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Some Common Misconceptions about Values

by Gordon Curphy and Robert Hogan
Go into any corporate lobby and chances are you will see a framed copy of the organization’s mission, vision, and values. Whereas the mission and vision describe the purpose or ends of the organization— its reason d’etre, values usually describe the means by which managers and employees are to achieve these ends. It is abundantly clear that values play a pervasive role in human affairs, as they affect virtually every strategy or marketing decision, organizational change initiative, budget allocation, personnel evaluation or interpersonal conflict. Despite the prevalence of values in our day-to-day activities, there appear to be a number of misunderstandings about what values are and the role they play in leadership and organizational life. The purpose of this paper is to provide answers to the following questions: (a) What are values and what role do they play in leadership and organizations? (b) What does it mean to lead “according to one’s values” and is doing so always a good thing?


What are Values?
Simply put, values are a person’s most important and enduring beliefs. When Patrick Henry said, “Give me liberty or give me death,” he was expressing the value he placed on political freedom. When Bernie Ebbers and Scott Sullivan “cooked the books” at Worldcom to the tune of 11 billion dollars, they were expressing the relative importance they placed on personal enrichment versus generally accepted accounting practices. One potential problem with values is that they are quite diverse—people believe in many different things. Some people believe in God and others do not, some think profitability is more important than social justice, and there are opposing beliefs about whether gay marriages should be recognized. But in the world of work, the most important values can be distilled into the ten distinct categories in Table One.

Table One: The 10 Key Work Values

Recognition:

The importance of standing out and being noticed. Some people believe work itself is its own reward, whereas others want public recognition for a job well done.

Power: The importance of making things happen and driving change. Some people believe getting along with others is more important than getting ahead or being successful. Other people believe in the Lombardi quote, “Winning isn’t everything. It is the only thing.”
Hedonism: The importance having fun and enjoying the fruits of one’s success. Some people believe it is important to stay out of trouble and take work seriously; others believe having fun at work is more important.
Altruism: The importance of helping the needy and powerless and improving society. Some people believe looking out for #1 is of utmost importance; others believe in doing things that help employees or people who are less fortunate.
Affiliation: The importance of being part of a group and seeking social stimulation. Some people prefer autonomy and independence; others place a premium on working in groups or teams.
Tradition: The importance of believing in family values and endorsing socially approved behavior. Some people believe it is important to live one’s life according to societal or religious values; others people like to challenge more accepted or traditional ways of living one’s life.
Security: The importance of having occupational and financial safety and avoiding risk. Some people enjoy taking business or career risks; others want more stable and predictable careers and work environments.
Commerce: The importance of financial success. Some people place a premium on the making money, whereas others believe having a life is more important.
Aesthetics: The importance of quality and appearance. Some people believe function is more important than form; others believe quality and appearance is more important.

Customers, shareholders, leaders and employees usually place differing levels of importance on each of these ten work values. Whereas some employees may believe having a stable job (Security) and having the opportunity to interact with others (Affiliation) is of primary importance, leaders may believe that getting results (Power) and getting praise for good work (Recognition) is more important. Customers may put more of a premium on the product or service quality (Aesthetic) and shareholders may believe making money trumps everything else (Commercial). Research shows that the most important values also tend to vary by industry-- many leaders in the health care industry endorse Altruism, whereas leaders in the financial services industry are committed to Commercial values. Political leaders are often driven by a need for Recognition, and military and religious leaders tend to believe Tradition values are very important.

There are two easy ways to help people determine where they stand with respect to these ten work values. People can be given the names and definitions of the ten values and then asked to rank order their importance, or they can take a quick on-line assessment and receive a detailed feedback report that describes how important these values are and how their results compare to others. In either case, we have found that most people have good self-insight about their most important work values. But we have also found that few people lead according to their values or fully comprehend the pervasive role their values play in the day-to-day activities.


What Role do Values Play in Leadership and Organizations?
Values develop early in life and play a central role in a leader’s psychological make-up. Leaders spend a considerable amount of time performing activities consistent with their values and generally avoid activities that are inconsistent. As a result, values tend to be a key factor in occupational choice and job satisfaction; people are usually happiest when they are doing things they believe to be important and are more likely to be retention risks when they have to do things that are not aligned with their personal values. Because leaders tend to behave in a manner consistent with their values, their personal values determine what data they pay attention to, what problems they see as critical, the solutions they adopt to solve those problems, and how they evaluate the effectiveness of their solutions. Thus a leader with high Commercial values, such as Sandy Weill at Citigroup, will pay much more attention to financial data and problems and gravitate towards financially driven solutions whereas leaders with high Recognition values, such as Elliot Spitzer, will only work on problems that provide them with public attention.

Personal values not only affect individual behavior; they also have pervasive team and organizational effects (see Figure One). For example, a leader’s personal values play an important role in shaping their team’s purpose, norms, team member selection, and team member commitment. We once worked with a manufacturing manager who had very high Power, Commercial and Tradition values and low Hedonism, Altruism and Affiliation values. He managed according to his values--using a command and control philosophy that was focused solely on financial results and not caring a whit about people he led. Soon after he was promoted his team became a revolving door of talent, his financial results started to tumble, and he was eventually asked to leave the company.

Because we tend to like people with similar values and dislike people with dissimilar values, most of the time leaders will hire team members who place a premium on the same things. This means that if a leader has hiring latitude, he or she pick team members having similar values. The end result of this process will be a team that shares a similar outlook on the team’s purpose, priorities, and norms and relatively harmonious team relationships. The downside is the systematic discounting of data, problems, and viewpoints that fall outside the team’s collective values. Whereas this one-sided view of world can be problematic enough for sales, manufacturing, or project teams, it can be deadly for top leadership teams. The Bush administration provides a good example here—the inner circle of team members all seem to get along, focus on similar data and problems, share the same sense of purpose, and generally are very good at staying “on message”. But data and problems that fall outside the Administration’s core values, such as bad news about Iraq, the 9/11 Commission, stem cell research, or anything to do with the United Nations are systematically discounted, dismissed, or ignored.

The same thing happens in corporations, where the collective values of top leadership are key determinants of organizational strategy and culture. For example, we worked with a group of CEOs from the National Health Service who were responsible for all public, primary, tertiary, and mental health services for 600,000 people in the United Kingdom. The CEOs managed a billion dollar budget and collectively had high Hedonism, Altruism, Affiliation values and low Power and Commercial values. The organization placed a premium on working together, helping others and having fun, and did not believe money or achieving results were particularly important considerations in decision making. Unfortunately, the health care system was $50,000,000 in debt and there were very long queues for surgery; because of these problems the National Health Authority told the CEOs to fix these problems or find something else to do. About six months later all but three of the CEOs had been sacked because of their unwillingness to believe these were serious problems and do anything to address these two issues.

Because the values of top leadership are major factors in organizational strategy and culture, many employees can get mixed signals with respect to the organization’s true versus espoused values. Many organizations state that employees are their number one asset and talent is a key differentiator in their industry. But if headcount, health care benefits, and training and development budgets are among the first things to get cut during financial crises, then it becomes abundantly clear that Commercial values rule the day. In other cases the organization’s true and espoused values may be more aligned but present a different sort of dilemma for leaders. Many organizations explicitly state that improving shareholder value is their number one priority. But a lot of employees do not have high Commercial values—they come to work in order to have an impact (Power), interact with others (Affiliation), or create high quality products (Aesthetic). Many employees would rather have life than work hard to make others money, particularly when the owners (i.e., institutional investors, day traders, and mutual fund managers) often have very little interest in the business other than financial results. All too many leaders have learned that appealing solely to employees’ Commercial values to drive change is often a recipe for failure.

Related to the notion of personal choices, team functioning, and organizational culture is the concept of organizational “fit”. No matter how talented an individual may be, if his/her values are inconsistent with the culture, then he or she will sooner or later leave the organization. We worked with the marketing department of a large, multi-modal transportation company; the management group contained 11 men and one woman. The men had high scores for Commerce and Power, and low scores for Aesthetics, Affiliation, and Hedonism. The woman, an Asian American with an MBA from Harvard, spoke 5 languages and was in charge of international marketing. She had high scores for Aesthetics, Affiliation, and Hedonism; although we thought she was the most talented person in the group, she lasted only six months in the job. Our research has shown that hiring people with values similar to those of the organization will significantly reduce employee turnover; hiring people with dissimilar values will help with strategy, product development, and decision-making but be harder to retain.


What does it Mean to Lead “According to One’s Values?”
As discussed so far, values affect occupational choices, hiring and operational decisions, interpersonal conflict, job satisfaction, retention, team functioning, and ultimately organizational strategy, culture, and results. Given the importance of values in a leader’s day-to-day affairs, one would think that the most effective leaders are those that lead according to their values. It is common knowledge that many popular leadership gurus have endorsed the notion of leading according to one’s values, but what does this really mean? And is leading according to one’s values always a good thing? Surprisingly enough, the answers to these two questions may not be as clear cut as they first appear.

Perhaps the first step in leading according to one’s values is to clearly understand what one’s values really are. Gaining this insight can be as simple as doing the rank ordering exercise or on-line assessment described earlier or spending time reflecting on the key decisions made over one’s career. Any of these activities should allow leaders to understand what is most important, of secondary importance, or relatively unimportant. As stated earlier, when asked most leaders can describe their key work values. However, whether they are leading according to their values can be entirely another thing. As seen in Figure Two, a person in authority can be considered to be leading according to their values when their values, intentions, behaviors and perceptions are in alignment. In other words, their core values drive what they intend to do as a leader, these intentions drive where they spend their time and what they specifically do as a leader, and others’ perceptions of the leader are aligned with these values, intentions, and behaviors.
Although most leaders do have insight into their core values, our research indicates that many do not lead according to their values. The most frequent problem is a disconnect between the leader’s values, what they actually do, and how those actions are perceived by others. For example, a leader may believe that helping others (Altruism), gathering data before making decisions (Science), and creating a stable and predictable work environment (Security) may be of utmost importance, but if they are in a turn around situation where they must reduce headcount, drive several major organizational change initiatives, and make quick decisions based on gut instinct then they will not be acting in a manner consistent with their values. And based on these behaviors employees will infer that the leader has a set of values that are very different than their core values (see Figure Three).
Although you might think these are rare and relatively temporary occurrences, the high levels mergers and acquisitions and industry consolidation over the past 10-15 years provide fertile ground for these types of events. It is not unusual for the acquiring organization to have a very different set of core values than those of the company they purchased, and the leaders in the acquired company face a dilemma of either leading according to their own or these new values. The same phenomenon occurs when an outside CEO is brought in. These individuals often place many of their friends in key leadership roles (who also happen to share similar values), and the new top leadership team may have very different values than those of the previous regime. Research has shown that either of these situations results in higher executive and middle-level management turnover, and we suspect that this conflict in values is at the heart of these retention problems. Of course, in many ways this turnover in the old regime has advantages from a decision-making and conflict perspective, but the disadvantages include losing alternative perspectives on issues as well as insider knowledge and skills.

Like assessing one’s core values, it is also relatively easy to determine whether a person is leading according to their values. Perhaps the simplest way to do this is to determine how someone typically spends his or her time. A quick review of one’s calendar over the past several months can help leaders see what activities are taking up most of their time. Figure Four provides an example of a time analysis for a senior level manufacturing leader. We can see that this leader spends a majority of his time in meetings, doing e-mail, and on the phone; the focus of many of these interactions with others had to do with exploring and resolving operational, quality, and financial problems. Given where this leader spends his time, one might assume that he had high Power, Aesthetic, and Commercial values. Although the Power and Aesthetic assumptions would be correct, the leader actually had lower Commercial and higher Altruism values. In reality the leader was spending very little time developing his staff, and this was becoming a major source of work dissatisfaction. Rather than adding another activity to an already hectic schedule, we helped the leader to better find ways to better leverage his meetings, e-mail, and telephone in order to coach his staff.

Our research has shown that most leaders do not always lead according to their values—sometimes it is very difficult to completely satisfy competing values (i.e., Altruism and Commercial) and at other times tradeoffs between personal and organizational values will need to be made. We have also found that other leaders are not aware of the degree of misalignment between their personal values and day-to-day behavior. Generally there are few consequences for relatively low levels of misalignment, but leaders who experience significant disconnects between their personal values and behavior over longer periods of time eventually will experience of job dissatisfaction and managerial derailment. Because leaders gain energy from doing those activities aligned with their values and doing non-aligned activities to be draining, misaligned leaders, no matter how strong, will not be able to maintain the emotional energy needed to successfully lead teams.

So the happiest and most successful leaders are those who not only understand their values, but have also found positions in companies where what they do and where they spend their time is aligned with these values. So does this mean that leading according to one’s values is always “good”? From the individual leader’s perspective the answer is probably yes, but from a team, enterprise, or society level the answer may be no. For example, there is no doubt that Adolph Hitler was leading according to his values. More recently the same could be said about Osama bin Laden, Saddam Hussein, or Andy Fastow, and history mournfully suggests that these types of leaders can have devastating effects on the companies, movements, and countries they lead. To be more specific, some of the values in Table One, when taken to an extreme, can lead to reprehensible conduct. For example, managers as a group tend to have strong Power and Commerce values and place little importance on Altruism and Security. Strong Power and weak Security values are associated with energy, drive, risk-taking, and upward mobility—essential ingredients of a successful business career. On the other hand, strong Commerce and weak Altruism values are associated with greed and selfishness; when these tendencies are unchecked, they lead to the sort of corporate misbehavior that has been so visible in the news over the past few years. As we have seen in the mutual fund and insurance industries most recently, bad values—greed and selfishness—are one way in which values contribute to managerial and organizational failure.


Summary
Hopefully by now we have presented a compelling case for the importance of values in everyday affairs. Because of their increased ability to make an impact, people with higher Power values often attracted to leadership positions. Their score on this and their other personal values will dictate what they consider to be problems, the role of and what sort of data they consider to be important, the solutions they apply to problems, the people they choose to associate with, what they enjoy doing, and where they spend their time. Values also play a key role in team function, as the leader’s values will affect the team’s purpose, norms, team membership, and team member commitment. And the personal values of top leadership teams have consequences for organizational vision, strategies, and culture.

Although values are at the core of leadership, many people may not be completely faithful to the notion of leading according to their personal values. Oftentimes situational demands and inter-value conflicts can cause leaders to spend considerable amounts of time of doing non-values related activities, and doing so can result in diminishing levels of effectiveness. On the other hand, it is also possible for team and organizational performance to suffer even when their leaders act in accordance with their values. Leaders having strong Commercial and weak Altruism values often act in a greedy and selfish manner and will surround themselves with like-minded people. Because groups having similar values will often report even more polarized beliefs, these groups will offer plenty of rationale and feel absolutely no remorse when they short-change shareholders, lie to boards, squeeze vendors, and screw employees in the pursuit of the almighty dollar. And this sense of greed and selfishness is precisely why strong codes of ethics, government enforcement agencies, and investigative institutions are so important to the long-term health of corporations.
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