Leadership Drives Culture, Culture Drives Performance
BY: Peter Cheel; Business Coach Sydney, 30 April 2025
Introduction
I think it’s safe to say that most of us have worked for and in organisations where manifest behaviours are not congruent with the values espoused by the executive and the CEO. Surprise, surprise, people become cynical and disengage when the importance of values is spoken about.
Why is this the case? The purpose of establishing values in the first place is often misguided, i.e., it will look good on the annual report and company website, and wherever relevant, will be well-received by shareholders.
The real reason for this misalignment between what is professed and what is experienced is that leaders fail to lead by example. It starts at the top; the leaders of the organisation must embody the values consistently and authentically. People watch their leaders, and if they see a match between what is espoused and what occurs every day, they will be engaged.
If the leaders of the organisation are truly committed to creating their espoused culture, then their leadership will drive the desired culture, and in turn, the culture will lead to performance.
In an era marked by rapid change, employee disengagement, and growing pressure for transparency and accountability, company values can no longer be just decorative slogans. For leadership to be effective and culture to be cohesive, values must be lived, not listed.
What is Values Based Leadership
Values-based leadership is a strategic leadership approach that builds alignment, trust, and clarity across an organisation. When leaders consistently act on core values, they create a culture of integrity, performance, and meaning—three things today’s workforce deeply craves.
Why Values Matter More Than Ever
The expectations placed on leaders have evolved. Employees and customers alike want to know what you stand for—and whether your actions match your words.
According to a 2023 Deloitte report, 68% of employees said they would consider leaving their job if their employer’s values didn’t align with their own. That statistic highlights a deeper truth: values misalignment is more than a cultural issue—it’s a business risk.
When values are clear and consistently demonstrated, they create a unifying force that guides behaviour, shapes culture, and drives performance—even in times of uncertainty.
Closing the Gap Between Aspirational and Operational Values
Many organisations can articulate values—innovation, integrity, collaboration, and excellence. However, these values often remain aspirational, featured on the website and in handbooks, but rarely reflected in day-to-day practice.
As already alluded to the gap between what’s said and what’s done breeds cynicism.
Values-based leadership closes that gap. It’s about making values visible and actionable through daily decisions, behaviours, and the systems that shape employee experience.
3 Ways to Embrace/Practice Value-Based Leadership
Model the Values—Especially When It’s Hard
Anyone can act on values when things are going smoothly. The real test comes under pressure.
Ask yourself:
- Am I transparent when the truth is uncomfortable?
- Do I act in alignment with our values, even if it’s unpopular or costly?
- Do I role-model accountability, humility, and care?
Culture isn’t shaped by what’s written—it’s shaped by what leaders tolerate, reward, and ignore and notably by how leaders conduct themselves.
Use Values in Conversations and Decisions
If you want values to be taken seriously, they need to become part of everyday language.
- In 1:1s: Ask, which value challenged you most this week?
- In feedback: Use values to anchor praise or redirection.
- In decision-making: Ask, what would this decision look like if we prioritised our value of respect/innovation/transparency?
Embedding values in dialogue helps people connect their day-to-day work with something bigger.
Embed Values Across the Employee Lifecycle
Values don’t come alive through posters—they come alive when they are integrated into all practices and systems.
If you want a truly values-driven culture, they must be embedded into every stage of the employee experience:
Area | How Values Are Embedded |
Job Advertisements | Language reflects values (e.g., inclusion, purpose, growth mindset). |
Position Descriptions | Responsibilities and behavioural expectations are linked to values. |
Interviewing Process | Questions assess alignment with values, not just technical fit. |
Induction & Onboarding | New hires learn not just what the company does, but why it does it. Stories, examples, and expectations are shared early. |
Performance Management | Reviews include values-based metrics: How results are achieved matters as much as what is delivered. |
Leadership Development | Programs reinforce leading through values, not just KPIs. Values become a leadership competency. 360 Assessment include feedback on the values. |
Succession Planning | Future leaders are identified based on cultural and values alignment, not just performance data. |
Remuneration Strategy | Incentives and bonuses reflect team collaboration, ethics, and leadership behaviours, not just output. |
Promotion Criteria | Advancements are based on how consistently individuals demonstrate the company’s values. |
Decision-Making Processes | Strategic decisions are filtered through values and the strategic plan, whether in product development, partnerships, or change initiatives. |
Board & Leadership Meetings | Agendas include culture health, values alignment, and leadership behaviour, not just financials. |
Every system either reinforces or erodes the culture. When these areas are aligned, values aren’t a side conversation—they become the operating system of the business.
To illustrate how values can guide decision-making, I’ll provide an example from a previous company I worked for as the Human Resources Director:
One of our core values was Respect. At a national sales conference, two team members exhibited highly inappropriate behaviour in front of a fellow team member. Their behaviour left this team member feeling quite distressed.
After the conference, the Sales Director popped into my office looking very concerned and proceeded to detail what the two team members had done. He asked: ‘What should we do about this?’ I paused for what seemed like an eternity, but I felt very convicted when I responded. I explained that we had no choice but to terminate their services, subject to due process. He said, ‘What will we say to them?’. I stated that it was very clear they had behaved contrary to our value of Respect, and as such, their conduct was totally unacceptable on several levels. We ended up terminating their employment. They subsequently appealed the decision in court and lost the appeal.
The salient point is that if an organisation is serious about its values, then it needs to follow through with action and accountability.
Leadership as a Values Multiplier
Ultimately, leadership is a multiplier. Your behaviour either amplifies or dilutes your organisation’s values.
If you want a values-driven culture, start by being a values-driven leader. That means practising integrity when it’s inconvenient, holding others accountable with empathy, and making tough calls through the lens of your organisation’s purpose.
“The culture of any organisation is shaped by the worst behaviour the leader is willing to tolerate.” – Gruenter & Whitaker
Values-based leadership isn’t about perfection. It’s about consistency, intentionality, and courage.
When values are embedded in the way people are hired, developed, managed, and rewarded—and when leaders consistently walk the talk—organisations don’t just perform better.
They thrive!
