What DEI misses: diversity of values

“Vertical value misalignment” — it may be an unfamilar term, but it's an important one, according to Italian researchers.

In a study of 38,800 bank employees, they found that this type of misalignment between employees and managers erodes organizational performance.

In particular, employees whose top values diverge most from their manager deliver roughly 6% lower on objective performance metrics – four times the hit associated with a gender-mismatched manager.

Value misalignment and DEI

According to microeconomist Alexia Delfino, assistant professor at Bocconi University in Milan and co-author of the paper Value Dissonance at Work, traditional DEI metrics miss a critical dimension.

 “Firms and companies are increasingly looking to attract diverse talent. But what do we really mean by diversity?” she says.

“There's a lot of research focusing on gender diversity, ethnic diversity, or even diversity in terms of age and different generations. At the end of the day, what really drives our behaviour in many situations is actually our values. What I wanted to look at was whether these diversity values also matter within organizations and for people's performance.”

By mapping each employee’s top five personal values against those of their manager, Delfino and co-author Miguel Espinosa created a “vertical misalignment” index, which shows that misalignment on these unspoken drivers has a measurable downside: workers with the greatest value distance from their manager underperform and disconnect.

That effect remains even after controlling for gender, age, ethnicity and alignment with senior leadership, Delfino adds, underscoring that values themselves carry unique weight.

Misaligned values and management

To conduct the survey, Delfino’s team added a values-ranking question to the financial institution’s annual engagement survey, asking them to rank values such as imagination, responsibility and unselfishness in order of importance.

“We merge this data with human resources records from the bank, and so we know exactly for each respondent who are their team members, who are the colleagues within the team, as well as who is the direct manager of the person,” Delfino says.

“The HR records also give us measures of performance, so these are basically our outcome variables. What we want to find out... is whether differences in values have some quantifiable and meaningful effect on an employee's performance.”

The research revealed that differences in values among co-workers do not have a significant effect on performance measures; it’s the crucial relationship with their manager that is the most affected by misaligned values.

“What matters is differences in values with your manager – and in particular, if I take an employee that is the most aligned in values with their manager, and I compare this employee with an employee that is the most misaligned …the performance difference is six per cent,” Delfino says.

“This tells us that differences in values have a negative relationship with performance in the organization.”

Communication breakdown

The research drills into the “how” behind performance drops, identifying communication breakdown as a key component – misaligned staff don’t initiate progress discussions or informal check-ins, and they score lower on Edmondson’s psychological-safety index.

“Employees who are more different in values with their managers are less likely to speak up, to participate in unstructured meetings with their managers, and in general, to have a voice in the organization,” Delfino says.

She and her team define two types of value dissonance: horizontal misalignment (among colleagues and team-mates) and vertical misalignment (between employees and their manager).

What they have found is that managers themselves don’t change their behaviour due to mismatched values – the jury is still out on why that might be – and the reluctance comes entirely from employees who feel “othered” and hold back their questions, feedback or ideas.

As Delfino elaborates, the research makes clear that stifled upward dialogue isn’t just a nicety issue; it can directly track dips in measurable output.

“It's the employees that are less likely to be willing to speak with the manager, to provide feedback to the manager, to ask for feedback from the manager, and it's not from the manager to the employee,” she says.

“They feel different from the manager, and therefore they shun away from interacting and engaging in the relationship.”

Value disconnects sap employee engagement, morale

Alongside communication woes, value misalignment erodes employee morale and engagement; Delfino notes, “Employees lose morale, so they're a bit less likely to be proud of their workplace, and to be engaged with their work.”

Increasing awareness and discussion around values in the workplace is a crucial step to addressing the negative effects of value misalignment, she says, emphasizing that when employees assume managers don’t share a value (for example, caring about social impact), they may stay silent even when alignment exists.

Delfino recommends that HR initiate programs that will increase psychological safety as well as communication flow between employees and managers.

“[It's about] starting to initiate measuring values, and having open conversations within the organization … encouraging employees to get to know each other and manage potential differences in the in the workplace.”