When leadership behaviour is out of sync with company values, the result can be disastrous. Unfortunately, this problem is rife in Australian businesses.

There are numerous examples of organisations that espouse a certain set of values but broadcast different ones through their actions. These are often referred to as ‘shadow values’.

Think of the businesses that talk up trust while making shady backroom deals; the ones that promise excellent work/life balance but whose managers send late-night emails; and the companies that profess a deep level of care for the environment, or safety, or inclusion, while doing nothing whatsoever to assist any of these causes.

The headlines are filled with stories of global brands that have been caught contemptuously cheating on their professed values. The evidence, both anecdotal and empirical, says few organisations actually manage to walk the talk.

“Most organisations find it really hard to create the culture they want,” says Dee Fitzgerald, an Executive Director at Russell Reynolds Associates. 

“And if you look to the research, you see there’s little to no correlation between the espoused values of leaders and the lived experiences of employees.”

A research study by MIT Sloan School of Management measured whether an organisation’s stated values helped to shape employee behaviour.

It looked into nine of the most commonly cited values across all businesses – agility, collaboration, customer centricity, diversity, execution, innovation, integrity, performance and respect – to measure how positively employees talked about those values.

“The analysis revealed that there is no correlation between the cultural values a company emphasises in its published statements and how well the company lives up to those values in the eyes of employees,” a report in Management Review magazine said.

“All of the correlations between official and actual values were very weak, and four of the nine – collaboration, customer orientation, execution and diversity – were negatively correlated.”

The report came as no surprise to Fitzgerald, who sees such contradictions regularly.

“One organisation we were working with espoused an environment where it supported and promoted women,” she says. “But the observation around how people were promoted internally was in contrast to that. As an outcome, a substantial amount of talented women were leaving the organisation.

“The role of the leader is critical in shaping the culture. If they don’t walk the talk, there’s typically an erosion of trust, engagement and commitment. There’s poor psychological safety, people worry about repercussions, it shuts down creativity, and it stops people from learning and taking risks.”

The right stuff: When company values and behaviour align

On the other hand, when you get it right, the results can be astounding.

Consider the story of Ausco Modular, a South Australian designer and developer of modular infrastructure for everything from education and sports facilities to remote workforce camps.

Incredibly, 13 staff have been on board for more than 20 years, two for 40 years and one celebrated his 50th year (and concurrent retirement) in November.

“When I got to 10 years, I looked around the room and there were 12 people who were there when I started. There’s a massive retention rate,” says Simon Manser, the company’s Regional Manager SA and NT.

“Values for this business are very important. But they’re only important if they resonate with the employees. Otherwise they’re just words on a page. Our employee group was actively involved in developing those values, so they’ve got skin in the game.”

What are the values at Ausco Modular?

They’re summed up in a simple sentence – ‘Teamwork is CORE to everything we do.’ CORE stands for Care, Ownership, Respect and Excellence. 

The values are bigger than any one person; they are owned and lived by the employee group. If an individual steps out of line, the collective immediately steps in and brings them back, no matter their seniority. The constant cultural policing offers enormous competitive advantage for the business.

“It begins at recruitment conversations,” says Manser. “We know our culture, so rather than finding the best fit for the skills we need, we look for the best fit for the culture. It means we can promote from within, then recruit for the lower levels to bring in people we can develop and who have fresh ideas.

“The last five roles have happened that way.”

Fixing the failures

If most businesses get it wrong, is there anything that can be done? 

There’s plenty, says Neal Woolrich, a Director in the HR Advisory Practice at Gartner.

It begins with an open, honest diagnosis of the current state of the culture.

“That’s got to be employee-led,” says Woolrich. “Get employees to diagnose the current state of the culture and identify the gaps between the aspiration and the reality. Next, you must drive your leaders to role-model the culture.”

“If you look to the research, you see there’s little to no correlation between the espoused values of leaders and the lived experiences of employees.” – Dee Fitzgerald, Executive Director, Russell Reynolds Associates. 

There are three ways a leader can role-model a culture. They can ‘say’, ‘behave’ and ‘operate’, says Woolrich.

“Saying is the easy thing, and most leaders do this. But it has the lowest impact on aligning people to the culture. It’s when leaders go beyond saying and behaving, and begin to operationalise the culture, that they have maximum impact.

“That reflects in the way they do everything, including decisions around staffing, budgeting, rostering, even down to the granularity of whether they send emails out of hours. When leaders embed culture into everything, from a systems and processes point of view, that’s when you start to get the entire organisation aligned on culture.”

Don’t expect overnight success, says Fitzgerald.

A culture change typically takes three to seven years.

“It’s a comprehensive journey,” she says. “Most important is to engage top leadership and create alignment around what you are trying to achieve as a business. Connect the culture to the strategy and objectives, think about what sort of culture you need to achieve your strategic goals, and you’ll be on your way to success.”