Corporate cultures for the 1990s: what is needed?

A strong culture -- a set of shared values, norms and beliefs that get everybody heading in the same direction -- is common to all the companies held up as paragons in the best seller In Search of Excellence.

But what is corporate culture really? Ivancevich, Donnelly and Gibson suggest that "...organizational culture refers to the impact of group norms and values and informal activities on the organizational environment." As they put it, "The impact of traditional behavior, sanctioned by group norms but not formally acknowledged, was first documented in the Hawthorne studies" and can impact considerably on organizational change, organizational development and the effectiveness of the manager attempting to implement change. And Allen A. Kennedy, co-author of Corporate Cultures, continues to emphasize its importance to the success of business in the long run.

In general, we agree with those writers who emphasize the importance of corporate culture. Further, we accept the general definition and description of corporate culture as a shared system of beliefs, values, norms, and rituals common to and guiding an organization. But we also believe that in an important sense the creation of organizational culture is equivalent to the creation of an organization itself. An organization does not so much "have" a culture as it "is" a culture. And that implies that the making of a dynamic corporate culture is in fact a continuous process of organizing.

However stylish or faddish the term "corporate culture" may be, the basic concept of a shared system of norms, beliefs, values, and rituals guiding organizations has been in existence for some time. As Lewis suggests: "The organizational climate distinguishes one organization from another, endures over a period of time, and influences people's behavior." Similar to Lewis, Bonoma and Zaltman use the term "organizational climate" rather than "corporate culture," but their main point is also valid for our purposes. "Organizational climate refers to the personality of the organization resulting from the characteristics of the people who manage the organization and the way the organization itself is structured." Whether the term of choice be "organizational climate" or "corporate culture," every organization has a personality of its own, a system of shared beliefs, values, norms, and rituals common to the organization and its objectives. And it is this system, we believe, that makes up the meaning of an organization. It is a socially constructed meaning, an organization of meaningful structure.

As we move into the decade of the 1990s, the basic question then is not "Will corporate cultures continue to exist?" but rather "What type of corporate cultures will be most effective in enabling companies to survive and prosper in the 1990s?" As Walter Kiechel states in Fortune: "An era in American capitalism is drawing to a close; another era is beginning. Where do we go from here?... To understand the soul of an organization we must travel into the underground world of corporate culture." That is where we want to head.

In every organization, there are initiation rites; stories to be heard; behavior to be learned; codes to be deciphered. There are rituals for veteran employees and for the new employee. There are corporate cultures filled with myths and rituals legitimating rigid hierarchies, loose structures, autocratic leadership styles, democratic participation. Corporate culture is, in other words, as various as life itself. We make culture as we organize and reorganize.

Of course, there are clashes in corporate cultures: struggles by workers, for example, required to adapt to a different corporate style or method of operation imposed by new ownership from the Pacific Rim, the European Community or the U.S. itself. There is corporate culture based on the metaphor of the family, the military, or the machine. And there are organizations that have established myth and ritual based on a belief in organic growth and the Darwinian sense of survival.

But despite this rich variety and diversity, we can speak in general terms about how corporate cultures originate and develop. Kilmann offers an important description and interpretation of such activity: "When an organization is born, a tremendous burst of energy is released as members struggle to make it work. A corporate culture seems to form rather quickly, based on the organization's mission, setting and requirements for success." Then, the reward systems, policies and work procedures are formally documented. They become part of the formal coding system of the organization, legitimating the kinds of behavior and attitudes important for success. However, such formalities, while important in shaping culture, cannot compete with actions of key individuals. Through informal gestures and behavior, the leaders of the organization continue to provide important clues as to what is really wanted from all employees.

Kilmann's description is useful because it suggests that employees take serious note of all critical incidents that stem from top management action. Employees then often attempt to emulate those actions eventually making them a part of the corporate folklore which helps sustain the organization for the future. But this process of organization, we believe, often creates a corporate culture that leads to a form of corporate schizophrenia. And it is this cultural schizophrenia that we believe managers need to address when considering corporate culture for the 1990s.

Corporate culture, we want to argue, can be viewed as part of the formal structure of the organization or as part of the informal structure. "The formal strategy, structure, and reward system" (to use Kilmann's terms) makes up what we call "the formal symbolic order." It is a symbolic order usually encoded in written texts disseminated throughout the organization. But this formal symbolic order is too often in contradiction to the everyday expressions, attitudes and behavior of top management, expressions and behavior that always help shape what we call "the informal symbolic order," a symbolic order usually encoded in non-verbal gestures and through oral communication. We believe that it is this contradiction that accounts for much of the mistrust and frustration found in the ranks of employees who are on the whole willing to serve top leadership providing they feel they are working in a coherent and cohesive cultural environment.

What inevitably causes frustration, in other words, is not primarily the particular style or approach of top managers; rather it is the existence within the organization of an informal symbolic order that does not complement the formal symbolic order established by top management. When this occurs, the organization suffers from a two-culture and two-tiered system. All relationships become ambivalent and confrontational. We enter the world of "us and them."

Kilmann states that "success in business is determined not by an executive's skills alone nor by the visible features -- the strategy, structure and reward system -- of the organization. Rather, the organization itself has an invisible quality, a certain style, a character, a way of doing things. They may be more powerful than the dictates of any one person or any formal system." For us, Kilmann is really talking about our two symbolic orders here: the formal one, visible and often consciously articulated in the written texts of the organization; and the informal one, often invisible because it is usually part of the oral and non-verbal codes of the organization. In our view, both the formal and informal symbolic orders of an organization must be taken together. They both makeup the corporate culture, and they both must provide employees with a coherent sense of the organization.

Pascale gives us one version of the way employees can be initiated into a coherent corporate culture. He outlines it in seven distinct steps:

Step One. The company subjects candidates for employment to a selection process so rigorous that it often seems designed to discourage individuals rather than encourage them to take the job.

Step Two. The company subjects the newly hired individual to experiences to induce humility and make him/her question his/her prior behavior, beliefs and values.

Step Three. The companies send the newly humbled recruits into the trenches, pushing them to master one of the disciplines at the core of the company's business.

Step Four. At every stage of the new manager's career the company measures the operating results he has achieved and rewards him accordingly. It does this with comprehensive and consistent systems.

Step Five. All along the way the company promotes adherence to its transcendent values, those overarching purposes that rise way above the day-to-day imperative to make a buck. Identification with such values enables the employee to accept the personal sacrifices the company asks of him.

Step Six. The company constantly harps on watershed events in the organization's history that reaffirm the importance of the firm's culture. Folklore reinforces a code of conduct--how we do things around here.

Step Seven. The company supplies promising individuals with role models and reinforces those roles with rewards.

While not advocating this kind of model, we see here, beneath the surface, one method of achieving a successful match between informal and formal symbolic orders. As Labich notes about the United Parcel Service, a company that has apparently subscribed to such an approach: "Top managers, most of whom have come from the ranks, instill a spirit of winning so pervasive that people who fail are ranked least best, not losers. Workers in turn have almost a Japanese-like identification with the company." Through such a method coherence and cohesiveness are apparently maintained at both the formal and informal levels of the symbolic coding processes.

We are suggesting that a cohesive and coherent corporate culture establishes a productive corporate unit because it creates harmony between the formal and informal symbolic orders within the organization. Such harmony establishes a sense of belonging and a supportive environment for the employees. In this context it is worth noting that Lewis attributes the major problems in an organization to an overwhelming feeling by employees that management is not being supportive." In such situations, we suggest, what actually happens is that the employees do not fully enter into the symbolic coding system of the organization. Because a gap exists between the informal and formal orders within the organization, employees do not enter into the full meaning and purpose of their work. It is in this sense that they do not experience "trust." The result is that they put an over-emphasis on their own individuality. Dissatisfied with their sense of being part of the organization, they remain separated from it.

We believe that all organizations' style and culture are most often reflective of the personality of the chief executive officer. But for us what makes a difference is not the style itself, but the way that style is embodied within both the formal and informal symbolic orders within the company. The research work of Kets DeVries and Miller regarding organizational style and culture is helpful here. Their research has led them to conclude that five basic neurotic organization styles exist, each style with its specific characteristics, predominant motivating fantasy and associated dangers. From our perspective, the issue is not whether these so called "neurotic companies" are healthy or unhealthy, positive or negative, but whether their symbolic coding offers a coherent and consistent frame for their employees.

Kets DeVries' and Miller's conclusions are interesting in this context: "We are not suggesting that neurotic styles always require changing. They may sometimes be quite compatible with the firm's environment, but too often they foster a kind of rigidity that inhibits adaptation..." To us, the problem is not so much rigidity as it is incoherence in the culture of the organization itself. The formal strategies, structures and behavior of an organization fitting any of Kets DeVries and Miller's models are usually inconsistent with the informal expressions and behavior of that organization. And that is the fundamental problem. We do not believe that chaos in itself fosters creativity. In fact, employees become fully productive only when they can comprehend and identify themselves within the symbolic order. If a split exists between the formal and informal symbolic orders then the employee will only receive mixed messages, creating the kind of "neurotic organization" that these researchers are pointing to American industry is undergoing the throes of reorganization, restructuring, leveraged buyouts, mergers, consolidations and plant closings. In our view, the basic reorganization and restructuring of American industry is far from being over. The available current literature indicates that the organization and restructuring currently taking place may be only the beginning of a much longer period of constant organizational change necessary to keep American industry competitive in the world marketplace. As Kiechel puts it in Corporate Strategy for the 1990s: "An era in American capitalism is drawing to a close: another era is beginning. Call the 1980s the decade of restructuring: Onto the scene rode the now-familiar horseman of the corporate apocalypse -- global competition, deregulation, accelerating technological change and the threat of takeover. In response, company after company, including over half the Fortune 500, restructured -- shedding businesses, laying off employees, cutting costs. The world of restructuring is not over. Indeed one of the lessons of the new age is that such work is never over, can't be over as long as the four horsemen patrol the field."

Further indications that the reorganization and restructuring of industry will continue well into the 1990s can be gleaned from a number of additional sources. Nulty relates that three great forces are drastically changing the structure, operation and organization of industry:

* Rapid growth of the service sector;

* Computer technology advances; and

* Cost consciousness on the part of business.

"Global competition and the advance of computers are driving whole layers of middle management into oblivion, a process known as downsizing or flattening the pyramid. Management used to mean getting things done through others, now it means getting value added, and that's a revolution." And Jeremy Main relates that in the 1990s middle managers could be in deeper trouble... reorganization and restructuring will continue as spans of control are increased and yield to spans of communication as companies continue to flatten the organizational pyramid and trim staffs to stay competitive and viable. For us, this time of turmoil is a time of opportunity, a time for creative change. And what will determine the success of that change is not whether the organizational pyramid is flat or multi-layered, governed by an authoritative leader or a democratic committee. What is important is that change is occurring at a rapid rate and that process has opened the possibility to organize new cultural formations, new supportive structures, structures that bring together in new ways the formal and informal symbolic codes within the organization. To transform corporate culture, to make changes in the formal and informal symbolic codes, the organization must be at a moment of flux. A cultural rule must have been broken, making change possible. The 1990s will be a time for refashioning corporate culture; it will be a time to build a coherent corporate culture from the chaos that currently exists.

Corporate cultures are the very texture of organizations. Be they productive or unproductive, organizational cultures exist -- usually reflecting the personality of the top executive. Corporate cultures can and do affect the success or failure of the corporate body and are determined in various ways by all who work for or do business with the organization.

To create a productive corporate culture necessitates the marriage of what we have been calling the formal and informal symbolic codes. These codes ordinarily emanate from the top executive, and unlike many other researchers, we do not believe that this fact by itself creates the most serious problems in the creation of a productive corporate culture. We believe that the crucial test of a coherent and meaningful corporate culture is whether the informal and formal symbolic codes together offer a consistency of purpose and structure for the employees. That consistency allows employees a coherent entry into the workings of the organization. It allows them to understand the meaning of their work within the organization. When employees fully understand the complete symbolic order of the organization, they become mature members of the corporate culture, ready and able to produce and reproduce through their labor.

Thomas J. Higginson, Ed. D., is a professor of management at Southeastern Massachusetts University. He has over 25 years experience at the university level and in industry, and is listed in several editions of Who's Who in the East and Who's Who in Finance and Industry. Robert P. Waxler, Ph.D., is a professor of English and former associate dean of the College of Arts and Sciences at Southeastern Massachusetts University. He has published many articles on literature and culture and has worked as a consultant in the public and private sectors.

For further reading

Ivancevich, J.M., J.H. Donnelly Jr., J.L. Gibson, T.V. Bonoma, and G. Zaltman, Psychology for Management, Kent Publishing Co., 1981.

Kets DeVries, M.F.R. and D. Miller, "Unstable at the Top," Psychology Today, October 1983.

Kiechel, Walter III, "Corporate Strategy For the 1990s," Fortune, February 29, 1988.

Kilmann, R.K., "Corporate Culture," Psychology Today, April 1985.

Labich, Kenneth, "Big Changes At Big Brown," Fortune, January 18, 1988.

Lewis, P.V., Managing Human Relations, Kent Publishing Co., 1981.

Managing for Performance, Business Publications Inc., 1986.

Nulty, Peter, "The Economy of the 1990s: How Managers Will Manage." Fortune, February 2, 1987.

Pascale, Richard, "Fitting New Employees Into the Corporate Culture," Fortune, May 28, 1983.