelligence of the organization.
In any case, we must bear in mind that the culture of a company is based on a series of assumptions and shared beliefs so deeply ingrained, and so well integrated into the dynamics of the organization, that they are often unconscious. Therefore, what we perceive of the culture of an organization through our senses are not those beliefs, but a more superficial layer, composed of the behaviors of its people and other cultural artifacts, through which we interpret what those shared beliefs are.
For this reason, to align how people (both insiders and outsiders) interpret the behaviors and cultural artifacts they observe in the organization, many companies, especially the larger ones, draw up documents in which they publicly declare the specific values that inspire (or should inspire) the behavior of their people, starting with their leaders.
These official declarations of values often do not correspond to the culture people experience in those organizations.
We see this in a recent article by Donald Sull, Stefano Turconi, and Charles Sull, entitled When It Comes to Culture, Does Your Company Walk the Talk?, and published in the MIT Sloan Management Review. Of the 689 large companies the authors analyzed, only 127 (18%) did not have a list of official corporate values. But still, the problem the authors highlight in this article is that these official declarations of values often do not correspond to the culture people experience in those organizations.
To reach this conclusion, they compared the organizational values officially declared by hundreds of companies, the vast majority from the United States, with the results offered by the Culture 500 application. This application uses machine learning and natural language processing technologies to describe the culture of an organization from the comments company employees, former employees, and candidates post on Glassdoor. More specifically, this tool quantifies how often and how favorably Glassdoor users think about nine dimensions of company culture: agility, collaboration, customers, diversity, execution, innovation, integrity, performance, and respect.
The data show that, at least concerning these nine cultural values or dimensions, the day-to-day culture of companies that proclaim these values as their own is far from being the one reflected in their speeches and corporate literature. All the correlations between official values and employee perceptions of these values are very weak. Even on the value ‘agility’, that shows the highest correlation between what companies declare and what their employees feel, with a correlation coefficient of 0.22, the correspondence between the companies’ public commitment with this value and the evaluations their employees make of it is very weak. Furthermore, correlations are negative for four of the nine values analyzed (collaboration, customer orientation, execution, and diversity). i.e., the more emphasis companies put on these values, the more negative the perceptions of workers tend to be.
The reasons for these discrepancies are diverse. Sometimes they have to do with the way companies formulate their values. Some companies express them so succinctly and generically that the negative opinions from some employees come from interpretations that may not fit with how the company understands those values. In other cases, these lists of values are a manifestation of institutional isomorphism. Some companies copy other companies’ values because they consider they are successful organizations. On other occasions, the reason is the lack of diversity among company leaders, most of whom have been educated in the same business schools and tend to see the world in much the same way. So, they chose the values they learned, without questioning to what extent those values are instrumental for their success, or if they fit with the other elements that make up the complex system that is any organization.
It is also possible that the culture of the organization has evolved, and what we read about it in the corporate literature has become obsolete. Because, in reality, organizational cultures are much more dynamic than what those who understand them as “the enduring essence of a company” believe. And this is the reason why many people still get shocked by approaches such as Netflix when they say that, instead of making efforts to preserve their culture, they work to take advantage of the fact that each person who joins the company helps shape it.
Whatever the reason, the fact is that Sull’s research provides evidence that the discourse of companies about corporate culture often does not correspond to what people observe at work (including the behavior of their leaders) or, more importantly, with their deep beliefs about what is right or wrong. And the risk for companies is that this dissonance between what they say and what they do can generate disorientation, skepticism, or distrust regarding the capacity or the true intentions of their leaders, and negatively affect their credibility. Besides, it absorbs precious time and energy the members of the organization may apply to other more productive ends.
Many large companies are successful with their businesses, and their people feel happy, without having an official list of values.
What can companies do in this scenario? First of all, understand that, although making a list of values explicit is a general practice among large companies, it is not essential to do so. Many large companies are successful with their businesses, and their people feel happy, without having an official list of values. Yet, this does not mean that these companies do not have a culture and values. They just have not bothered to write them down and make them public.
However, if we decide to make an official statement of what the values of our company are, we’d better do it rightly. To begin with, we need to identify the shared assumptions that help us solve the internal integration and external adaptation problems we face. Next, we have to decide how we will express them in terms of values. A simple headline is not enough. For people in the organization to interpret what we mean in the same way, it is good to translate those values into specific behaviors. Besides, we should explain why we have chosen these values instead of others. How they help us be who we want to be, differentiate ourselves from our competitors, and achieve both our business objectives and our purpose.
Although the beliefs and values of the leaders shape the culture of the company, leaders cannot dictate how that culture must be.
Schein argues that culture arises from three principal sources: the beliefs, values, and assumptions of the founders of the company, the experience and learning of the organization’s members, and the new beliefs introduced by new members and leaders who join the organization. Thus, although the beliefs and values of the leaders shape the culture of the company, leaders cannot dictate how that culture must be. Instead, the members of the organization learn its culture as they see how the problems of internal integration and external adaptation the company faces are solved. For this reason, if we want to change the culture, an official statement about the values the company needs may help align the interpretations the members of the organization make of the changes they observe around them. But still, it will be of little use if we do not also modify how the leaders of the company solve those problems, and we do not ensure the other elements of the organization also fit with those values. Because like it or not the culture of a company is not what the company says, but what the company does.