For years, as scholars of organizational behavior and as corporate consultants, we’ve researched what you might think of as the value of values. We’ve conducted dozens of studies designed to determine how a clear understanding of individual and organizational values can affect decision-making, motivation, relationships, well-being, leadership, and performance.

What we’ve discovered in this work is striking: When you align your organization’s values with both your strategy and the values of your employees - creating what we call values alignment—you reap all sorts of benefits: higher job satisfaction, lower turnover, better teamwork, more-effective communication, bigger contributions to the organization, more-productive negotiations, and, perhaps surprisingly, more diversity, equity, and inclusion. Our favorite finding involved the impact of values alignment on the turnover of chief operating officers. When we studied the divisions of one multiunit organization, we found that COOs whose values alignment was low needed a salary increase of 40% to become as likely to stay in their jobs as those whose values alignment was high. Imagine that: An increase in values alignment had as great an effect as a 40% raise.

The stakes for organizations to get it right on values have never been higher. For years cultural and economic changes—many of them brought about by new technologies—have forced companies to reassess what they value in their relationships with their employees, their customers, and even their societies. The global pandemic and a renewed sense of urgency relating to issues of social justice have recently galvanized those efforts. Across industries and sectors, companies have been forced to ask themselves, “What do we stand for?” and “What binds us to one another and to the community?”

In our work, we’ve seen companies flounder when they can’t answer those questions in ways that align their institutional values with both their strategy and the values of their employees. Coinbase, Netflix, Twitter, and Disney, for example, have all discovered, each in its own way, how hard it is to develop and pursue an organizational strategy when employees have come to believe that their values trump the organization.

But companies also recognize that if they align themselves with their employees’ values, they will substantially improve employee retention—which is vital at a time when unemployment is at a record low and they must fight for talent. The need for alignment will only grow as employees increasingly look for meaning at work and choose careers and jobs on that basis. Erika Irish Brown, the chief diversity, equity, and inclusion officer and the global head of talent at Citigroup, recently summed up the situation this way: “There are a lot of companies out there, and if you don’t have values alignment at one, you can find it at another.”

The bottom line is simple: Values alignment is worth a lot. In this article, we’ll lay out a process to help you achieve it in your organization.

Values Versus Beliefs

To think clearly about the alignment of values, it’s necessary to understand what values actually are—and are not. They are simple principles of evaluation: They determine whether a perceiver views something as good or bad or important. Values are not beliefs, and they are not strongly related to demographics such as race and gender.

Think of values as the ends you pursue, and of beliefs as the paths you perceive as leading to those ends. Consider two people who both value creativity. The first believes that it is achieved through quiet contemplation, and the second believes that it is achieved through interaction with others. They have the same goal but will pursue it very differently.

Because you can be wrong in your beliefs, you can improve them. One of the best ways to do that is by interacting with others who have different beliefs. If the two people in that example got together to talk about creativity, one might persuade the other to change his or her belief about how best to achieve it, and that change would be experienced as learning.

That’s not the case with values, however. If you’re a mature person, your values are always right—for you. It makes no sense to think of “improving” them because your values define what you mean by “improve.”

Before we give advice on how to identify and clarify your organization’s values, we want to warn you about some traps. We’ve increasingly seen leaders make one of two mistakes when they try to use values to build culture and drive performance.

The first is this: All too often leaders assume that if they continually recite their organization’s values, the words will take on an incantatory power, and employees will fall under their spell, almost like zombies. We’ve come to think of this as the values as magic position. It was epitomized for us by what a leader at one global investment bank said when explaining how he communicates the bank’s official values to new employees: “I point to the list of the values, and I tell them that when you are within these four walls, you are no longer an individual. These are your values.

That executive had a perfectly reasonable goal: He was trying to create a shared set of values that would foster a more ethical culture at his bank. But the bank has not come to be known for ethics, and the values he was pushing have not gained traction. That’s not surprising, because the values-as-magic approach tends to have an alienating effect. No matter where people work, they don’t want values imposed on them unilaterally, especially if those values don’t align with their own. When that happens, they feel robbed of agency, and they become cynical—which (ironically for the bank) makes them start behaving less ethically.

The second mistake involves a different assumption: that working to develop shared values is antithetical to the goals of diversity, equity, and inclusion. But that’s a faulty assumption. If you’re pursuing a diversity of values in your organization, you’re actually pursuing a diversity of ends, which means you’re encouraging people to work at cross-purposes. It’s much better to have employees all aim in the same direction, in pursuit of the same values.

Kris Beevers, the CEO of NS1, a cloud-computing company we’ve done values work with, likens this idea to a vector field—a concept from calculus that describes the combined influence of many independent forces. If the vectors in a field aim in different directions, they cancel one another out. The same holds true for values in an organization: If you want to achieve the benefits of diversity, you need to work toward alignment.

Think of values as the ends you pursue, and of beliefs as the paths you perceive as leading to those ends

Leaders who don’t recognize this often seek to banish all talk of “cultural fit”—which is a natural function of shared values—from hiring. We call this the values a smoke screen position because it’s tied to the idea that recruiters use talk of values to obscure the biased ways in which they make hiring decisions. We agree with Lauren Rivera of Northwestern’s Kellogg School and others that organizations may sometimes hide bias in recruiting processes under the label of cultural fit—by, for example, privileging people with elite hobbies such as sailing and squash. But proponents of the values-as-smoke-screen idea take that observation too far and use it to justify completely disregarding the concept of cultural fit.

Organizational culture is at its heart made up of values and beliefs and the behavioral norms derived from them, and those are critical for organizational success. When “cultural fit” is taken as shorthand for similarity in organizationally irrelevant attributes such as leisure pursuits and interpersonal style, then the organizationally relevant components of culture are compromised by association.

We first encountered the values-as-smoke-screen idea among thought leaders in the human resources space. One of them, the diversity consultant and researcher Bayo Adelaja, has described cultural fit as a “cop-out.” When managers speak of hiring with cultural fit in mind, she argues, they’re just being lazy and unwilling to do the work of inclusion.

Given the importance of culture to organizational performance, we never expected such an idea to gain much traction in the real world. But a few years ago, at a meeting of global HR directors, we learned just how wrong we were. The moment came when one of us, Paul, was on a panel discussing the future of work, during which a fellow panelist, the head of HR at a global industrial company, told the audience that his organization considered cultural fit to be a problematic goal for hiring. Why? Because its leaders thought, it produces organizations that are clubby and exclusive rather than open and inclusive.

Others have made that argument more stridently. Forbes has published an article titled “The End of Culture Fit,” and the Huffington Post has called cultural fit a “failed idea.” Meta has gone so far as to ban the term from its hiring process. Google, for its part, shuns cultural fit in recruiting—but nonetheless invests heavily in finding job candidates with “Googliness,” which, of course, is nothing more nor less than alignment around a set of core values.

The Values-Alignment Process

In our work with organizations, we follow five steps to establish a foundation for values alignment. They should be taken sequentially.

1. Identify the individual values of all organization members.

2. Identify key priorities from the strategy.

3. Look for values “candidates” that both serve the strategy and resonate with individuals.

4. Assess the values of candidates.

5. Edit the top-ranking candidates to generate a final set of organizational values.

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