Virtues-Based and Values-Based Cultures

Last week’s essay contained a paragraph on the difference between virtues-based and values-based cultures. Several readers asked me to explore it in more depth, so here we are.

Value-based, Virtue-based, and the implications on productivity and engagement

Take the following example. One organization may say, “We care about ethics,” while another may say, “We never lie.” The former is values-based (it describes ideals and beliefs), while the latter is virtues-based (it describes behaviors).

At face value, the two cultural statements in the example above seem equivalent: both consider ethical behavior important. In practice, however, they are very different. Consider an employee thinking about telling a white lie. “We care about ethics” does not rule it out if the employee believes his intentions are good. “We never lie” is instead much clearer.

Or consider what happens when a manager needs to review the performance of a star employee who has a habit of lying. In a values-based culture, the employee can argue about whether the lies produced ethical outcomes. In a virtues-based culture, that discussion will not arise. The review will proceed more smoothly, and the employee will be less likely to feel that the manager is being arbitrarily harsh.

This is the power of virtues-based cultures: because they describe behaviors rather than ideals, they do not leave employees wondering what they should or shouldn’t do. Nor do they leave room for two employees to disagree over what a value-encoded norm means.

The result is less doubt, less discussion, less friction, fewer misaligned actions, and more aligned action.

Q&A

“But Luca, values are universal across roles, so I can just tell everyone in my company to care about Safety, and that’s relevant to everyone. Whereas it’s a lot of work to tell each role what behaving safely means!”

True: a value such as safety can apply across the whole company, while the behaviors required to protect it may differ by role. But those behaviors must still be identified, whether the company describes its culture through values or virtues. A warehouse worker, an accountant, and a product designer all need to know what safety requires in their own work.

The difference is who identifies those behaviors, and when. In a values-based culture, employees are often left to interpret the value themselves when a situation arises. And when their interpretation differs from yours, conflict, friction, or resentment arises. Conversely, in a virtues-based culture, leaders define the expected behaviors in advance, using company-wide rules where possible and role-specific rules where necessary. This requires more work from leaders, but only upfront, for it avoids discussions later on. Moreover, it produces clearer and more consistent behavior across the organization.

“What should leaders do when two virtues conflict, such as honesty and confidentiality?”

Trick question! As I use the terms here, honesty and confidentiality are values, while “We never lie” and “We do not disclose confidential information” are virtues because they describe behavior.

That said, “act based on honesty and confidentiality” leaves employees with considerable discretion in edge cases, and you may not agree with how they resolve them. Behavioral rules narrow that discretion and encourage solutions that satisfy both standards. For example, a manager asked about a confidential personnel decision can say, “I cannot discuss confidential personnel matters.” The manager neither lies nor reveals the information. Because everyone knows the behavioral rule, the manager can give this answer without feeling unreasonable, and the person asking has little basis for pressing further. Abstract values leave more room for negotiation and for pressuring others to make exceptions.

Of course, behavioral rules can still conflict or require interpretation. Their advantage is not that they eliminate judgment, but that they make the boundaries clearer and disagreements more concrete.

“Can a virtues-based culture become too rigid when circumstances require judgment or exceptions?”

Yes. Any behavioral rule can become too rigid if applied without regard for circumstances. However, values can also become absolutist, and history teaches us that they are more at risk of it.

Moreover, virtues are more objective, and if one is too extreme, it can be discussed objectively; whereas values are more subjective and, as such, discussion is more likely to go in circles or be subject to rhetoric, bailey-and-motte fallacies, and so on.