Every organisation should have a set of underpinning values, and this is especially true of non-profit organisations, which exist for reasons other than earning profit. The values are typically embedded not only in the strategic objectives that leadership sets for the organisation but also in the methods by which the organisation seeks to attain those objectives. The values set the cultural tone for the organisation, and the culture influences organisation actions and outcomes. The amount of study on this subject, however, has been minimal in management literature. This paper will examine the relationship between organisational culture, organisational values and organisational strategic objectives, with an emphasis on the non-profit sector. The values that underpin an organisation should be reflected both in the culture and the objectives, but the nature of this relationship remains relatively unexplored. This is the gap that the present paper will seek to fill.
Defining Values and Culture
Organisational values are defined as the shared values of the people within the organisation, while working in that organisation's specific context. In many organisations there are competing values, and the organisation must find ways to manage any dilemmas that arise from the multiple competing values that exist (Quinn & Rohrbaugh, 1983). An organisation will have values that govern its internal communications, its external communications, its strategic objectives and how it resolves conflicts (Neal, 2013). Value dimension affect a number of cultural characteristics such as risk-taking, communication style, adaptability, innovation, internal power dynamics and goal-setting (Colley, Lincolne & Neal, 2013).
It is also necessary to understand the difference between organisational culture and values. There is a difference between these concepts. The culture is basically the outward manifestation of values. Thus, culture can be found in the policies, procedures and other organisational practices. These will reflect the underlying values, but those values are often organisation-wide, rather than relating to individual employees. Individual employees may have values that differ from those of the organisation as a whole, but it is only the latter that affects the organisational culture (Hofstede, 1998). The strategic objectives that are set by the leadership of the organisation are another matter entirely.
While it is typically assumed that organisational culture affects outcomes, and that there is a relationship between values and outcomes, the nature of this relationship has not received much study and thus remains unclear. There is some support for the idea that organisational values should be congruent with the overall organisational culture, and that when they are this will have a positive moderating effect on organisational outcomes (Gregory et al., 2009). Thus, it is reasonable that an organisation should hire for value congruence, for example. At non-profits, some people are volunteers and self-select, which raises questions about staffing practices and how those can affect the values-culture-objectives relationship.
The Role of Leadership
Leadership is often a key driver of organisational values. The CEO has both formal and informal power within the organisation, and sets its strategy. The strategy will often reflect the values of the CEO (Berson, Oreg & Dvir, 2008), which raises the question as to whether the relationship between values in an organisation and its strategic objectives is bi-directional. CEO values will often have an influence over organisational culture, and there is a subsequent relationship between organisational culture and organisational outcomes. What this indicates is that organisational values are constantly-shifting. While they have an influence over organisational objectives, they are also subject to change. This implies that there may well be a relationship between changes to the organisational value systems, organisational culture and organisational objectives.
Relationship with Strategic Objectives
This paper aims to study what sort of relationship organisational values have with both culture and outcomes. Values in part determine the strategic objectives, but the ability of the organisation to execute on its strategy to reach its objectives is another matter altogether. One of the moderating factors that has been identified that governs the relationship between organisational values and outcomes is that of value congruence. Boxx, Odom and Dunn (1991) note that the people within the organisation perform better with respect to working towards the organisation's objectives when they have a high level of alignment with those objectives. This has some interesting implications for the not-for-profit sector because people working in such organisations should be expected to...
Certainly, they should have a higher level of value congruence than people working in for-profit companies, as in the latter there is likely to be a value conflict wherein workers do not care much about earning profit for shareholders, which is likely to be a core value for the organisation. In a not-for-profit, especially a charity, the strategic objectives of the charity are highly likely to reflect something that is a priority for its employees as well. At least, if there is a higher level of value congruence, this should help create a more cohesive organisational culture and result in greater goal congruence as well.
Values and Ethics
Another interesting dimension is that of organisational ethics. Values can be a baseline for ethics, and a strong set of values that is genuinely shared throughout the organisation can contribute to an organisational culture that promotes high ethical standards. This is particularly true when the values and ethics bear the influence of leadership, as leaders have unique influence over their followers (Grojean, Resick, Dickson & Smith, 2004). Moreover, leadership is a strong definer and carrier of organisational culture. Because of the influence that leadership has over aspects of the organisation such as its values and culture, and the reality that leaders are primary in setting goals for the organisation, there should be a high level of congruence between all of these different elements.
Valentine and Barnett (2003) also noted a relationship between ethics and values. An organisation that has a published code of ethics, and that ensures its employees are aware of it, will be perceived as being more ethical, and having a legitimate set of organisational values. A person within the organisation is more likely to buy into that set of values, simply on the perception that the organisation takes these sorts of values seriously. There is a certain amount of conflation, interpreting their study between ethics and values, but the key takeaway is that values and ethics can influence each other. Values influence the organisation's ethical culture, but the existence of strong ethics within the organisation will influence the shared values and value congruence with internal stakeholders.
Value congruency is one of the more central themes in this area of study. Posner (2010) notes that the higher the degree of congruence between personal and organisational values, the more engaged workers will be, the higher their ethical behaviour will be, and ultimately this should lead to superior organisational outcomes as well. The area where the research does not cover at this point is investigating whether there is any difference in the degree of value congruence, or its influence on organisational outcomes, between corporate entities and not-for-profit organisations.
The Influencing Role of Organisational Change
Because the values, culture and goals of the organisation are related, and they are subject to change, it is also worth evaluating the role that change has on these factors. All organisations face change; the only real question is the pace of change and its intensity (Kotter, 2007). Organisations therefore need to be able to change, when the external environment changes. The first thing that will change will be the goals, because those reflect both internal and external realities. But in order for the organisation to change its goals, it may sometimes need to make adjustments to its culture and its underlying values. For example, if a company is family-owned, and that is a key part of its values, it may have to re-evaluate those values if the environment is one of rapid industry consolidation and the firm is a takeover target.
There is an inherent conflict here. If organisational values are ingrained in every aspect of the organisation, that presents challenges for changing this values. Certainly, organisational values and even organisational culture cannot be changed nearly as often as strategic objectives, unless the latter do not change much. For an organisation in a mature environment, as might be the case with charities, this is not going to be much of a problem, but for any organisation with a rapidly-changing operating environment, there will ultimately be some sort of conflict between core values of the organisation and the need for constant shifting of goals. Kotter (2007) advocates having a high readiness for change, and more importantly willingness to change, but this is challenged by the fact that changing strategy is more complicated than simply setting new goals. A legitimate shift in strategy implies that there will be a change to the value system that underpins every single aspect of the organisation. From a performance perspective, the fact that performance is in part driven by the congruence between the values of the people within the organisation and the values…
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