Values Enactment in Organizations: A Multi-Level Examination

Authors:

Melissa L. Gruys* Department of Management, Wright State University, Dayton, OH
Susan M. Stewart Department of Management, Western Illinois University–Quad Cities, Moline, IL
Jerry Goodstein Department of Management and Operations, Washington State University–Vancouver, Vancouver, WA
Mark N. Bing Department of Management, University of Mississippi, University, MS  
Andrew C. Wicks The Darden School of Business, University of Virginia, Charlottesville, VA 


Business writers and practitioners recommend that core organizational values be integrated into employee work life for enhanced organizational productivity, yet no published studies have empirically examined the antecedents and outcomes of values enactment. Using longitudinal data on 2,622 employees, hierarchical linear modeling (HLM) results revealed that tenure and department-level values enactment were significant predictors of individual values enactment. Furthermore, employees who demonstrated high levels of values enactment were less likely to leave, and employees of high or low levels of values enactment in departments whose levels of values enactment matched their own were the most likely to be promoted.


Keywords: values; values enactment; organizational values; values-based performance; performance; promotion; voluntary turnover


“ . . . AND NOW ABOUT THOSE VALUES. . . . People must be able to use them as marching orders because they are the how of the mission, the means to the end, winning. . . . To make values really mean something, companies have to reward the people who exhibit them.” Welch (2005: 17, 20)

Within the past decade, writers from a variety of backgrounds, including the famous and former CEO of General Electric, Jack Welch, have directed attention to the importance of developing core values to guide an organization over time (Collins & Porras, 1994). Core values formally define the key components of an organization and are descriptive terms used to denote dimensions of the strategic mission as developed by leaders of the organization. Most organizations have core values that are communicated to its members in various ways. A study by the American Management Association (AMA) of AMA executives and council members found that 86% of these respondents indicated that the corporate values of their organizations are explicitly written or stated (AMA, 2002). Another survey on corporate values conducted by the Aspen Institute and management consulting firm Booz Allen Hamilton included responses from 9,500 senior executives within 365 companies representing a broad range of industries in 30 countries (Van Lee, Fabish, & McGaw, 2002). The survey found that 89% of the companies responding had a written corporate values statement that reflected values such as integrity, commitment to customers, commitment to employees, and teamwork. In addition, nearly three fourths of respondents noted that both executives and employees in their organizations are under significant pressure to demonstrate strong corporate values. The study concludes that core values are defined as “a corporation’s institutional standards of behavior” (Van Lee et al., 2002). On the basis of these large scale findings, we will adopt this definition of core values in the current study.

Core values, as Lencioni noted, are “inherent and sacrosanct; they can never be compromised, either for convenience or short-term economic gain” (2002: 114). The core values provide a foundation for profitable and ethical performance (Collins & Porras, 1994; Paine, 1994, 1997, 2003; Waddock, 2002), as they reflect the organization’s business plan and strategic long-term plans. In short, these core values are explicitly espoused to be important for the organization.

But simply declaring what the organization’s values are is not enough. The values must be lived out or enacted by the organization’s leadership and its employees through specific actions and behaviors (McGaw & Fabish, 2006). In this vein, many writers have stressed that values-based management is not simply a question of developing a values statement. Lencioni noted that more than 80% of Fortune 100 companies “tout their values publicly— values that often stand for nothing but a desire to be au courant, or worse still, politically correct” (2002: 113). Integration of the mission and core values into organizations requires that the mission and values be reflected in organizational structures, decision-making processes, employee rewards, and in measures of employee and organizational performance (Paine, 1994; Pruzan, 1998; Welch, 2005). The consequences of values publicly espoused and not backed up by tangible actions or fully integrated into the processes and structures of organizations are troubling: “Most values statements are bland, toothless, or just plain dishonest. And far from being harmless, as some executives assume, they’re often highly destructive. © 2008 Southern Management Association. All rights reserved. Not for commercial use or unauthorized distribution. Downloaded from http://jom.sagepub.com at WESTERN ILLINOIS UNIV on August 7, 2008 Empty values statements create cynical and dispirited employees, alienate customers, and undermine managerial credibility” (Lencioni, 2002: 113). As demonstrated by this quote, failing to reinforce the important connection between espoused core values and employee activities can lead to cynicism and mistrust, or as seen in the Enron case, can set the stage for ethical disconnects that undermine the integrity and long-term performance of the organization (Cha & Edmondson, 2006; Welch, 2005).

It is clear that one of the key challenges faced by organizations that want to follow through on their core values is how to reinforce the importance of the values in the day-today lives of executives, managers, and all employees (Anderson, 1997; Pruzan, 1998; Rosenthal & Masarech, 2003; Wetlaufer, 1999) and thus align employee behaviors with the core values. We refer to this alignment as “values enactment” and will use this term to emphasize the vital connection between espoused core values and workplace behaviors on the part of employees and managers that reflect these values. One of the most important vehicles for fostering the integration of the mission and values into employees’ work lives is the human resource management system (Barber, Huselid, & Becker, 1999; Paine, 2003; Trevino, Hartman, & Brown, 2000). Lencioni (2002: 117) argued for integrating the core values into all aspects of the human resource management process—hiring, performance assessment, rewards, and punishments. This view is supported as well by users of high-performance human resource management systems who note the importance of measuring and rewarding what is valued in the organization (Pfeffer, 1998). Within values-driven companies like AES Corporation, for example, 50% of an employee’s performance assessment is based on technical factors and 50% on the degree to which the employee understands and conforms to the shared values of AES (Wetlaufer, 1999).

One strategy for an organization to encourage values enactment, as suggested above, is to use formal performance assessment and reward systems as mechanisms for reinforcing the integration of the core values into employee and managerial behavior. When employee and managerial behavior reflect the values of the organization, these behaviors should help the organization achieve its broad strategic goals. For example, if an organization is focused on customers as a key stakeholder critical to its long-term success and has put in place a core value of excellent customer service, then as employees and managers enact that value by providing good service, this is likely to enhance customer satisfaction, repeat business, and contribute to the overall performance of the organization.

Purpose of the Current Study

Although there has been no shortage of descriptive and prescriptive arguments offered on the importance of organizational members’ living out core values, we could not locate any rigorous empirical work directed at examining values enactment and its antecedents within organizations. Furthermore, researchers have not scientifically studied the implications of values enactment on important outcomes such as individual rewards (e.g., promotion) and separation (e.g., turnover) over time. We therefore agree with Cha and Edmondson (2006: 58) who characterize the field of research on values in organizations as in “nascent stages.” Hence, the primary contribution of our study is to open up this unexplored area of inquiry by adopting a social learning perspective (Bandura, 1977, 1986) in specifying some key antecedents and outcomes of values enactment (see Figure 1). Our fundamental argument is that the level of values enactment on the part of individual employees is likely to be higher when employees work for an organization longer and are therefore aware of and understand the core values, and when direct managers and departmental coworkers also enact the values of the organization. We also analyze the effects of values enactment over time on employee promotions and turnover, thereby contributing to the broader literature on values in organizations by departing from the more traditional cross-sectional studies.

We draw on longitudinal data obtained from a large health care organization that uses a performance evaluation system that specifically includes ratings for how well employees and managers within the hospital have enacted the core values of the hospital. Given that values enactment represents an important dimension of performance within the context of health care organizations, one might expect that those who perform well on this dimension would be less likely to leave the organization and more likely to be promoted when the department within which they work shares these values. Using a health care organization for the current study on values enactment is especially relevant and timely, as hospitals have recently been under strong attack to change or strengthen their organizational values in areas such as patient safety, evidence-based medicine, and quality of care (Leapes & Berwick, 2005; McCarthy & Blumenthal, 2006; Yates, Bernd, Sayles, Stockmeier, Burke, & Merti, 2006). Our discussion highlights both the theoretical and practical implications of our findings and offers a variety of possible directions for researchers and practitioners alike.