Two authors argue that companies function best only when their basic principles create a unifying corporate culture for their employees.
If you want to improve profitability, Larry J.B. Robinson suggests you orient your "corporate culture" to the Golden Rule. Robinson says that a key reason his Cleveland-based retailing chain, J.B. Robinson Jewelers Inc., has grown from 2 to 74 stores in the past 13 years is that its way of doing business is deeply embedded with concern both for return on investment and for "doing unto others as you would have them do unto you."
Robinson Jewelers's use of the Golden Rule is an outstanding example of how a smaller company can benefit from having srrong cultural norms, says Professor Terrence E. Deal of Harvard University's Graduate School of Education, who with McKinsey & Co. consultant Allan A. Kennedy wrote CorPorate Cultures: The Rites and Rituals of Corporate Life (Addison-Wesley, Reading, Mass., 1982). Deal and Kennedy claim that to manage employees well, all companies need basic principles or values that -- through corporate rituals, heroes, stories, and even "priests" -- are built into the company's business methods.
A jewelry store, for example, works best when its employees are deeply committed to the Golden Rule. Shoppers who visit the store often fear that they will be cheated in the purchase of a diamond or other expensive gem -- produets that are usually difficult for unsophistieated shoppers to evaluate. Since salespeople at Robinson Jewelers -- a unit of W.R. Grace & Co. since 1979 -- have been trained to follow the Golden Rule, they behave in ways that give shoppers more confidence in their purchases.
Deal, Kennedy, and Larry Robinson believe that a boss can't get employees to care about corporate principles just by preaching them, however. The key factor, they feel, is to reward employees who contribute to profitability or demonstrate concern for others -- rewarding them with raises, bonuses, and recognition. In addition, Robinson, who remained as chairman of his company after selling it to Grace, draws on the means identified in Deal and Kennedy's book.
To teach the importance of understanding the needs of customers, for example, Robinson employs the ritual of role-playing: Salesmen at company meetings are asked to act the part of customers who don't quite know what they want. Story telling, another method, takes place during company training programs when employees may hear the tale of a store representative who delivered directly to the ehurch, a wedding ring that had been ordered late. Also discussed are such heroes as Lou Schwartz, now supervisor of the company's stores in Columbus, Cincinnati, and northeastern Ohio, who once delivered an engagement ring in the midst of a blizzard in the Midwest. And the priests in this scenario are store supervisors. They evaluate everything in a store to make it agree with Robinson's principles, in much the same way that religious priests are expected to examine the behavior of their congregations.
Deal and Kennedy say that every workplace possesses a culture -- a "way we do things around here" that is based on the principles or values important to the people in the company. The culture is normally expressed, the authors say, in such ways as how meetings are conducted, the stories people tell, the choice of company buildings, and how people are greeted at the door.
The publication of Deal and Kennedy's book eulminates a movement that started among personnel managers in the late 1970s to view corporations as cultures. Many business problems occur because corporate cultures are weak, say contemporary personnel theorists. A company's culture may be based on contradictory principles that don't help employees undersrant what is expected of them or what will ensure suceess in their business. Executives may proclaim the importance of responsibility to the customer, for instance, but act as though what is important are immediate increases in earnings or the maximization of their own power.
Deal notes that principles differ considerably from company to company -- although people in strong cultures normally consider their basic principles to be universals. For example, while Robinson argues that the Golden Rule should be fundamental for all companies, Deal notes that strong emphasis on the Golden Rule could run counter to other business values. At PepsiCo Inc., Deal notes, the central value is not the Golden Rule but competitiveness: While the company was once content merely to offer Pepsi as an alternative to Coca-Cola, management in recent years has reoriented the company to aggressiveness, both internally and externally. Employees keep their jobs and get ahead only if they find ways to devastate rival companies.
Deal argues that organizations must choose fundamental principles that work for them. Business principles normally arise from a combination of the entrepreneur's upbringing and his business experience. "You find out what works, and you say, 'Let's do more of that,' " says Deal. Fundamental principles that have been summarized in slogans include innovation at General Electric ("Progress is our most important product"), service at IBM ("IBM means service), and community at Rouse, a real estate developer ("Create the best environment for people"). While many companies believe they have no rituals comparable to those at Robinson Jewelers or IBM, Deal disagrees. He says every business follows different patterns -- or rituals. In a company with a strong culture, the patterns support the company's basic principles. The leader of a meeting, for example, conducts it according to strong beliefs about what ought to be accomplished there; those beliefs are largely shared by the meeting's other participants, and they shape the way the meeting progresses. Deal points to a capital equipment producer where the basic principle is careful decision-making. At its meetings, each person speaks in order of experience. At a meeting in a sales-oriented company, on the other hand, the salesmen often sing songs that reinforce the value the organization puts on involvement in the work.
By contrast, a meeting in a weak corporate culture carries no underlying agreement on what ought to be accomplished. "People are late. They trickle in, and they trickle out," says Deal. "During the meeting there are a lot of things that people say that just fall through the cracks."
Heroes are crucial in every culture because they provide a readily understood model for the employees. People have difficulty knowing what is meant when they are urged to be "good" or "productive," Deal and Kennedy note; it is much easier to aspire to be like someone.
Another method of bringing meaning to a company, Deal notes, is to hire a trained "priest" -- a professional human resources person. The best human resources people help managers clarify their company's principles and values, encourage employees to appreciate heroes and stories that support those values, and counsel employees when they are confused about how to reconcile a conflict in the values. Often the "priests" aren't chosen by management. A longtime employee constantly sought out by other employees may function as priest, giving advice about how hard people should work, how much money they should demand, and how they should treat others in the company.
A good human relations person will be able to win a substantial degree of shifted loyalty, however, and promote a unified and workable set of principles. At a small New England computer software company where the owner hadn't been able to let go of day-to-day management, for example, a new personnel director produced a training film that was a first step in promoting two new heroes. As the film begins, the founder -- who has so far been the main hero in the company -- speaks animatedly about his vision. But then a top manager, whom Deal felt was the embodiment of the cautious managerial values the company believed it must learn, is shown seated behind a desk and speaking much more conservatively. Finally, a creative young software designer shouts at the camera. Deal says the unconventional "flakiness" and creativity the software designer embodies are crucial to success in software. The "priest" was encouraging employees to see the software designer as a hero, too, and reminding them that independent creativity is an important value in the company.
Deal and Kennedy don't have all the answers to personnel problems. And reviewers have criticized their book for a lack of skepticism about "strong culture" companies. But few criticisms strike at one key message: that "most meaningful change -- for example, developing a marketing orientation or becoming more cost effective -- involves cultural transformation." To change people's behavior it helps to get them to identify with new values or principles. Communicating the new values effectively, as Deal and Kennedy note, is a difficult and subtle managerial task.