CEOs can define company values. They can put those values on the website, discuss them during onboarding and repeat them at company meetings. But that doesn't mean employees will see those values in action.

People learn what a company stands for by watching what happens every day. They notice which behaviors leaders reward, how managers respond when something goes wrong and how much freedom they have to make decisions.

In both being a leader and studying how other leaders create strong organizations, I've learned that culture becomes evident at the decision level. An organization might say that it values trust, accountability or growth, but employees learn what those values mean when they make a mistake, challenge a decision or ask for more responsibility.

1. Build Company Culture By Modeling Your Standards

Leaders set expectations through their own behavior long before those expectations appear in an employee handbook.

A connection of mine, Steven Nigro, is the founder of TAG Financial Institutions Group and has a specific philosophy that’s clear to everyone in the organization.

His philosophy begins with building a clear moral and ethical foundation and sticking to it. That extends to education, trust, responsibility, empathy and giving people the freedom to learn through mistakes.

Employees notice discrepancies between what leaders say and what they do. A CEO who talks about respect but tolerates disrespect from a high-performing employee has communicated a standard. So has a CEO who says that employees should take initiative but then second-guesses every decision.

One way to see how well your values hold up is to look at what happens when things go wrong. Take accountability as an example. Someone misses a deadline. What happens next? Does the manager ask what went wrong? Does the employee get a chance to fix it? Those everyday situations show people what accountability means at your company. If the company values development, how much time will be devoted to instruction or coaching? Are executives held to the same standards?

Culture is more credible when employees don't have to guess which standards count.

2. Strengthen Company Culture Through Employee Ownership

Employees are more likely to take responsibility for their work when leaders give them room to make decisions.

Amazon CEO Andy Jassy has emphasized the importance of ownership, which goes beyond an employee’s immediate responsibilities. At Amazon, employees are encouraged to think about the broader business, take responsibility when they see a problem and help find a solution. Speaking up is part of that culture, even if an employee disagrees with someone in a higher position.

CEOs can help foster this feeling of ownership by examining how decisions are made within their own companies. If routine decisions keep moving up the chain for approval, employees may have responsibility for the work without much authority over it.

Giving employees more authority can also encourage collaboration across roles and teams , especially when people have the freedom to contribute outside a narrow set of responsibilities.

Context matters. If an employee just knows what to do, they're stuck when things change. It’s difficult to take ownership of a decision when you don’t understand what the business is trying to accomplish or why a goal exists in the first place.

Employees don't need to weigh in on every strategic decision. But they can't take ownership of their work if they don't understand where the company is going or why a priority exists in the first place. That's where effective communication comes in. CEOs need to give employees the context to make decisions, solve problems and keep work moving .

And then they need to get out of the way. I’ve seen firsthand how this strategy works much more successfully than micromanagement.

If every customer request, project change or unexpected problem requires a manager's approval, employees aren't really making decisions. They're waiting for permission.

CEOs should also pay attention to what happens after they give more authority. Employees will simply stop making decisions if every choice is second-guessed or reversed. When you give someone ownership, that means accepting that the individual may approach the work differently than you would.

It’s also useful to look at where work regularly slows down. Maybe a manager has to approve routine customer requests. Maybe employees have good ideas but no authority to test them. Pick a few low-risk decisions that can move closer to the people doing the work. Give employees clear boundaries and let them make the call.

3. Create A Company Culture Where People Can Admit Mistakes

More freedom means employees will occasionally make the wrong call. CEOs have a lot of influence over what employees do afterward.

Former Ford CEO Alan Mulally encountered this problem during the company's turnaround. Ford executives had been hesitant about raising issues during executive meetings, even as the company struggled. When an executive finally raised a serious problem, Mulally welcomed the honesty and moved the conversation toward solving it.

Employees pay attention to what happens when someone admits they got it wrong. If the response is blame or embarrassment, why would the next person be eager to raise their hand? They may end up waiting. And while they do, a problem that was manageable on Monday can look very different by Friday.

A better strategy I would recommend for leaders instead is to use mistakes as learning opportunities for employees. CEOs can make these conversations more productive with a few straightforward questions. What happened? What information did the employee have at the time? What would the person do differently now? Leaders should be willing to answer those questions about their own decisions, too.

Accountability still has a place here. Someone making a reasonable decision that produces a bad result is different from someone ignoring a known issue or repeatedly disregarding company standards. Employees should know where that line sits.

If a mistake exposes a weak process, fix the process. If someone needed information or training they didn’t have, address the gap. And when an employee identifies a problem early, involve that person in finding the solution when it makes sense.

Employees learn a company’s culture through experiences like these. They see who gets trusted, how leaders react to bad news and whether executives follow the standards they expect everyone else to meet.

In my experience, values are easy to put on paper. However, employees are the ones who ultimately decide whether to believe them by watching what leaders actually do.