Ask a hundred employees to name their company's values and most will pause, glance at the wall, and guess. That blank look is the whole problem in miniature: values that nobody can recall and nobody can feel are not values at all. They are decoration. Defining values is the easy half-day workshop; embedding them, making them the thing that actually decides who gets promoted, what gets tolerated, and how a hard call is made, is the work that takes years and that most organisations never really do.

The quick version

  • A value is a principle the organisation will trade something for. If you would never sacrifice money, speed or convenience to honour it, it is a preference, not a value.
  • The gap that matters is between your espoused values (what you say on the wall) and your enacted values (what your promotions, firings and budgets actually reward). Employees read the second and ignore the first.
  • Not all "values" are the same kind. Some are core (non-negotiable identity), some aspirational (where you want to get to), and some are just basic decency every employer expects, declaring those as if they set you apart fools no one.
  • Embedding is a systems job, not a poster job. Values stick when they are wired into hiring, onboarding, recognition, performance reviews and, the real test, what leaders are willing to lose to uphold them.

The idea in depth: values live below the poster

The most useful starting frame comes from organisational psychologist Edgar Schein, whose Organizational Culture and Leadership (first edition 1985) splits culture into three levels. At the surface sit artifacts, the visible stuff: the open-plan office, the all-hands rituals, the values poster itself. Beneath them are espoused values, the principles the organisation states and believes it holds. And underneath those lie basic underlying assumptions, the taken-for-granted beliefs that actually drive day-to-day behaviour, usually invisible even to the people acting on them.

Schein's point is uncomfortable and durable: the espoused values on the wall and the underlying assumptions running the place are often two different things, and the second always wins. A company can sincerely "value collaboration" while its assumption, formed by years of who got rewarded, is that lone heroes get the credit. Writing better words won't touch that. What does: surface the assumptions you already operate by, decide which ones you actually want, and then change the systems that taught people the old ones. You cannot poster your way past an assumption. You have to out-reward it.

flowchart TD
  A(["Artifacts
posters, rituals, the office"]) --> B(["Espoused values
what we say we believe"])
  B --> C(["Basic assumptions
what actually drives behaviour"])
  C -.->|"when these conflict,
this layer wins"| B
Schein's three levels of culture, the deeper you go, the more it governs behaviour and the harder it is to see. Leaders Loop

The same gap shows up in a second, independent body of work. Chris Argyris and Donald Schön drew a now-classic distinction between an espoused theory (the beliefs and values people say guide them) and a theory-in-use (the values actually implied by how they behave), and observed that the two are routinely out of step, often without the actor noticing (see the summary of Argyris & Schön's models). That two separate traditions, Schein's clinical culture work and Argyris & Schön's theory of action, landed on the same say-do gap is exactly why it deserves to be the centre of how you think about values. It is not a slogan; it is a well-triangulated finding. Which is why you audit yourself by behaviour, not intention: look at your last ten promotions and ask which values they actually rewarded. That list is your real value system.

An honest limitation. Schein's levels are a lens, not a measuring instrument, "basic assumptions" are inferred, not observed, so two thoughtful people can read the same organisation differently. The framework tells you where to look and why slogans fail; it does not hand you a clean test for whether assumption X or Y is in charge. Treat it as a diagnostic prompt, not a verdict.

Name the right kind of value

Part of why values statements ring hollow is that organisations lump four different things into one list. Patrick Lencioni, in "Make Your Values Mean Something" (Harvard Business Review, July 2002), sorts them into four types worth keeping straight:

  • Core values, the deeply held, non-negotiable principles that genuinely define the organisation and that it would defend even at a cost. These are few.
  • Aspirational values, qualities you need but do not yet have. Useful to name, as long as you are honest that they are a destination, not a description.
  • Permission-to-play values, the basic standards of behaviour any decent employer expects (honesty, respect). Worth holding, but they distinguish you from no one, so parading them as your identity is the fast route to cynicism.
  • Accidental values, the traits that arose from who you happened to hire (a particular style or vibe). Sometimes good, sometimes exclusionary, and easy to mistake for core principles.

Lencioni opens with the example that makes the whole field wince: Enron's values were Communication, Respect, Integrity and Excellence, printed, framed, and meaningless. Run your draft list through his four buckets and be ruthless about the difference. If "integrity" is on your wall, it is almost certainly permission-to-play, table stakes, not a differentiator, and stating it as a proud core value tells employees you confuse decency with distinctiveness. Keep three or four core values you would actually trade money for, label your aspirations as aspirations, and cut the rest.

A value you would never sacrifice anything to honour is not a value. It is a preference with good PR.

There is a complementary idea from Jim Collins and Jerry Porras worth borrowing here. In "Building Your Company's Vision" (HBR, 1996), the article behind Built to Last, they argue that enduring companies hold a small, fixed core ideology (core values plus a core purpose) while everything else, strategy and practice, changes freely: preserve the core, stimulate progress. Their warning is the same as Lencioni's from the other direction: you do not invent core values in a workshop, you discover the ones you already hold. So stop asking "what values should we have?" Ask instead: "which of our principles would survive even if they put us at a competitive disadvantage?" That question filters fashion from identity.

Embedding: wire values into the systems, not the walls

Definition without embedding is where the cynicism is manufactured. The reliable way to embed a value is to make living it the path of least resistance, and that is a systems problem. Lencioni's prescription is to weave values into every people process: who you hire, how you onboard, what you recognise, how you review performance, and who you reward or remove. The acid test he names is that real values cost you something, you should be willing to hire and fire, and to take a financial hit, to uphold a core value. A value the leadership team won't lose anything for is one employees correctly learn to ignore.

flowchart LR
  V(["A stated value"]) --> H(["Hiring
screen for it"])
  V --> O(["Onboarding
tell the founding story"])
  V --> R(["Recognition
praise it in public"])
  V --> P(["Performance & promotion
reward it, gate on it"])
  V --> X(["The hard test
fire / lose money for it"])
  X -->|"if yes,
it's real"| V
Embedding loop: a value is only as real as the systems that reward it, and the cost leaders will pay to keep it. Leaders Loop

The practical, do-it-this-quarter version: pick one core value and audit it through three systems. Does your interview process actually screen for it? Does your promotion criteria reward it, or just tolerate it? Has anyone ever been managed out for repeatedly violating it? If the honest answers are no, no and no, the value is espoused-only, and your people already know. Fixing one value end-to-end teaches the organisation more than rewriting all five on a slide.

A worked example

Take a 200-person software company, call it Harbour, whose top value is "Customer first." (Illustrative scenario; not a real company.) It is on the wall, on the laptop stickers, in the all-hands deck. Then a senior account manager closes the year's biggest deal by promising a delivery date engineering has flatly said is impossible, knowing the customer will be furious in three months but the commission lands now. He is celebrated on stage. The bonus pays out.

Run that through the frameworks. Harbour's espoused value (Schein) is "customer first"; its enacted value, the theory-in-use Argyris would read off the behaviour, is "hit the number, sort the fallout later." Every employee in that room just received a precise, unambiguous lesson about which one is real, and it was not the poster. No amount of values-reinforcement emails will undo what one celebrated short-term win taught them.

The repair is not a new poster; it is a systems change with a visible cost. Harbour changes how deals are recognised: commission on over-promised dates claws back if delivery slips, and the quarterly "customer first" award goes, publicly, to a team that turned down a lucrative but undeliverable contract. That decision costs real revenue, which is exactly why it works. When leaders are seen to lose something to honour the value, the enacted value finally moves toward the espoused one, and "customer first" stops being a slogan and starts being a constraint people can rely on. That is embedding: not louder words, but a price paid in public.

Frequently asked questions

How many values should we have?

Few, typically three to five core values. Collins and Porras found enduring companies hold a small, fixed core; a long list dilutes attention and usually smuggles in permission-to-play basics dressed as principles. If you cannot recite them from memory, you have too many.

Should values be aspirational or describe who we already are?

Core values should describe who you already are at your best, you discover them, you don't invent them. Aspirational values (qualities you need but lack) are legitimate too, but Lencioni's rule is to label them honestly as aspirations. The damage comes from passing off an aspiration as a current reality, because employees can see it isn't true.

Our values feel generic, "integrity", "respect", "teamwork". Is that a problem?

Usually, yes. Those are mostly what Lencioni calls permission-to-play values, the baseline any decent employer is expected to meet. They are worth holding but they distinguish you from nobody, and stating them as your identity invites cynicism. Better to name the few principles that are genuinely distinctive and that you would defend at a cost.

How do we actually embed values, not just publish them?

Wire them into the systems that allocate reward and consequence: hiring screens, onboarding stories, public recognition, performance reviews, promotion criteria, and, the decisive one, whether you will lose money or part with a high performer to uphold a value. Embedding is what your incentives do, not what your intranet says.

What's the single biggest mistake leaders make with values?

Tolerating a visible breach by a high performer. One celebrated win that violates a stated value teaches the whole organisation that the value is negotiable, and that lesson outweighs any number of reaffirmations. Values are defined by the worst behaviour leadership is willing to reward.

Related in the Toolkit

Values are one layer of a larger system: they sit inside how organisational culture forms & persists (the assumptions beneath the poster), and they only translate into a place people want to stay when they connect to belonging & engagement rather than becoming a compliance exercise.

Where to go next