According to a new paper by Marya L. Besharov, Cornel University, and Rakesh Khurana, Harvard Business School, it is critical for leaders to focus on embodying institutional values.
Based on an analysis of the writings of Philip Selznick, noted 20th century organizational theorist, they explain how the embodiment of organizational values enables leaders to address both the symbolic, social aspect of organizational behavior, as well as the technical, administrative aspects. Besharov and Khurana explain that these two functions combine to produce business value. They write:
“We also seek to extend this work by focusing on the fundamental dualities and tensions between the institutional realm of values, culture, and politics, and the technical realm of efficiency, rationality, and administration. The central purpose of our chapter is to explain how these two realms are interrelated and to articulate how leaders can uphold institutional values while simultaneously meeting technical imperatives.”
Here are three ways leaders advance their companies by embodying organizational values.
1. Maintaining a Long-Term View
Focusing on organizational values helps leaders focus on the long-term integrity and sustainability of their company, Besharov and Khurana write. A focus on the technical or administrative side of their work can cause leaders to become too focused on short term returns. “Leaders of modern corporations, [Selznick] argued, tended to pursue narrowly defined technical interests, consistent with organizational theories that prescribed maximization of shareholder value as the sole purpose of the corporation,” they explain.
The researchers continue, “If leaders instead sought to uphold values and maintain integrity, they could establish the long-term perspective and commitment to innovation necessary for sustaining their competitive position in an increasingly global economy.”
2. Maintaining Employee Engagement
When leaders don’t live up to the values they espouse, organizational employees can lose faith in the company and become disengaged from their work. Besharov and Khurana explain, “when formal structures are perceived by members to be inconsistent with the organization’s espoused purposes, members make attributions of hypocrisy and may ultimately become disillusioned.”
For example, they discuss a retail company whose “values” include promoting natural products and environmental sustainability. But when those values weren’t upheled by leadership, “the introduction of less ‘natural’ products and the promotion of managers who do not recycle and compost waste generated outrage from employees who viewed these actions as violations of the organization’s core purpose.”
Employees lost faith in the company and its leaders, leading to disengagement.
Moreover, by embodying the values they espouse, leaders enable employees to find meaning and value in their own work – another facet of employee engagmenet. Besharov and Khurana write:
“Members’ interactions with the organization and their actions on its behalf are not just transactional but are imbued with meaning. As members internalize the organization’s purpose, to the extent that their own actions further this purpose, they come to regard these actions as meaningful. They further view themselves as part of a valued community. They are motivated to exert effort on behalf of that community, to defend it when threatened, and to advocate on its behalf.”
The sense of meaning and community leaders can engender can help boost employee engagement.
3. Maintaining Brand Integrity
Finally, focusing on organizational values can ensure that companies don’t lose their way when seeking wider profit margins. Besharov and Khurana write:
“For example, multinational corporations that put a high premium on their consumer brands face the challenge of balancing cost efficiencies gained by outsourcing their production with the reputation risk that arises from using suppliers who violate labor laws or are not environmentally responsible. Firms such as Nike, Apple, and Levi Strauss that outsourced key tasks in order to focus their strategies on product design and marketing, as well as buffer themselves from the costs of maintaining expensive manufacturing facilities, now find themselves playing a more active managerial role in monitoring their global suppliers who sometimes are accused of labor violations and harmful environmental practices.”
Straying from stated values of brand integrity can cause leaders to focus on maximizing efficiency at all costs – ultimately resulting in a tarnished brand and more work in the long run.
As the researchers explain, Selznick believed leaders had a duty to uphold both the values of their institution as well as maximize their company’s ability to achieve their business goals. Besharov and Khurana’s analysis shows that leaders need to do both to be successful. Ignoring the practical side of their jobs will cause a company to fail obviously, but ignoring corporate values will lead to a focus on short profit margins – which won’t necessarily help an organzation sustain itself in the long term either. By maintaining a dual focus – the practical or technical side as well as the symbolic, values-laden side, leaders produce sustainable organizations.