Category: Ethics and Conduct

Organizational Values

Also known as: Company Values, Corporate Values, Core Values

Simply put

Organizational values are the core principles that guide how an organization behaves, makes decisions, and treats its people. They act like a compass, giving the organization a sense of purpose and direction and shaping its culture and everyday practices. They typically influence how employees are expected to act and how the organization pursues its strategy.

Formal definition

Organizational values are enduring, guiding principles that articulate what an organization considers preferable and that inform its culture, decision-making, and behavioral norms. As a construct, values reflect beliefs held to be personally or socially preferable to their converse, and at the organizational level they are generally used to steer employee conduct and support strategy execution. In practice, they are typically defined through a deliberate process and are intended to align individual behavior with the organization's stated purpose and direction; this entry is educational and does not address the legal or regulatory status of any specific values framework, which may vary by jurisdiction, sector, and entity type.

Why it matters

Organizational values function as a reference point for how an organization behaves, makes decisions, and treats its people. They typically give the organization a sense of purpose and direction, and they shape the culture within which employees operate day to day. Because values inform behavioral norms and decision-making, they are closely connected to the broader governance and culture environment that boards and management are generally expected to set and oversee.

Values also matter to strategy. Where they are well defined and genuinely embedded, core values can guide employee behavior in a way that supports strategy execution, helping align individual conduct with the organization's stated purpose. They may also influence practical outcomes such as an organization's ability to build a strong culture, attract talent, and support retention. Conversely, values that are merely stated but not lived can create a gap between aspiration and practice, which is a matter of interest to those responsible for culture oversight.

It is important to note that organizational values are, in themselves, guiding principles rather than binding legal requirements. Their formulation and use are generally a matter of an organization's own judgment, and this entry does not address the legal or regulatory status of any specific values framework, which may vary by jurisdiction, sector, and entity type.

Who it's relevant to

Boards and their committees

Values sit within the governance and culture domain that boards typically oversee. Directors are generally concerned with whether stated values are consistent with the organization's purpose and strategy and whether the culture reflects them in practice, rather than with the day-to-day operational task of applying values, which sits with management.

Senior management and executives

Management typically owns the practical work of defining, communicating, and embedding values so that individual behavior aligns with the organization's purpose and direction. Because values are described as vital to guiding behavior and supporting strategy execution, executives generally rely on them when setting expectations and reinforcing behavioral norms.

Human resources and culture professionals

Those responsible for culture, talent, and people practices often use values as a compass for shaping norms and everyday practices. Values may influence people-related outcomes such as building a strong culture, attracting talent, and supporting retention, making them relevant to how these functions design and reinforce workplace expectations.

Compliance and assurance functions

While values are guiding principles rather than binding requirements, compliance and assurance professionals may take an interest in whether stated values are genuinely reflected in behavior. Any assessment of the gap between stated and lived values depends on facts and context and is a matter for professional judgment; this entry is educational and not legal, audit, or compliance advice.

Inside Organizational Values

Stated Values and Core Principles

The explicit set of guiding beliefs an organization articulates to describe what it stands for, such as integrity, accountability, or respect. These are typically approved or endorsed by the board and senior management and are intended to shape decision-making and conduct across the entity.

Code of Conduct and Behavioral Standards

The translation of abstract values into concrete expectations for behavior. A code of conduct generally operationalizes values into observable standards, though the specific contents and enforceability vary by jurisdiction, sector, and entity type.

Tone at the Top and Tone in the Middle

The signals sent by the board, senior leadership, and middle management through their own conduct, decisions, and communications. Values are generally reinforced or undermined by whether leadership behavior is consistent with stated principles.

Embedding Mechanisms

The processes through which values are integrated into operations, such as hiring, onboarding, performance evaluation, incentives, promotion, and disciplinary decisions. Embedding is what distinguishes lived culture from aspirational statements.

Culture and Conduct Linkage

The connection between organizational values and the broader control and compliance environment. Under frameworks such as COSO's internal control model, the control environment, which includes commitment to integrity and ethical values, is generally treated as a foundational component, though this reflects a framework concept rather than a universal legal mandate.

Measurement and Assurance Indicators

The indicators used to assess whether values are operating in practice, such as speak-up rates, survey results, or investigation outcomes. Which function performs this assessment, management self-assessment versus independent assurance, depends on the organization's design.

Common questions

Answers to the questions practitioners most commonly ask about Organizational Values.

Are stated organizational values the same as the organization's actual culture?

No. Stated values are aspirational declarations of what an organization intends to stand for, while culture reflects the behaviors, norms, and decisions actually observed in practice. A gap between the two is common, and boards and management generally treat the alignment (or misalignment) between espoused values and lived behavior as a distinct area of oversight and monitoring. Assessing this gap typically depends on the organization's specific facts and the assurance mechanisms it has in place, and any conclusion is a matter of professional judgment rather than a given.

Does having a formal statement of values satisfy an organization's compliance obligations?

Not by itself. Articulating values is generally a governance and cultural matter rather than a substitute for a compliance program. Compliance obligations typically arise from binding law, regulation, or listing rules and are owned by the compliance function and, ultimately, overseen by the board or a designated committee. Values can support a compliance program by shaping the environment in which controls operate, but whether specific legal or regulatory requirements are met depends on the applicable jurisdiction, sector, and the design and operating effectiveness of the relevant controls. This is not legal or compliance advice.

Who is accountable for defining and embedding organizational values?

Responsibilities are typically shared but distinct. The board generally sets or approves the tone at the top and oversees whether values are reflected in the organization's conduct, while management is usually responsible for operationalizing values through policies, incentives, communication, and day-to-day decisions. Assurance functions may evaluate how effectively values are embedded. The precise allocation of these roles depends on the entity type, applicable governance framework, and jurisdiction, and is a matter for the organization to define within its own governance arrangements.

How can an organization assess whether its values are actually influencing behavior?

Organizations generally use a combination of qualitative and quantitative indicators, such as employee and stakeholder surveys, exit interview themes, patterns in reported concerns or whistleblowing data, disciplinary trends, and observations from internal audit or compliance monitoring. No single indicator is conclusive, and interpretation requires professional judgment. The appropriate methods depend on the organization's size, sector, and risk profile, and this entry is educational rather than a prescriptive assessment methodology.

How should organizational values relate to incentive and performance systems?

Many governance approaches suggest that reward, promotion, and performance-evaluation systems be reviewed for consistency with stated values, since incentives that reward conduct at odds with declared values can undermine them. Whether and how to align these systems is generally a management responsibility subject to board oversight, and the specific approach depends on the organization's context. This describes a common practice rather than a universal legal requirement.

What role do values play in an organization's risk environment?

Values are often treated as part of the internal environment or control environment that shapes how risks are identified, escalated, and managed, and they can influence risk culture. Under certain frameworks, the environment in which controls operate is considered a foundational element affecting the effectiveness of risk management. However, values are distinct from the specific risk appetite, risk controls, and assurance activities owned by management and assurance functions. How values interact with a particular risk framework depends on the framework adopted and the organization's circumstances.

Common misconceptions

A published values statement or code of conduct means the organization has an ethical culture.

A documented statement reflects only stated intent. Culture is generally evidenced by actual behavior and the consistency between values and decisions on hiring, incentives, discipline, and leadership conduct. The design of a statement and its operating effectiveness are distinct, much as control design differs from operating effectiveness.

Organizational values are the responsibility of the compliance function.

Accountability is typically shared and layered. The board and its relevant committees generally hold oversight responsibility for culture and tone, management owns the operational task of embedding values day to day, and assurance functions may assess whether embedding is effective. Attributing values wholly to compliance conflates distinct roles.

Adopting a recognized framework or code makes value-setting a legal requirement that guarantees good conduct.

Many governance codes and frameworks addressing culture and ethical values are principles-based and non-binding, though certain elements may be reinforced by law or listing rules in some jurisdictions. Requirements vary by jurisdiction, sector, and entity type, and adoption of a framework does not by itself ensure conduct outcomes.

Best practices

Align stated values with concrete behavioral standards in a code of conduct so that abstract principles translate into observable expectations that can be evaluated.

Embed values into people processes, hiring, onboarding, performance evaluation, incentives, promotion, and discipline, so that lived culture reflects stated principles rather than aspiration alone.

Clarify accountability by distinguishing the board's and committees' oversight role for culture and tone from management's operational responsibility for embedding values in daily activity.

Assess both the design and the operating effectiveness of values-related controls, recognizing that a well-drafted statement can still fail to operate as intended in practice.

Use practical indicators, such as speak-up activity, survey results, and investigation outcomes, to test whether values are operating, and consider whether measurement is a management self-assessment or an independent assurance activity.

Confirm the applicable legal and regulatory expectations for your jurisdiction, sector, and entity type before treating any framework or code provision as mandatory, and seek qualified professional advice where the position depends on specific facts.