Best Business Books 2014: Organisational Culture

Increasingly, business consultants, scholars, and executives are coming to the conclusion that culture is the prime driver of organisational performance. Despite the prevalence of that point of view, however, there’s
06 Dec 2014 00:20
Best Business Books 2014: Organisational Culture
The Circle: The genius of the book—and what separates it from run-of-the-mill science fiction—is that Eggers extends Silicon Valley’s existing technology and organizational practices no further than to their next logical step

Increasingly, business consultants, scholars, and executives are coming to the conclusion that culture is the prime driver of organisational performance.

Despite the prevalence of that point of view, however, there’s little agreement about what culture is or what it entails.

You can’t see it, touch it, or measure it, yet culture is said to explain why some companies fare better than others.

The authors of the year’s three best business books on culture, one of which is a novel, explore the elusive subject from widely divergent perspectives, but all end up confirming that it is the single most powerful influence on how people behave in organisations.

A Leader’s Insights

In Joy, Inc.: How We Built a Workplace People Love, Richard Sheridan, cofounder and CEO of software design firm Menlo Innovations, delineates the practical steps he has taken to create and maintain a corporate culture that makes people “excited to come to work every day.”

The book provides a detailed look at how a culture is intentionally designed and implemented right from a company’s start.

Although Sheridan shies away from defining the term culture, he uses it as a shorthand way of encapsulating the unique personality of his company, which is, in his reckoning, a highly productive organisation where a “culture of joy” entices workers to enthusiastically engage, without being coerced or controlled by management.

He says that Menloians willingly give their all at work because of the intrinsic rewards they derive from constantly learning new things and being granted a high degree of autonomy in how they manage their work.

I think I believe him, even though the “joy” part seems like a hyperbolic stretch.

Menlo’s culture

The practical aspects of Menlo’s culture that Sheridan describes will be useful to any manager who wants to bolster employee engagement.

He offers a raft of suggestions about how to transform work into a self-managed learning experience, and how to encourage constant dialogue and discussion among all employees in the firm—including the shiest and most introverted—in order to share that learning across the company.

Many of these ideas are creative, some are tried and true, and almost all are deserving of consideration.

The most innovative—even radical—of Menlo’s practices is the pairing of employees (in the main, software programmers): “Two people sit together at one computer working all day on the same task at the same time,” explains Sheridan.

These pairings are rotated weekly, so eventually every employee at this midsized firm works intimately with every other one. Sheridan makes a strong case that this seemingly expensive and inefficient practice actually increases organizational productivity, learning, innovation, and quality, while reducing stress and fatigue.

One thing that is noticeably missing from Sheridan’s otherwise detailed portrait of the company’s culture is a discussion of compensation.

Unlike other high-involvement organizations, Menlo seems not to make use of profit sharing, stock ownership, gain sharing, and other proven methods for rewarding the people who do the work that leads to financial success.

Only at the end of the book does Sheridan express the aspirational hope that by 2018, his employees will “trade up to 50 percent of their own income for the upside on the project they are working on.”

After 13 years in business—and several years of Sheridan trumpeting his approach at management conferences—it seems odd that “hope” is the best Menlo can do in this regard. Convinced as I am of the value of the company’s admirable managerial practices, this sows seeds of doubt in my mind about the real purpose of a culture of joy.

Is it just a creative way of getting employees to work harder without fully compensating them for their efforts?

An Anthropological View

Culture has long been the purview of anthropologists, but oddly, there are no previously published books that I can think of that offer an anthropological perspective on corporate culture and change.

In their manager-oriented manual, The Moment You Can’t Ignore: When Big Trouble Leads to a Great Future, they ably explain “how culture drives strategic change.”

The anthropological perspective on culture and change is long overdue because, as the authors note, “behavior is culturally prescribed.”

Organisational culture concept

The concept of organisational or corporate culture is of more recent origin. (Warren Bennis and I could find no published references to the concept when we first discussed it at a gathering of social scientists at the Aspen Institute in 1973.) As the study of organisational culture has developed, however, it is clear that the insights of pioneering anthropologists about societies are broadly applicable to modern business organizations.

Every company has a culture, and each one is unique, difficult to accurately describe or model, and hard to change.

Additionally, most organisational cultures are complexly interrelated systems that initially tend to reflect the beliefs and values of their founders, which are, in turn, influenced by such factors as local customs and norms, the type of industry, and the technology employed.

Process of culture

Because the process of cultural genesis is largely unplanned, to later alter any major part of a system (the authors focus on strategy) requires modifying other parts to ensure compatibility and, thus, the effective functioning of the whole.

That means, in effect, that Richard Sheridan’s shaping of Menlo’s culture from scratch was far easier than the task faced by leaders of established companies when they attempt to change existing cultures. O’Connor and Dornfeld usefully focus on the latter task.

Changing an existing culture, particularly in a large organization, is so hard because it’s analytically difficult to pinpoint precisely how any one part of a system interacts with any other part.

Further, some parts can be devilishly hard to detect.

For instance, the actual values of an organization are often hidden from view; therefore, it’s challenging to identify and measure them (even if the organization posts a list of “Our Values” on the lunchroom wall).

Different takes

Nonetheless, because people typically act in ways aimed at achieving what they value, it is possible to infer the true values of an organization by observing the behavior of its members. In practice, then, cultural change can be the most daunting of all social tasks, because it goes against what an organization’s members value. That’s why O’Connor and Dornfeld’s behavioral perspective is of practical use.

Creating that pull is a tall order, which is made even more challenging by the paradoxical nature of cultures: They become dysfunctional if they are too weak, and equally dysfunctional if too strong.

Weak cultures encourage members of an organisation to do their own thing, which leads to a lack of focus, coordination, and effectiveness.

Because there is no unifying, collective purpose, there is insufficient motivation and commitment.

In contrast, as O’Connor and Dornfeld point out, strong cultures tend to become rigid, complacent, and susceptible to groupthink.

Because members who dare to question fundamental organizational assumptions are viewed as disloyal, a shortage of healthy self-criticism develops, which leads to resistance to change and innovation.

And, as we see below, a too-powerful culture can even take an unethical turn.

The Novelist’s Take

High-tech company the Circle is the brainchild of novelist Dave Eggers and the setting for his best-selling novel of the same name. The events in The Circle occur in the future, but just barely so: Even geezers like me might live to see the day Eggers describes.

The genius of the book—and what separates it from run-of-the-mill science fiction—is that Eggers extends Silicon Valley’s existing technology and organizational practices no further than to their next logical steps (imagine Google on steroids), and only at the conclusion does he move to the illogical and chilling end to which they may be heading.

Most reviews of The Circle have focused on the frightening prospect of the loss of freedom, democracy, and ethical judgment inherent in the privacy-invading technology emerging in Silicon Valley, but there have been fewer comments about the equally terrifying corporate culture that Eggers realistically limns.

The Circle

If the Circle were a real company, it would sit atop Fortune’s list of the 100 Best Companies to Work For with its platinum medical insurance, free gourmet lunches, health club, laundry service, pet sitting, luxury commuter buses, and the Menlo-like opportunity to be creative and learn on company time.

The purpose of these perks is, of course, to encourage employees to spend more time working productively, and less time managing their personal lives, wasting time with friends and family, and, presumably, reading long novels like The Circle.

But the fictional company doesn’t stop there. It elevates these goodies to the next level, satisfying not only employee needs, but also their wants, with first-class live entertainment, boozy parties, on-campus housing (with opportunities for sex), social clubs, a sense of community and social purpose, and even, dare I say, a dollop of joy.




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