How CEO Values Affect Company Performance
How Culture Is Affected by ValuesThe way organization members enact, or articulate, their personal values help to create a shared meaning which forms the culture of an organization. An organization’s culture can be seen through its norms and rituals. Three frequent types of culture consistently seen across organizations are:
- Innovative: demonstrated through entrepreneurial, creative, and risk-taking behaviors.
- Bureaucratic: seen through an emphasis on rules, consistency, and structure.
- Supportive: seen in trust, encouragement, and collaborative relationships.
- Self-direction – making one’s own choices, expressing free thought, and having independence.
- Security – having stability, preserving order, and maintaining predictability.
- Benevolence – having concern for others, attending to their needs, and establishing supportive relationships.
- CEOs who value self-direction, tend to lead highly innovative organizations.
- CEOs who value security, tend to lead highly bureaucratic organizations.
- CEOs who value benevolence, tend to lead highly supportive organizations.
Organizational Outcomes Related to CEO ValuesAn organization’s culture (influenced by the CEO’s values) contributes to different performance outcomes. The particular outcomes experienced depend on the values a CEO impresses upon its organization’s culture.
- CEOs valuing self-direction, who lead innovative organizations, tend to experience outcomes such as high sales growth.
- CEOs valuing security, who lead bureaucratic organizations, tend to experience outcomes like efficiency, though sometimes elicit negative employee satisfaction.
- CEOs valuing benevolence, who lead highly supportive organizations, tend to experience outcomes like greater employee satisfaction.
Practical Implications:In order for the links between the values, culture, and likely outcomes to be fully understood, CEOs must increase awareness of their value systems. Identifying how one’s values fit with different cultural aspects can help CEOs find the appropriate balance between their own values and the needs of the organization’s culture in order to achieve desired outcomes. For example, organizations needing to invigorate themselves to remain competitive might choose to enact a more innovative culture that is counter to the CEO’s preference for security and stability. In such instances, the CEO may choose to depend on the (more culturally compatible) values of other executives for leading the organization in a new direction.
DeGarmo GroupThis was a summary of the research and practice implications from: Berson, Y., Oreg, S., & Dvir, T. (2008). CEO values, organizational culture, and firm outcomes. Journal of Organizational Behavior, 29, 615-633.