Are value-based organizations more succesfull?

Kristel M. SkorgeAssociate professor

Department of Business Administration

Link to general topic – People, Planet, Profit

• How is this question connected to the theme? Deals with organizations with more than onepurpose – to make a profit, but also to achieveother goals…. (make a difference – both to internal and external stakeholders)

• Important question: Should organizations spend more time on organizational purposes, valuesand visions?

• Or – will a focus on values make theorganizations more succesfull (increasedeffectiveness/legitimacy)?

What are values?

• Values are deeplyheld principles thatpeople adhere to when making descisions

• Individuals expresstheir values throughtheir actions and behaviour

• Organizations express their valuesthrough theirworking culture

Previous research

• Many claim that value-driven organizations aremore succesfull (Senge, Collins & Porras, Kotterand Heskett )

Why?- Values drive culture- Culture drives employee fulfillment- Employee fulfillment drives customer satisfaction- Customer satisfaction drives shareholdervalue

Kotter and Heskett

• In corporate cultureand performance, Kotter and Heskettshow thatcompanies with a strong adaptive culture based onshared valuesoutperformed othercompanies by a significant margin.

Collins and Porras

• ”Profitability is a necessary condition for existence and a meansto more important ends, but it is not the end in itself for many of thevisionary companies. Profit is like oxygen, food, water and bloodfor the body; they arenot the point of life, butwithout them, there is no life.”

What companies need (according to Collins & Porras)…

Senge

• To create a learningorganisation thatwill survive and prosper over time, people need to feelthat their own visionand values areconnected to thecompany’s….

So far so good….

• But how easy is it actually to manipulateorganizational culture or for employees to internalize organizational values?

Difficult….

• Joanne Martin (1992, 2002)

• Proposes threedifferentperspectives onorganizationalculture –integration, differentiation, fragmentation….

Differentiation/fragmentation

• In a differentiation–perspectiveemployees willrarely share thevision and values ofmanagement and will not increasetheir effectivenessbased on a greaterfocus on this….

• In a fragmentation-perspective, employees willsometimes sharethe vision and thevalues ofmanagement, butwill chose what suitsthem…. People canbe motivated by common values–but they also have their ownmotivational base.

Martin continued…..

• The link between a strong sharedorganizationalculture and adherence to common goal and purposes and increased effecti-veness/success has not been proved…

• Although the cultur-profit hypothesis is very popular it has not been proved to be right….

Complex…

• Organizations maypretend and adoptpractices (imitating) but without manyinstrumental effectsin the organization.

• However, it mayhave effects on theorganizationlegitimacy…

My own research…

• A study of theeffects (if any) ofa greater focuson organizationalvalues in a publicsectororganization –Sandnes Kommune.

Three core values and a vision

• Romslig, modig, sunn…Tolerant, brave, healthy

• I sentrum for framtiden…. At the heart of thefuture…

The intention…

• To create a common focus for the organization(increase organizational effectiveness)

• To strenghten the organizational culture and theemployees pride and sense of belonging(increase organizational effectiveness)

• To strenghten the image and the reputation ofthe organization in the eyes of stakeholders (increase organizational legitimacy)

Organizations - a conceptualframework

The behavioralsystem

The coalitionsystem

The managementsystem

The transformationsystem

The organization

Findings

• Is organizationalculture shared? No hardly….

• Did the focus onvalues increaseorganizationaleffectiveness?

Both yes and no…

• Did it increasethe legitimacy ofthe organization?

Clearly yes…

Findings

The increased focuson values in theorganization did not make peoplechange theirbehavioursignificantly, and individuals or leaders did not report increasedeffectiveness on a personal level…

• However, it clearlyincreased theeffectiveness of themanagementsystem….

Legitimacy, identity and image

• People clearly felt prouder to work in theorganization and perceived the organization as more professional with a clearer image….

4,5 4,55 4,6 4,65

Omdømme

Omdømme 2007

Omtaler du Sandnes Kommune positivt?

2007

2008

Conclusion

• Shouldorganizationsspend more time on organizationalpurposes, valuesand visions?

• Yes, there arepositive effects, but do not thinkthat it will solveall yourproblems….