How to Build a Values-Based Culture

The secret to building a high-performance, values-based culture: Extend trust from the middle.

By Marsha Ershaghi Hames, Ed.D., Advisory Leadership, LRN

People don’t quit their jobs; they quit their managers.

This old adage is emerging in the patterns we see in today’s hyper-connected world. Employees have choices, and they are seeking to build their careers in companies with healthy organizational cultures. According to LRN’s Ethics Study on employee engagement, more than 90 percent of U.S. workers say it’s “critically important” for them to work for an ethical company. Organizations have been tracking issues such as revenue, profitability, productivity, and customer satisfaction for decades. Today’s global landscape is so interconnected through social media channels and the market demands full transparency, so companies are leaning in, aspiring to build cultures that can transcend the limitations of rules and regulations. There is an acute focus on buildingvalues-based cultures.

Inspiring a values-based culture can be a challenge. Organizations often lack the framework and common language to even start a dialogue about culture. They are often unsure about how to develop initiatives to drive behavior change, even if they have garnered the buy-in.

Managing employee behaviors and performance traditionally has been relegated to the role of the front-line manager. After decades of research and practice, the comprehensive performance management systems that have been used to measure behavior are being challenged for not always driving effective performance or behavior change. Instead, they seem to be serving merely an administrative purpose.

According to findings in LRN’s HOW Report, companies are struggling to inspire employees to take more responsibility and ownership over living their values when faced with complex business decisions. More than one-third of employees hesitate to speak out in team meetings out of a sense of fear about how their managers may react. Fewer than half feel they have the license to question established methods and practices within their organization. Only one in four employees would apply peer pressure to influence a colleague who was not behaving in line with the company’s values.

Emerging from this research is the need for a primary focus on fostering a trust-based environment. The extension of trust is the key enabler of a sustainable organizational culture. The HOW Report finds that employees who experience a high-trust environment are 22 times more likely to be willing to take risks that could benefit the company. The report also shows that employees who work in a high-trust organization are eight times more likely to report higher levels of innovation relative to their competition. And employees functioning in a culture of high trust are six times more likely to report elevated levels of financial performance compared to their competition.

The key to success is to establish the expected behaviors, and then design a system to reinforce and support those behaviors. Expected behaviors will emerge from the foundation of a company’s values—things such as transparency, integrity, and collaboration. But studies indicate that not all employees will have a common understanding of the values. Therefore, explaining these values and behaviors through practical and tangible examples helps employees understand how to integrate them into the daily performance of their roles. Managers are in the best position to reinforce and support the expected behaviors.

Walking Values

Step 1: Enlist your managers. Design a culture initiative that empowers managers to act as culture exemplars and ethics envoys to their teams. This will promote a stronger ethical culture and breed greater trust amongst their teams. Research shows that a manager’s consistency in word and deed sets the tone. When managers are not involved and do not serve on the front line as culture envoys, it can breed a tone of cynicism and skepticism among their employees.

Creating a Shared Vision

Internalization of values-based principles does not happen overnight—it can take some time. Create a campaign and kick it off with a visible launch with senior leaders and middle managers present. The objective is to inspire middle management with a compelling vision of how culture matters, and howleadership on the front line shapes culture.

In practice at the local level, invite managers to embrace and cascade the values message by sharing stories of when the company and its people really “walked the walk” on mission and values.

Values-Based Leadership Training

Design a cascaded training plan to span the next three to five years, with leaders training managers and onwards. Whether it’s a VP, director, or front-line supervisor, education about values-based leadership and the expected behaviors should teach managers how to model desired behavior, encourage reflection (asking how and why questions) among employees, and deal openly and frankly with ethics issues as they arise in the workplace. Along with self-assessment and peer coaching, scenario-based discussions and role-play exercises are effective means of promoting values-based leadership education.

Toolkits and Coaching Strategies

Managers at every level need the right tools to engage their teams on the company’s values and expected behaviors. Managers should be encouraged to have regular discussions with their teams to keep values on everyone’s minds. Managers will need coaching on how to comfortably conduct values discussions with their teams. Research suggests that discussion-based training that explores challenging, gray-area situations may have the most impact. Many organizations are developing toolkits—electronic versions of “meetings in a box”—that contain resources, case studies, facilitator guides, and other learning aids to help bring values to life. Be prepared to refresh and revise the case discussions to stay on top of the relevant issues and keep employees engaged. Consider collecting real stories from employee participants to enrich the case discussion.

Measurement

Performance measurement systems need to be re-calibrated to measure managers’active participation as culture envoys. Clear, actionable benchmarks are particularly helpful for managers who may minimize the mandate to take an active role in strengthening the organizational culture. Many organizations are developing toolkits that allow managers to facilitate short 10- to 20-minute discussions around values-based decision-making on a quarterly basis.

Recognition

In high-performing cultures, recognition and celebration can reinforce the spirit of the company. Promoting greater alignment between the company’s core values and day-to-day operations through real stories helps crystalize the message to employees worldwide. Identify communication channels and forums to publically celebrate employees for their acts of values-based leadership and values-based decision making.

Tips and Recommendations

  • Assess how well your company reinforces successful performance behavior as a key business strategy. Set clear expectations around aspired behaviors, starting with trust.
  • Improve the quality and trust of the manager-employee relationship. Empower managers with teaching toolkits and resources to drive more dialogue around the company’s values.
  • Promote regular and informal dialogue: Encourage managers to be coaches and to promote two-way communication regularly.
  • Acknowledge and publically recognize employees who internalize values-based decision-making in their day-to-day role

Marsha Ershaghi Hames, Ed.D., is responsible for advisory leadership around governance, culture, and leadership solutions at LRN. She provides strategic guidance around compliance and ethics education for global organizations worldwide. Her expertise is around designing blended learning strategies, especially in the framework of experiential and interactive learning methodologies. She has helped hundreds of organizations drive engagement and foster healthy ethical cultures. Ershaghi Hamesholds a Doctorate in Education Technology & Leadership from Pepperdine University. Her dissertation was on the role of Ethical Leadership as an Enabler of Organizational Culture Change. She holds an M.A. from Pepperdine, and her B.A. is from University of Southern California. She is a CCEP (Certified Compliance and Ethics Professional).

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