Organizational Values, Culture, Behaviour

 Organizational Values, Culture, and Behaviour

Ajit Chaudhuri – October 2024

 

“Culture eats strategy for breakfast” – Peter Drucker

 

I taught strategy earlier this year to a bunch of non-typical management students (i.e., mostly non-engineers, mostly ladies, and mostly prioritizing making the world a better place over becoming masters of the universe). It was interesting for many reasons, including that I had to make a case for quantitative over qualitative methods for project monitoring from first principles (an male-engineer-dominant group would consider this a given) and revert to my PhD reading material on research methods to do so; I was exposed to terms such as ‘girl math’ (see box); and I was subjected to an array of insights that had me questioning my assumptions.

 

Girl Math	Boy Math (the feminist backlash to )
·       It costs under Rs. 500? It’s free. ·       Will not spend Rs. 5,000 on Amazon but will spend Rs. 1,000 five times.	·       Have only three pairs of socks to my name but am afraid of gold diggers. ·       Want a traditional woman who pays the bills

 

One such insight, during a discussion on the soft components of strategy, was on whether an organization should publicly state its values. The counter arguments made were that most stated values are the same everywhere (integrity, excellence, blah, blah, blah, usually articulated as abstract absolute positives); most are unconnected with the organization’s actual values; and actual values are what they are, whether you state them or not. Unless stated values reflect actual values and influence the organization’s culture and the behaviour of employees towards each other and towards external stakeholders, they are just some nice words on a website, much like a Tinder profile.

 

So, should organizational values be articulated? If they are, should they be stated publicly? And how can they influence organizational culture and behaviour?

 

My thinking on these matters is influenced by long stints in two organizations.

 

The first is IRMA, where I spent 2 years (1987-89) working towards a master’s in rural management and then 3 years (2011-14) before flunking out of its doctoral programme. The first of these was interesting because the institution had no stated values but very strong actual ones – and it had most students on board with them from the time we spent 10 weeks in remote corners of rural India (a description of my own stint in north Bihar is available at https://kaaluontheroad.blogspot.com/2007/03/another-world-bihar.html) . The second was interesting because the world had changed – the private sector was much more influential; Dr. Kurien was not at the helm anymore; and IRMA was struggling to distinguish itself from the smorgasbord of management institutes that had sprung up – and it had a website-full of carefully articulated vision, mission, values, etc., statements to communicate what it stood for.

 

The second was in the Tata group (I was there from 2014 to 2023), where the actual values derived from a statement by the group’s founder that ‘the community is not just another stakeholder in business, but is in fact the very purpose of its existence’ (and I know this because I led the group’s disaster response function, where a value system is stress-tested to the extreme) and were different from its stated ones, which were the same old boring corpcomm-concocted stuff cleverly acronym-ed to I-PURE (you can guess what this stands for and I am sure you will be right).

 

So, in my opinion, values are important for many reasons including that, if there is a mismatch between those of the organization and its stakeholders, it is a source of stress and tension (as many Tata employees who leave for competitors discover).

 

An organization should articulate its values only if they are worthy ones, its senior leadership observes and is seen to observe them, and it wishes its employees to use them as a guiding light; and it should publicly state them only if they bear resemblance to its actual ones or it is willing to do what it takes to change actual values to stated ones (which is quite a task, as those dealing with diametrically opposite value systems from, for example, the Tata group’s takeover of Air India, will know).

 

Else, it would be stupid to trumpet values all over the place. Claims of being ‘dedicated’, ‘motivated’, and ‘committed’, acceptable for a young NGO working for the poorest of the poor, would be less so when the same organization transforms into a family business that uses public money for the greater glory of its founder; and you can well imagine my reaction upon discovering that Indian Oil Corporation, who turn a blind eye to its now ex-customers (including me) being scammed at its outlets, includes ‘trust’ among its stated values. Hah!!

 

It is the third question, relating to the relationship between values, culture, and behaviour, that is a little nuanced. Conventional thinking is that values underpin culture, which in turn informs behaviour, and that senior leaders walking the talk and being seen to do so are critical enablers to desirable outcomes on these fronts in an organization.

 

A recent article (“Build a Corporate Culture That Works”, Erin Meyer, HBR of Jul-Aug 2024) claims that managing corporate culture is key to business success, and yet few organizations articulate their culture in a way that it guides employee behaviour. I am not sure I completely agree – I remember a talk on integrity by Dr. Kurien in which he said that honesty was like virginity (or was it pregnancy?), you either are or your aren’t; if you weren’t you did not have a future working with him; and that honesty could not be used as an excuse for poor performance, you had to get your work done AND not pay bribes – as clear an articulation of values, culture and desired behaviour as it gets.

 

The article suggests six guidelines to confront the challenges of culture-building, and I encapsulate five of these (the ones that made sense to me) in tabular form below.

Guideline	Description
#1: Build culture based on real world dilemmas.	·       It is a mistake to focus upon abstract absolute positives (such as integrity, respect, trust, etc.) – they make a statement but are unlikely to drive day-to-day decision-making. ·       Desired culture can come alive using debate and dilemmas – o   Identify tough dilemmas that employees routinely face and debate how they can be resolved. o   When employees face situations with multiple possible responses, they can make a choice based on personal preferences or be guided by organization culture. o   Create value statements that will guide employee responses. o   Encourage vigorous debate of the responses.
#2: Move culture from abstraction to action.	If building culture from scratch, debate it using dilemmas from the beginning. If there is a stated culture with abstract principles, dilemma-test them to determine whether they are actionable and usable in real decision-making situations. And use words carefully.   ·       Amazon – ‘Have backbone. Disagree and commit.’ ·       Airbnb – ‘Make space for introverts’
#3: Paint your culture in full colour.	Once a clear set of values are identified and dilemma-tested, articulate the desired culture using colourful images to get the values to stick.   ·       Amazon’s 2-pizza rule – ‘a team should not be made up of more people than two pizzas can feed’ – not ‘we value small teams’. ·       Airbnb – ‘elephants, dead fish, and vomit’ – leaders should transparently address unpleasant stuff that all are aware of but no one dares mention.
#4: Hire the right people, and they will build the culture.	·       ‘Garbage in, garbage out’ – if you hire people whose personalities don’t align with desired culture, you will not get desired behaviour. o   Patagonia – ‘we’ll take a risk on an itinerant rock climber over a run-of-the-mill MBA’. ·       Look at who you will fire. Should a company have a family ethos? Or should it be like an Olympic team? o   ‘Shopify is not a family. You are born into a family, they can’t un-family you. The danger of family thinking is that it becomes hard to let poor performers go. Shopify is a team’ – CEO, Shopify. ·       Deal with skilled, brilliant, effective but unsuitable employees? o   Netflix – ‘no brilliant jerks, the cost to teamwork is just too high.’ o   Shopify – ‘slack trolling, victimhood, us-vs-them divisiveness, and zero-sum thinking must be seen for the threat they are.’
#5: Don’t be a purist.	Culture should be a north star, not a strait jacket. Identify dilemmas where stated values do not apply; define which situations are over the limit. For e.g., with respect to transparency, should everyone know everyone else’s salary?