Image Copyright: © David Low Associated Newspaper / Solo Syndication, London

Ills of Suppressive Organizational Culture

Consider yourself in a communist party meeting where Comrade Stalin is addressing a large audience. The hall is full with enthusiasm and energy, suddenly, you stand up in middle of the speech and shout loudly, “comrade Stalin, you are wrong!”. What happens after that, I think the big question next morning would be be who saw you last time. Lets take this hypothesis further, what if another comrade stands up and tells you that you cannot talk to Comrade Stalin like that, as you delivered your famous final words to comrade Stalin, probably the same fate, or worse would fall on that unfortunate fellow. In suppressive systems like that working under Stalin, it prohibited to criticize the leader, but it was more even more prohibitive to condemn public expression of disagreement against the leader, than the condemnation of the leader. Does this define the corporate culture today? In many ways, I think it does, modern corporate culture apparently promote behavior to question the leader, sometimes accuse him through processes to encourage open expression e.g. whistle-blower protection programs, anonymous communication channels, third party managed fraud reporting services, these mostly serve PR purpose and delivered very little speaking empirically. Do corporations today need such systems in the first place, yes, but what is the cost of having, or not having it.

These costs can fall into two bigger buckets, one, the direct cost of maintaining such a system which is the employees related costs, technology etc., and more importantly the hidden cost of corruption these systems are designed to protect against. Quiet obviously the best solution would be that the system delivers, and people come forward to highlight concerns which can be controlled to begin with before it balloons into an unmanageable problem which could then attract bad press, and deteriorating brand equity. Well, while we can either work on substantiating these costs into more smaller details, on the other hand an introspection of the organization’s culture could reveal problems for these failures.

The enigma described in the beginning of this brief essay can be used to help us generalize the problem. The leader in an attempt to concentrate his authority makes rules for communication which is not supportive of criticism to the core, most central part of an organization, the vision. Goals, objectives, mission, road-map etc. are part of this lexicon . You may be thinking that how could vision (and its other forms) be criticized as that makes the organization deliver value, think about it by reading the Stalin example described above. The answer lies in such behavior of not questioning what is obviously wrong, which undermines the governance structures which are heavily influenced by an organization’s culture .

To illustrate the point described above about an unquestionable vision, consider a start-up and imagine its vision and culture e.g. when they are working from a garage, or an apartment these friends/partners have rented by pooling funds, expenses are shared, and everyone is eager to do more than their assigned work. Then it becomes successful and sufficient funds are collected from venture capitalists or angel investors, the startup moves into a small office, they hire some accountants, human resources specialists, office administrators, as the family grows with new members the company’s vision and culture evolves. With more success the company gets listing on New York Stock Exchange, and now you have a fleet of salesmen, auditors, risk managers, actuaries, administrators, accountants, strategists etc. which bring the company to an entirely new level of complexity which was unimaginable at the beginning, why, because there was no need for such expertise in the beginning nor was it planned in such details, it evolved into this new form from its humble beginning. What I am trying to say here is that the vision and culture evolves continuously, with addition and deletion of people, processes, skills, resources, office sizes, no. of photocopiers, brand of coffee served to employees, so why would we want to freeze it at that point.

Before going deeper into this point, I want to just briefly describe an organization as a living organism in context of complexity. As an organism goes through different phases of life and changes its shape, and outlook, and behavior, similarly a company also goes through these phases, this is popularly described in product life cycle theory, which equally applies to an organisation if you can imagine it as a product which is consumed to create value for its shareholders. Compare two illustration below, one shows the product life cycle curve of a company, and the second shows the human life in different stages and you can clearly see a resemblance in the system.

What is not so obvious however, is that humans in their external three dimensional world, also have an internal dimension, which constitutes of what they are made up of i.e. brain, blood, veins, and other body organs. Interestingly, this also exists in companies if we use this understanding of the fourth dimension, it constitutes of business model, processes, functional units, terminal points etc. And whats more remarkably interesting is that as humans grow and their organs change, the metabolism changes, companies too when they grow change as described in the example above of the startup, externally and internally.

Now, with this coarse understanding of the complex system, let me briefly also discuss an important attribute of complex system, which is that complex system as a whole function differently from their individual parts e.g. a human brain preserved in a lab does not function in the same way your or my brain functions in our body. More so, the development of a human body organs does not follow an equal growth with other organs, why, its how the human DNA has developed, but that’s another discussion. Now when we analyse a company in this context of a company, e.g. its growth from a start-up, to a venture funded, and then to a publicly traded organisation, we see that similar pattern of growth is observed e.g. all units of the organization do not grow at equal rate, and changes in the structure of the units start taking shape based on the needs of the organization, this need is the equivalent of a human DNA in transforming the company through various stages of its life cycle.

These changes in organisations as a single organism influences its vision and culture e.g. like a child a more mature elderly person, lifestyle, fashion, gadgets, and interests change in this transition. The idea of having a vision or culture which is not changing is therefore not sustainable. Its only a matter of time, which in an organizational context could be a few decades, or shorter, or longer, before the internal system becomes dysfunctional and cease to exist in absence of the change. Questions raised against the vision and culture should not be dismissed, these are strong indicators that a change is needed, individuals in this case could be more or less important it depends on the way you want to see, the important thing is that individuals/functions start feeling frustrations when the vision and culture no longer consistent with the transition into new phase of the life cycle.

Going back to Comrade Stalin, and let me clarify here that I am neither a fan, nor an expert on Stalin, and the anecdote in the beginning is not my work. What struck me however was that the observation made there so closely described not only what probably was also one of the reasons of Stalin’s fall from grace, but how such culture somehow continues to operate in modern, western and eastern sides of the world.

Let me share with you an obvious and oversimplified solution, which clearly is not to have a culture which suppresses disagreements as such attempts to sustain only creates internal conflicts while on the surface business looks as usual, weakening the organization beyond repair. While programs such as whistle blower etc. are a good gesture, these are temporary, and often ineffective remedies to a bigger problem. Maybe the solution is to create a process where disagreements are allowed, or using internal controls in defining transparent processes where most of these disagreements could be settled before destabilizing the whole system leading to a fall from grace, I don’t know, but I am clear that existing formulations will not deliver without addressing the Stalin in us.

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Idealism the highest truth which we must lack to be human