To What Degree Does “Identity” Affect Economic Performance?
Summing up comments to his March column, Jim Heskett says perceptions vary widely on the issue of "identity" and economic performance, particularly as it applies to the U.S. What will it take to turn around negative trends in employee identity? (Forum now closed. Next forum begins April 2.)
Is "identity" a victim of competitiveness? A recent study of organizational behavior published by Timothy Kieningham and Lerzan Toksoy shows that employees' perceptions of their employers' levels of commitment to them track their own levels of commitment to their employers. On both measures, the U.S. ranks low relative to other countries, particularly those in the Middle East. In responses to this month's column, Kamal Gupta believes one explanation is that "societies range from 'deal based' to 'relationship based,'" suggesting that the latter have higher levels of identity.
Perceptions vary widely on the issue of "identity" and economic performance, particularly as it applies to the U.S. One school of thought is summarized by C. J. Cullinane when he says, "Our identify has changed, and not for the better." Tom Hirons says, "(There is) a disconnect between the identity (employees) experience in their workplace and the identity valued in their organizations' business models." Dr. Kervokian asks, "What exactly is the new American dream…?" Mark Clark worries that "… in the rush to repair the bottom line, we are ignoring the engine that drives it." Gerald Nanninga laments that instead of going to economic war with committed volunteers, "… unfortunately, we are building a mercenary culture in the US workplace." As Dennis Hopwood puts it, "Executives cannot reasonably expect or command the commitment and loyalty of employees who perceive themselves as the most disposable of corporate assets…."
What will it take to turn around negative trends in "identity"? Ajay Kumar Gupta suggests that "creation of structure that is transparent, honest and responsible towards people, society and government is required." David Cawlfield, citing his experiences in what he believes is a high-identity organization, credits this to "Consistent discussion and communication of 'corporate values' (that) help our management to consistently apply these concepts as leadership changes…." Phil Clark comments that "… you really cannot hide your identity. No brand, motto, or corporate mission statement written on a wall can cover the reality of what others see."
Alexis Meza poses and responds to an important question for us to ponder by saying, "Competitiveness drives America to heights that, quite frankly, other nations will never be able to achieve. I believe it is this same competitive drive that gets in the way of an individual being able to identify with its company."
On the other hand, Buckley Brinkman is more optimistic. He appears to suggest that the very meaning of "identity" is changing. In his words, "This is a new era…. The old loyalty was an unhealthy exchange of salary and security from the company for attendance and obedience from workers. The new loyalty is based on an exchange of real value which results in more honest—though shorter—relationships between companies and employees." Do you agree? If so, what should management's response be to this kind of change? Has Alexis Meza, on the other hand, identified the problem? Is "identity" a victim of competitiveness? What do you think?
To read more:
Timothy Kieningham and Lerzan Toksoy, Loyalty Matters: The Groundbreaking Approach to Rediscovering Happiness, Meaning and Lasting Fulfillment in Your Life and Work. Benbella Books, 2009.
Recently I have revisited a topic that has intrigued me for years, ways in which an organization's culture affects its economic performance. The basic working hypotheses are that: (1) people put forth more effort and produce better results for organizations whose values they identify with, and (2) therefore, it's in the best interests of organizations to clearly formulate those values and make them clear to prospective employees in the process of building an organization of people who subscribe to those same values and generally want to "fit in."
There is some amount of evidence that satisfaction with one's workplace, as characterized by the poll results for "best places to work" both in the U.S. and the U.K., is related positively to economic performance. Further, intrinsic rewards, such as capable colleagues and recognition for good work, play a larger role in worker satisfaction than extrinsic rewards such as monetary compensation.
A new book, Identity Economics, by Nobel Prize-winning economist George Akerlof and Rachel Kranton, takes this thinking to a macro-economic level. In their view, an organization (and even entire societies) works well when people personally identify with it, so that their self-esteem is tied up with its activities. Identity helps explain why people do things, everything from getting tattoos to volunteering, that aren't in their immediate best interest. I'm reminded of this when I recall the dedication with which my South Korean business friends doggedly pursued success during the rapid growth period of the country in the 1980s even if it meant weeks of travel and significant strains on their personal lives. They were doing it in part as a personal sacrifice in pursuit of national goals for a better life for future generations of South Koreans.
One has to ask whether citizens in the U.S., who have experienced little loyalty on the part of their employers, can any longer identify with their organizations and, in a broader sense, their economy? Economist Robert Shiller's response to this question is sobering. He says: "In most civilian fields, job satisfaction may not be a life-or-death matter, but a relatively uninterested, insecure work force is unlikely to bring about a vigorous recovery." He concludes that "Solutions for the economy must address not only the structural instability of our financial institutions, but also these problems in the hearts and minds of workers and investors-problems that may otherwise persist for many years."
The questions this raises are: Just what solutions address Shiller's concerns? How can they be achieved? Can businesses, for example, be provided with incentives to retain their employees and generally improve employee "identity"? Does this require yet one more intrusion by government into the private sector? In fact, is it even achievable in countries like the U.S. at this late date? Will such efforts result in the same slow responses to an economic crisis and sluggish recovery in productivity being experienced at this moment in European countries with their more "humane" laws regarding employment? Or are we confronting a crisis of "identity" so critical that some kind of effort will be well worth the long-term benefits that it might yield in terms of citizen "identity" with the economic success of countries like the U.S.? What do you think?
To read more:
George A. Akerlof and Rachel E. Kranton, Identity Economics: How Our Identities Shape Our Work, Wages, and Well-Being (Princeton, NJ: Princeton University Press, 2010).
Robert J. Shiller, "Stuck In Neutral? Reset the Mood," The New York Times, January 31, 2010, p. BU4.