Who develops, shapes and controls organizational culture?

Corporate culture is increasingly gaining employers attention in that it is supposed to have a remarkable impact on individual behaviour: “the way we do things around here” and ultimately on businesses performance. Whether employers and their management could be able to control corporate culture, these would be in a position to influence individual comportment in the workplace and the degree of employee contribution to organizational success.

Academics, practitioners and managers, nonetheless, formulate and support different theories and ideas so that it can be hardly averred that a widespread agreement as regards this subject actually exists. All in all, these theories can be grouped into two main categories: those who support the idea that culture is “something an organization is” and managers cannot hence manipulate or control (Silver, 1987; Smith and Peterson, 1988 and Ackroyd and Cowdy, 1990) and those averring that in order to attain organizational efficiency and effectiveness corporate culture needs to be controlled by a company management (Ouchi, 1981; Peters and Waterman, 1982 and Smith, 1992).

Trying to determine whether corporate culture can be actually shaped and controlled by an employer can prove to be quite a conundrum; to this extent taking heed of the genesis of corporate culture can prove to be a good starting point. The first question to answer hence is: does culture actually develop or is it rather defined and shaped by the company founders and subsequently handed down through the generations?

Whether we support the idea that organizational culture stems from the shared values on which individuals base their common beliefs and develop the group norms, which ultimately influence their behaviour and are reinforced by the positive results it enables these to yield, we should conclude that corporate culture can be hardly controlled or manipulated by a business management. Notwithstanding, in many cases organizational culture is actually defined by the company founder who expects that this will be subsequently handed down by the business management through the generations.

In the former case corporate culture can be considered as the outcome of a rather slow and habitually relatively long process where all individuals are or can be potentially involved; whereas in the latter case organizational culture is somewhat of an off the shelf package, it has been prepared and prepackaged by the founder and fostered and implemented within the business with the help of the organization management.

The example of the Disney Enterprises is one of the most fascinating and remarkable in this sense and can definitely help to identify some crucially important aspects.

In order to clearly communicate and express his vision of the company and the culture he desired to foster, we go back to the early 1950s, Walt Disney had recourse to the figurative language, more precisely to the metaphor of organization as drama or theatre. Customers were thus called “guests”, employees were known as “casting”, the ticket boots were called “box offices”, the dress code “costuming”, a clear difference between “back-stage” and “on-stage” was made with reference to the different areas of the park and everyone was essentially acting according to the Disney script.

 

Albeit staff at Disney used an unconventional business wording, the metaphor of drama was absolutely consistent with the requirements of a typical for-profit organization. Each individual basically played a precise role, within a structured framework, aiming at favouring the attainment of a specific business-related objective (Smith and Eisenberg, 1987).

By reason of the paternalist and friendly approach adopted by Disney, many employers had also developed the idea that an additional metaphor could have been used to describe the park culture, that is, the metaphor of organization as a family.

Things changed dramatically when Walt Disney died in 1966. Walt, as he wanted to be called by the park’s employees, was charismatic both as a founder and as a leader and after his demise the park management literally strived to cope with his absence. Insofar as in the 1980s employees harshly complained that the management was sensibly diverging from Disney original vision and that they were the only people who were truly caring to keep faith to Disney’s genuine view (Smith and Eisenberg, 1987). As suggested by Martin et al (1985), the circumstance that a founder might hand over an organization culture as a legacy can be considered questionable, insofar as the Authors defined this option as “seductive promise.”

The employees desire to preserve Disney’s original vision led these to re-interpret the metaphor of the park culture putting much more emphasis on the metaphor of family, rather than on that of drama; a reinterpretation which Walt would have not possibly supported himself. The park management, in a bid to cope with these adversities, developed the “Disney philosophy” based on the image of the park as a friendly place, first-name-based and where teamwork was crucially important (Smith and Eisenberg, 1987).

These values and beliefs gained a widespread acceptance and consolidated rather quickly within the business. Employees treated the park visitors as their personal guests and were expected to receive the same treatment from the park management, which actually did not take any particular action to redress employee expectations. In contrast, managers adopted a paternalistic style and people feel so at ease working at Disney insofar as nobody did even consider leaving the company; working at Disney was ultimately considered somewhat of “a way of life”, rather than a job.

In the early 1980s the external environment played a sorely remarkable role and made quite an impact on the organization and its people. The growing pressure exerted by competitors, some company takeover attempts and the increasing level of the operating costs accounted for the company management needing to pay extra care to the cost-containment side of the park administration. Yet, the findings of an industry-related salary investigation revealed that wages at Disney where 62 percent higher than those offered by the other employers of the same industry so that in 1984 the park management proposed a two-year pay freeze and the elimination of some benefits for the employees who would have joined the company hereinafter.

The need for this profound, revolutionary change was essentially based on economic and financial grounds and was negatively perceived by staff, who considered the interference of the economic and financial factors as threatening the stability of the Disney family and in open contrast with Walt’s original vision. Despite Disney was also remembered by staff as an acute and clever entrepreneur, as it has to be, very focused on the profitable side of his business too. Discontent and malaise culminated in an unprecedented 22-day strike. The park managers tried to persuade the employees that the proposed sacrifices were actually necessary and essentially consistent with the metaphor of the organization as a family in that when a family is experiencing difficulties the family members need to jointly tie the belt and make some sacrifices. Notwithstanding, employees rejected this management argument, which was tantamount to a distort re-interpretation of Walt’s vision. At that stage, the park management clearly realized that some permanent changes needed to be introduced (Smith and Eisenberg, 1987).

Employees and management come thus to an inevitable, open and indeed marked contrast. Employee concern, however, was not actually mainly due to the financial sacrifices the new circumstances required, but rather to the different management interpretation of Walt’s philosophy and the amendments made to the park policies as a consequence of that re-interpretation.

The aftermath of these events was really severe, especially in terms of human relations. Some employees perceived managers as enemies insofar as restricting the metaphor of family to the employees only, with the exclusion of the organization management. Indeed, contrasts also spread amongst employees. The difference in salaries between the people recruited after the abolition of some benefits and the “old employees”, who were still entitled to enjoy those benefits, clearly generated divisions and tensions amongst employees too.

Some complications were also caused by the confusion generated by some opposing preferences expressed by staff. Despite some employees enjoyed the care for the individual, which the old paternalistic approach used by the management entailed, many others did prefer not to be considered like children and wanted to have their say on the design and development of the future “life at Disney.”

All of these events gave rise to a strong resentment amongst staff and to a clear split between employees and management which had a long-lasting remarkable impact on the business performance and on both staff motivation and morale.

At Disney organizational culture has over time generated from different sources. Culture was originally shaped by the charismatic founder and widely recognized strong leader, that is, Walt Disney; whereas subsequently it was developed and to some extent manipulated by employees. In both cases the business management played a limited, if any, role in defining the corporate culture.

This case also shows the significance of the impact and role played by the external environment. Life at Disney essentially changed when after the economic prosperity of the mid-1960s the external economic circumstances changed dramatically in the early 1980s. The worsening market conditions in fact sensibly, negatively influenced the park atmosphere and exacerbated internal human relations; in the first place between management and employees, soon after also amongst staff.

The endogenous environment actually contributed to add fuel to the flames too. The idyllic atmosphere which had characterized the park during the previous decades of its establishment had in fact accounted for managers and staff never having managed conflicts so that, the moment arrived, both parties were not used and prepared to manage these (Smith and Eisenberg, 1987). Somewhat ironically perhaps, in this case, the nonexistence of previous conflicts made it harder the conciliation process between the two parties involved.

The Disney Enterprise experience also shows that whether the development and control of organizational culture are entirely left on employee hands, the final result may not fully fulfil the business leaders’ real expectations. When corporate culture is shaped by the founder not only culture has to be embraced by the existing employees, but also the identification of the future recruits has to be based on their capability to adapt, or rather, naturally fit the employer vision. In the Disney case, employees could re-interpret the founder vision of organizational culture in that the park management did not continue to strongly and firmly support it and did virtually nothing to redress employee deviating views.

The more charismatic a company founder, the stronger the impact of the culture this shapes and introduces within his/her business. Yet, the more recognized the founder leadership qualities, the easier for this to foster the desired culture and the likelier that individuals will keenly and eagerly embrace this; Apple’s Steve Jobs and Microsoft’s Bill Gates are two remarkable examples of this in modern times.

When a founder is a strong genuine leader and a charismatic person it is indeed also very likely that stories, narrations and myths where the founder plays the role of the hero can effectively help the business to hand down culture through the generations.

Despite this might not always be the case, Disney’s lessons learned book definitely supports the Ouchi, Peters and Waterman, and Smith view: to attain organizational effectiveness and efficiency corporate culture needs to be shaped and controlled by management. It can be added, and particular attention needs to be paid to the exogenous environment for the impact this can potentially make on it.

It could be argued that culture tends to develop, and hence to be managed by employees, when no charismatic founder or genuine leader is shaping it or, more in general, when the business management is unable to shape and effectively, influentially and convincingly foster it. It is in fact hardly imaginable that corporate culture may be developed by employees whether a charismatic founder or a strong leader has shaped it and the business management is strongly supporting this. By contrast, the management lack of initiative and support to an even strong corporate culture might account for this drastically weakens over time and for employees developing and supporting a new or different culture, which in some cases, albeit diverging or sensibly diverging from this, may also be the fruit of the re-interpretation of the original culture (as, for instance, in the Disney case).

The role and support of informal leaders might reveal to be paramount. Especially in the absence of a genuine leader amongst the business management, these may make or break corporate culture. Regardless of the specific circumstances, the informal leaders support to foster corporate culture is definitely invariably important.

It can be concluded that in practice corporate culture can be either shaped by a company founder or management, or developed by the employees. The latter process, however, is much more likely to be triggered by the absence of a charismatic founder or of a genuine strong leader amongst the business management, or can be initiated by employees to fill the vacuum left by the company management. Yet, the circumstance that corporate culture is developed by the employees not necessarily entails that this meets the employer expectations and wants and that it is consistent with the employer strategy and objectives. In actual fact, organizational culture should support the business strategy and policies, and needs thus to align with these. A business culture exclusively developed and shaped by employees can hardly enable employers to fully attain this objective.  

Longo, R., (2014), Who develops, shapes and controls organizational culture?; Milan: HR Professionals.