The Emperor Has No Clothes: Bosses think their firms are caring; their minions disagree

Recently, Dov Sidman, who heads a consulting firm called LRN that specializes in corporate values and culture, commissioned research into how employees view their company’s culture compared to senior management. The results, summarized in a recent article in The Economist (“The view from the top and bottom” September 24, 2011) show a significant gap between what the bosses think and what the rest of the folks in their organizations think of their company’s culture and values.

Writes The Economist:

As Walmart grew into the world’s largest retailer, its staff were subjected to a long list of dos and don’ts covering every aspect of their work. Now the firm has decided that its rules-based culture is too inflexible to cope with the challenges of globalization and technological change, and is trying to instill a “values-based” culture, in which employees can be trusted to do the right thing because they know what the firm stands for.

“Values” is the latest hot topic in management thinking. PepsiCo has started preaching a creed of “performance with purpose”. Chevron, an oil firm, brands itself as a purveyor of “human energy”, though presumably it does not really want you to travel by rickshaw. Nearly every big firm claims to be building a more caring and ethical culture.

A new study suggests there is less to this than it says on the label. Commissioned by Dov Seidman, boss of LRN, a firm that advises on corporate culture, and author of “How”, a book arguing that the way firms do business matters as much as what they do, and conducted by the Boston Research Group, the “National Governance, Culture and Leadership Assessment” is based on a survey of thousands of American employees, from every rung of the corporate ladder.

One of the findings was that 54% of employees surveyed viewed their company’s culture as  top-down with lot’s of rules and mix of carrots and sticks. Dov Seidman called this kind of company situation “informed acquiescence,” a wonderfully laconic label for a benign kind of purgatory — not terrible but not great either. Basically, this is a transactional relationship between employees and employer; it’s a paycheck and a source of benefits.

A large number of employees, 43%, described their company as top-down, command-and-control, with a lot of micro-management, coercion, stress and a good dollop of fearfulness. This group Seidman calls the “blind obedience.” In this situation, employees may not think of where they are and what they’re doing as the kind of work life they hoped and imagined for themselves when they were younger, but they have mortgages and kid’s education to pay for and so they’re basically fated to taking whatever the company dishes out.

The smallest category, only 3% of employees, identified themselves as “self-governing” in which everyone is guided by a “set of core principles and values that inspire everyone to align around a company’s mission”.

Writes The Economist:

The study found evidence that such differences matter. Nearly half of those in blind-obedience companies said they had observed unethical behavior in the previous year, compared with around a quarter in the other sorts of firm. Yet only a quarter of those in the blind-obedience firms said they were likely to blow the whistle, compared with over 90% in self-governing firms. Lack of trust may inhibit innovation, too. More than 90% of employees in self-governing firms, and two-thirds in the informed-acquiescence category, agreed that “good ideas are readily adopted by my company”. At blind-obedience firms, fewer than one in five did.

Tragicomically, the study found that bosses often believe their own guff, even if their underlings do not. Bosses are eight times more likely than the average to believe that their organization is self-governing. (The cheery folk in human resources are also much more optimistic than other employees.)

Equally revealing is that for every 100 senior managers who think their employees are inspired by their company’s values and culture, barely 15 employees would hold the same opinion.

Likewise, for every 100 bosses who say their firm rewards performance based on values, only 34 employees swallow this.