What role do terminal and instrumental values play in organizational culture?

When you think about Gandhi, Martin Luther King, or even Steve Jobs, they were all successful because of their ideas and values. People didn't follow them, believe in what they said, or even work for them because they were successful. Instead, people followed them because they believed in the same values.

A value is one of the most important things a person believes and stands for. It's something essential that defines that person. Without their values, people wouldn't be the same.

In this explanation, we will have a closer look at values from a personal point of view and in the workplace. Keep on reading to learn more about them.

Values Definition

To better understand what values are, we need to define them first.

A person's values are their code of conduct, behavior, beliefs, and principles they live by.

It's important not to mistake someone's values for their beliefs. A value is more than something people care about. A value is a guiding principle that defines a person's actions and behavior. In other words, a person wouldn't be the same if you took away their values.

Having values and caring for something is different. For example, if you feel like generosity is one of your core values, you are always trying to be generous, which impacts most of your actions. In that case, not only would you give all the time to charities, but whenever someone asks for help, you always drive the extra mile for them; you would do a bit of extra work every day to help others and be generous towards all. However, remember that you can be generous without necessarily having generosity as your core value.

Here are some examples of factors that can affect our values:

  • Environment: our values are often the result of the environment we live in. The country we are in, the culture surrounding us, etc.
  • Family Situation: our family and close relatives will significantly impact our value systems and decisions.
  • Network: the people we know play a key role in our values, as we will often have similar ones.
  • Locus of control: someone with an internal locus of control will think that problems are in their hands and that it's their job to find a solution. In contrast, someone with an external locus control is more focused on what surrounds them.
  • Education: can also greatly impact how people think and define their values.

Example of Values

Valuegraphics surveyed more than 500.000 people across 152 countries.2 This fascinating study shows what values are important to people according to their country.

Here are some examples of values and findings from this survey:

  • Family: it's, of course, one value that many can relate to. Family plays a key role in many cultures and can be the center of decisions for many people. A good example representing this family value is Don Corleone in the movie "The Godfather." In this show, all the decisions the Godfather took were for the good of the family, to protect and make it thrive.

  • Tradition: traditions and religion play an important ideological and cultural identification role in many countries. It is generally considered an essential value in the Middle East, where people wear traditional clothes daily and have strong religious beliefs.

  • Respect: a value we generally associate with the elderly or more experienced people. This value is particularly important in Africa and Central America, more than in other continents.

  • Loyalty: it's an essential value in society: we keep loyal to our spouse, the place we work, the people we know, etc.

  • Morality: having high morale and doing everything in our power to be good is also a great value; it's also often associated with religious values.

What role do terminal and instrumental values play in organizational culture?
Fig. 1 - Family values

Values Characteristics

An individual's values are part of their DNA, and they tend to have the following characteristics:

  • Permanent: values tend to be permanent and generally don't change much, as they are part of someone's personality.

  • Importance: an individual's core values are essential to them. Although one specific value might not matter to someone, it might mean a lot to someone else. For example, tradition and religious values might not matter as much to an atheist as to a religious person.

  • Moral compass: someone's values often act as a moral compass and can help them make decisions that align with their beliefs. For example, an eco-friendly individual who needs to buy a new car might be more interested in purchasing an electric vehicle rather than a diesel one.

  • Personality: our values are closely related to our personality. Whether we choose a value based on our personality or our values shape our character, there is a clear link between the two.

  • Subjective: values tend to be subjective; what can be considered a value to someone might not be for someone else. For example, someone can see themselves as a traditionalist, but someone else might still see them as a progressist.

Values Types

Generally, we can consider two value types:

  • Individuals: These values are embedded in a person—for example, family, tradition, respect, etc.

  • Organizational: these values are embedded in an entire group of people or an organization. For example, France defines its value as "Freedom, equality, and fraternity," the company Apple genuinely believes in creativity, etc.

Beyond the two value types, we can also define values based on different characteristics. For example, we might consider values such as justice, generosity, and empathy positive because they generally impact people and society positively around us. Some other values, such as tradition, morality, or religion, can be regarded as moral values because they intend a higher standard of thinking and respect for our existence.

Values in Workplace

The values of an organization are the code of conduct, behavior, beliefs, and principles the organization represents and pursues.

What are terminal and instrumental values in organizational behavior?

Terminal values are goals that a person wants to achieve in life like wanting to be successful or growth in career. Instrumental values are means to achieve goals. Instrumental values include ambition, honesty, self-sufficiency and courageousness.

Why terminal and instrumental values are important?

Instrumental values are useful because they provide acceptable ways of behaving, which allow us to reach our terminal values. Our terminal values define the overarching goals that we hope to achieve in our lifetime; our instrumental values define how we go about reaching these goals.

What are terminal values in an organization?

Terminal values are the goals in life that are desirable states of existence. Examples of terminal values include family security, freedom, and equality. Examples of instrumental values include being honest, independent, intellectual, and logical.

What is the importance of terminal values?

Terminal value (TV) determines a company's value into perpetuity beyond a set forecast period—usually five years. Analysts use the discounted cash flow model (DCF) to calculate the total value of a business. The forecast period and terminal value are both integral components of DCF.