Professional Documents
Culture Documents
Com 437 Term Paper
Com 437 Term Paper
University at Buffalo
November 1, 2020
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Abstract
This paper goes over the role Organizational Communication has played in the success of Estee
Lauder. It draws focus to 4 main elements - Team Building, Identity and Meaningful Membership,
Strategic Ambiguity, and lastly, Organizational Transparency and Openness - and how they played
a part in Estee Lauder’s success in the cosmetics industry. We will be looking at the stages of
socialization in team building, how organizational identity dynamics and identification affect
identity and meaningful membership, strategic ambiguity in company positioning and crisis
management, and lastly, how transparency and openness creates trust between consumers and the
organization.
Estee Lauder Companies Inc (here in after we will refer to it as Estee Lauder Companies) is
one of the largest conglomerates and leading manufacturers or high quality skin care, make up,
fragrances and hair products. Founded in 1946, they have a long history of 74 years and the success
in Estee Lauder is undeniable as they have products being sold in over 120 countries such as
Singapore, United States of America, Taiwan and United Kingdom to name a few. Estee Lauder has
also acquired many well-recognized brands such as Clinique, Bobbi Brown, Tommy Hilfiger and Jo
Malone to name a few over the years (EL Companies, 2020). With their extreme success, Estee
Lauder has a net worth of $79.25 Billion USD as of 3rd November 2020 (Macrotrends, 2020) and
according to Forbes 2016, the Lauder family has a personal net worth of $17.90 Billion. The
following themes which we will be touching on: team building, identity and meaningful
membership, strategic ambiguity, and transparency provides a clearer understanding why Estée
Estee Lauder is a family owned business where the second and third generation members of
the Lauder family are on the board and are doing their part for their family by being part of the
executive leadership. They are very actively engaged in the leadership of the company and are
focused on the long term growth of the company (EL Companies, 2020). Estee Lauder has a
hierarchical organizational structure as they rely on a vertical chain on command. They have a
company president and chief executive officer who oversees the whole business and has an
Executive Leadership Team (ELT) that works under him and reports directly to him.
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Team Building
The word group and team is always used interchangeably but there is a difference in the
terms. A group is when everyone is accountable for their actions individually and everyone shares
information from his own point of view (Wrench & Punyanunt-Carter 2012 ). Everyone’s role is
very specific and objectives are made by the leader. On the other hand, a team has a common goal
or collective purpose and efforts (Wrench & Punyanunt-Carter, 2012). There is no specific role as
their roles can change for each member, and the focus is often on the team’s goals instead of
individuals. Big organizations like Estee Lauder want to have teams so that they are able to continue
to evolve and generate greater results. In essence, team building is to enroll the help of a group into
planning and implementing change internally, which would make group work more effective than if
they were to do it from the outside (Salas et al, 1999). The members of the team change so that they
will be able to obtain new skills and insights. According to Woodman and Sherwood (1980), team
building was designed to enhance organizational effectiveness by improving team operation through
developing problem solving procedures, skills and increasing role clarity. The ability to work
(Holton, 2001). There are four current models of team building which are goal setting, interpersonal
Firstly, team members will be gathered together to come up with a way to achieve the goals.
This is seen in Estee Lauder where they have the CEO Global Reverse Mentor Program where
digitally savvy Millennials are partnered up with Gen Z employees so that they can learn from each
other and come up with ways on how they can impact and improve the business. Through this
mentorship, employees of Estee Lauder get to build interpersonal relations which helps to develop
trust in one another which can increase the confidence in the team and increase their work
chemistry. As with every project, there would be disagreements and arguments. However, with the
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problem solving phase, employees of Estee Lauder would be able to brainstorm together and be
involved in finding a solution to their problems and come up with ways to implement as well as
evaluate the solutions. Lastly, when the project is completed the team would go through role
clarification to make sure that everyone is sure of how they have contributed to the project and have
a better understanding of each other’s roles and duties in the team. This is important especially
when they are doing presentations on their ideas so that they know what exactly they have done and
questions can be directed to them for them to be answered. Team building is also shown in the
encounter and metamorphosis of the socialization process which is crucial in making sure that the
Estee Lauder’s socialization process also contributed to the success of the company.
Individualization could occur when Estee Lauder encourages their talented employees to give
creative recommendations, share their own personal experiences and empower them to think as
entrepreneurs so that they are able to perform to the best of their abilities by harnessing their
three phases before they are accepted into the organization. The three phases are anticipatory
socialization, encounter and metamorphosis (Miller, 2006). Anticipatory socialization is when the
prospective employee learns about the work and their position in general and the particular
the tip of our fingertips where everything is a click away. Anticipatory socialization is made easier
since new employees can do prior research on Estee Lauder from online review websites or articles.
Following that would be the encounter phase which is their first step into the organization. The
employee would have to learn the organization’s culture and forget whatever they have learnt in the
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past. Estee Lauder encourages diversity and individuality which the organization seeks out and
cultivates in their workplace. This culture is guided by the Lauder’s family values which is ‘respect
for the individual and a collective generosity of spirit that infuses everything we do’ (ELcompanies,
2020). While this might seem as a good thing, it might have some problems in the future as
conflicts may arise when working due to a difference in values, work experience and work
ideology. Estee Lauder also has a training and development program for new employees to improve
their capabilities and skills. This training includes orientation to the brand, regular product update
sessions, teamwork and customer service skills, sales techniques and leadership for retail managers.
On top of that, there is also an individualised learning programme which is used to track their
performance at work. In order to make sure that they have assimilated well into the company, their
manager will meet with them twice a year to discuss their strengths and how they can develop and
improve (EL Companies, 2020). The training is done through their own experienced staff so the
new staff can learn from the professionals through observation and hands-on activities. This would
help them learn the organizational culture at a faster pace and at the same time create interpersonal
relationships with their peers and superiors. Following a smooth transition for these new employees,
they can then move on to the metamorphosis phase since they are fully assimilated into the
Since the new employees have been together since their training period, it will increase
cohesion which would allow them to have more chemistry and work together well. On top of that, it
might also breed some friendly competition where they push each other to do better. Effective
socialization is also a good investment for the company as it can increase organizational loyalty
(Fang, 2011) and with a low turnover rate, the company would not have to spend so much money
retraining their employees time and time again. Having a cohesive team and good socialization
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process where they are formally welcomed into the company is one of the ways which contributed
Instead of identifying the specifics of what Estee Lauder’s organizational identity exactly is,
this paper looks into how Estee Lauder facilitates the processes in organizational identity dynamics
to achieve a “healthy” organizational identity. Organizational identity is dynamic in the sense that it
is continuously affected by its organizational culture and image. Organizational identity has been
defined as a set of statements that organization members deem to be central, distinctive, and
enduring to the organization that they belong to. Organizational image is described as the set of
organizational understandings, in the form of beliefs and values (Hatch & Schultz, 2002). In
essence, organizational identity is neither entirely based on its culture or its image, organizational
identity is made up of a dynamic set of processes that links organizational culture and image to
identity. According to the organizational identity dynamics model, these processes are categorized
as such: “Identity mirrors the image of others”, “Reflecting embeds identity in organizational
culture”, “Identity expresses cultural understandings”, and “Expressed identity leaves impressions
on others” (Hatch & Schultz, 2002). Estee Lauder has demonstrated that they are aware of these
processes, hence managing to avoid the dysfunctions of organizational identity dynamics known as
Narcissism occurs when organizational identity that is constructed entirely based on the
organization’s culture. This implies that focus is only given to reflecting and expressing processes,
while mirroring and impression processes are ignored. Conversely, loss of culture happens when
organizational identity is based on organizational image, and the underlying processes that are given
more attention to or ignored are in contrast to narcissism (Hatch & Schultz, 2002). The
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commonality between the two dysfunctions is that it occurs when certain processes are either given
too much attention or largely disregarded. Estee Lauder has managed to give importance to the four
processes and managed to strike a balance by enhancing consumer engagement and placing a strong
Estee Lauder’s ability to avoid narcissism can be attributed to its increased consumer
engagement, thus giving importance to the mirroring process. The mirroring process is connoted as
a metaphor such that the organizational images held by external stakeholders is the mirror for
members of the organization to see. The establishment of “Estee Lauder’s consumer engagement
centre of excellence” centralizes consumer information, through data collection methods such as
social listening and focus groups, and provides valuable insights to a wide range of consumers.
Social listening refers to monitoring various social media outlets for mentions about anything
related to your organization, ranging from your company itself, or your products, or even your
competitors; after the monitoring phase, an analysis on the information gathered is performed to put
what is learnt into action. A focus group refers to bringing together small groups of people to
provide feedback on the organization’s area of interest. The increased audience engagement
provides Estee Lauder with a “bigger mirror” of what their organizational image is, increasing the
company’s ability to see a “fuller picture” of the notions external stakeholders have about the
company.
In addition to avoiding narcissism, Estee Lauder’s strong emphasis on heritage prevents the
loss of culture. Especially in today’s society, it is very easy for organizations to fall victim to
adopting the culture of the consumer, resulting in the loss of its own culture. But Estee Lauder has
demonstrated its strong emphasis on heritage which can be observed through its “High- touch
approach”. The high- touch approach is what Estee Lauder describes makes their organization truly
distinct, it is the guide to providing highly personalized service and education to their consumers.
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This approach was first conceived by the company’s founder, Estee Lauder, motivated by her belief
that women should experience her products first- hand, she personally introduced her cosmetic
products to consumers knowing that her personal interaction, instruction and connection would
create a lasting bond. Fast forward to today, the high- touch approach has gone high- tech, and the
company still continues to strive to achieve high- touch innovations to meet the consumer’s needs.
For example, the company managed to build a voice application, “Liv”, that can be used through
mobile devices or Google Home. “Liv”, was created to allow consumers to test, learn, and engage
with Estee Lauder’s products, as well as purchasing them. This highlights how Estee Lauder is
continuously adapting to the changing needs and wants of today’s consumers and offering a truly
In sum, Estee Lauder has been able to cultivate a “healthy” organizational identity through
interpretation and decision making by its members (Dutton & Dukerich, 1991). However, another
important aspect is organizational identification which has been proven to induce higher levels of
providing constructive suggestions), increased job satisfaction, and lower turnover ratio (Hameed et
al., 2016). Organizational identification is a crucial concept which describes the degree to which
members experience a sense of oneness with the organization’s values, brand, ethics. Estee Lauder
recognizes the importance of organizational identification, and has made extensive measures to
engaging in various Corporate Social Responsibility (CSR) efforts. Various CSR studies have found
a positive relationship between organizational identification and CSR activities (Hameed et al.,
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2016). In order to better understand how CSR influences employees’ identification, CSR has to be
differentiated into internal and external CSR activities and its underlying mechanisms, perceived
internal respect and perceived external prestige, which promotes identification (Hameed et al.,
2016).
With regards to internal CSR activities, perceived internal respect mediates the relationship
between internal CSR and organizational identification (Hameed et al., 2016). Internal CSR
activities are understood as an organization’s operations relating to its members’ physiological and
psychological welfare. While perceived internal respect is members’ assessment of their position in
the organization (Hameed et al., 2016). Members assess perceived internal respect via certain
indicators such as organizations prioritizing its members' well- being, and members’ ability to
partake in decision making. These indicators serve to remind members that they are not only
important to the organization, but are also respected and valued (Hameed et al., 2016). In this
regard, Estee Lauder has been involved in various CSR initiatives ranging from employee health
In relation to employees’ health and safety, the company offers a wide range of “benefits
programs” that supports employees’ needs across all stages of life, some of the programs include:
healthcare benefits, insurance and financial schemes, wellness programs, family support and
flexibility, and education programs. Apart from the plethora of programs solely catered to the health
and safety of its employees, the company has also established informal and formal programs that
promote equal employee training and equal opportunity, one of which is “The CEO Global Reverse
Mentor Program”. This reverse mentoring program, as mentioned in the above team building
section, pairs senior executives with younger employees to learn from each other, with the aim of
nurturing a work environment that encourages continuous learning and development. Furthermore,
the company advocates “leadership from every chair”, this is meant to empower all employees,
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regardless of their status in the company, encouraging them to actively lead and participate in
company activities, which espouses the idea of equal opportunity. In addition to its commitment to
employee well- being, employee training and equal opportunity, the company emphasises the
importance of diversity. Especially being a global company with stores located worldwide, diversity
in the workplace should not be neglected. Estee Lauder has excelled in this aspect by endorsing as
many as 30 “Employee Resource Groups (ERGs)”, these resource groups are not only limited to
race and ethnicity, but also spans across gender, sexual orientation, age groups, and even physical
disabilities. The purpose of ERGs is to create an inclusive culture where different perspectives are
not undermined, leading to greater innovation and problem- solving skills for the organization, and
fosters a sense of trust for the employees. All things considered where internal CSR is concerned,
Estee Lauder is engaged in meaningful activities that cover various aspects of an employee which
conveys a message to employees that they are appreciated and not simply treated as “cogs in a
machine”.
Similar to how perceived internal respect mediates the relationship between internal CSR
and organizational identification, perceived external prestige mediates the relationship between
external CSR and organizational identification (Hameed et al., 2016). External CSR activities are
understood as an organization’s operations that serve to solidify its legitimacy and favorable
position amongst external stakeholders. While perceived external prestige refers to employees’
assessment of their organization’s social standing (Hameed et al., 2016). In this aspect, Estee
Lauder has also demonstrated its commitment to boosting organizational identification through
activities such as cause- related marketing which encompasses philanthropy and volunteerism, and
environmental and wildlife protection. Under cause- related marketing, Estee Lauder’s largest CSR
program is its breast cancer campaign: The late Evelyn Lauder, founded the Breast Cancer Research
Foundation (BCRF), partnered with The Estee Lauder Companies, that has grown to be a prominent
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non- profit breast cancer organization. Another notable cause related effort includes “The Estee
Lauder Companies Charitable Foundation Girls’ Education Initiative” and its subsidiary brands’
cause related efforts includes, the “M.A.C VIVA GLAM fund”, “Aveda earth month”, “Jo Malone
London- Shining a light on mental health”, “La Mer blue heart”, “Origins green the planet”. Apart
from cause related efforts, Estee Lauder also created the “ELC Good Works” digital platform where
employees can register personal donations made and volunteer activities that they have participated
in, in turn, the company will match the according funds to non- profit organizations of the
employees’ choice. In sum, Estee Lauder has made significant contributions to create positive
impacts for the health, environment, and education of its external stakeholders. Because of the
extensive contributions the company has made, it is undeniable that Estee Lauder is a highly
respected organization. Furthermore, as a result of its internal CSR activities, Estee Lauder has been
continuously recognised as being a highly reputable and respected company. These recognitions are
showed in being included in the Bloomberg Gender- Equality index for the third consecutive year,
achieving a perfect score for Human Rights Campaign’s (HRC) corporate equality index for the
fourth consecutive year and named as one of the HRC’s “best place to work for LGBTQ equality”,
and being named as a “Top 10 best company for multicultural women” by Working Mother
magazine. All these acknowledgments serve to boost perceived external prestige amongst
organizational members.
The cumulation of CSR activities serves to increase Estee Lauder employees’ perceived
internal respect and external prestige, thus leading to increased organizational identification. An
increase in organizational identification creates committed employees, thus propelling Estee Lauder
Strategic Ambiguity
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Another contributing factor to Estee Lauder’s success is their use of strategic ambiguity in
marketing to consumers, as well as for crisis management. Strategic ambiguity is a strategy that
enables different groups of people to assign different meanings to any given goal, leaving
interpretation of material put out by organisations up to the audience. It can then be said that the use
the audience to perceive things from their own point of view, even when the organisation holds
An example of strategic ambiguity enabling Estee Lauder to express their own interests
while still catering to their audience is in their position on animal testing. It is stated on their
website that “We don’t test our products on animals and we don’t ask others to test for us. We
acknowledge our brands are sold in countries where animal testing on cosmetics or cosmetic
ingredients is required by law.” (Animal Testing, n.d.). This allows Estee Lauder to effectively
avoid responsibility of the animal testing that happens outside of their labs, but still maintaining a
firm position on their fight against animal testing. It is also important to note that many cosmetic
companies – even Estee Lauder – have ties with pharmaceutical, chemical, or petroleum companies.
These companies test their raw materials on animals, which makes the materials safe for human use.
This in turn leads to cosmetic companies not needing to test the final products on animals as the
ingredients have already been deemed safe by the original producers. Because of this, cosmetic
companies are able to declare that the product or brand does not test on animals (Kumar, Massie, &
Dumonceaux, 2006).
With a growing market of ethical consumers, brands like Estee Lauder have to adapt quickly
to ensure that they do not get boycotted by consumers or “cancelled” by the media. Ethical
consumerism has seen a sharp increase in recent years - consumers are becoming more informed
and are educating themselves on the products they buy. It has been reported that consumers today
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have a bigger inclination to buy products from brands that are more “socially responsible,
sustainable, and ethical”, and are less likely to purchase from brands whose values are not aligned
with theirs (Vessio, 2019). In fact, consumers willing to pay more for more ethical products have
increased by 200% between 2011 and 2015. 62% of Gen Z and 73% of Millennials prefer to shop
with ethical brands and are willing to pay more for sustainable products. Estee Lauder’s stance
against animal testing feeds into commodity activism, in which companies align themselves with a
social issue to garner support from consumers with the same values (Jarvis, 2020). Estee Lauder’s
effective use of strategic ambiguity strengthens their position in the market as a leader in the beauty
industry.
Estee Lauder also uses strategic ambiguity to handle crises. Crises can get out of hand
rapidly with social media being the main medium of mass communication. An organizational crisis
can be defined as the “perception of an unpredictable event that threatens important expectancies of
stakeholders and can seriously impact an organization’s performance and generate negative
outcomes.” It is crucial for organizations to use social media to mitigate crises as crisis information
released by third-parties will lead to greater public outrage. Organizations need to respond to the
public proactively, and use official social media pages to reach out to consumers when a crisis
happens - it is important for organizations to be “crisis coping facilitators”, in which the public is
One such case of an organizational crisis within Estee Lauder would be a recent public
relations nightmare in which 76-year-old board member and descendant of founders, Ronald
Lauder, was exposed for his political donations to President Donald Trump during the “Black Lives
Matter” movement. Estee Lauder received backlash from both consumers and employees for
Lauder’s contributions to “state-sanctioned violence” that conflicted with the company’s stance on
diversity and inclusion. In response to this, Estee Lauder’s internal group, NOBLE (Network of
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Black Leaders and Executives), said that the company was donating $1 million in support of racial
and social justice organizations, without first addressing the problem of Lauder’s personal political
contributions. Following more backlash that the donations did not match up to Lauder’s donations
in support of state-sanctioned violence, the company released a second statement that said that they
would donate $5 million to “support racial and social justice and to continue to support greater
access to education,” as well as an additional $5 million over the next two years (Harmon,
Now, Estee Lauder’s website also has an additional page on diversity and inclusion which
headlines “We recognize that Inclusion and Diversity are natural extensions of our company values
and must be fully embedded in our culture and our business strategy.” (Inclusion & Diversity, n.d.).
Additionally, Estee Lauder has committed to being more inclusive with their hiring, sourcing more
products from black-owned businesses, as well as increasing the variety of shades in their
foundation line (Brown, 2020). In responding to the consumers’ demands of matching donations
with that of Lauder’s, as well as making company wide commitments to being more inclusive, Estee
Lauder’s successful use of strategic ambiguity mitigated the crisis without having to address the
intentionally shared information from a sender. There are three factors which would point out
whether or not a company is transparent. Firstly, transparency is seen as a vital part of information
sharing to an extent that growing transparency comes with enhanced awareness, consistency, and
understanding to knowledge shared between two parties. In layman terms, it is the amount of
information disclosed between two parties. Secondly, transparency involves deliberately shared
information such that organizations have the capacity to deliberately withhold or release
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information in ways that would increase or decrease transparency. For example, organizations
might choose not to report on news that might negatively affect them, and instead push for news
that would cast them in a positive light. It is sort of like ignoring the bad parts and focusing on the
good parts. Lastly, transparency can also be viewed as a perception of obtained information,
although organizations have the capability to sway that understanding through various means.
Information quality is also an important part of transparency. For example, it can be evaluated as
the appraisal of the quality of information shared by a company or a boss towards their employees.
As with most cosmetics and skin products brands, the topic of animal testing is always
brought up. Most companies in the cosmetics industry are generally not that transparent when posed
with questions or allegations of animal testing. However, Estee Lauder is a brand that claims on
their official website that they do not test their products on animals and that they do not ask others
to test for them. However, in the sentence following that, they also mention that they acknowledge
that they do have brands which are sold in countries where animal testing on cosmetics or cosmetic
ingredients is required by law (Estee Lauder, 2020), which begs the question; how much of what
International announced a partnership with well-known cosmetics firm Estee Lauder to reach a
global goal to end animal testing in the cosmetics industry. However, numerous websites such as
PETA and Cruelty Free Collections, to name a few, have denied this statement. They have stated
that certain brands under The Estee Lauder Companies such as Bobbi Brown and Clinique still do
test their products on animals (Cruelty Free Collection, 2020). As mentioned in the previous
paragraph, on Estee Lauder’s website, they have repeatedly emphasized that they are putting in the
utmost effort to combat animal testing, but they acknowledge that their products may be sold in
country where animal testing on cosmetics are mandatory by law (Estee Lauder, 2020). One such
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country would be China, where numerous quantities of their products are sold due to the huge
market there, which begs the obvious question; why would Estee Lauder choose to continue doing
business in China, even with all the ethical issues that arise and the potential backlash they might
face?
That Estee Lauder’s web page mentions very little on the countries where its products are
required by law to be tested on animals. This could be a case of empty-archive syndrome, whereby
they are shirking from the fact of still doing business in those countries by instead focusing more on
their work with cruelty-free organizations. It would definitely seem as though they are feigning
ignorance, as if to claim that they are not aware of what really goes on there. However, by looking a
little deeper into their partnership with Cruelty Free International, Estee Lauder is actually trying to
bring about change by using their reputation to stop animal testing for cosmetics globally instead of
going completely cruelty-free as most people assume (Rose, 2019). Furthermore, some brands
owned by Estee Lauder are already acknowledged as cruelty-free. These brands are less likely to
operate in countries where animal testing is mandatory and will receive their cruelty-free
Animal testing is not the only scandal Estee Lauder has been associated with in recent
years. In 2018, Estee Lauder CEO Fabrizio Freda publicly apologised for false ad claims on some
of their cosmetic products. Freda mentioned in the article that the company recently found out that
some testing related to advertising claims for specific products had been tampered with by some
employees. However, he did not reveal the names of the products affected by the tampering, only
that there would not be any issue with safety. According to the Business Times in 2018, Mr Freda
apologized on behalf of Estee Lauder and assured the public that they would take full responsibility
for this issue. What this meant for the company is that their shares dropped to as much as 6.9
percent to US$135, despite increasing by 14 percent in 2018. However, their willingness to be open
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and transparent could be a move by the Estee Lauder board in a bid to appeal to potential
transparency is the appraisal of the quality of deliberately shared information from a sender.
Another potential reason for this might be that Estee Lauder would have preferred to alleviate their
choices through transparent and truthful interactions with consumers and taking responsibility in the
long term (Whitehouse, 2019). This would certainly put Estee Lauder in the limelight as an
organization whose words and product claims can be trusted to an extent, simply because it is very
rare to see a company openly come out and admit their faults despite still being able to cover it up
as the issue was not known to the mainstream media at the time. Being open itself may also bring
about positive externalities which expand beyond the organization itself (Roper, Vahter, & Love,
2013). All in all, honesty is still the best policy, and a brand known for its transparency would
Conclusion
The beauty industry is highly competitive, companies are working to meet consumers’
growing demands. In today’s globalized society, the size Estee Lauder has grown into today is not
by sheer luck. Rather, it is applying effective organizational communication strategies that has
played a huge role in its success. This paper has thoroughly explored the following themes: Team
Building, Identity and meaningful membership, Strategic ambiguity, and Transparency and
Openness. In relation to Estee Lauder, these themes provide links as to how Estee Lauder has
socialization processes, they have been able to assimilate their employees into the company well,
reducing their turnover rate and increasing loyalty to the company. Understanding organizational
identity dynamics and enhancing consumer engagement, focusing on company heritage, and
increasing identification boosts the company’s overall effectiveness. Being able to use strategic
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ambiguity has been proven useful to Estee Lauder as it has helped them avoid scandals and handle
crisis well without losing much in terms of profit and loyalty to the brand. Lastly, being transparent
and open despite being thrust in the spotlight for wrongdoings has also renewed the confidence of
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