Article in Business / Leadership / Leadership Principles
The early months of 2010 were punctuated by events that pointed to the pervasiveness of “bad corporate citizenship”. Organizational leadership has the power to motivate and encourage employees and shape positive corporate cultures that yield positive results.
 
 
 

The early months of 2010 were punctuated by events that pointed to the pervasiveness of “bad corporate culture” and its potential for deadly consequences:

The Toyota recall: In the case of Toyota, design flaws resulted in safety defects in accelerator and braking systems. After numerous reports of sticking accelerators, the company indicated that the problem was floor mats becoming lodged under the pedals and suggested that owners remove them. The problem, however, was mechanical; 52 deaths were attributed to cases of “sudden acceleration”. Industry analysts indicted a culture in which extreme deference is given to superiors. The focus is “on team spirit and consensus more than a boss who...inspires with bold vision”1 to the extent that bad news is withheld from each successive level of management.

Upper Big Branch mining disaster: Massey Energy Co, the owner of the mine, had a reputation for prioritizing profits over safety. The company was the recipient of “about 500 citations issued between June 3, 2006 and April 5, 2010 – the day of the explosion” in which 29 miners died. There were over 90 allegations of “high negligence or reckless disregard for safety standards” according to the Huffington Post2. President Obama, addressing the press, said “This tragedy was triggered by a failure...first and foremost of management [and] a failure of oversight and a failure of laws so riddled with loopholes that they allow unsafe conditions to continue.”3

Deepwater Horizon oil platform: Multiple, catastrophic systems failures contributed to the explosion and subsequent sinking of an oil drilling platform off the Louisiana coast. This caused the deaths of 11 workers and resulted in an estimated 210,000 gallons of oil spewing daily into the Gulf of Mexico for weeks. The company first attempted to burn the oil; it later used booms and dispersants. These failed efforts were followed by an attempt to cap the underwater geyser with a 100-ton box; this, too, was unsuccessful, but the flow was slowed somewhat by inserting a 5,000 foot long “straw” leading from the gusher and into a tanker at the surface. However, oil that had already surfaced reached the Louisiana coast. It had also been caught in the Gulf’s “loop current” and was expected to round Florida and be carried into the Atlantic4.

The Senate Committee on Energy and Natural Resources held hearings on proposed oil drilling and the May accident that occurred in the Gulf. During this session, BP Chairman Lamar McKay testified “We’re installing operation and management systems everywhere in the world that are consistent, diligent and rigorous to a higher standard. It gets down to the agenda and the culture of the company.” Senator Ron Wyden (D-OR) retorted, “It sure does. And the culture is that this company has one accident after another.”5

Owned by Transocean and leased by BP, a dispute occurred between officials of these two companies earlier on the day of the explosion as to how to deal with the blowout preventer (BOP) that precipitated the accident. “[T]here was a sort of chest-bumping kind of deal. The communication seemed to break down as to who was ultimately in charge” said Mike Williams, an attendee of the meeting and explosion survivor6.

The Dark Side of corporate culture is often less newsworthy; its effects, however, are every bit as devastating to those impacted.

Consider the corporate citizenship of Monsanto. This company has created over 600 genetically-modified plants to which it holds patents. These were made to withstand another of the company’s products, RoundUp. Monsanto bought most of its competitors and prosecutes an average of 500 farmers annually with a mean court award exceeding $400,000. All readers of this article are encouraged to read the 84-page report of the Center for Food Safety7.

The Goldman Sachs securities fraud is representative of a culture perverted over time. Through the “greed is good”8 1980s, the firm offered the incentive of partnership to young MBAs, attracting and retaining the cream of the crop; the company went to great lengths to maintain its “special culture” in which teamwork was emphasized. Recently, though, the firm designed an instrument that allowed it to bet against the same subprime mortgages it had been foisting on its clients, effectively protecting its interests in a situation of its own making. Blogger Jay Bookman employed the following metaphor: “[John] Paulson handpicked sick, diseased pigs to be made into sausage, then bet millions that the resulting sausage would make people sick.”9

Bad culture can, and more often than not does, exist strictly within the organizational structure. Toxic work environments exist as hierarchies in which negative behaviors proliferate. It could be postulated that negative work environments precipitate the actions contributing to news stories such as the ones at the beginning of this article. A feckless leader accepts these behaviors as “normal” or shrugs them off as “office politics”. Sometimes it is the leadership that is guilty of creating or fostering the negative environment. Regardless, this kind of culture is the bastion of bullies.

Workplace bullying is recurring negative behavior or aggression by someone who perceives they have the upper hand in the existing power balance. In fact, available research agrees that bullies are seeking power. According to Catherine Mattice, M.A.10, of Civility Partners, LLC, a consulting firm focused on eradicating bullying and building positive workplaces, research indicates bullies often feel threatened by targets, and targets are usually high producers. In other words, competition! Negative behaviors can range from eye-rolling to gossip-mongering to withholding information to threats. The National Institute of Occupational Safety and Health (NIOSH) recognizes bullying as a form of workplace violence and found that a quarter of the more than 500 businesses it studied for a 2004 release reported instances of bullying; this arm of the Centers for Disease Control (CDC) defined bullying as “behavior that intimidates, degrades, offends, or humiliates a worker, often in front of others...and undermines an individual’s right to dignity.”11, 12 Specific examples included:

Invalid criticism

Blame without factual justification

Being treated differently than peers

Being sworn or shouted at; being humiliated

Exclusion or social isolation

Targeting for practical jokes

Excessive monitoring (micromanaging)

The results of bullying resulted in “significant” physical and mental health issues for the targets and witnesses, including high absenteeism, job loss, reduced self-esteem, musculoskeletal disorders, sleep disturbance, depression, digestive issues and even post-traumatic stress. The costs to organizations are seen in decreased retention, excess recruitment and (re)training, expenditures relating to Human Resources departments contending with the fallout, excess sick time and decreased productivity. Robert I. Sutton, Ph.D, in his book The No Asshole Rule13 provides a detailed accounting of one fictionalized case in which the perpetrator was required to go to anger management classes as well; the series of incidents he recounts cost the company an estimated $160,000.

Toxic workplaces have been studied in Europe since the 1980s; however, some consider the competitive nature of business in the United States as rewarding powerful individuals whose tactics are “justifiable” when visited on the “weak”. Workplace bullies are seldom censured for their actions. “Indeed the research found that the negative effects are widespread: employees who witness others being bullied suffer secondary harm, reporting high levels of stress, and low levels of work satisfaction.”14 Professor Pamela Lutgen-Sandvik of the University of New Mexico found that nearly half of American workers surveyed reported enduring one negative act each week in a culture of “persistent workplace negativity” that encourages and even rewards such behavior15.

Workplace bullying is, at present, 100% legal in the United States, unless it is coupled with harassment of a protected class:16

Employees who are demeaned, humiliated, harassed and bullied over an extended period of time will exhibit increased absenteeism, presenteeism (present but not really functioning or productive), increased worker's compensation claims, and lawsuits. Recent cases of harassment and bullying where a person was in a protected class and won: In 2009 the Department of Corrections in California lost and paid out an undisclosed amount to a female employee who had worked for them for over 20 years. This is only one case and as organizations such as Los Angeles County Office of Education refuse to accept training for their administrators to prevent bullying, more cases will arise. Some organizations actually refuse to offer training to prevent bully-style management in fear of "opening themselves up to lawsuits", when the exact opposite would eventuate. Until this archaic manner of thinking is changed, and organizations are open to changing and becoming aware of the negative impact bullying has in the workplace, it will be an uphill battle.

Marilyn E. Veincentotzs, CEO, Do Right At Work

In 1998, Drs. Gary and Ruth Namie founded the Workplace Bullying Institute; they actively endeavor to legislate against harassment in the workplace and continue scientifically documenting bullying and its effects. 17 As of this writing, 17 states have bills pending before their legislatures. If, like Los Angeles County, employers will not reform themselves, the law will soon demand it.

So where’s the “doing well by doing good” part?

The examples cited above might be construed as evidence of a society in the throes of moral decay. However, just as corporate culture can be established, it can also be changed. To do so, one must understand culture generally. Professor Gideon Kunda, Ph.D. is a recognized expert on organizational culture; in a recorded lecture he delivered at Stanford University18, Kunda defined culture as a learned body of tradition that governs what people think, feel and do; it is composed of two constructs: artifacts (concrete manifestations of collective knowledge) and rules.

Culture is often established by a company’s founder(s). Over time, organizational history – often conveyed as mythological ideal – imparts to new hires “the way”: what behaviors are acceptable, which are expected, and even the transgressions that will result in immediate termination. Culture is imparted like a catechism to staff; it is part of the assimilation process that binds them to the organization and makes them feel like “family”. Kunda’s ethnography Engineering Culture: Control and Commitment in a High-Tech Corporation19 addresses the sometimes insidious normative controls employed by “Tech” to drive workers to choose “which 20 hours of the day [they] want to work” and achieve “Wage Class 4” status before reaching the event horizon and succumbing to burnout.

A classic primer on changing a corporation’s culture is Who Says Elephants Can’t Dance?, written by Louis V. Gerstner, Jr.20 This is an account of Gerstner stepping into the role of Chairman of IBM at a time when the company was in a death spiral; recognizing that IBM’s culture was at the root of its troubles, he attacked the first symbol of the outmoded organization that he saw: white shirts and ties. He instructed people to dress as their clients did (page 185). “People do what you inspect, not what you expect”, he said and, through what had to be a sometimes painful few years, he instilled a strong customer-first orientation – and engineered a return to solvency. Although Gerstner left the company in 2002, it has continued to follow the course correction he set. TV viewers are regaled with commercials in which employees proclaim “I’m an IBMer” and that the company generates eight times the information found in all U.S. libraries to “build a smarter planet”.

The IBM example of no longer requiring neckties is one in which the culture is transformed by changing its artifacts. Through its mission and vision statements and strategic plan, a company establishes its identity and raison d’etre. Creating manifestations that mirror these serve to continually remind those who work for the company what they are there to do and why. Other examples of artifacts which contribute to the whole of corporate culture include:

Language and symbols – To improve corporate culture, communications directed to colleagues and clients must be respectful and positive. Civility should be stressed; bullying behaviors should not be tolerated. Encourage open discussion, constructive criticism and the exchange of ideas. Acknowledgement of those who have spoken by letting know they’ve been heard is essential.

Ritual and practice – Adopt rewards systems that recognize initiative, teamwork, and demonstrations of commitment to departmental or organizational goals. Find alternatives to methods that require different business units to compete against one another for recognition.

Organization of space and time – Reorganizing workspace to meet company goals is an under-utilized artifact. If a company is attempting to convey a “we are one” message, but the c-suite denizens still have wood-paneled offices while everyone else is in cubicles, the hypocrisy will not go unnoticed. Flexible hours provide for staff to work around family schedules or traffic snares and thus reduce employees’ stress; permitting different teams working together on projects to establish mutually-beneficial schedules can increase productivity.

When a positive work environment is created, a firm can do exceptionally well by “doing good”. Profitability and ruthlessness are not synonyms! While there are many worthy examples, just a few are cited below:

Google: The company’s culture is summed up by the motto “Don’t be evil”. Google was founded in 1998 and has grown to a world-wide operation with more than 10,000 employees situated in multiple U.S. cities and numerous countries. Google’s net income for the first quarter of 2010 exceeded expectations by climbing 37% over the same period in 200921. Its stock price closed on May 21, 2010 at nearly $473 per share. Founders Larry Page and Sergey Brin don’t rest on their laurels, and “permit” any Googler to address them directly. Staff members are not confined to offices; couches and arm chairs are arranged in groupings that allow people to mingle and work together comfortably. The environment is casual. Each location boasts cafes and recreational opportunities – and employees can bring their dogs to work. Although each location is slightly different, most have the “creature comforts” shown in “Tour of the Googleplex in 200 Seconds22.

Zappos: Established as an on-line outlet for shoes, the firm became a full-fledged mercantile before being acquired by Amazon. In 2008, its gross profit percentage was 35%23. What made the company unique was founder Tony Hsieh’s search for a “unified theory of happiness”. The company was known for being employee-friendly, yet paid below market rates. It paid all health care costs and offered free lunch in its cafeteria. Representatives were encouraged to make unilateral decisions that would foster consumer confidence and satisfaction; this was known internally as PEC (personal emotional connection) and could take the form of refunds, personal notes and even flowers. Each employee was asked to contribute an essay annually to an ever-growing book so that they would think about the meaning of their work and commitment to the company. Interviewees were required to pass an hour-long “culture interview” prior to being directed to the department to which they’d applied; among the questions: rate on a scale of 1 to 10 how weird you are...24

Marriott: What started as a single A&W (“A” for “Alice” and “W” for “Willard” Marriott) root beer stand has become a world-wide chain of hospitality enterprises with an $83 million profit reported in the first quarter of 201025. The “Marriott Way” puts associates first with the expectation that they, in turn, will provide a positive experience for customers. The firm, further, expresses its social responsibility commitment by matching financial contributions with in-kind giving and encourages volunteerism by employees. Each community in which Marriott operates is expected to SERVE:

Shelter and Food

Environmental five-point strategy

Readiness (for careers)

Vitality of Children

Embracing Global Diversity and Inclusion

Panera Bread Co.: In mid-May 2010, the national bakery and sandwich chain opened the first of what will ultimately be 1,400 non-profit stores. Through its charity that assists (and employs) handicapable adults, patrons can pay whatever they want for whatever they order. Suggested (usual Panera) prices are available to those who ask, but the only thing posted is a banner that reads “Take what you need, leave your fair share”. Reverting to the company’s “maiden name”, the chain will be known as St. Louis Bread Co. Cares. It is hoped that people will open their hearts and wallets to make the stores at least budget-neutral enterprises and, at best, sources of revenue for the charitable foundation. This is not the first of its kind; One World Salt Lake City has operated as a non-profit since 2003.26

Each of these companies found a unique way to bring vital energy to its community. Each has put people first. Positive cultures can – and do – yield positive results. “Organizational leadership has the power to motivate, and to encourage their employees, or to demean and demoralize them; whichever management strategy they choose to use will impact the organization either positively or negatively. The organization which uses the first strategy will have increased morale, productivity, retention and profitability. Whereas, the organization which uses the negative management style will experience increased turnover, lowered retention rates, and decreased profits.”27

“Each time a man stands up for an ideal, or acts to improve the lot of others, or strikes out against injustice, he sends forth a tiny ripple of hope, and...build[s] a current which can sweep down the mightiest walls of oppression and resistance.”

Robert F. Kennedy

June 6, 1966 Capetown, South Africa

REFERENCES

1 Industry Week http://www.industryweek.com/articles/toyota_crisis_throws_spotlight_on_japans_corporate_culture_21175.aspx

2Huffington Post, May 14, 2010

http://www.huffingtonpost.com/2010/05/14/upper-big-branch-mine-dis_0_n_577043.html

3Reuters.com http://www.reuters.com/article/idUSTRE63E1ZG20100415

4 Chron.com http://www.chron.com/disp/story.mpl/business/deepwaterhorizon/6992936.html

5 New York Times.com http://green.blogs.nytimes.com/2010/05/11/live-blogging-the-senate-hearing-on-offshore-drilling/

660 Minutes, Sunday May 16, 2010

http://www.cbsnews.com/stories/2010/05/16/60minutes/main6490197_page3.shtml?tag=contentMain;contentBody

7 Center for Food Safety, Monsanto vs. U.S. Farmers Report, 2005

8Wall Street (film), 1987, 20th Century Fox, Oliver Stone, Director

9 Jay Bookman Blog, Atlanta Journal Constitution http://blogs.ajc.com/jay-bookman-blog/2010/04/17/goldman-sachs-fraud-case-stunning-in-its-indictment-of-wall-street-culture/

10Mattice, Catherine M., M.A. Bullying @ Work, Presentation 1: What is workplace bullying? Slideshare Presentation, http://www.slideshare.net/catmattice/what-is-3855085

11 National Institute for Occupational Safety and Health (2004) Most Workplace Bullying is Worker to Worker, Early Findings From NIOSH Study Suggesthttp://www.cdc.gov/niosh/updates/upd-07-28-04.html

12 Nzinga (2010) Workplace Bullying: What Everyone Needs To Know . Praise Houston.com http://praisehouston.com/health/nzinga/workplace-bullying-what-everyone-needs-to-know/

13 Sutton, Robert I. The No Asshole Rule: Building a Civilized Workplace and Surviving One That Isn’t, pages 40-43, Warner Business Books, New York, 2007.

14 Management Issues U.S. Organizations Encourage Bullying (2007) http://www.management-issues.com/2007/8/31/research/us-organizations-encourage-bullying.asp

15 Lutgen-Sandvik, P., et al., Burned by Bullying in the American Workplace: Prevalence, Perception, Degree and Impact, Journal of Management Studies, 44:6 September 2007

16 Archives.gov: The Civil Rights Act of 1964 http://www.archives.gov/education/lessons/civil-rights-act/

17 Workplace Bullying Institute http://www.workplacebullying.org/

18 Stanford Center for Professional Development, Advanced Project Management Certificate Program, Converting Strategy Into Action.

19 Kunda, Gideon. Engineering Culture: Control and Commitment in a High-Tech Corporation, Temple University Press, Philadelphia, 1992; 2006.

20 Gerstner, Jr., Louis V., Who Says Elephants Can’t Dance?: Inside IBM’s Historic Turnaround HarperCollins, New York, 2002

21 NYTimes.com, April 15, 2010 http://www.nytimes.com/2010/04/16/technology/16google.html

22 Google.com, Corporate Culture page http://www.google.com/corporate/culture.html

23 MineThatData.com http://blog.minethatdata.com/2009/09/zappos-profit-and-loss-statement-2007.html

24 Inc Magazine, The Zappos Way of Managing, May 1, 2009 http://www.inc.com/magazine/20090501/the-zappos-way-of-managing.html

25 Wall Street Journal, Business Travel Boosts Marriott, April 23, 2010 http://online.wsj.com/article/SB10001424052748703876404575199683555302538.html

26 Associated Press, New Panera location says pay what you want, May 18, 2010 http://www.google.com/hostednews/ap/article/ALeqM5g__EQ-OG9DhU1YwC4Fo4s5QREdbgD9FPI2380

27 Marilyn E. Veincentotzs, CEO, Do Right At Work. E-mail correspondence, May 23, 2010

 
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