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Culture Is the Behavior You Reward and Punish

Let your actions, not your words, define your culture.

By Gustavo Razzetti

March 9, 2023

Company values are invisible – what's rewarded and punished shouldn't

Workplace culture is more than "the way we do things around here." It's the gap between what we are saying and what we are doing. The behavior that's tolerated – not your words – determines the real culture.

Marc Eugenio couldn't believe he found an angel on Christmas Eve. The U.S. Bank customer was stranded. He had been waiting for hours for a deposit to show up in his account – both his fuel gauge and bank balance were empty.

After a long call with customer service, a representative offered to hand Mr. Eugenio $20 of her own money. Emily James, the senior U.S. Bank officer, received permission from her manager and drove to meet the customer during her lunchtime. She handed him the money and wished Marc Merry Christmas.

You would think the employer would reward Emily for her selfless behavior, right? Not so fast.

What did U.S. Bank do when it found out? It fired both her and her manager. Interesting response from a company that empowers employees to "do the right thing."

The Problem with Company Values

The above story is the norm rather than the exception.

After an investigation, U.S. Bank "concluded" that Emily James broke the rules. The company bars call center employees from meeting customers. Rather than acknowledging the generous behavior, U.S. Bank accused the employees of putting the bank at unnecessary risk.

As a culture consultant, I often observe this disconnect between the declared culture and the real one – corporate behaviors don't match words.

49% of employees in the UK can't recite their organization's values and almost one-third feel their organizations' vision or values have too much corporate jargon. In the US, over 30% of employees believe business leaders don't behave in ways consistent with the company's stated values.

Take Boeing as an example. Integrity, Trust, and Safety – among others – are the aerospace company's core values. However, the analysis of recent safety incidents unearthed the real behavior. Boeing's company culture is anything but safe. Employees neither trust each other nor respect its safety approach – even engineers are called "clowns."

Patrick Lencioni, the author of The Advantage, identified four types of company values – most get companies into trouble.

Core values are the principles that guide your company's behavior. They cannot be compromised. Not only are they deeply engrained in the organization, but they also make your culture unique. Core Values capture the shared beliefs – what's expected of people in your company.

Airbnb's CEO, Brian Chesky, said it best: "Integrity, honesty — those aren't core values. Those are values that everyone should have. But there have to be like three, five, six things that are unique to you."

Aspirational values are those the company needs but actually lacks. Aspirational values can be deceiving. The fact that you add them to your list doesn't mean that you actually live them. They require turning words into action.

If played to the extreme, aspirational values can be harmful. Especially if there's a lack of context or role modeling. For example, "be brutally honest" can promote disrespect or lack of care for our colleagues.

Permission-to-play values represent the minimum expected behavior of any employee, regardless of their job. They don't differ from one company to another. "Collaboration," "integrity," or "diversity," to name a few, are not core values – every employee in any organization should play by those principles.

So, why do organizations insist on including minimum expected behaviors as values?

Usually, to get out of trouble. Netflix added the "Diversity" value to its culture map after experiencing backlash. Similarly, when Uber refreshed its values, it included "Do the right thing. Period." to neutralize an incredibly toxic culture.

Lastly, Accidental values arise spontaneously as a result of people's behavior. They reflect employees' interests and aspirations – sometimes they elevate the culture; usually, they don't.

The problem with values is that most leaders fall in love with their own words. They like to craft a self-serving mission statement but fail to distinguish their aspirations from reality.

Lencioni shares an example of a senior executive who couldn't take it any longer. He realized that "The gap between what we were saying and what we were doing was just too great."

The Great Resignation has accelerated the tipping point. People feel in control now. They no longer want to tolerate the gap between what leaders think the culture is and what employees suffer.

The Behavior You Reward, Punish, and Tolerate

"So what should I do to get ahead in your organization? What makes people successful here? What made you successful?" Stanford GSB's Charles O'Reilly posed that question and invited VMware's employees to reflect on what the company rewarded.

Employees started filling the board with the usual suspects – innovate, work hard, be open, and be collaborative. As they continued to reflect, more specific behaviors came to mind: "Be available on email 24x7," "Sound smart," and "Get consensus on your decisions." With more prompting, employees gave an accurate answer of what the culture was.

Once the team had finished, professor O'Reilly pointed at the whiteboard and said, "That's your culture. Your culture is the behaviors you reward and punish."

When role models are consistent, everyone gets the message. However, if behaviors don't match words, that's when culture goes wrong. As Jocelyn Goldfein wrote, "People stop taking values seriously when the public rewards and consequences don't match up.

Research indicates that values often don't have a significant impact.

An MIT Sloan study found no correlation between a company's expressed values and how employees felt they lived up to them. For example, promoting diversity but not supporting it with action can do more harm than good. Statements such as "We don't discriminate" create an impression that the organization has achieved equity and fairness, when in fact, it hasn't.

Behavioral cues provide concrete guidance on how to translate values into actions. Leaders must clarify why they matter. According to the same study by MIT, less than one-quarter of companies connect values with behaviors – a significant majority fail to link beliefs with business success.  

A lack of specificity is a common issue when crafting company values.

One of Facebook's core values is "build social value." But, what does that mean? Social value could simply mean creating connections among people – both positive and negative. Based on recent events, Facebook clearly doesn't care about the harm caused when social connections are a conduit to spreading fake news or hate speech.

Words are invisible; actions are not.

You can't call your culture 'transparent' if people are afraid of speaking the truth to power. If you promote a selfish employee, you can't say you have a 'collaborative' workplace. You can't pronounce your culture as 'innovative' if all ideas are killed before they see the light of day.

U.S. Bank cannot say that it wants employees to do the right thing and then fire an employee who did a good deed.

Company culture is a reflection of their leaders. Not just what they do, but also what they tolerate. To change your company's culture, seek to change the behaviors you celebrate or call out. Your action – or lack thereof – speaks more than a thousand words.

Spotify punishes playing politics and rewards creativity instead: Ideas, not the highest pay grade, win.

Perception is reality.

It takes consistency to establish a positive standard in your culture, but it only takes a slight inconsistency to lose it.

What people perceive you reward and punish matters the most, as Emmett Shear tweeted.

Letting an underperforming employee go is difficult and painful. You invested a lot in hiring them and you want them to succeed. However, procrastinating the decision can send the wrong message. People could think that bad performance is okay.

As Anish Hindocha wrote, "What you ignore, disregard, turn a blind eye to, or sweep under a carpet, becomes the things you implicitly endorse."

Defining the behaviors you want to reward and punish is not about building consensus, but drawing a line. Choose what's right, not what's easy.  

Amazon punishes "complacency" and having a "Day 2 mentality." Mediocrity is not welcomed. The tech giant rewards speed, relentlessness, and intellectual autonomy (the virtues of wandering). This is consistent with Amazon's aggressive culture.

The behaviors that are rewarded and punished are one of the building blocks of the Culture Design Canvas. It's one of the most difficult conversations to have. After having facilitated hundreds of culture design workshops, I can testify to that. Leaders struggle with this exercise – listing values is easy; connecting them to actual behaviors is a different story.

HubSpot punishes taking shortcuts to achieve short-term results. Conversely, it rewards: simplicity, being a culture add (versus fit), work and life balance, and results (not hours worked).

As Ben Horowitz explains in What You Do Is Who You Are, company culture is not defined by having dogs at work, free yoga lessons, or ping pong tables. Those are perks. The company values and CEO's personality might help shape the culture, but are not enough.

Culture is how a company behaves when no one is looking.

It's not your employer brand or the speech you give at an all-hands meeting. Your culture is the actual day-to-day behavior. It's the tough choices you make to stay true to your purpose and value – from dealing with mistakes or bad news to establishing why people get promoted or fired.

One of my clients recently defined they want to punish "putting yourself, not the customer, first" and "complacency: sticking to the way we've always done things here." Furthermore, they defined that they want to reward: "Don't talk about it, solve it" and "Building the bench." This started a profound transformation. The company decided to change its performance review systems, bonuses, and decision-making. It turned words into concrete action.

Define Culture: What do Reward and Punish? 

The behavior you tolerate (or not) shapes your culture.

Model the right behavior and inspire others to follow suit. Walk the talk. Let your actions, not your words, define your culture.

What you reward and punish requires drawing a line – how hard are you willing to fight to protect your culture?

Your turn. Try this exercise to define the behaviors you reward and punish. Or reach out to discuss how we can help your organization design a high-performing culture – and turn words into action.

Article by Gustavo Razzetti, CEO of Fearless Culture

Gustavo facilitates courageous conversations that drive culture transformation. He is a sought-after speaker, culture consultant, and best-selling author of the book Remote, Not Distant.

Razzetti is also the creator of the Culture Design Canvas – a visual and practical method for intentionally designing workplace culture. His insights were featured in Psychology Today, The New York Times, Forbes, and BBC.

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