Style Over Substance: Why Virtue Signaling Backfires in Business

We all know the virtue signaling types: individuals who regale us with the wonderful things they do and represent. Some of these people are simply proud of what they’ve accomplished and vocal about it. They may even inspire others to be more involved. However, those who crow the loudest often don’t walk the talk.

In business, companies can also take on similar characteristics. In recent years, many organizations have grabbed headlines with messaging about specific topics designed to appeal to the public, notably DEI policies and environmental concerns. As Ron Jabal, CEO of the Pageone Group, explains in an article for Business World:

“The essence of virtue signaling lies in the disjunction between words and actions. It often involves carefully curated public relations maneuvers that prioritize optics over substance. As organizations become increasingly attuned to the demands of a socially conscious audience, there’s a danger of performative activism overshadowing genuine efforts toward positive change.”

When news agencies dig deeper, they often discover that the way these organizations conduct business contradicts the image they want to project. Instead of building a reputation of high character and commitment, such companies become known for their hypocrisy, inconsistency, and superficiality. The result is lost trust and, ultimately, lost revenue.

Unintentional Mixed Messages

Companies that play to the crowd but don’t even try to live up to their claims are extreme examples that draw a lot of attention. Most organizations don’t take this route, but there is a subtler and inadvertent kind of grandstanding that is much more common. Unfortunately, it often results from the noble intention of establishing core company values.

CEOs aren’t wrong to identify principles they want their organizations to represent and enshrine them on their websites and walls. However, these values remain relatively meaningless unless a system is developed to activate them. Employees and the public can see that these noble words frequently don’t align with how the company operates.

Because of this disconnect, many leaders with the best intentions inadvertently develop virtue-signaling cultures. Their companies claim to be one thing, but their actions say otherwise. Eventually, what they created to strengthen the organizations becomes a factor in lost business, turnover, and lower productivity.

The Benefits of Signaling Positive Traits

Many business leaders associate their companies with core values centered on ethics, such as honesty, inclusiveness, and service. Aside from aligning with their personal ideals, leaders want the public to perceive their companies as conscientious and dedicated to their customers and staff.

If they authentically demonstrate these characteristics, they can generate loyalty and advocacy by broadcasting a virtuous brand.

Author and behavioral scientist Nathalie Nahai and leadership authority and business psychology professor Tomas Chamorro-Premuzic analyzed the phenomenon of virtue signaling in a recent article for Fast Company. They delve into the emotional and intellectual relationships consumers have with brands.

“We attribute human-like personality traits to brands and gravitate toward those we perceive as congruent with our own values and identities.”

The authors note that just as we are drawn to companies committed to demonstrating their values, we are repelled by enterprises that fail to live up to their hype. They cite the ultimate example of Enron, who made a mockery of their espoused values of “Respect, Integrity, Communication, and Excellence.”

Living Up to Your Company’s Core Values

If leaders sincerely want their companies to win the hearts and minds of their customers and staff, they must give their stated values agency. Ron Jabal writes, “The challenge lies in fostering a culture where genuine action aligns with professed values.” He also points out that we hold virtue-signaling companies to a higher standard of accountability and sincerity.

Jabal summarizes: “Genuine commitment to values requires more than rhetoric — it demands tangible, sustained efforts.”

In his book Culture by Design, CultureWise CEO David J. Friedman provides a practical method for leaders to build a culture that authentically reflects the values they want to project. He notes that companies must build cultures based on behaviors that demonstrate commitment to the qualities they prioritize.

Friedman makes the following distinction: “A value in the context of culture is a principle that governs our actions—they are ideas. In contrast, behaviors are actions.” For customers and employees to buy into a company’s values, leaders must identify, define, and coach the behaviors that show what they look like in action.

Moreover, a workforce may not reflect company values because these words are subject to interpretation. For example, a value like “respect” may have different meanings to various people. However, leaders can specify behaviors that everyone understands that their workforce can engage in to facilitate the kind of respect they want to see.

Friedman agrees that values influence how we behave. However, he asserts, “Trying to clarify these values isn’t nearly as useful as defining the behaviors that we want to see practiced in our organizations. They’re much easier to teach, guide, and give feedback about. They are how we operationalize the culture.”

Another important difference between values and behaviors is the ability to hold staff members accountable. Employees can say and even believe they are living up to company values, but making them accountable for reflecting an abstract concept is hard. In contrast, clearly defined behaviors enable employees and management to detect whether expectations are being met.

Additionally, values are strong words with vague parameters, making it difficult for people to understand how and when to apply these concepts. Leaders can solve this problem by showing employees practical ways to link the company’s values to everything they do at work. This scrutiny of how their company signals its virtues can help organizations transition from symbolic gestures to actions with real impact.

Notably, David Friedman’s philosophy about behaviors goes beyond a means to activate values. He makes it clear that not all behaviors that have the power to enrich a company’s culture fall within the scope of its core values. Such behaviors may be more practical and help employees function at a higher level. Friedman advises leaders to think beyond values and determine all behaviors that will set the company apart, impress its stakeholders, and build an admirable reputation.