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LODJ
28,1
36
Received March 2006
Revised August 2006
Accepted September 2006
Leadership & Organization
Development Journal
Vol. 28 No. 1, 2007
pp. 36-50
q Emerald Group Publishing Limited
0143-7739
DOI 10.1108/01437730710718236
The effect of leadership on
values-based management
Aaron A. Buchko
Bradley University, Peoria, Illinois, USA
Abstract
Purpose – The purpose of this paper is to examine the role of organization leaders, particularly top
managers, in building support for and developing behaviors that are consistent with values-based
management, by providing an empirical assessment of the effect of an organization’s senior leadership
on the values-based management process.
Design/methodology/approach – As part of a program of organization development, a
values-based management approach was implemented in a large manufacturing organization. As
part of the process, a system of measuring and evaluating values-based behaviors was developed. The
senior leaders of two groups of the organization were assessed in terms of their values behaviors, and
their direct reports were likewise evaluated by the organization using a 3608 process.
Findings – The results indicated that the leader’s values behaviors were significantly related to the
values behaviors of subordinates. Subordinates of leaders who strongly demonstrated values-based
management behaviors were more likely to exhibit the same behaviors.
Originality/value – The value of these findings lies in the suggestion that the role of organization
leaders, and specifically the behaviors demonstrated by leaders, are important in determining the
outcomes of values-based management techniques. Subordinates may take cues from their leaders and
model their values-based behaviors after those of the organization’s leadership.
Keywords Leadership, Management technique, Management standards, Organizational culture,
Core beliefs
Paper type Research paper
Introduction
There has been a lot of interest generated in the last few years among managers and
organization development professionals on the use of organization values as a tool for
driving increased organization performance. Some fairly well-known (or at least well
read) books on firm performance have suggested that the presence of identifiable “core
values” or “common values” is a characteristic of successful organizations (Collins and
Porras, 1994). While some have attempted to dispute such claims (e.g. Shellenbarger,
1999), the overall consensus seems to be that organization values are an important
factor in the successful management of large organizations (Anderson, 1997;
Blanchard and O’Connor, 1997).
Most of the writings of organizational development consultants, managers, and
academicians emphasize the managerial importance of core values using a
philosophical and/or anecdotal perspective. The “values philosophers” have tended
to assume that, since shared values are basic characteristic of social organizations,
such values therefore significantly affect management practices and behaviors. These
philosophers then argue for a set of prescriptive or normative values that will help
managers be more effective. Usually, such approaches have a set of values that the
proponents are “pushing” as in some way “good” or “right” for achieving organization
performance, or a series of rather broad generalizations about the effectiveness of Values-based
common values in the practice of management (e.g. Blanchard, 1997). management
The anecdotal perspective tends to tell stories about or provide case studies of
various organizations and the values of the leaders of those organizations, then infer
that these values are essential components of the firms’ success. We are treated to
articles, books, and discussions of “Managing the XYZ Company Way” or “Leadership
According to (Fill in Name of Very Successful CEO)”. in which the values of XYZ 37
company or very successful CEO are presented as keys to organization success (Collins
and Porras, 1994; Anfuso, 1999; Filipczak, 1996). Of course, such stories conveniently
ignore the fact that some very unsuccessful companies – such as Enron and Arthur
Andersen – had a well-defined and well-articulated set of core values.
There’s been very little empirical effort devoted to examining many of the tenets of
the proponents of “values-based” management. To date, there has been little attempt to
empirically test the suggestions and principles set forth by those who argue for a
values-based management perspective.
The purpose of this paper is to examine one of the basic concepts of values-based
management by empirically assessing the effect of organizational leaders on the
values-based managerial behaviors of their subordinates. The paper reports on a field
study with practicing managers in a large organization that implemented a
values-based management approach as an organization development intervention and
the results of the initial assessment of values-based managerial behaviors using a 360
degree evaluation process of the organization’s top management team (TMT) and the
operating team leaders. The goal is to begin rigorously testing values-based
management concepts to determine if the claims of proponents have some merit.

Organization values: a review

The concept of organization values
The concept of values as central to organizations and organized societies has a long
history in the sociology of organizations, and it is not my intent to delve into the
conceptualization of the subject. Suffice it to say that values have long been considered
central to understanding the principles that guide societies, institutions, organizations,
and individuals (Schwartz, 1992). Within the field of organization management, early
writers such as Chester Barnard (1939) suggested that shared values were useful in
addressing the problem of creating and managing complex organizations. Others have
noted the importance of shared values as central in building a strong organization
culture (Deal and Kennedy, 1982; Ouchi, 1980) and in the practice of management and
leadership in organizations (Blanchard and O’Connor, 1997; Peters and Waterman,
1982).
For purposes of this discussion, we will define values as the relatively enduring
beliefs about what kinds of behaviors or end-states are preferable to others (Rokeach,
1973). Values form the shared conceptions of what is most desirable in social life; in
effect, values are the “glue” that binds people together into organizations. When a
group of people share a set of beliefs about the goals that need to be achieved and the
means to be used to attain those goals, there is a basis for organization. In fact, without
some common beliefs or values, organizations could not exist; people need a common
set of beliefs to come together and create social organizations.
LODJ If common values are inherent in all social organizations, what is the meaning of the
28,1 term “organization values” or “core values?” In most cases, this term appears to refer to
a specific set of publicly stated beliefs or concepts that are expected to be adhered to by
everyone in an organization. While not all organization values are public, those that are
seen as forming the core of the organization and that are central to the organization’s
existence are generally known by all members of the enterprise. In many cases, these
38 are formalized and stated in writing for all members of the organization, and are
frequently shared with other key organization stakeholders, including the general
public at large.
It is important to note, however, that organization values and organization culture
are not one and the same thing. While the values are the beliefs, the culture is the
outward representation or manifestation of certain key underlying beliefs. Culture
consists of the myths and legends, stories, rites and rituals, symbols, and unique
language that defines a social group (Frost et al., 1991). As such, the culture reflects the
underlying values. Culture demonstrates the values to members of the organization
and to outsiders in very visible ways.
From a management perspective, core values are seen as the underlying
attitudes and beliefs that help determine individual behavior (Deal and Kennedy,
1982). This view largely explains the fascination many managers have with the
concept of shared values. Many executives view common values as a means of
influencing individuals’ behaviors without the need to resort to formal structures,
systems, policies, or control mechanisms. As such, these values provide managers
with a means of directing the organization in a desired way without having to
resort to authoritarianism.
The linkage between core values and the practice of management is shown in
Figure 1. This figure, developed by a team of managers at an organization with whom
the author was involved, illustrates the relationship between an organization’s core
values and the firm’s performance. To interpret the figure, one reads the model from
right to left. A business (or for that matter, any type of organization) has certain
performance expectations that must be met if the organization is to survive. In the case
of for-profit firms, these performance outcomes are measured by returns, profitability
and similar financial metrics; in the case of not-for-profit firms, these might be clients
served, societal outcomes achieved, or similar non-financial, mission-based results. To
achieve the desired performance, organizations must provide some type of product or
service to the external environment; that is, it must provide outputs that are valued by

Figure 1.
The relationship of
organization values to
performance
members of the society in which the firm exists. To the extent that a firm is successful Values-based
in providing these desired products and services, performance will increase. management
A firm’s success at providing valuable products and services is dependent upon the
execution of certain fundamental organization processes. In the case of the for-profit
business, these might include marketing, operations, finance, etc.; the basic functions of
the enterprise. A firm that is able to properly manage and control the key processes
will be able to provide the desired products and services at a cost that allows for the 39
attainment of performance results. The factor that determines the success of the
organization at executing these key processes is the people of the enterprise. If people
behave or act in the appropriate ways, if their decisions are proper and timely, and if
they can use creativity to develop new and improved processes, products, and services,
the organization will continue to achieve the desired performance and will prosper.
Accordingly, the issue becomes: what determines the behaviors and decisions of the
people in the organization?
One important factor is the organization’s values, the shared beliefs that influence
behaviors and establish the goals that are mutually desirable among the members of
the organization. To the extent that these shared values shape individuals’
understandings of their world, organization, and social environment, values affect
the decisions people make and the behaviors in which they engage. To be sure, there
are many other factors that also influence individuals’ behaviors and decisions in
organizations – attitudes such as commitment (Mowday and Steers, 1979), satisfaction
(Smith et al., 1969) and the like, and basic human needs (Alderfer, 1972; McClelland,
1985; Vroom, 1964). However, to the extent that values are present within the
organization, and that people understand and share a set of core values, these will
certainly affect how people think and act within the organization.
Recognizing the importance of values in shaping behaviors, it is no surprise that many
management theorists, consultants, and writers have centered on the importance of core
organization values as a basis for achieving high performance (Collins and Porras, 1994;
Peters and Waterman, 1982). It has been suggested that successful management of
complex organizations is based upon having a clear set of values that provide a
foundation for the development of the organization mission and subsequent planning
activities, and that such values-based management serves as an essential “first step” in
building a high growth organization that yields improved individual performance, and
such individual achievement drives economic success (Anderson, 1997).

Organization values: a research perspective

Despite the many claims of proponents of values-based management approaches, there
has been relatively little empirical research that has examined the concept. This is
somewhat surprising, in light of the large volume of work that appears in more
“popular” or practitioner-oriented books and journals. While many practitioners (and
those who write for practitioners) acknowledge the importance of common
organization values, few researchers appear to be examining the topic with much rigor.
To be fair, there has been some research that is worth considering. Much of the
published research takes the form of an assessment of a single company in a
case-study or anecdotal form and is subjective in nature (e.g. Ledford et al., 1995;
Fitzgerald-Turner, 1992; Howard, 1990). There has been some research that is more
empirical in nature, though, and that supports many of the claims for values-based
LODJ management methods. Nohria and Ghoshal (1994) demonstrated that having a high
28,1 degree of shared values between corporate headquarters and subsidiary groups is a
legitimate approach to governance of multi-national corporations, and that the
presence of such shared values enhances the performance of the corporation. This
research is somewhat reflective of Ghoshal’s earlier work with Christopher Bartlett on
managing global organizations (Bartlett and Ghoshal, 1989), but does indicate that
40 shared values can be transnational or global in nature and can lead to positive
outcomes for those organizations that properly define and use such values.
Hinings et al. (1996) established a linkage between organization values and
structure. Using a set of Canadian amateur sports organizations, the authors were able
to identify seven core values. These were then linked to three elements of organization
structure: specialization, standardization, and centralization. There results indicated
that there were similarities in the values of the senior personnel (“elites”) of the
organizations and the type of organization structure.
Two studies have examined the structure of organization values. Kabanoff and Holt
(1996) examined changes in the espoused values of Australian organizations over a
five-year time period of 1986-1990, and linked these changes in values to a framework
of values based upon notions of distributive justice (Kabanoff, 1991). In this typology,
four value structures were identified, based upon the issues of power structures and
organization processes: Elite value systems, Meritocratic value systems, Leadership
value systems, and Collegial value systems. Through a content analysis of public
statements of 85 organizations, the authors were able to identify minor shifts over time
in the values systems of these organizations. Using the same sample of organizations
and date set, Kabanoff et al. (1995) demonstrated a linkage between espoused
organization values and the way organization members described organizational
change.
Buenger et al. (1996) used a typology of values developed by Quinn and Rohrbaugh
(1981). In this framework, termed the “competing values model,” organization values
are seen as influenced by two fundamental tensions: internal versus external focus, and
control versus flexibility. Using these tensions, a 2 by 2 matrix was developed and four
competing values sets identified: internal process values, rational goal values, human
relations values, and open systems values. Their results indicated that, within the same
organization, unit managers can have differing preferences for the four values in the
competing values model, and that these four values were associated with differences in
organization design. Other theoretical foundations for competing values in
organizations and various typologies that result from such frameworks have been
developed in the literature on complex organizations (e.g. Parsons, 1956; Perrow, 1961;
Gross, 1969). All typologies are based on larger theoretical constructs and issues
common to large complex organizations and social systems.

The development of organization values

Within the field of organization development, there are several individuals and
organizations who have concentrated efforts on understanding the process whereby
organizations adopt shared values as a basis for management of the enterprise (e.g.
Blanchard and O’Connor, 1997). One suggestion that has developed from this
OD-practitioner involvement has been that the ability of an organization’s leaders to
model or demonstrate the desired values-based management is crucial to the
development of values-based managerial behavior throughout the company (McCoy, Values-based
1985; Shamir et al., 1993). management
But do leaders shape the values of their followers, or are organizational values
transcendant, surpassing even individual leadership behaviors? Do organization
leaders impact the values of their subordinates in a meaningful way, or is this assumed
to occur based on other leadership research? That is, conceptually values are the
enduring systems of belief in an organization, and as such are assumed to take 41
precedence over the individuals who populate the enterprise. Since values are the
overarching norms of organization behavior, the ability of individual leaders to
materially affect the values of individuals within there sphere of influence would
appear to be marginal. Conversely, other OD practitioners suggest that leaders are the
crucial element in developing and implementing organization values and values-based
behaviors (Blanchard and O’Connor, 1997).
To date there has been little empirical research that has examined this question,
particularly using field sites. The following section reports on an empirical assessment
of the leadership effect on organization values based upon a field study and
organization development intervention conducted at a manufacturing company.

Leadership and organization values: an empirical assessment

Methodology: the research setting
The site for this research is a medium-sized manufacturing company located in a large
city in the mid-western USA. The company manufactures complex components for the
transportation industry. Employment at the facility is approximately 900 persons, with
slightly over 600 people who are members of a union and are employed as hourly
workers in manufacturing and assembly and 300 non-union people employed in
management, supervision, engineering, and administrative support functions.
To manage the company, the organization is structured entirely in work teams. The
Business Management Team is comprised of the company President (CEO), the Chief
Financial Officer (CFO), and Vice President of Manufacturing Operations, Vice
President of Commercial Operations, and a Vice President of Human Resources. These
five people make up the top leadership team (TLT). The CFO and three Vice Presidents
officially report to the CEO as their superior. The CFO is responsible for the accounting
and finance functions, purchasing and procurement, and information technology
services. The vice president of Human Resources is responsible for administering the
collective bargaining agreement, training and education, and corporate
communications. The staffs for these two areas are relatively small and report
directly to their respective senior manager.
The Vice President for Manufacturing Operations has 13 team leaders who report to
him; each of these individuals is responsible for a team of eight to 70 people who handle
the various manufacturing activities of the enterprise and are referred to as the
Manufacturing Operations Team, or MOT. The Vice President for Commercial
Operations has 14 team leaders who report to him. Each of these team leaders is
responsible for a team of four to 20 people who are responsible for product design,
engineering, customer support, and other commercial activities, and are referred to as
the Commercial Operations Team, or COT. Together, these 27 team leaders are the
management structure of the business. The team leaders are selected by the TLT and
are responsible for the commercial success of their product line. Each team has an
LODJ individual profit and loss statement and is responsible for accountable financial
28,1 results.

Methodology: identifying and measuring organization values

As part of a program of organization development, the members of the TLT
determined that the organization needed to establish a values-based management
42 process for the business. The author was asked to assist the TLT in this process.
The initial phase of the process involved reviewing the organization’s vision and
mission; current and intended strategies; and management practices. A series of
meetings was held with the TLT to establish the key behaviors that the senior
managers wanted to be demonstrated in the company, and the type of organizational
climate that the TLT felt was essential for the organization’s success. From these
behavioral expectations and desired climate, the TLT derived seven values that were
seen as essential or “Core Values” of the enterprise: Creativity, defined as “We
continuously seek new, innovative, and better ways to improve our performance”;
Dedication, defined as “We are committed to doing whatever is necessary to meet
customers’ needs and support our company”; Initiative, defined as “We are free to take
action as needed to make our company better and produce better results for our
customers”; Motivation, defined as “We are driven to perform for our customers, our
team members, and our company”; Respect, defined as “We treat each other as we want
them to treat us”; Teamwork, defined as “We believe in the value of working together;
that together we are better than any one of us individually”; and Trust, defined as “We
rely on each other to do what is best for our customers and for our company”. These
were defined by the members of the TLT and communicated to all members of the
organization at a series of all-employee meetings with the CEO and the TLT.
Following the communication of the core values, the TLT determined that it would
be essential to measure how well these values were being demonstrated in the
organization, in order to determine if future organization development efforts, such as
training and education, reward and recognition programs, communications efforts, and
similar practices were having the desired effect in making the company more of a
values-based organization. To establish the measurement process, a process similar to
that used for developing a behavioral observation scale (BOS) was used. Since the
company was managed by a total team process, it was decided to let the people of the
organization develop the measurement instrument.
Each of the nearly 300 individuals in the management and administrative sections
of the organization were provided with the seven core values of the company along
with the definitions of the values. (Due to language and constraints imposed by the
collective bargaining agreement, union represented hourly workers had to be excluded
from the evaluation process.) They were asked to describe, for each of the seven values,
a behavior that would exemplify or demonstrate that an individual in the company was
acting in a manner consistent with the core value. These were returned to the Human
Resources department, where a team of seven employees reviewed the behaviors,
eliminated duplicate concepts, and developed an initial list of 345 behaviors that were
proposed by the company personnel as indicative of values-based management.
The approximately 300 managerial and administrative were then divided into three
groups of roughly 100 each. The 345 values behaviors were then randomly arranged
and returned to these three groups with one of three sets of instructions. The first
group was instructed to read through the 345 values behaviors and then determine Values-based
which of the firm’s core values was indicated by this behavior. This was done to assess management
the reliability of the behavior; did the behavior measure a specific value? The decision
rule used established 90 percent interrater agreement as the standard for reliability of a
specific behavioral item. The second was given the same 345 behaviors and asked to
indicate if the behavior had little effect, some effect, a significant effect, or a large effect
on an individual’s job performance. This was done to establish the job-relatedness 43
criteria for the values behavior, since those behaviors that do not contribute to job
performance cannot be considered a valid measure of individual performance. The
third group was given the same 345 values behaviors and asked to think about the
people on their team, rating the best person on the team in terms of the values behavior
and the worst person on the team. The scoring for this evaluation was a four-point
scale, with a score of 1 indicating that the person demonstrated this behavior less than
25 percent of the time, a score of 2 indicating that the individual demonstrates the
behavior 25-50 percent of the time, a score of 3 indicating that the individual
demonstrates the behavior 50-75 percent of the time, and a score of 4 indicating that the
individual demonstrates the behavior more than 75 percent of the time. Each person
was asked to provide a score for the best and worst person on their team, and to
indicate the difference between these scores on their response form. This was done to
determine if the item would allow the company to discriminate between high and low
values-based managerial behavior.
Based on the responses from the three groups, 19 behavioral descriptions of the
organization’s seven core values were determined to be reliable and valid measures for
evaluation purposes. These 19 behaviors and the associated core values are shown in
Table I. These were randomly sorted and presented to the organization as the Values
Evaluation Survey for the company. (Note: Table I is the actual behavioral values
evaluation survey instrument that was used by the organization in conducting the
initial assessment.) These 19 individual behaviors were then grouped according to the
seven core values, and an average score for each of the seven core values was
determined for the individual as the measurement of the extent to which the individual
demonstrated the specific core value of the company in her or his behaviors.

Results
The Top Leadership Team Assessment. In order to provide an “example” for the
organization, it was determined by the TLT that the five senior managers would be the
first people to be assessed by the organization, with the 27 team leaders to follow once
the TLT assessment had been completed. Each of the nearly 300 individuals in the
organization filled out an assessment for the five members of the TLT, using the same
4-point frequency scale as described previously in the development of the measurement
instrument – that is, how often did the individual under evaluation demonstrate this
behavior in interactions with people in the company? These evaluations were therefore
done in the “360 degree evaluation” format – the individual’s superior, peers, and
subordinates were all able to provide feedback to the members of the TMT. The results
of this initial assessment are presented in Table II.
As can be seen from the data on this table, the results of the average scores for the
seven Core Values varied for the individual members of the TLT, and these differences
were statistically significant (using a t-test). Importantly, it should be noted that there
LODJ
XYZ Company
28,1 Core values evaluation survey – feedback
Name:
Survey item Core value

1. Adapts ideas from other applications to solve current problems Creativity

44 2. Anticipates potential problems and takes actions to avoid them Initiative
3. Cooperates with his/her own team and with other teams Teamwork
4. Creates alternative solutions to problems Creativity
5. Delivers the same story to all people Trust
6. Follows through on commitments and sees problems through to resolution Dedication
7. Identifies and implements better ways to do the job Creativity
8. Is consistent in words and actions Trust
9. Learns from mistakes Motivation
10. Listens and responds to the needs and concerns of others Respect
11. Maintains confidences Trust
12. Follows things through to completion Dedication
13. Participates in reaching team consensus and supporting team decisions Teamwork
14. Recognizes the strengths and contributions of team members Respect
15. Shows a willingness to make sacrifices for the good of the customer Dedication
16. Takes advantage of educational opportunities to improve job skills Motivation
17. Takes ownership and pride in all aspects of the job Dedication
18. Treats people fairly, recognizing their differences Respect
19. Understands his/her role and contributes to the success of the team Teamwork
Overall average score:
Trust (5,8,11)
Respect (10,14,18)
Teamwork (3,13,19)
Table I. Creativity (1,4,7)
Core values, behaviors, Initiative (2)
and assessment Dedication (6,12,15,17)
instrument Motivation (9,16)

Core value CEO CFO VP-Mfg. ops VP-Com. ops VP-Hum. res. t-test

Creativity 3.79 3.18 2.73 3.66 3.17 26.23 * *

Dedication 3.73 3.14 3.49 3.65 3.28 31.26 * *
Initiative 3.37 2.81 3.50 3.31 2.69 19.40 * *
Motivation 3.12 3.08 2.84 3.33 3.00 38.44 * *
Table II. Respect 3.57 3.10 2.74 3.43 3.08 21.85 * *
Average values Teamwork 3.53 3.15 2.96 3.56 3.18 28.19 * *
behaviors scores for the Trust 3.79 3.18 2.73 3.66 3.17 17.36 * *
top management team
(by core value) Notes: * *Significant at the 0.001 level

tended to be a large difference in the evaluations for the Vice President of

Manufacturing Operations and the Vice President of Commercial Operations for the
seven Core Values. For six of the seven Core Values, the VP of Manufacturing
Operation’s scores were significantly lower than those of the VP of Commercial
Operations; the only exception was Initiative.
 The Team Leader Assessment. Following the evaluation of the TLT, it was Values-based
determined that the next phase of the “rollout” of the company’s core values process management
would involve the evaluation of the 27 team leaders. Since this is a fairly “flat”
organization in terms of structure (due to the team-based management model), it was
felt important that the team leaders demonstrate their support for the process by
undergoing the values assessment process. Similar to the assessment of the TMT, it
was determined to use a 360 degree evaluation process. Each team leader was 45
evaluated by his or her direct superior (either the VP of Manufacturing Operations or
Commercial Operations), by his or her immediate team members (subordinates), and by
his or her fellow team leaders (peers). The number of evaluations an individual
received ranged from 32 to 48, depending on the size of the individual team. As with
the TLT evaluations, the individual behavioral assessments were averaged to
determine an overall average score for each of the seven core values.
Based on the results obtained for the TLT members, the 27 team leaders were
divided according to the individual area of activity – the 13 team leaders who were in
the Manufacturing Operations Team and the 14 team leaders who were in the
Commercial Operations Team. Noting that the respective Vice Presidents for these
teams differed significantly in their values assessments, it was decided to determine if
these differences would be found among the respective Operations Teams. That is,
would there be an effect on an individual’s values assessment based on team
membership, and would these results be consistent with the assessment given to the
overall TLT team leaders? A one-way analysis of variance was used to compare the
mean scores for the MOT team leaders and COT team leaders. The results are shown in
Table III.
As can be seen from these results, there were indeed significant differences between
the two operating teams in terms of the average leaders’ evaluations. In all cases, the
average manufacturing team leaders’ scores for the seven core values were lower than
the corresponding scores for the commercial team leaders. These differences were all
statistically significant, at least at the 0.05 level.

Managing by values and the leadership effect: discussion

The results of this empirical investigation are important for individuals who work with
managers in organizations, for the data provide initial insights into one of the basic
issues in developing values-based management in organizations: namely, the effect of

Manufacturing team leaders Commercial team leaders

Core value average score (n ¼ 13) average score (n ¼ 14) F ratio

Creativity 2.82 3.14 11.178 * Table III.

Dedication 3.18 3.41 6.026 * * * Summary table: one-way
Initiative 2.80 3.24 23.266 * * analyses of variance:
Motivation 2.93 3.15 7.169 * * * average values behaviors
Respect 2.94 3.32 8.024 * scores of team leaders,
Teamwork 3.08 3.42 6.216 * * * comparing
Trust 3.10 3.49 11.572 * manufacturing team
leaders with commercial
Notes: *Significant at the ,0.01 level; * *significant at the ,0.001 level; * * *significant at the , 0.05 team leaders (by core
level value)
LODJ leadership on values-based management behaviors. In this study, the process to use
28,1 and measure the organization’s values and values-based management behaviors was
common for all individuals in the organization. The use of team management and team
leaders made this a particularly useful site for this study, as this provided a common
framework for managerial practice that allows for some control over extraneous
variables that can enter into the individual assessment process. The use of the 360
46 degree evaluation process was likewise important, as it enabled all individuals in the
study to be evaluated by the same group of people or by the same common
measurement system. Finally, basing the values assessment on demonstrated
behaviors provides for a more reliable and accurate evaluation than would be provided
by other alternative measures that would be based on an individual’s perceptions of
another’s beliefs. Anchoring values to behaviors through the modified BOS technique
avoids many of the measurement problems inherent in assessments based on global
perceptions.
The results indicate that, consistent with the suggestion by some OD practitioners
and management writers, leadership does indeed have an effect on individuals’
demonstration of values-based management. At this company, the team leaders who
were members of the MOT were much lower, on average, than their counterparts on
the COT in terms of their demonstrating values-based management behaviors. This
corresponds to the differences in the individual evaluations given to the respective
team leaders, the Vice-Presidents of Manufacturing Operations and Commercial
Operations. Bear in mind that the individual assessments allowed everyone in the
management and administration of the organization to evaluate the members of the
TLT. Therefore, both the members of the MOTs and the COTs viewed the VP of
Commercial Operations as having greater values-based management behavior
frequency than the VP for Manufacturing Operations; there was(bias due to one
group evaluating their own senior manager more favorably, as all persons provided the
initial assessment.
When the individual team leader assessments were completed, the results of the
ANOVA indicated that the team leaders in Manufacturing Operations were viewed by
their superiors, subordinates, and peers as demonstrating the values-based behaviors
less frequently than the team leaders in Commercial Operations. Following up on these
findings, I initiated a series of conversations with various team leaders of the
departments to determine if there were any particular forces that might have
contributed to this result. It was noted that the manufacturing environment, with the
presence of the union represented employees, tended to differ from the office
environment or customer contact involved in the commercial operations area of the
business. However, it also became apparent through these interviews that a key factor
was the individual team leader’s perception of his or her superior’s belief in and
demonstration of the organization’s values. Several of the interviewees indicated that
they took their cues for their behavior from their superior. In such cases, the team
leaders adjusted their behavior to match the frequency that they perceived as being
consistent with their leader’s expectations.
There is therefore empirical evidence that the leadership of an organization does
indeed have a significant impact on values-based management practices in
organizations. The perceived frequency with which individual team leaders
demonstrated the organization’s values-based management behaviors varied in a
manner consistent with the overall organization assessment of the values-based Values-based
management practices of the respective organization leaders. Correlation is of course management
far from causation, but the empirical results suggest there is an effect. There is a
significant opportunity for further work to establish some of the key constructs and
causal mechanisms that are at work in these situations, but the results do provide
quantitative support for what has largely been a qualitative prescription.
Naturally, caution should be used in interpreting these results. The study was done 47
at a single organization that might not be representative of other organizations and
environments. However, the large number of persons involved in the evaluations and
the gathering of the data helps mitigate against certain statistical issues. The study is
obviously limited by the time frame in which the data was collected, and generalizing
to other organizations in different circumstances is not reasonable based on these
findings.
Likewise, there are some inconsistencies in the data. For example, the VP of
Manufacturing was viewed by the organization as having more initiative than the VP
of Commercial, yet this particular value-based behavioral result is not repeated in the
overall assessment of the 13 manufacturing team leaders. In fact, the difference
between the two groups was not only in the opposite direction as the individual
assessment, but this difference was statistically greatest for this particular value. Thus
it would seem in appropriate to conclude that there is a direct effect of leadership
values-based management behavior and subordinates’ behaviors. The form of this
effect is uncertain at this point, however. It may be that superiors hire or selectively
promote individuals whose values-based management behaviors are most similar to
the superior’s. Or perhaps individuals adapt their behavior to the superior’s
expectations based on feedback from the superior in the form of performance
appraisals and perceived rewards and recognition.
Alternatively, it is possible that these differences might be due to differences in the
perceptions of those conducting the ratings. The higher rating for initiative given to the
VP of Manufacturing may be due to a perception that the VP is a more controlling
individual, while the VP of Commercial may be viewed as a more empowering type of
leader who allows the commercial team members to take more initiative themselves.
The fact that initiative was measured with only a single item makes it particularly
problematic to interpret these results, as the instability in the measurement of initiative
(due to having only one item) could be affecting the results from the assessments.
Such issues and other causal forces support the call for future research to more fully
examine this organizational phenomenon. Such research might explore the effect of top
managements’ efforts to communicate the values, individuals’ awareness and
understanding of the firm’s values, and the importance management places on the
values within the organization as moderating the values-behavior relationship.
Whether or not values in general, or specific organizational values, are more effective
at producing actual firm outcomes is a premise in much of the literature that is largely
unexplored empirically. The effect of reward structures on reinforcing values-based
behaviors is likewise unknown. This area of organizational research would appear to
offer rich potential for further exploration.
However, the limitations of the study and inconsistencies in the results do not
necessarily negate the overall findings and conclusions of this study. There does
indeed appear to be a significant effect of organization leadership on subordinates’
LODJ values-based management behaviors and practices. There are several implications
28,1 from this study. Organizational development practitioners should pay particular
attention to the commitment, support, and the ability of an organization’s senior
managers and leadership to demonstrate or model the organization’s core values.
There is an apparent leadership effect present in values-based management. Engaging
in a process of developing or managing by a set of core organization values is affected
48 by the attitudes and visible behaviors of the organization’s leaders. Trying to develop
values-based management practices and principles without the support and, more
importantly, the evidence – through demonstrated behavior – that top managers
support the values is likely to be difficult.
For managers in organizations, the implications are likewise clear – values-based
management requires that leaders demonstrate the values. Subordinates take many
cues from their superiors. To ask that the members of an organization live by or
demonstrate a set of core values without providing a pattern or model for the desired
behavior is likely to achieve limited outcomes and have limited impact on organization
performance.
There is evidence – largely anecdotal, or in the form of general platitudes – that the
process of managing an organization according to a set of core values can improve
individual and firm performance. Such promises of increased outcomes is tantalizing to
managers and to OD practitioners seeking to generate positive results. The results of
this study suggest that the leadership of an organization may have a significant role in
affecting the eventual outcomes of a values-based management process. Practitioners
and researchers alike need to continue to develop the level of understanding of the role
of leadership to enable values-based management processes to be effective.

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Further reading
Jones, P. and Kahaner, L. (1995), Say it and Live it: The 50 Corporate Mission Statements That
50 Hit the Mark, Bantam Doubleday Dell Publishing Group, New York, NY.

Corresponding author
Aaron A. Buchko can be contacted at: aab@bradley.edu

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