Help Guide: Aligning to Organisational Core Values in Business Transformation

Introduction

Transformation agendas often overlook a critical factor—organizational core values. Just like the keel of a ship ensures it stays on course in turbulent waters, core values serve as a guide in the complex landscape of transformation. This article explores the psychological impact of misaligned values, providing real world examples, and highlights the incredible power of well-aligned core values.

The Psychological Toll of Core Values Misalignment in Business Transformation

Consider the dissonance of a lifelong vegetarian working at a meat processing plant; the disconnection is not just professional but profoundly personal. When an organization’s actions during transformation misalign with its core values, it creates a psychological unrest among employees. This dissonance often manifests as stress, dissatisfaction, and a lack of engagement which may not even be fully conscious. Over time, this disconnect can result in high staff turnover,  decreased pace, disappointing outcomes or even severe reputational damage.

Wells Fargo and the Dangers of Misalignment

The Wells Fargo scandal was a major financial fraud that occurred from 2002 to 2016. During this time, Wells Fargo employees opened millions of unauthorized bank accounts and credit cards in the names of their customers. These accounts were often opened without the customer’s knowledge or consent, and they were often used to generate fees and commissions for the employees.

The scandal was first uncovered in 2016, and it led to a number of high-profile resignations and firings at Wells Fargo. The bank also paid billions of dollars in fines and settlements. It damaged the bank’s reputation and led to a loss of trust from customers and investors. It also highlighted the need for stronger regulations in the financial industry.

And yet the scandal was not an isolated incident; it was symptomatic of a broader issue—the misalignment between stated core values and actual business practices. While the company had espoused values like “trust” and “customer service,” their relentless push for employees to meet unrealistic sales targets led to the creation of over 1.5 million unauthorized bank accounts and 500,000 unauthorized credit cards.

Employee Dissonance and Whistle-blower Retaliation

Internal dissonance among Wells Fargo employees was palpable. Some workers who attempted to blow the whistle on the unethical practices faced retaliation, including termination, further eroding trust within the organization. Imagine the mental tug-of-war employees faced: uphold ethical standards and face potential job loss, or participate in unethical actions to safeguard their livelihood.

Employee Turnover and Low Morale

This misalignment of values didn’t just stop at scandal; it reverberated throughout the company in the form of high turnover rates and low morale. Employees found themselves questioning the integrity of leadership and doubting the ethical foundation of the company they worked for. Such scepticism naturally led to decreased engagement, making any transformation or growth exponentially more difficult.

Impact on Organizational Identity

When a company’s actions contradict its core values, it doesn’t just affect existing employees; it impacts how potential hires see the company. Talent acquisition becomes a challenge because top-tier candidates are likely to shy away from an organization that has a reputation for not “walking the talk.”

By compromising its values, Wells Fargo jeopardized more than just customer trust; it undermined its internal culture, making any form of positive transformation an uphill battle.

The Wells Fargo example serves as a sobering lesson on the destructive capabilities of misaligned core values. Not only did it lead to a financial and reputational quagmire, but it also corroded the very fabric of the company’s culture, making recovery and positive change far more challenging to achieve.

Enron’s Fall from Grace

Enron, once a darling of Wall Street, provides a harrowing example of what can go wrong when core values are misaligned. The energy company had core values that included “Communication,” “Respect,” and “Excellence,” but the reality inside the corporation was dramatically different.

Ethical Dilemmas and Employee Dissonance

Employees at Enron faced moral and ethical dilemmas as they were often encouraged to engage in deceitful accounting practices to inflate the company’s profits. This internal dissonance was evident as some employees tried to voice concerns but found no support. In a company that purported to value “Communication” and “Respect,” the silence and retaliatory actions spoke louder.

Demoralization and Distrust

The disconnect between stated values and actions led to widespread demoralization. Employees who initially joined the company attracted by its purported values found themselves ensnared in a web of deceit and ethical compromise. This distrust permeated throughout the organization, causing a breakdown in teamwork and unity, which are often essential for successful business transformation.

Long-term Repercussions

The misalignment had catastrophic long-term consequences. Enron filed for bankruptcy in 2001, and its downfall led to severe financial losses for employees and shareholders. The lasting impact of the scandal also resulted in new regulations, like the Sarbanes-Oxley Act, to increase transparency in financial reporting by corporations.

Enron’s failure serves as a vivid cautionary tale highlighting the importance of aligning corporate behaviour with core values. When actions and values diverge, it not only threatens the immediate well-being of a company but can also lead to far-reaching implications that change the rules of the game for everyone in the industry.

Successful Alignment: The Road to Employee Buy-in

Organizations that get it right don’t just list their core values; they breathe life into them and especially during turbulent times. Their values act as their guide through the chaos.

Airbnb’s Adaptation During the Pandemic

In the face of the COVID-19 pandemic, Airbnb faced a crisis that threatened its very existence as travel restrictions paralyzed the industry. The company’s core values, including “Host and Guest Community” and “Embrace the Adventure,” were tested as never before. Airbnb had to lay off nearly 25% of its staff, but it did so in a manner that was deeply aligned with its core values. They offered generous severance packages, provided resources for job placement, and even created a public directory for employers to hire those who were laid off.

Meanwhile, they pivoted their services to offer ‘Online Experiences’—a way to travel and connect from the safety of one’s home, thus adapting while remaining committed to their community-centric values. This strong alignment with core values during a transformative period allowed the company not only to survive but also to rebuild trust and engagement among its remaining employees and broader community.

By leading with values, Airbnb managed to navigate through an existential threat while maintaining integrity and employee engagement, serving as an excellent example of successful transformation rooted in core values.

Growth Mindset – A Core Value at Microsoft

When Satya Nadella took the reins at Microsoft, he aimed to transform the company into a cloud-first, mobile-first entity. His new culture mantra was “growth mindset,” rooted in learning from failure and constantly evolving. By aligning this value with every facet of the transformation, from employee evaluations to product development, he achieved phenomenal buy-in from his workforce. Consequently, Microsoft’s transformation has been largely successful.

Concluding Thoughts

Transformation in business is not just about processes, technology, or even strategy. It’s about people—engaging them, inspiring them, and uniting them under a shared set of core values. When organizational core values align perfectly with transformational efforts, they serve as a compass, guiding everyone safely and collectively to new horizons.

By understanding the psychological impacts and real-world consequences of misaligned values, and by celebrating the successes of strong alignment, businesses can navigate the complex waters of transformation with greater confidence and integrity.