Most large companies today have stated values, but it’s unclear how consistently these values guide behavior. This is an important issue because maintaining a values-driven, ethical company culture may likely lead to many positive outcomes. These could include greater integrity of the products and services delivered to customers, higher retention and engagement of staff, and even a decreased likelihood of a large-scale misstep or scandal. (This last issue taps into a growing area of interest among our clients — managing risk culture. For a more detailed discussion of this topic, please see Risk culture starts to come of age.)

To examine employee opinions on the ethical nature of company culture, we selected six questions from our most recent Global Workforce Study of over 32,000 employees in 26 markets. Here are the questions of interest, along with the percentage of employees agreeing with each associated statement:

  • My organization conducts its business activities with honesty and integrity, 72%.
  • Senior leadership behaves consistently with the organization’s core values, 56%.
  • I believe the information that I receive from senior leadership, 54%.
  • My immediate manager acts in ways consistent with his or her words, 57%.
  • The people who work here are committed to and take pride in our shared values, 63%.
  • This company operates with integrity in its internal and external dealings, 69%.

None of these findings are particularly encouraging from the perspective of the widespread existence of ethical company cultures, and a few are downright alarming, such as the fact that only 54% of employees globally believe the information they receive from senior leadership.

How much do these scores vary by employee demographic? To find out, we computed the average of all six questions and examined it by gender, age and tenure, as shown below. (There is some statistical justification for this, as the alpha reliability coefficient is 0.87.) Although not much difference exists between males and females, there does seem to be a tendency for younger and less-tenured employees to respond more favorably (although favorability peaks at five to 10 years in tenure). While this may reflect a growing cynicism that comes with age or experience, note that the range of scores is only eight percentage points at most. This suggests that these personal demographic factors have a modest impact.

Values Index Based on Demographics

Towers Watson Media

Note: Scores on the Values Index reflect the percentage of employees who "strongly agree" or "agree", on average, with six survey questions related to the presence of a values-driven, ethical culture in their company.
Source: Willis Towers Watson Global Workforce Study

What about the role of industry? Surely each sector faces unique challenges, and thus, company cultures may evolve differently across industries. These patterns are shown below. As can be seen, employees in the nonprofit sector have the most favorable responses regarding the ethical nature of their cultures. However, before one concludes that the profit motive is a common source of ethical conflict, note that employees in the government sector have among the least favorable responses. Why the stark difference between those two groups? We can only speculate, but perhaps those classified as nongovernment nonprofit, largely religious, education and human service organizations emphasize values more explicitly in their work (and attract individuals for whom that is important).

Values Index Based on Industry
Click to enlarge Values Index Based on Industry

Note: Scores on the Values Index reflect the percentage of employees who "strongly agree" or "agree", on average, with six survey questions related to the presence of a values-driven, ethical culture in their company.
Source: Willis Towers Watson Global Workforce Study

Other industries at the top of the list include high tech and financial services. While the reasons for the former are not immediately apparent, the latter is likely influenced by the heavy emphasis on risk culture that has existed in financial services for the last several years. At the bottom of the list, we see the somewhat related industries of transportation, hospitality and retail. This finding may reflect the challenge of consistently meeting customer needs and the common gap between aspirational goals and values, and the on-the-ground reality of customer service.

Perhaps most importantly, what is the impact of maintaining a values-driven, ethical culture? We can draw on two pieces of evidence to confirm our suspicion that doing good can lead to doing well. First, we found a clear and strong relationship between an ethical culture and engagement, as shown on the left of the graph below. Given the well-established connection between engagement and business performance, we can draw a straight line between living our corporate values and improved performance. This is further bolstered by the findings depicted on the right side of the graph below. Here we are examining data aggregated from across hundreds of client-sponsored employee surveys conducted by Willis Towers Watson. The client data have been segmented into two groups: all U.S. operations (the U.S. national norm) and those that are part of companies with above-average financial performance and engagement scores (the U.S. high-performing companies norm). Clearly, the latter outperform the former on all three questions.

High Performers Values Index
Click to enlarge High Financial Performers Values Index

Note: Scores on the Values Index reflect the percentage of employees who "strongly agree" or "agree", on average, with six survey questions related to the presence of a values-driven, ethical culture in their company
Source: Willis Towers Watson Global Workforce Study

Stating values is easy; living by them is hard. Most companies today have stated values, but this research shows that less than two-thirds of employees believe their companies truly live up to these values. Experience tells us this will have an impact on employee engagement and financial performance, and there is evidence to confirm that experience. The message for leadership is clear: Stating values is not enough. Company culture must be regularly monitored, through anonymous employee surveys and other means, to gauge how consistently values are being lived. Further, such measurement can be used to guide corrective action, whether through revised policies and procedures, aligned incentives or clearer articulation of how values should be translated into behavior.