Putting a price on principles
A strong set of personal values yields dividends for everyone in an organisation.
What qualities mark out the best business leaders? Intellect? Communication skills? Charisma? Admirable attributes all, but how many of us would add having strong personal values to the list? The view that values are simply not relevant to getting ahead in business is held by a surprisingly large proportion of the population. And it is completely wrong.
Consider this one simple fact: recognising the importance of personal values is the motivational equivalent of adding 40% to every employee's salary. 'Our research into staff turnover is very clear on this,' says Paul Ingram, Kravis Professor of Business at Columbia Business School in New York City. ‘You can find ways to make your employees see their values being satisfied or you can pay them an extra 40%.'
You can find ways to make your employees see their values being satisfied or you can pay them an extra 40%.
Even the most jaded investor would see the value in that. And while it may sound like a revolutionary concept, in fact this thinking has been around for some time. It was over a decade ago when Professor Ingram took over Columbia Business School's Advanced Management Program, a program which helps senior executives respond to evolving leadership challenges and create a vision to lead their organisations to success. At the time there was a segment of the program looking at values, yet barely any research into why - or even whether - values matter. Ten years on, the landscape has changed dramatically and the importance of establishing a strong Values Hierarchy - as it is known - is well established. Like many great ideas, it is simple in its execution. Leaders are asked to drill down to establish the eight values that are most important to them. This could be anything from family to impact, from legacy to wellbeing. By cataloguing exactly what drives their lives and careers, they are able to make better, more satisfying decisions.
Authenticity, the gold standard of business leadership, then follows as a matter of course. Don't believe it? The research is unequivocal. 'The data shows that leaders make decisions that are more ethical if they are reminded of their top values first,' says Prof. Ingram. 'Leaders are more committed to following through on a strategy if they can see it aligned with their own values. 'We also find that the alignment of your top values with your job explains 25% of job satisfaction. In the US economy, about 2.5% of job satisfaction is explained by what people are paid. So you could say values are ten times more important than pay.'
This approach has been endorsed by some significant figures. Joe Almeida, the Chairman and CEO of Baxter International Inc., carries a laminated card detailing his own Values Hierarchy in his wallet. Matthew Feely, a former Commanding Officer in the US Navy and past participant of Columbia Advanced Management Program, drew on his Values Hierarchy to make calm, clear decisions amid the chaos of coordinating the relief effort for the Japan tsunami of 2011.
But what if the values in question are negative? The caricature of greedy, grasping business leaders is well established, but in practice Prof. Ingram says this is all but unheard of. 'We have gone through the process with thousands of leaders and almost everybody reports values which other people would regard as admirable,' he says. 'We have 150 values which are reported with frequency and they are almost all positive. Occasionally people might mention power, which is perhaps borderline, but that's not a common value.'
Research has thrown up some interesting results as well. For example, if leaders are reminded of their values immediately before giving a speech, staff regard them as being more authentic. In the modern context, persuading employees to trust their leaders is particularly problematic. Columbia's researchers have found that many of the younger generation have the perception that leadership is suspect. If a decision is made which they disagree with, it is often viewed as a violation they cannot accept.
'The CEO of a consulting company who was once an MBA student of mine approaches this challenge by bringing a junior employee with him on work trips, and giving them the assignment of reporting his values in decision-making back to the other employees,' says Prof. Ingram. 'Essentially he's getting a witness on the ground, in the belief that the more transparent he is, the more they will be able to empathise with the course he picked. 'That way people will be much more open to the idea that there are good reasons for a decision, even if it's not the one they would have made themselves.'
We see this as really the common glue, the fabric, that allows people of different backgrounds and perspectives to work together.
The polarisation of society in the Donald Trump era provides fertile soil for moral certitude and a lack of empathy, which leads to healthy debate being replaced by demonisation of anyone who might disagree with you. Prof. Ingram has the antidote: 'Quite simply we find that the act of sharing your values with somebody else goes a long way towards moderating conflict.' Interestingly there is no correlation in the Columbia database between gender or race and values. Men and women of all backgrounds report the same basic values. Even nation of origin shows only a very slight effect.
And while perhaps 1% of business leaders are psychopaths (as is true of society as a whole), research shows that those who lie about their Values Hierarchy find it virtually impossible to remain consistent in their actions over the long term. So while the cynics may see this as a mere side show, values are in fact essential in business. As Prof. Ingram puts it: 'We see this as really the common glue, the fabric, that allows people of different backgrounds and perspectives to work together.'
Paul Ingram is Kravis Professor of Business at Columbia Business School and the Faculty Director of Columbia’s Advanced Management Program.