Principles

Many companies begin shaping their culture by defining their values.

The leadership team holds a workshop. A few good words are chosen. The result is a set of values such as openness, collaboration, care, customer focus, accountability, and innovation.

They are placed on the company website, in job advertisements, and on the office wall.

But a company's culture does not emerge from the words the organization uses to describe itself.

Culture emerges from the decisions the company makes repeatedly.

Is quality more important than a deadline, or vice versa?

Does a strong sales result excuse bad behavior?

Is an employee allowed to challenge a manager's decision?

Is raising a problem early appreciated or punished?

Are promises made to customers more important than a realistic workload for employees?

After a mistake, does the company look for someone to blame or improve the system?

A list of values does not answer these questions.

They are answered every day through real decisions.

Culture is a repeated response to a difficult choice

It is easy to talk about values when they cost nothing.

Every company wants to be honest, caring, and customer-focused.

A genuine value becomes visible when there is a choice between two important things.

Should you tell the customer honestly that the deadline will not be met, or hope the team will save the situation by working overtime?

Should you walk away from a major customer whose behavior is harming employees?

Should you part ways with a high performer who is poisoning the team?

Should you admit to an investor that the plan is not working?

Should you pause sales until a quality issue has been resolved?

If a company always chooses money, speed, or the manager's convenience under pressure, that becomes its real culture.

It does not matter what values are displayed on the wall.

Culture is what a company does when living by its values becomes uncomfortable.

Employees believe behavior more than words

During their first week, a new employee may hear about the company's values.

They receive onboarding materials, attend a culture session, and hear from their manager that autonomy is valued here.

Then they make their first independent decision.

The manager reverses it without explanation and says that next time, approval must be sought first.

The employee has learned a far more powerful lesson about the culture than any presentation could provide.

They have learned that autonomy is permitted only as long as their decision agrees with their manager's.

People watch:

• whose opinion is heard;
• who gets to decide;
• who is forgiven;
• who is promoted;
• what is recognized;
• which problems leadership ignores;
• what kind of behavior leads to success;
• what happens to someone who says something uncomfortable.

These observations shape their understanding of how to get by in the company in practice.

Culture is not learned primarily from what a leader says.

It is learned from what a leader does after someone genuinely believes their words.

Who gets ahead in the company reveals its real values

One of the most powerful decisions shaping culture is who gets promoted.

A company may talk about collaboration while promoting someone who achieves results at the expense of others.

It may talk about accountability while giving a bigger role to someone who is good at explaining away failures.

It may talk about openness while favoring those who rarely disagree with the manager.

It may talk about developing people while promoting its strongest specialist into management without assessing their ability to lead.

A promotion tells the entire organization what kind of behavior really pays off.

Every employee watches which qualities lead to greater influence, pay, and decision-making authority in the company.

When promotion decisions conflict with the stated values, people adapt to the decisions, not the words.

Who a company retains shapes its culture as much as who it hires

Culture is not defined by recruitment alone.

It is also shaped by the behavior the company is willing to tolerate.

A strong salesperson may bring in substantial revenue while making promises to customers that the rest of the company cannot keep.

An experienced specialist may be technically indispensable but treat colleagues badly.

A manager may hit the numbers while burning out their team.

When leadership overlooks such behavior because of performance, it is making a cultural decision.

It is telling the organization that some people do not have to follow shared principles if their direct contribution is valuable enough.

That decision does not affect just one person.

Others learn that the standard of behavior is not really a standard. They either adapt, stay silent, or leave.

Often, the first to leave are precisely those who have alternatives and do not want to work in such a system.

Leadership retains one “indispensable” person and loses several other strong employees because of them.

The flow of bad news reveals a company's true openness

Almost every leader says they want to hear about problems early.

The real culture becomes clear when someone brings bad news.

Does the leader ask what we can learn from it?

Or do they start looking for who made the mistake?

Is the person recognized for their honesty?

Or does their work become more difficult from then on?

Does bringing the problem into the open lead to swift help?

Or does it lead to more meetings, oversight, and a need for self-protection?

If the bearer of bad news is treated as the problem, the organization quickly learns to hide problems.

Information moves upward only when it can no longer be concealed.

Leadership may think everything is fine because no one is talking about problems.

In reality, the company may have created a culture in which silence is the safest choice.

An open culture does not mean that people talk a lot.

It means that important information can move freely without the person bringing it forward having to fear for their position.

Metrics and compensation shape culture faster than values workshops

People do what their performance is measured against.

If sales is measured only by revenue, the sales team will optimize for revenue.

Even if this brings the wrong customers, excessive promises, and unprofitable projects into the company.

If customer support is assessed by response time, responses will become faster.

That does not necessarily mean the customer's problem will be solved.

If managers are assessed only by their department's costs, they will cut costs even when doing so increases another department's workload.

If employees are expected to innovate but failed experiments hurt their performance reviews, experimentation will quickly stop.

A metric is the company's decision about what behavior it wants to see more of.

Compensation is a decision about which outcomes the organization considers valuable.

When these decisions do not align with the stated values, the values always lose.

The budget reveals what a company truly considers important

A company may call people its most important asset.

But are there genuinely time and money for developing managers, onboarding employees, and creating effective tools?

A company may talk about customer focus.

But does fixing the root cause of recurring customer problems make it into the product development priorities?

A company may value quality.

But is enough time allocated to quality assurance, or is every project pushed out at the earliest possible moment?

A company may talk about innovation.

But is there dedicated capacity for testing new ideas, or must people do it in the evenings alongside their core work?

The budget and people's time reveal values far more accurately than the wording on a website.

If something is given no money, time, or owner, it is not a company priority.

It may be an aspiration.

Culture, however, emerges from what the organization consistently funds and makes room for.

A leader's calendar is a cultural document

Employees also watch how leaders use their time.

If a leader talks about the importance of strategic thinking but spends all their time checking operational details, the organization understands that details are considered more important.

If a leader emphasizes people but constantly cancels one-on-one meetings, the message is clear.

If a leader demands that deadlines be met but does not make their own decisions on time, people learn that accountability applies differently at different levels.

If a leader says that problems must be raised quickly but it is impossible to get time with them, problems go elsewhere or remain hidden.

A leader's attention shows the organization which issues really matter.

Culture does not emerge only from major decisions.

It also emerges from the small choices leaders make consistently every week.

Exceptions reveal the true boundaries of culture

A company may have a clear rule, but then an important customer, an urgent deadline, or a strong employee enters the picture.

Does the rule still apply?

Sometimes an exception is necessary. Not every situation can be resolved by a single standard.

But an exception must be a conscious decision whose impact is understood.

If the team is repeatedly required to work overtime for an important customer, the exception becomes the operating model.

If the top salesperson is allowed to break agreements, the exception becomes their privilege.

If managers do not have to follow the same standards of communication as everyone else, two cultures emerge within the company.

An exception does not affect only the specific situation.

It teaches everyone when the company's values cease to apply.

One exception may not change the culture.

A repeated exception becomes the real rule.

Speed, quality, and care need a logic for making trade-offs

A company's values will inevitably conflict with one another at times.

Customer focus may conflict with employee well-being.

Speed may conflict with quality.

Openness may conflict with confidentiality.

Autonomy may conflict with risk control.

Collaboration may conflict with fast decision-making.

That is why naming values is not enough.

Leadership must explain how to choose when two sound principles cannot both be fully honored at the same time.

For example:

• When may quality be sacrificed for the sake of a deadline?
• When must a customer be told no?
• Which decisions may an employee make independently, and when must they involve others?
• What kind of mistake is acceptable when experimenting?
• What level of risk requires additional oversight?
• Does high performance excuse bad behavior?

These answers shape the decision-making culture.

Without them, everyone interprets the values in their own way.

Culture emerges from precedents

An organization remembers significant events.

What did the leader do when a major customer treated an employee badly?

How did the company respond to a major mistake?

What happened to the manager whose team delivered results at the cost of burnout?

Did the company admit its mistake to the customer?

Was a project stopped when it became clear that it created no value?

These events become stories that are retold within the organization.

“We once had a situation like this, and the leader made this decision.”

These stories help people predict which decision will be considered right in the company in the future.

One real decision can shape culture more than an entire values handbook.

A leader should therefore understand that a decision made at a particularly visible or difficult moment does more than resolve one situation.

It sets a precedent.

Culture cannot be delegated to HR

An HR leader can help articulate values, give managers tools, measure behavior, and draw attention to problems.

But they cannot create culture on behalf of leadership.

If the CEO tolerates bad behavior, an HR leader cannot fix it with a values workshop.

If functional leaders issue detailed instructions instead of giving people responsibility, autonomy training will not change how the company actually operates.

If the incentive system values only short-term numbers, internal communication will not create long-term thinking.

Culture is shaped by every management decision:

• who is hired;
• who is promoted;
• who is allowed to leave;
• what is rewarded;
• which projects are funded;
• who is given decision-making authority;
• which behaviors are corrected;
• what is swept under the rug;
• which outcomes are measured.

These decisions belong to leaders.

HR can help them make better decisions.

It cannot be accountable for those decisions on their behalf.

Cultural change does not begin with writing new values

When a company's culture no longer supports its goals, a new values initiative is often launched.

The wording is refreshed.

An internal campaign is launched.

Leaders talk about change.

But if the logic of decision-making does not change, the culture remains the same.

Cultural change requires different repeated decisions.

If greater accountability is desired, people must be given real decision-making authority.

If openness is desired, the bearer of bad news must be heard, not punished.

If collaboration is desired, departmental metrics cannot pit departments against one another.

If innovation is desired, time must be provided for experimentation and some failures must be accepted.

If care is desired, chronic overtime cannot be treated as commitment.

If quality is desired, a project whose deadline allows only a poor outcome must be stopped.

A new culture cannot simply be declared.

It must be proven through new decisions until people believe the change is real.

How can values be turned into decisions?

A value becomes useful only when it helps people make a difficult choice.

To achieve that, four questions must be answered for each value.

1. What behavior does this value require?

“Accountability” may mean that a person raises a problem together with possible solutions and does not wait for someone else to notice the situation.

2. What behavior does it rule out?

“Openness” may mean that a significant risk is not hidden even when disclosing it makes one's own performance look worse.

3. In which decisions must the value become visible?

“Customer focus” must influence product priorities, sales promises, and the speed at which problems are resolved.

4. What price are we willing to pay for this value?

If a company is not prepared to give up money, speed, convenience, or a strong employee for the sake of a value, it is not yet clear whether it is a genuine value or merely an appealing aspiration.

Leadership should audit decisions, not words

If a leader wants to understand the company's real culture, they should not begin with a values survey.

They could look at the real decisions made over the past six months.

• Who was promoted, and why?
• What behavior had no consequences?
• Why did people leave?
• Which projects were funded?
• Which problems were postponed?
• How were mistakes handled?
• Was a customer ever told no?
• Who was given more decision-making authority?
• What were people recognized for?
• Which goal was used to justify overtime?
• Did bad news reach the leader early or late?
• In which situations was an exception made to the values?

The company's real culture can be described quite accurately from these answers.

Not as leadership wants to see it.

But as people experience it every day.

Values matter only if they change a decision

Values can be highly useful.

They give people a shared logic in situations where there is no guideline and no leader present.

But for that to happen, values must be clear enough to support a real choice.

If a value does not change a single decision, it has little influence on how the company is managed.

It is a description of the kind of people they would like to be.

Culture is a description of how they actually behave.

A company's culture is not born on the day its values are approved.

It is born the next day, when living by a value becomes uncomfortable and a leader must decide whether it still applies.

Every such decision tells the organization what kind of company it really is.

Mikk Orglaan

Challeng.ist