Is your company just pretending to care about its core values?

Without fail nowadays, every company out there has some sort of espoused corporate values. That’s great. But while a values document looks great hanging on the lobby wall, is it really providing guidance to employees about how they should (or shouldn’t) comport themselves on a daily basis?

In a new study from Leadership IQ, called Why Company Values Are Falling Short, we discovered that only 21% of employees said their company always embeds corporate values into their performance appraisals.

Although putting values into annual performance reviews is not the only way for a company to show that it’s serious about its values, it is, nevertheless, a pretty big signal that organizations are serious about them if they’re willing to use them as criteria for evaluating employees. Which is why this significant level of omission should be a cause for concern.

Not being serious about integrating values into reviews could be a major missed opportunity. The aforementioned study also revealed that when companies always embed their values into their performance appraisals, employees have 80% higher employee engagement than at companies where that’s never the case.

But why would the average employee care about corporate values, and why would taking values seriously (e.g., in performance appraisals) affect employee engagement?

There are a number of reasons why employees care about corporate values:

1) It’s better than caring about share prices

It’s tough for most employees to feel emotionally connected to increasing a company’s stock price by a certain percentage point. But when a company has values, employees can develop an emotional connection; they can feel like their work is important and is making a difference in the world. In the test, Do You Set SMART Goals Or HARD Goals?, we discovered that people who feel emotionally connected to their work are over 20% more likely to feel inspired to give their best effort on the job.

2) Companies talk about values

Another reason employees care about corporate values is because companies do seem to take them so seriously (at least at first blush). Visit most corporate career websites or read their annual reports, and you’ll notice that the vast majority of corporations prominently display their values. When a company displays its values on the main page of its career website, it’s telling future and current employees that it takes its espoused values seriously.

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3) Values have a subtle message

Values are a way companies can tell employees that “no matter how talented you are, if you’re an absolute jerk, you won’t succeed here.” That might be the biggest reason why embedding values into performance appraisals has such a powerful impact on employee engagement. It’s comforting to think that you don’t have to be born with a 200 IQ to be successful; that by being thoughtful, collaborative, customer-focused (and whatever else is in your core values), anyone can succeed. When values are important in an organization, it tells employees that they can be successful if they simply do the right thing. Given most people don’t fall into the brilliant jerk category, employees generally like to know that being a terrible person is not excused, regardless of one’s talent.

Make sure values ‘mean something’

Overall, it’s a good thing that companies talk about their values. The risk, however, is that talk about values is seen to be hollow and insincere.

If a company touts its values in its annual report but doesn’t translate that into daily operational reality, it’s all-but guaranteed employees will feel disillusioned.

For companies that prioritize their values, it’s critical they take them seriously. And one important step is embedding those corporate values into every annual performance review.

Mark Murphy is the CEO of Leadership IQ and a New York Times bestselling author. His books include Hiring For Attitude, Hundred Percenters, HARD Goals, and Managing Narcissists, Blamers, Dramatics and More. Mark’s groundbreaking leadership studies have appeared in The Wall Street Journal, The New York Times, Fortune, Forbes, Bloomberg BusinessWeek, and U.S. News & World Report. Mark has also appeared on CNN, NPR, CBS News Sunday Morning, and ABC’s 20/20. He’s trained leaders at the United Nations, Harvard Business School, Microsoft, Mastercard, and hundreds more.

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