The Importance of Values to Leadership and Business Performance

The story of a smart, talented individual hired to repair an ailing company, only to fail and cost the company dearly in the process, isn’t unfamiliar. When values of a leader don’t match up with those of the company, leader-subordinate relationships may spiral out of control, taking the whole company down with them.

Download The Culture Clash and discover the impact values have on motivation, culture fit, leadership style, and biases within a work environment.

Many business owners and managers have likely found themselves in a predicament similar to the one Eric Sinoway describes in a recent blog for the Harvard Business Review.

One of his firm’s top performers was having a detrimental impact on the company culture. Should he and his partner continue to support and reward the employee based on his results, or should they cut him loose? How do you weigh the results a person gets vs. how he or she gets them?

Culture is a crucial factor in business success. There are dozens of stories of how a company’s culture either positively or negatively impacted its business.

Sinoway goes so far as to quote a Harvard Business School professor who claimed, “maintaining an effective culture is so important that it, in fact, trumps even strategy.”

Sinoway proposes there are four types of employees in terms of culture:

• Stars – Employees who perform well and align with organizational values
• High Potentials – Employees whose performance could improve, but who align with organizational values
• Zombies – Employees who neither perform well or align with organizational values, and
• Vampires – Employees who perform well but fail to align with organizational values.

Vampires, Sinoway said, can prove the most destructive, since most companies are reluctant to fire top performers. In this particular employee’s case, Sinoway knew he had to let him go.

For more about how values impact organizational culture and how culture can affect performance, check out our three part series, The Power of Unconscious Biases, The Value of Values, and The Culture Clash.

By now, most people have heard about Greg Smith, the former Goldman Sachs vice president who resigned in a searing article on the New York Time’s op-ed page. The former investment banker has been making news again this week following the release of a book detailing his experiences at the storied firm.

In his op-ed article, Smith leveled intense charges against the firm’s corporate culture, calling it toxic and destructive, and said that the firm promoted morally bankrupt people.

Although there is a fair amount of question regarding his allegations, Smith’s article and subsequent interviews bring up an interesting topic – the effect of leaders’ values on corporate culture. From Apple to Zappos, there are hundreds of examples of the positive effect a CEO can have on his or her company’s culture. Unfortunately, there are just as many about what happens when that effect takes a dark turn.

For more about how leaders’ values can affect company culture, check out Eric Sinoway’s recent blog on the Harvard Business Review, or take a look at our whitepapers The Power of Unconscious Biases and The Culture Clash.

Yahoo recently announced the hiring of Marissa Mayer – employee number 20 at Google – as its new CEO. Her appointment is noteworthy for a few reasons; she has been appointed CEO in a notoriously male‑dominated industry, she is the youngest CEO of a Fortune 500 company, and as has been widely reported, Ms. Mayer is pregnant and expecting her first child in October. The vast majority of press concerning her appointment to date has centered on this last bit of news, inciting discussion and debates about balancing careers and personal lives, and how she will manage through late-term pregnancy and her maternity leave. While this will certainly be an adjustment, Ms. Mayer will enjoy an army of help and plethora of resources that most new parents have never dreamed of. She will be able to manage this transition just fine.

In all the excitement concerning her pregnancy, few are writing about the real challenges that await Ms. Mayer as the new chief of Yahoo. For 13 years she has been with Google, leading the charge as the company grew from the tech nerd’s search engine of choice with a funny name, to the dominant search, cloud, mobile, and advertising giant we know today. Fortune has named Google the top company to work for in 3 of the past 6 years, allowing them to attract top talent in the industry. Google has developed a culture of success.

On the other hand, Yahoo has been a steady state of decline during the same period. An early internet darling in the late 20^th century, Yahoo has gradually ceded ground to others in areas such as search, content, mail, and advertising, all areas where they were formally leaders. Ms. Mayer is Yahoo’s 4^th CEO in as many years (not including interim CEOs), and former leadership has been criticized for failing to provide any direction or strategic leadership. Yahoo’s sales peaked at over $7 billion in 2008, and have steadily fallen to less than $5 billion in 2011.

All of this points to the biggest challenge; changing the culture at Yahoo. Where Google was a confident culture that expected to succeed, Yahoo’s culture is one that has been continually losing ground and lacks confidence in leadership. Yahoo has been losing out in the talent war to organizations like Google, Facebook, or promising start-ups in Silicon Valley. Ms. Mayer will need to convince Yahooers that they can be successful, and that they can trust her vision. She will need to put in place a strategy to recruit, develop, and retain the highly-prized talent that helped Google be so successful.

We know that leadership is not about the individual, and Ms. Mayer cannot expect to single-handedly rescue Yahoo from its recent woes simply by decreeing a new strategy or direction. Leadership is about facilitating the performance of others, about building and maintaining high-performing teams, and about winning and beating the competition. The biggest challenge that Ms. Mayer will face is building a company culture that, after years of losing ground and churning through leadership, believes it can compete and win against the Googles of the world.

Over the past several years, Hogan has held an annual Game Day as a way to bring everyone together and have a little fun on a Friday afternoon. Hogan Game Day involves teams competing in a series of Minute to Win It-style challenges where individuals earn points for their teams based on successful completion of the game. Not only does the winning team get a swanky trophy and bragging rights for the year, they also get to make a donation to the charity of their choice.

Given our ambitious and driven nature, things can get a little competitive. Your teammates are cheering you on, while the competition will do whatever it takes to rattle your concentration and get in your head, which can make stacking chocolate Ding Dongs on your forehead pretty challenging.

Beyond the fun of taking a Friday afternoon off to compete in silly games with your coworkers, Game Day serves another important function – it helps get people engaged. Hogan recently published a whitepaper on the importance of engagement in the workplace. One of the key points from this paper was that engagement has an impact on a company’s bottom-line. When employees are disengaged, productivity suffers.

So, how do we get (and keep) employees engaged? Research shows that it starts with senior management. When bosses treat their employees with concern and respect, workers tend to feel valued and will go above expectations.

There are many techniques bosses have at their disposal to help increase employee engagement. Although extravagant corporate outings like whitewater rafting excursions tout their ability to help build and engage teams through improved communication skills and enhanced trust among team members, these excursions are not only costly but incredibly time consuming. Luckily, there are much simpler ways for managers to get their employees engaged.

The first step for organizations to increase engagement is to hire employees that are more likely to be engaged. An obvious first step would be to hire people that possess the relevant knowledge, skills, and experience necessary to perform the job. However, there is more to engagement than simply being able to perform the job. It’s important that people also like their job. As such, understanding organizational and cultural fit is imperative to having engaged employees. If people do not find congruence between their values and the values of the company, we are more likely to see dissatisfied and disengaged workers.

Once the right people are in the position, it is important to keep people engaged. A few ways to keep people engaged include increased communications between boss and employee, providing opportunities for stretch assignments, and hosting events that display appreciation for the employees. When managers have regular communications with their employees, they have an opportunity to reinforce how the employee’s work has contributed to achieving the mission of the organization, which should help provide a sense of meaning for their job. Providing stretch opportunities allows managers to challenge their workers and allow them a chance to grow their skill sets and responsibilities. Lastly, having appreciation events such as game days and other outside the office gatherings can allow workers to have fun and bond with one another. Probably the most important thing to consider with any engagement activity is to be genuine. If the initiative seems forced, chances are the employees will see right through it and the activity may backfire.

From casual Fridays to corporate retreats, companies spend thousands of hours and millions of dollars to develop passionate, committed employees. Yet, according to a recent Gallup poll, more than 71% of employed adults aren’t engaged at work.

In the following Q&A, Dr. Robert Hogan discusses why companies are getting it wrong, and what they can do to improve engagement.

What is engagement?

Employee engagement is a psychological state that is associated with behaviors beneficial to an organization. The psychological opposite of engagement is alienation.

Engagement has four components:
1.    Employees see their job as consistent with their self image – they like themselves when they are at their job;
2.    Employees like the job itself;
3.    Employees work hard at their job;
4.    The job gives employees a sense of meaning and purpose.

Engagement is an ideal state that is rarely ever fully realized.

Why does engagement matter for (a) individuals and (b) companies?

When employees are engaged, they work hard and take pride in their jobs. When they are alienated, they won’t and don’t.

When employees are engaged, absenteeism, turnover, and theft go down, and productivity and customer satisfaction go up. When employees are alienated, absenteeism, turnover, and theft go up, and productivity and customer satisfaction go down.

Measures of engagement are correlated with every important organizational outcome, at both the individual and team level.

A recent Gallup report indicated that 71% of employees in America aren’t engaged at work. How did engagement become such a widespread problem?

Engagement reflects how employees are treated by their immediate bosses. Because 60% to 70% of existing managers don’t understand leadership, they alienate their direct reports and staff.

What is the impact of managers’ derailers on employee engagement?

The term derailer refers to inappropriate interpersonal behavior; managers’ derailers are the principal cause of employee alienation.

Do some derailers have a greater impact on engagement than others?

The 11 derailers identified by the HDS are all associated with different forms of poor leadership, but they all have the effect of destroying employees’ trust in their boss, which then leads to alienation.

How does culture affect engagement?

Cultures that encourage trust in leadership and employee empowerment create engagement; cultures that focus exclusively on the bottom line tend to erode engagement.

What can companies do to drive employee engagement?

There are three steps to driving engagement:
1.    Conduct an engagement survey to determine where things are.
2.    Identify the managers who are killing engagement and give them some training.
3.    Tell the managers who are killing engagement that they will be evaluated in terms of their ability to create engagement.

Dozens of mergers and acquisitions (M&A) occur on a daily basis in the business world. A vast majority of these deals are strategic plays designed to reduce costs, increase competitive advantage or simply buy out the closest competition. Many M&As go relatively unnoticed by the public unless an interest piece is published showcasing a $ billion headline paired with a well-known company. Unless you track these events, or their impact on everything from your cell phone bill to your investment portfolio, they can be easy to miss.

 Here is an abbreviated list of the largest global M&A’s from Q1 of 2011:
1. AIG: $59 billion
Acquirer: Preferred Shareholders

2. TMobile USA: $39 billion
Acquirer: AT&T

3. Progress Engery Inc.: $26 billion
Acquirer: Duke Energy Corp.

4. Fiat SpA-Auto Business: $18.5 billion
Acquirer: Shareholders

5. ProLogics: $15.2 billion
Acquirer: AMB Property Corp

In the last few months, M&A’s have also been a recent topic of conversation with multiple individuals from a consulting standpoint. Unfortunately, these have been negative experiences from the ‘acquired,’ citing example after example of poorly-managed and poorly-implemented transitions.

Regardless of the financial purpose behind M&A activity, there are still corporate citizens (aka: people) that are dramatically affected by such deals. It is only natural that employees may feel alienated in their role or fear losing their senior position to an individual with marginal experience in their area of expertise. Said differently, an acquired employee is likely to view this situation as something closely aligned with a hostile takeover rather than a merging of shared I.P. and capital in which a new more competitive company can emerge. Senior executives must then lead this transition rather than manage reactions or mitigate attrition.

Deanna Hartley, in an article from Talent Management magazine, proposes that leaders must clearly communicate the intentions behind M&A activity, expectations of value-added processes, and potential risks and opportunities to all staff members. Hartley goes on to say that a key process in communication with M&A is ensuring your message matches what employees hear or interpret. She suggests numerous top-down meetings, roundtable discussions, and exposure to leadership from both sides of the deal. Ultimately, clarity and security should be a target in the minds of upper management while stabilizing the merging of two distinct companies. As long as new business relationships form with frequent, open dialogue, there should be reduced chance for productivity to suffer.

It would not be a surprise to say that there is little emphasis on aligning corporate culture in the boardroom during M&A negotiations. Be that as it may, companies should still involve employees to gather opinions or ideas on the transition as soon as a deal is reached. Early intervention, in the form of open communication, is crucial to quiet the fears of employees on both sides of the table.
 

After seven seasons playing the wacky, yet lovable Michael Scott on NBC’s hit series, “The Office,” Steve Carell left the show this spring to focus on his film career. With his crazy antics and hilarious one-liners, Carell’s character enticed more than 7 million viewers to “The Office” every Thursday night. From off-the-wall impersonations to “that’s what she said” jokes, Michael Scott was a staple (no pun intended) of Dunder Mifflin, and his resignation will certainly lead to changes for the fictional company.

Like all managers, Michael’s personal values shaped the culture of the Scranton branch. One of his most fundamental beliefs was that his employees weren’t just staff – they were family, with perhaps the exception of Toby. Michael clarified during one episode that “Toby is in HR. Which, technically, means he works for corporate. So he's really not a part of our family. Also he's divorced. So he's really not a part of his family.”

Because he placed great value on relationships, Michael created an office environment that revolved around social interaction, frequent unscheduled meetings, constant communication, and spontaneous special work teams. For example, Michael held impromptu meetings on hot workplace topics including diversity, sexual harassment, and fire safety. He also assembled the Party Planning Committee to organize office events, such as birthday parties and holiday celebrations.

Another one of Michael’s drivers was the need for recognition. He sought visibility and admiration and cared deeply about having his and others’ accomplishments publically acknowledged. Michael carefully selected job titles such as “Assistant to the Regional Manager” to properly acknowledge his employees for their work roles. Also, Michael hosted “The Dundies,” an annual award show that publically recognized the Scranton staff by bestowing prestigious awards such as Whitest Sneakers, Longest Engagement, and Busiest Beaver.

After his nearly 20 year tenure (9,986,000 minutes to be exact) at Dunder Mifflin, Michael hosted his last Dundies and a new manager will take his place as the leader of the Scranton branch. Although “The Office” season finale left viewers in the dark about who the next regional manager will be, one thing is certain – a new leader will create a new office culture.

Will it be Dwight Schrute with his traditional values of reporting hierarchies, respect for authority, rules, and formality? Or will it be Kelly Kapoor with her attention to appearance and style? Perhaps it will be an external applicant with a completely different set of values and beliefs.

Regardless of the new boss’s identity, the culture of Dunder Mifflin will surely change with Michael Scott’s departure. Despite his quirks, Michael’s unique personality and value set created a one-of-a-kind office that we won’t soon forget. At least, that’s what she said.

Last month, Hogan celebrated its annual Hogan Game Day competition, a team-based version of the popular game show “Minute to Win It” that is a much-anticipated event at our Tulsa office.

In the week leading up to Game Day, and the week that followed, the halls were alive with spirited banter (and sometimes outright trash-talk). Our elite marketing team, which planned the event, kept the list of games close to its vest, and for good reason. There are those competitively spirited individuals at Hogan who would have mastered each challenge before Game Day actually took place! Needless to say, Game Day is a big deal around here. And even though my team took last place, my experience far outweighed earning a trophy.

To kick off the event, each employee was randomly assigned teams and tasked with generating a team name (we were Hogan’s Heathens) and deciding who would participate in each event:

Game 1: Stick To It – Two team members, a thrower and catcher, bounce ping pong balls across a table and catch them with a pair of lint rollers. Three balls per roller, one minute to win it.
Game 2: Hanky Panky – One team member pulls out an entire box of tissues, one at a time, in one minute.
Game 3: Breakfast Scramble – One team member solves a puzzle consisting of the front of a box of cereal cut into perfect squares in less than one minute.
Game 4: Dizzy Mummy – Two team members, a holder and turner, wrap a roll of toilet paper around the turner in under one minute.
Game 5: Triple Pong Plop – One team member bounces ping pong balls on a plate and into a fish bowl.
Game 6: Face the Cookie – One team member places an Oreo on their forehead and, without using his/her hands, moves the cookie into his/her mouth.
RELAY: Five team members push a lemon across a 10-yard section of the parking lot with chopsticks. The first team with all members down and back won.

Some would suggest such team-building activities are wasteful, but consider the employee whose only workplace social incentive or team-building event is a break room birthday party or casual Friday. Now consider workers at Apple, Google, Facebook, or other unconventional workplace where a shift in corporate culture – the addition of office game rooms, flex time, office pets, happy hours, or casual dress codes - makes their work lives more enjoyable.

And these initiatives aren’t just to attract quality employees – though applicants are beating the door down to work there – they are examples of low-cost agendas that seriously drive engagement and pride through higher employee satisfaction.

It wouldn’t be appropriate for every business to install a basketball court in its offices, but that doesn’t mean it can’t do something for its people. Creating creature comforts at work not only increases satisfaction, but it also motivates employees to work harder. It’s common to see workers at many of these workplaces voluntarily burning the midnight oil. What motivates your staff?