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.)
by Jim Heskett

Summing Up

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.

Original Article

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.

    • CJ Cullinane
    This is a great question to ponder, "is this achievable in the U.S. at this late date?" I believe at this time we, the U.S., are not capable of a true rebirth of our economy or industries. I say this because over the many years of my career I have seen numerous owners, managers, and directors of various companies and organizations.

    The 'good' ones inspire people (workers, customers, other stakeholders) not only by what they say but by their examples and high standards. The 'bad' ones do just the opposite. The example they present to their people is one of greed at the expense of the customer and company, a distinct ineptness, and very short term planning usually for the sake of better bonuses.

    The people see through the rhetoric and verbiage and act accordingly. The team spirit, working together towards a common goal, is all but gone in the U.S. and our economy reflects this.

    In conclusion, I guess what I am saying is that we have lost a lot of integrity, competance, and the willingness to work for the for the good of the whole. Our identity has changed, and not for the better.

    • Ajay Kumar Gupta
    • Management Professional, Master in Management, AIM, Manila
    Organizational culture plays a major role in economic performance. Culture creates the platform and environment to perform. Performance depends upon the kind of platform. If the platform is based on values and is resilient then the performance has to be positive and if the platform is based on rigidity & value creation is not the focus, then outcome has to be negative.

    Same thing applies to the society. The activities where people see value in their decision and action create better environment to work with more commitment. This creates a feeling of giving without selfish reason. People who give without selfish reason are happier and happier people give more. In this way it creates a virtuous circle.

    I strongly feel that the solution to the identity problem lies in structural instability. It is applicable to any organization and country on the globe. There is a rule: Structure follows strategy and not otherwise. So creation of structure that is transparent, honest and responsible towards people, society and government is required.

    Loyalty comes from relationship. Short term relationships often diminish loyalty and long term relationships increase loyalty. Employees on payroll are more likely to be loyal than part time and contracted employee.

    Today organizations are result centric. People who work hard are laid off because company is in loss. In this scenario, government should intrude by implementing stringent rules. At the same time government should provide alternative avenue for employment that does not lay off its people at all. I think this is achievable and can be done with the strong will power and determination of people in the politics.

    Last, I conclude that degree of identity depends upon relationship, intrinsic recognition, structural stability, substitute, feelings, system based on trust, honest and transparent culture. This is possible through committed and responsible leadership by the people in business and politics towards people, society, organization and country.
    • Dr. Kervokian
    • Dark Arts of Management
    Talking about identity reminds of Impressions Management and how it's more prevalent in 'mechanistic' versus 'organic' organization. And when you mentioned about the "macro" level, potentially corporate "identity" is one form of impression magnification ballooning up to the corporate or even national level.

    Maybe even leading to organizations behaving a certain way risk wise in order to maintain a particular image. Could we also say that the reason Lehman Brothers and Fannie May made their business decisions were in order to maintain that image or otherwise? Finally self destructing in the process of wanting too much, too fast... remember Enron, WorldCom and Satyam?

    On the matter of whether corporations who's staffs identify with the value system of the organization leads to better economic performance is well researched and proven. I'd challenge the researchers to look into the dark side of this behavior, and whether corporations are able to balance greed, good governance and sustainability.

    What exactly is the new American dream to fuel the generation of entrepreneurs?
    • Yaron Kaufman
    • CMO,
    Is it really the identity of the organization - or is it actually the identity and values of the organization leaders? As far as I see it, determining the identity of the organization and its values is good for strategy development and goals setting. But the economical value of this is worthless without:

    1. True commitment of the organization leaders for the values.

    2. A reflection of this identity in the higher management of the organization (and vice versa).

    3. Communication of the two above to every employee.

    I came to this conclusion after witnessing organizations in which values and identity were only words used by their managers, and there was nothing true and honest behind them.

    There's no organization with "identity" and "values". There are only people with identity and values.
    • Anonymous
    Employee identity affects every bottom line. In the public sector, while not being financially affected, an organization can flourish or flounder depending upon the attitudes of it's employees.

    As much as an organization is motivated to ensure it promotes a positive culture and attitude, the real responsibility lies with the choices the individuals themselves make. With that being the case, perhaps the real onus on organizations is to ensure they are hiring the right people who are committed to making a difference because it is part of who they are and reflective of the choices they make in life. If they are positive, contributing people in their personal lives, they will do and be so at work.

    More often than not, those who choose a negative approach to life will do so, regardless of the programs, offerings, rewards or any other motivations provided. If we can come up with a better process to apply when hiring, then our workplace recognitions/motivations will not only be received more gratefully, but will already fan the positive flames burning deep within those individuals.
    • Tom Hirons
    • Prof., PSU
    Eye opening. Imagine how many business models, designed with the best of intentions, become negatively circumvented by employees who suffer identity distortion. A disconnect between the identity they experience in their workplace and the identity valued in their organizations business model.
    • Phil Clark
    • Clark & Associates
    Great topic. Charlie #1 kicked the topic off with a dose of reality. I fear the resolution of our current state may be very painful. Dr. Kervorkian asked the important question, which applies to everyone, not just entrepreneurs. What is the American dream?

    Yaron Kaufman #4 hit it on the head. All business and organizations are about people. The only reason a business exists is to serve people and produce products and services to serve people. Thus the ONLY focus management really has to maximize an organization's performance and profits is the people. All other contorsions of "business behavior", cost cutting, etc often is a reflection of an organization's leaders failure to work with their employees to maximize the business.

    The reason we have this economic recession is that leaders in organizations found ways to create and push paper and processes into financial instruments with no face behind it. You would not risk the stability of mortgages and investments if you really knew the people who entrusted they money and future in them. Why would you risk destroying their market and your profits if you really cared about financial sanity? We chased the dollar, which has no heart or allegiance, and it responded in kind.

    This recession has placed every business in the values market. Employees are responding to senior leadership values. Many will change jobs once the economy improves because they do not like what they see. Others have found their company holding firm positive values and will stay and are helping them survive.

    People do not, nor will not accept, the government involved in these value decisions. They will walk if they do not like it, especially when the economy improves. As long as they remain in a job they do not like they may provide service, but you will see no value added benefits. They can form unions if they want to fight it. Sadly, it would be much easier for all if we valued and respected each other. That lies in the nature of man, not business or government.
    • Gerald Nanninga
    • VP, Retail Ventures, Inc.
    In the heat of wartime battle you are typically better off surrounded by committed volunteer soldiers than mercenaries. And unfortunately, we are building a mercenary culture in the US workplace.

    How do you convert from mercenaries to committed soldiers on a macro level in the US?

    1. Stop the internal bickering and start looking externally at the global marketplace. As long as internal politics focuses on the "reds" versus the "blues" we will never come together as a nation over anything.

    2. Create the mindset that the US is in an economic war. The history of a strong domestic market has blinded the US to the global economic war surrounding them. You cannot win a war that you are not aware of.

    3. Play to your strengths. If our national identity is framed by individuality and freedom, we should put our support behind industries which thrive under that mindset.

    4. Redefine Patriotism. National identity is wrapped up in patriotism. Successful patriotism is measured by passion (strength of emotion) and direction (what it demands of its citizens--how a "true patriot" is supposed to act). Current US patriotism is relatively weak and really doesn't demand much of anything from its citizens, especially when it comes to the economy. John Kennedy's "ask not what your country can do for you, but what you can do for your country" is dead.

    As for micro-economics, the Gallup organization has proved you can measure this stuff at a company level. And if you can measure it, you can modify it. For those solutions, read some of the books by Marcus Buckingham.
    • Buckley Brinkman
    • President & Change Catalyst, Vallon, LLC
    This is a new era. The definition of loyalty between employer and employee has been changing for decades, and now that change is accelerating with the current strains on the economy and the rise of Web 2.0 technology that makes connections and possibilities more visible. 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.

    We are entering a new and better era - uncomfortable, but more honest. The Internet and social networking capabilities put a premium on transparency and authenticity. It is becoming more difficult to hide bad behavior, and much easier to recognize positive contributions. The emerging system is putting much more responsibility on individuals and organizations to create real value.

    It will be a better time for companies. Good companies will triumph by creating engaging work, progressive practices, and innovation around clear, inspiring missions.

    It will be a better time for individuals. The new environment creates the opportunity to create real security that aligns with personal value and values - a personal brand. The connections and visibility created by Web 2.0 make knowledge and expertise mobile, accessible to anyone with an Internet connection. It puts individuals in control of their own destinies.

    It's a painful time. The old rules no longer hold true and we have yet to create a clear formula for future success. There will be much more personal sacrifice and effort to create this new economy - especially with the economy and financial systems experiencing so much stress. Many people are hurting without enough help available to make the transition a smooth process.

    It will be a better time for all of us. The new economy will make it much easier to have an honest understanding about our individual and collective positions. We have the opportunity to take direct and effective action in order to create the world we envision for the future. People are becoming more interconnected while working on practical, effective solutions to create real value for all of us!
    • Anonymous
    There is a difference between Firm culture and group culture (the capitalization of the "F" in Firm is not arbitrary here and is not accidental). Firm culture defines the "holistic identity" of an institution--it is the totality of behavior patterns that blankets the overall institution. However, individual group culture tends to "hover" around the Firm's culture. Today's institutions are complex and global and demand various functional groups within an Organization. It is here--at the individual group level--where the seeds of culture evolution are sown. Firm culture ("Upstream Culture") must have core anchorages that allow for differentiation in the marketplace and must flow downstream to the various individual groups at the Organization, however, Firm Culture must simultaneously be malleable enough for individual group cultures ("Downstream Culture)" to flow back up to it. Firm culture must evolve in this complex and global world we live in. Downstream culture--the foot-soldiers of the Organization, is the voice that must be heard even by the strategic high-level Executive Management arm of the Organization. People are a Firm's "real assets." Technology is only a tool for the implementation of innovation, but it is here, beyond the golden-parachute halls of the corporate towers and at the floors beneath them, does the "real implementation" of Executive strategy occur. Globalization has shrunk the world we live in, and assimilation is forgone conclusion in some regards. However, a lack of identity in a marketplace that is saturated with the status-quo can drastically affect an Organization's performance. Don't sell out and strike courage for the Cause of Identity.
    • Mark Clark
    • MA Clark & Assoc.
    One wonders if the disaffection of corporate employees has resulted so much from recent economic decline as from the remarkable success of the previous decade? Employee loyalty results from an alignment of promise and delivery. A cynical attitude can be bred among workers just as easily by too much of the former as too little of the latter. That our recent economic malaise so abruptly follows a period of unprecedented prosperity serves only to magnify the crisis of loyalty.

    Minimizing the gap between promise and delivery is the function of corporate culture. It is a disappearing art. The linkage between corporate culture and performance is well established in business research, and in spades in my experience in the security industry. It is, or should be a primary occupation of corporate leaders. Their ability to create that identification of employee with employer, or corporate culture is a really a challenge in communication. Never has that been more difficult in the corporate environment. A changing cultural demographic. Geographically dispersed workers. Independent dispositions of Gen X and Gen Yers. Aging workers. The impact of technological change. And on . . .

    As companies "lean" themselves are they slashing too deeply in their capacity to communicate well? Are executives sufficiently well educated in the positive use of social media and other evolving tools to engage rather than alienate their employees? Do they rely on them too much? Is sufficient attention being given in corporate leadership development to communications skills and the importance of culture? I wonder.

    I worry that in the rush to repair the bottom line, we are ignoring the engine that drives it. Recently I heard one young CEO preach that the key to leadership is the three "M"s: measure, monitor and manage. What a shame that he had no idea about how to motivate.
    • Anonymous
    On an anecdotal level (where all strategy becomes reality), I work for a European firm and recently had some issues w/my newborn that was not covered by insurance. Immediately, our local and global HR directors called to say they would cover the high hospital bills incurred.

    Our firm prides itself on its strong culture, which has grown and expanded through various CEOs. This is just one manifestation of it.

    My first thought when I heard from them was, "this would never happen at an American firm". As an American MBA previously besotted with market efficiency, it still amazes me when we beat our competitors by sticking to our strategy, culture and values while they chase quarterly earnings like a dog after its own tail.
    • Anonymous
    While I agree, in theory, with the working hypotheses offered in the first paragraph, I find it unlikely that the workforce mentality is going to change on the dint of the hard work of the workers themselves.

    Let us not lose sight of why the economy is in the place that we find it today. It is mostly due to the lack of moral, ethical, social or whatever "al" behaviour you prefer to use to describe the failure of the largest companies in America.

    This was borne upon the rest of the country not by the workers themselves but by the "kings of capitalism" who dictate terms and conditions to their employees.
    Let us not forget that it is the industrial capitalists who decided to rid the American economy of its manufacturing base by moving the enterprises to foreign shores for lower costs and higher profits.

    The American economy is motivated by corporate greed.
    The "disaffection of corporate employees" has a lot to do with the "remarkable success of the previous decade" since that success, by and large, did not move past the upper 3% of individuals in the country.

    As I have worked in both private and public sector, I have seen that there are differences and commonalities within the workforces. One commonality seems to be that a "hands off" approach is taken toward big business. Private and public sectors are in the state that they are today due, not exclusively but perhaps primarily, to the lack of strong oversight of industries. You can start with Wall Street and continue with the banking industry, automobile manufacturing and on and on.

    The workers in America are asked to do more with less and not to pay attention to the lack of loyalty, loss of wages, benefits and, ultimately, jobs that is displayed daily by the corporate structure they work within.

    The American workforce is not where we need to be taking the long, hard looks; rather, it is the lack of real, not strictly motivated-by-desire-to-make-larger-profits, leadership that should demand our attention. No matter how much we claim that our corporate entities have flattened out, they are still, unequivocally, top-down entities.
    • Don Hare
    • Principal, Global HR Leadership
    I too am "amazed" when a european centered company "beats our competitors by sticking to our strategy, culture and values, while they chase quarterly earnings."

    It has been a very long time since composite companies in european markets outperformed US market companies financially, other than exchange rates. In fact, aren't the European Union group of economies also in significant disruption currently? Aren't there concerns about some countries defaulting?

    I think it is nice and benevolent that your company offered to pay for your families high hospital expenses. Your surprise suggests that this was not customary protocal. So, as a US MBA high potential in a European Based company, where will you draw the line of benevolence when you are in a leadership position?

    Will you pay for everything not covered by your benefit program regardless of your company earnings to keep all employees "happy"? What controls do you put in place. What is the principle that you stand on? Did you study precedent vs employee expectation and demand in your MBA program. If you elect to pay for typically non covered items, why have a benefit plan? Just pay for everything.

    Quarterly earnings are problematic for executives, but they are financially valuable for investors.

    There remains an inherent conflict in business between the good of the employee and the good of the investor. The successful leader regardless of trading market knows that they must deliver for the investor, and retain employees of appropriate quality to drive and flourish the business.
    • Kumara Uluwatta
    • Senior Lecturer, Wayamba University of Sri Lanka
    Organizational culture sometimes regarded as tool for innovativeness to the organization. It plays a vital role in economic performance. Total innovation of the organization totally created by the culture and culture is created by the organizational innovation. If the required innovation achieved through the behavior of the organizational groups, the economic expectations of groups as well as organization can be successful. The total advantage at the end will go to the society. If organizations are suffering with some problems, it is to be identified very quickly and to have corrective actions before long so as to keep the existing economic advantages and to achieve more and more performance based economic successes.
    • Larry Ackerman
    • Founder, President, The Identity Circle
    Thank God, I am not alone.

    Consider this posting only the briefest expression of my connection with Jim Heskett's convictions. At the root of all success and failure, for individuals, companies as well as societies, is the extent to which they operate in accordance with who they are at the core of their beings.

    I have built my career as an identity consultant, working with some of the most influential organizations on earth: Fidelity Investments, Ingersoll Rand, Dow Chemical, Alcoa, Norsk Hydro, Maytag, State Farm Insurance, and AARP.

    Under the guise of corporate branding, M&A, leadership changes, etc,, all of these institutions have reached an inflection point, where their core sense of identity is challenged in fundamental ways, consciously, or otherwise. The ones who go on to succeed, are those who embrace the Identity Paradox: the need to change from a changeless foundation. Others are driven to change everything - including their identities, which are not subject to change, except if the organization is completely disassembled.

    My definition of identity is: the unique characteristics that reveal one's value creating potential. In this regard, I make a crucial distinction between identity and culture (based on a set of values) - the former is bedrock motivation; the latter focuses on behavior.

    I have written two books on identity. They are, Identity Is Destiny: Leadership and the Roots of Value Creation, and The Identity Code: The 8 Essential Questions for Finding Your Purpose and Place in the World. I invite you to seek them out.

    Most recently, The Identity Circle has released the results of a quantitative research study, the Identity Impact Survey, which demonstrates the powerful effect identity has - both organizational and individual - on employee engagement and business performance (revenues, productivity, etc.) If you are interested in seeing that research, contact me.

    In sum - at least for the moment - let me say that "identity" is the proverbial elephant in the room. There is nothing larger or more powerful, when it comes to aggregate human achievement, than knowing who you are, commiting to that reality, and manifesting it in the world.

    That is the essence of value creation, whether you're a human being, an organization, or a nation.
    • Phil Clark
    • Clark & Associates
    I usually never offer a second response to a blog but Larry Ackerman's deserve an Amen. Identity must be the elephant no one wants to talk about. Only 16 responses to this subject to date. That says a great deal about this issue. Usually Jim Hesketts subjects command 40 to 60+ responses. The silence around this subject tells me that this IS the "elephant in the room" and managers and companies do not want to face it or at the least are at a loss on how to face it. I think what frightens most organizations is 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.
    • Kamal Gupta
    • CEO, EdSeva Software
    May I go beyond the direct question? To my mind, societies range from "deal based" to "relationship based"; in practice, societies like that of US, Canada, much of Europe, Oz etc tend to be deal based, while those in Arab world, South Asia, and Chinese countries tend to be relationship based.

    People in deal based societies generally tend to be individualistic, and normally find it difficult to identify with an organization (except in times of crises). Therefore, you can have Korea Inc or Japan Inc or India Inc or Toyota Inc or Tata Inc, but not USA Inc or Cisco Inc.

    Trying to plant an alien concept does not work. The fabled Japanese system of management did not, and will not work outside Japan, the Karma psychology of work will not work outside India.
    • Margie
    I think that one very fundamental thing needs to be realized: no matter what you stick to - identity, values, leadership, culture or whatever else - the time should be perceived as moving cyclically. Most western people view time as sequential, moving in a straight line. The people who think they are smart, like to believe that this line should go upward.

    That is a fundamental orientation causing the expectations of ever-increasing profits, ROI figures and the corporate performance. The financial crisis was triggered because a large group of numerically-enabled people thought that a matured financial system should be able to allow them to consistently outperform the market. How can everyone outperform the market?

    The reality is, whatever goes up comes down inevitably. even the most able leader would make mistakes, the wisest will err and the star performer would bite dust.

    If we accept this as inevitable, we can focus on 'what next after falling?' and learn from mistakes, own and others, and move on.

    But there is no single mantra that gets the fallen back on to the track. There is no final answer. It comes from the context. How can such a large country with such diverse industries have a single answer for revival?
    • Luis X. B. Mourno
    • CTO, Upside Commerce
    As usual Jim Hesket has asked another very important question, and while less than usual there are some very interesting answers.

    As a European who has a long experience working in the USA I need to note that yes, Europe Inc. generally has a stronger sense of social responsibility and accepts more political influence.

    That said employer to employee loyalty is not in a much better state in Europe than in the USA. However our social security system creates a wider network of security, solidarity and civic responsibility that to an extent compensates for the one lacking in the workplace.

    To address the question directly, yes, the USA is in bad shape as loyalty in the workplace is nonexistent and government (the political system) has not successfully managed to create a wider identity and culture of solidarity and civic responsibility with which Americans can identify themselves.

    However the USA is a incredible nation and can off course get back on track. The USA has a man at the top who seems to be trying quite hard, and with a bit of luck the American public will understand the benefits of taking responsibility for each other and building strong bonds of solidarity and loyalty between people even if that means giving up the TV in the guest room or a car for each member of the family, so that everybody can have a modest but dignified life and get a helping hand when they need it. Not that this is a given everywhere in Europe.

    As Kamal notes the USA and Europe have deal based cultures, and an anonymous poster notes that workplace mentality is not likely to change. The European deal is between its citizens not in the workplace because it's not going to change, but as individuals, a nation and as a union of nations we stand by each other. You have a good President, listen to him without prejudice.
    • J Schalick
    • Principal, Communications Strategies
    I was struck by the phrase, 'mercenary culture'. That phrase nailed it for me. We have lost cultural 'glue' that is reflected in various ways. One is the disconnect of values post WW11 between generations. A second is the throwaway attitude encouraged by a range of technologies that create for youthful generations a set of cyber-enabled 'friendships' and 'communities' which can be discarded at will. A third is the use of language to obfuscate the lost land inside the Beltway. Language used to mislead, distract in a way for which we used to criticize 'Madison Avenue'. Displacement as a tool, unfriending as a skill, the loss of glue that old values formed around the defense of a country that was equally shared in the population, all have watered down our communal sense of commitment to each other. It is no brave new world, but a notion of identity broader than that given by work. Nation states are fragmenting. Our basic identity and tribal associations shaped by what is perceived to be German, or French, Turkish, Chinese, Malay or American has faded with the global sense. The old LIFE magazine notion of the Family of Man? it hasn't taken root and we are left with a rootlessness and sense of loss that is pervasive. In a wasteland? the beast of self-interest prevails.
    • David Cawlfield
    • Principal Engineer, Olin Corporation
    As an employee of Olin's Chlor-Alkali division for 30 years, you might be surprised to know that I often feel like a youngster among many of my peers who have worked at Olin for 35-40+ years. I feel that the value-identity factor does indeed play a role in long-term employee retention here.

    An often neglected part of corporate culture and values are the commitment to employee safety, and to ethics and integrity that have been consistently communicated and applied at Olin over many years. Olin has been a leader in the chemical industry in developing the "Responsible Care" ethic. This ethic is an extension of the internal Olin culture to the relationships with our customers and the community.

    Consistent discussion and communication of "corporate values" help our management to consistently apply these concepts as leadership changes, so we have actually seen a lot of consistency and strengthening of the corporate culture through several changes of leadership.
    • Sweta Mohapatra
    • HR Business Partner, Barclays
    A thought provoking piece of writing! The big question it brings into my mind is how can organizations capture the uniqueness or individuals and varying factors that contribute to each one's self esteem and create a culture to nurture multifarious aspirations! And in the ruthless culture that many firms adopt today which says 'Shape up or Ship Out', who wears the hat to champion the thought and actions around what we all principally agree, i.e. 'If I enjoy the workplace, I will go the extra mile.'
    • Lisa Manners
    I look at the contrast between the three major airlines and Southwest. The major airlines have cut employee pay and benefits repeatedly, disemboweled the pension funds but continued to reward top executives. Customers tolerate packed planes, reduced schedules, loss of legroom and myriad fees for food, checked luggage and even water. The disheartened employees have little tolerance for the disgruntled passengers and no longer care about the employer's image. Southwest, which started out with lower pay, now pays employees more than the majors. Snacks are still free. And they are opening more flights into new markets. As a passenger, it is still fun to fly.

    I find this an apt analogy to the global position of the US. As the economy has become global, with motivated and educated workforce in developing countries, Americans are bound to see wages fall even if they remain far higher than other markets. Too many Americans have never travelled outside the US (and maybe Europe) and really have no idea of the talent, energy, and sense of national or community values and spirit that motivate their international competition. We are too insular. The American student needs a gap year and the American worker needs more vacation time so they can go see the world as the Europeans, Australians and Canadians do.
    • Alexis Meza
    • Manager of Data and Analysis, Democracy Prep Charter School
    There are many conflicting factors here in America that makes it difficult to truly analyze this question. Competitiveness drives America to heights that quite frankly, other nations will never be able to achieve. Yet I believe it is this same competitive drive that gets in the way of an individual being able to identify with its company. Identifying with a company means comfort and comfort is linked to weakness. If the employer knows its employee is loyal, the employer can demand more for less, at least in theory. World War II did manage to bring Americans together as did the oil crisis of 1973 and recently, the September 11 attacks. One can conclude that a crisis may bring people together. Briefly looking at the market impact of September 11, the Dow looks to have recovered fairly quickly. Can this be attributed to a renewed loyalty to the American economy? I look forward to reading the book. Thanks for the post!
    • Anonymous
    It would be interesting to see if there is a big difference between private and public companies. Most public companies seem to be owned today by highly fragmented investors who are masters in speed-trading at Wallstreet and whose loyalty as investors to the respective company is just the number of computer-cycles it takes to determine automatically when to buy and when to sell.
    In this environment executives have the real power within the company, not the owners, and they just use it to makes as much money out of "their" company as fast as they possibly can.
    To whom should these executives be loyal to, to the computers? And is there any executive loyal to their country?
    Why should normal employees be loyal to these types of executives and investors?
    As a result of this big change in the structure of company owners over the last 30 years, the U.S. as a whole is not only losing the commitment of the employees, the country also has lost dramatically its competitiveness. Look at the export/import situation. Here you can easily measure the consequences and the decline. Can it get worse? Unfortunately probably yes.
    • Dennis Hopwood
    • Recovering Corporate HR Executive
    Long before the current hardships, indeed for more than two decades, sweeping cost reduction initiatives, restructurings, site consolidations, outsourcing, mergers and acquisitions, leveraged buyouts, the movement of jobs overseas, and reductions in force became accepted and pervasive practices that altered the corporate landscape. Almost without exception, these practices resulted in the contraction of workforces. People released for reasons wholly unrelated to their performance struggle to make sense of things, adrift in a seemingly random world where abrupt unemployment coexists with unimagined affluence, where hard work and allegiance is no longer an assured path to prosperity.

    These sweeping developments have had a profound affect on the national consciousness. The way people think about work has changed. Most view the historically balanced quid- pro-quo of the employment relationship as a casualty of the current economic circumstances. Many regard the expectations of employers as hopelessly unilateral. Management rhetoric regarding the virtues of empowerment, teamwork, and commitment is harshly contrasted with reductions that remove hundreds with surgical precision.

    Those who remain within our corporate organizations are contending with heavier workloads, an increased pressure to perform, and a disheartening work atmosphere. Many are troubled by a persistent distrust of an often-insulated senior management and mounting fear for their own security. There is a palpable disappointment in the leadership. Few will step out into traffic and offer constructive criticism of management decisions. Even fewer feel compelled to give the extra measure.

    Executives cannot reasonably expect or command the commitment and loyalty of employees who perceive themselves as the most disposable of corporate assets, as so much cannon fodder. Furthermore, executives, who may have negotiated lucrative retention and severance terms for themselves, should expect that their unprotected employees would, over time, leave for safer environments, organize for their collective preservation, or express their disaffection through lower productivity.

    What has happened to our sensibilities and to our values? Is this really the best that we can do? The answers are straightforward. They require a different will. We must return to a management philosophy of principles and convictions and stewardship, whereby the people who labor to make our organizations successful are accorded the respect and gratitude, and indeed the emotional safety, their efforts deserve. We must restore the reciprocal goodwill and the economic partnership for which our workplaces were once known the world over.
    • David Physick
    • Principal Consultant, Glowinkowski International Limited
    In our work with organisations, from major global conglomerates to schools, we talk about the concept of Climate, or 'how it feels to work here'. Climate is a product or outcome of culture, which reflects 'how things are done around here' and comprises three principal components. These are Organisational Structure, Leaders' Behaviours and Processes. Professor Heskett's question in essence concerns Climate. If Climate is weak, the likelihood of employees exercising discretionary effort is low. Conversely, in those enterprises possessing strong Climate, employees go the extra mile. One dimension of Climate we call Involvement and it is no surprise to me whatsoever that if through leaders delivering behaviours that suggest they do not value their people's involvement, a self-fulfilling prophecy occurs - they won't involve themselves. Leaders' fundamental accountability is not delivering the next quarterly bottom line figure. It is to create a Climate in which their people's talent can be utilised to maximum effect. Too many people consider there is a talent shortfall. This is poppycock. There is talent in abundance if only leaders would look for it in their people and allow it to flourish. I can remember in the late 1990s setting a business unit plan with my colleagues which we shared with our people in Liverpool, UK, where we were based. They said we were being unambitious. I pulled together a small group representing all levels and functions and challenged them to set the business plan. They did. It was 15% more aggressive. The business was unionised and had experienced industrial action a year earlier. This alternative plan was accepted by everyone in the business and 12 months down the road the actuals outpaced the targets by an increment of 5%. This shows what can be done when you include and involve your people. Exclusion doesn't get you anywhere in sorting out the issues. The same applies nationally. Two years ago I was in Singapore on the day a league table of national competitiveness was issued. Singapore had slipped from second to third in the rankings. I was asked if I thought the concept of Climate worked on a national basis. It does as Professor Heskett indicates in his own narrative. The pervading sense of Climate I discenr in Singapore is one of winning. This is not so in the UK, which in the same league table was positioned somewhere in the mid-30s! Leaders who involve and trust their people will create organisations that out compete their competitors and achieve sustained success.
    • Anonymous
    To what degree does corporate "Identity" affect economic performance?

    To the same degree as employee "Personality" affects performance. None whatsoever!

    Corporate Identity has gone from the Accountants' "Goodwill" post to the Marketers' arena.
    We don't buy phones or PCs any longer, but Apples. This is just Marketing trying to disguise the OEM reality at the core of all products.

    This is similar to the way individuals' "Personality" has been used in the recruitment triage process, claiming that it can predict employee Performance.

    This process is only just a disguise for the incompetence of psychologists.
    • Elizabeth York
    • I/O Psychology Consultant, ERYork, Inc.
    This is an interesting question to ponder and would certainly warrant further research. I have been watching an organization here in Hawaii that may serve as a case study. When this organization first came to the islands, they expounded incessantly about their corporate culture of integrity, honesty, loyalty to the work staff, etc. Initially, the new workers they hired were deeply committed to the organization, were excited about aligning this this company, and joined in on the organization's expressed vision and mission.

    As time wore on, the true nature of the organization became clear to the workers. The facade presented to the public and to the workers initially, gave way and a culture of deceit, complacency, and even corruption on several levels became obvious. Many of the workers have developed a condition of shame and embarrassment to be aligned with this organization, and their work has suffered accordingly, and in accordance with the information revealed. In other words, as more and more unethical behavior was revealed, the workers became less productive, technical substandard work increased, complacency and even refusal to work increased, absenteeism is rampant, and workplace injuries have increased in alignment with apathy.

    So yes, a study should indeed be performed that solidifies the information that many of us see in the workplace. Clearly, people need to know that the organization for which they work is ethical and acts responsibly. As people tend to identify themselves by what they do and with whom they associate, of course, individuals will align personal identity with corporate image and behaviors. This can be seen daily, as we take the macro-view. We consider many groups our organizations with which we align - family, friend and social network, organization for which we work, professional groups to which we belong, state, country, etc. When the integrity of one is questionable, our personal integrity is questionable. This is human nature, we judge according to alignment as well as individual aspects of our being. Furthermore, groups demand alignment and agreement with values and behaviors before they will grant belonging. This is why we must choose our groups carefully, and have the courage to disalign when the group's behaviors and image becomes questionable.

    Just a few thoughts on the subject...
    Thank you,
    Elizabeth R. York
    I/O Psychology Consultant
    • Vanitha Rangganathan
    • Malaysia
    Culture of any form permeates human society; silently and powerfully. It requires no constant reminder but binds its members together. Organisational culture works the same way. It is relevant only if members of every echelon live and breathe it. Those responsible in defining the tenets of that culture and those at the receiving end of it who are positively steered to emulate values in that culture. Identification with the organisational culture whether self-driven or (sadly) coerced, however, is futile if employees are not continually engaged - faculties, minds & hearts - to uphold those very tenets deemed necessary in keeping the culture alive.

    The future of economic performance, even a mild awareness of it, will be bleak - without constant employee engagement.
    • Kapil Kumar Sopory
    • Company Secretary, SMEC(India) Private Limited
    An ideal corporate citizen will satisfy many criteria out of which company loyalty is by far very important. Once one has joined an organisation with long term relationship in view, he has got to involve himself wholeheartedly by being deeply concerned about the well-being of the company.

    In my view, the key aspect is total job satisfaction. This can come only if the working environment is attuned to the employees' aspirational needs which may only slightly vary from employee to employee. Good employers are employers of choice not merely because they pay better than others. Such companies build an image leading to high reputation and once having reached that stage, no special incentives are necessary to improve employee "identity".

    There, however, are companies which employ short-term tactics to retain employees and reflect these as steps taken to improve the "identity". If they dig deep and face the reality they would realize that these means do not cement ihe relationship which may break even on a nominal excuse.

    To confront any crisis of "identity', strategic planning with lot of patience and perseverance is necessary as it is not a matter related to a few employees but to all across the board.
    • Lawrence Selvanayagam
    Some wise person said "you can take the horse to the water but you can't make it drink" someone probably wiser would say well, but you have to take it when it is thirsty.
    Culture is identity and identity is culture when it comes to performance. When employees identify with the shared values of the organization there will be an upward thrust in economic performance. To sustain this upward thrust it should be linked with thirst-shared goals and values which should be reviewed regularly and updated often in accordance with the business goals. Having worked in an organization which I couldn't identify with was an unpleasant experience not only that the organization didn't benefit economically.Identity is also a crucial component in an organization's vision