WHAT HOLDS MODERN COMPANIES TOGETHER?

The article “What Holds the Modern Company Together?” by Rob Goffee and Gareth Jones,
published in the Harvard Business Review in November-December 1996, discusses the
importance of corporate culture in maintaining the unity and identity of a company.

The article emphasizes that corporate culture is a powerful tool for holding a company
together against pressures for disintegration. It presents a sociological lens to understand
corporate culture through the dimensions of sociability and solidarity. It also highlights that
different types of cultures are suitable for different business environments, and changing an
organization’s culture should be a strategic decision based on its competitive situation.

I. Corporate Culture: Culture has become a powerful way to hold a company together
against pressures for disintegration, such as decentralization, de-layering, and
downsizing. Traditional mechanisms for integration like hierarchies and control
systems are proving costly and ineffective.
II. Culture as Community: Culture is an outcome of how people relate to one
another. Like families, villages, schools, and clubs, businesses rest on patterns of
social interaction that sustain them over time1.
III. Sociability and Solidarity: These two sociological concepts are used to understand
corporate culture. Sociability is a measure of sincere friendliness among members of
a community. Solidarity is a measure of a community’s ability to pursue shared
objectives quickly and effectively, regardless of personal ties.

Sociability is like how friendly you are with the other kids. You share your toys, play
together, and have fun. It’s about how much you enjoy being with your friends. For
example, when you play a game of tag and everyone is laughing and having a good
time, that’s high sociability.

On the other hand, solidarity is like being on a team for a tug-of-war game. Even if you
don’t know all the kids on your team very well, you all pull the rope together because
you share the same goal: to win the game. It’s about how well you work together to
achieve a common goal. For example, when your team works together to win the tug-
of-war, even helping those who are weaker or slower, that’s high solidarity.

So, sociability is about being friends and having fun together, while solidarity is about
working together as a team to achieve a goal.
IV. Four Types of Community: When sociability and solidarity are plotted against each
other, four types of community emerge: networked, mercenary, fragmented, and
communal. Each culture type is appropriate for different business environments.

I. Networked Organisations: High sociability and low solidarity. People are friendly
and help each other, but they may not share common goals. It’s suitable for
organizations where individual relationships and idea exchange are important. For
example, creative agencies or small start-ups where employees enjoy being around
each other and other people on a regular basis. They love having an open floor plan,
and the noise associated with that setup. Everyone could play off of the bell ringing
that happened when something exciting happened, like closing a new deal. Hallway
communications, Attending birthdays and important milestone events, genuinely
being friends are some of the characteristics.

 Benefits: Increased creativity and commitment.

 Method: One method of maximizing the benefits of a networked culture is to move
individuals regularly between functions, businesses, and countries in order to limit
excessive local identification and help them develop a wider strategic view of the
organization. Later on, these individuals often become the primary managers of the
networked organization’s political processes, and they keep them healthy.
 Drawbacks: Cliques, gossip, and low productivity, low on needed criticism, low on
checks needed to improve productivity, hesitancy in correcting others and informal
meetings influencing decisions leading to uncommunicated changes.
 Situations where networked culture works:
1. When corporate strategies have a long time frame such as in case of
start-ups and shifting to a new geography. Sociability maintains
allegiance to the organization when short-term calculations of
interest do not.
2. When knowledge of the peculiarities of local markets is a critical
success factor.
3. When corporate success is an aggregate of local success
4. Businesses which require fostering creativity as main function.

NETWORKED ORGANISATION CASE - UNILIVER:

 Unilever’s Culture: Unilever, an Anglo-Dutch consumer-goods group, is known for its

networked culture characterized by high levels of sociability.
 Recruitment Strategy: Unilever recruits compatible people with similar
backgrounds, values, and interests.
 Employee Interaction: Unilever reinforces sociability through activities at its
international-management-training centre, Four Acres.
 Annual Conferences: Unilever’s top 500 managers attend annual conferences to
communicate and review strategy.
 Outcome: This shared experience creates an informal network of equals who know
one another well and usually continue to meet and exchange experiences.

Unilever's networked culture, characterized by high sociability and low solidarity,

fits well with its diverse and decentralized structure. This culture promotes
fellowship and keeps units focused on their local markets. However, the emergence
of a single European market may necessitate higher levels of corporate solidarity at
Unilever. The company has already started centralizing some of its businesses to
improve coordination.

Unilever's competitors, such as Procter & Gamble and L’Oréal, have high levels of
solidarity that allow them to quickly exploit market opportunities. Unilever needs to
match these competencies or risk losing its competitive edge. Lastly, Unilever's lack
of solidarity can lead to complacency, especially in its more successful units. The
company's leaders recognize this challenge and believe it may be necessary to shake
up the system.

 Unilever’s Restructuring: Unilever is restructuring into 14 business groups to

address the negative consequences of its networked culture.
 New Structure: Each business group will have a clear business rationale, stretch
targets, and transparent accountability. They will make annual contracts that they
must deliver.
  Values of New Organization: The new organization values simplicity, clarity,
delegation of authority, and a disciplined approach.
 Move Towards Mercenary Culture: The reorganization is an effort to move towards
a mercenary culture with less politicking and a more ruthless focus on results.
 Future Performance: Whether Unilever can let go of its ingrained sociability and
adopt the behaviours of a high-solidarity enterprise will be revealed by its future
performance.

II. Mercenary Organisation: Low Sociability, High Solidarity. Low on hallway

hobnobbing and high on data-laden memos. Mercenary organizations are
characterized by the ability to respond quickly and cohesively to a perceived
opportunity or threat in the marketplace. Priorities are decided swiftly—generally by
senior management—and enforced throughout the organization with little debate.
Mercenary organizations are also characterized by a clear separation of work and
social life. Because of the absence of strong personal ties, mercenary organizations
are generally intolerant of poor performance. Those who are not contributing fully
are fired or given explicit instructions on how to improve, with a firm deadline.

 Benefits: High sense of competition, Performance driven culture, High productivity,

Less distractions.
 Drawbacks: Low Loyalty, Low on sharing ideas and information, Co-operation
between units inside company is less likely.
 Conditions where they work well:
1. When change is fast and rampant.
2. When economies of scale are achieved.
3. When corporate goals are clear and measurable and low inputs are
needed.
4. When the nature of competition is clear.

MASTIFF CASE:
 Mastiff Wear: An international manufacturer of popular children’s clothing, known
for its mercenary culture characterized by low sociability and high solidarity.
 Work Culture: Members work long hours, often prioritizing work over family life.
There is a high degree of internal competition and a strong focus on task
achievement.
 Performance Standards: The company has strict performance standards, and
underachievers are dealt with ruthlessly. Those who survive are well rewarded.
 Work-Life Balance: Many executives work hard, accumulate wealth, and then leave,
often at the cost of their personal life.
 Culture in Action: The company’s culture is evident in scenarios such as devising a
new advertising slogan over dinner or the expectation for new joiners to start work
immediately.

III. Fragmented Organizations: These organizations have low levels of sociability and
solidarity. Employees often believe they work for themselves or identify with their
professional groups. Employees work independently, often at home, and are
secretive about their projects. They may attempt to sabotage the work of their
colleagues. Sometimes, fragmented organizations reflect dysfunctional communities
where old ties of friendship and loyalty are replaced by an overriding concern for
individual survival.
  Benefits: Personal and business life separate, Beneficial to Lone wolves,
High personal performance.
 Drawbacks: Lack of agreement, High levels of dissent, Heavily transactional
relations, Low levels of trust and high chances of sabotage.
 Conditions where they work well:
a. When there is little interdependence in the work itself. e.g.
A company pieces together sourced parts.
b. When significant innovation is produced primarily by
individuals rather than by teams.
c. When standards are achieved by input controls, not process
controls.
d. When there are few learning opportunities between
individuals or when professional pride prevents the transfer
of knowledge.

UBS CASE:
 University Business School (UBS): UBS is a typical business school with a fragmented
organizational culture, characterized by low levels of sociability and solidarity.
 Work Culture: Professors at UBS work mainly on their own, often at home or in the
office, and many have demanding second jobs as consultants to industry.
 Low Sociability: Social contact at UBS is often with clients, students, or research
sponsors rather than with colleagues. Faculty members may actively avoid sociability
on campus to maximize discretionary time for private consulting work and research
for publication.
 Low Solidarity: UBS professors see themselves foremost as part of an international
group of scholars, feeling no particular affinity for the institution that employs them.
They believe their occupational group sets the standards and controls outputs, such
as journal articles.
 UBS’s Success: UBS is regarded as respected business school. The success of UBS
underscores the point that there is no generic ideal when it comes to corporate
community. If the culture fits, wear it.

IV. Communal Organisations:

 Communal Culture: Communal culture, characterized by high sociability and
solidarity, can be found in both small start-ups and mature companies.
Employees have a high consciousness of organizational identity and
membership.
 Social Events: Organizational life in communal companies is marked by social
events with strong ritual significance, such as parties, master classes, and
awards ceremonies.
 Equitable Sharing: The high solidarity of communal cultures is often
demonstrated through an equitable sharing of risks and rewards among
employees.
 Leadership: Leaders in communal companies command widespread respect
and affection. They invite dissent, but their authority is rarely challenged.
 Examples: Companies like Apple Computer and Nike, where employees
identify strongly with the corporate identity, and J. Walter Thompson,
known for its glamorous staff parties and creativity master classes, exemplify
communal cultures.
  Benefits: High consciousness of organisation, Clear Vision, High
satisfaction levels, Respected Identification, High productivity and
Clear sight of competition, goals and challenges.
 Drawbacks: Difficult to sustain, May lose their sense of purpose
upon departure of Key leaders, Communal culture is often
antithetical to high performance phases during periods of growth,
diversification, or internationalization, Unstable due to built-in
tension between relationships of sociability and solidarity
 Situations where it works best:
1. When innovation requires elaborate and extensive
teamwork. For example, at the pharmaceutical
company Glaxo Wellcome, research projects are
undertaken by teams from different disciplines—
such as genetics, chemistry, and toxicology—and in
different locations. Without such team-work, drug
development would be much slower and
competitive advantage would be lost.
2. When there are real synergies among organizational
subunits and real opportunities for learning.
3. When strategies are more long-term than short-
term.
4. When the business environment is dynamic and
complex like in technology, telecommunications and
pharmaceuticals.

BRITISH-BORNEO PETROLEUM SYNDICATE CASE:

 British-Borneo Petroleum Syndicate: This London-based company, which explores
for and produces oil and gas in the North Sea and the Gulf of Mexico, has a
communal culture characterized by high sociability and high solidarity.
 Synergy: The synergy among groups at British-Borneo is perhaps its greatest
competitive advantage. The company has grown more than tenfold in the 1990s to
reach a market capitalization of $550 million in 1996.
 Success Factors: Success in this kind of endeavour arises from speed of movement,
risk management, and the innovative use of technology—which in this context can
come only out of cross-functional teams.
 High Sociability: British-Borneo’s high levels of sociability can be seen in the honest
and relaxed way employees interact. They talk about their feelings openly and often
help one another out—without making deals.
 Leader's role: The most important source of success of British-Borneo Petroleum
Syndicate is CEO Alan Gaynor, whose charismatic leadership sets an example.
Gaynor participates in the company’s many social functions, for example, and is
open about his feelings. At the same time, he is intolerant of subpar performance
and is relentlessly focused on strategic goals.
 Challenges: While a communal culture is usually difficult to attain and sustain, a
strong leader can manage both to powerfully effective ends. But should the leader
ever leave, the community he or she created can easily collapse. Because of its
fragility, a communal culture is also difficult to export. That is the challenge Gaynor
faces today, in fact, as British-Borneo’s embryonic operations in Houston, Texas, go
through a dramatic expansion.
 V. Aligning/ Changing Culture as per Business Environment: Managers need to assess
their own culture and whether it fits the competitive situation. Only then can they
consider techniques for transforming it.

Remember, there is no one-size-fits-all approach to corporate culture. The most

effective culture varies depending on the specific circumstances of each organization.

Changing an organization’s culture is a delicate process. It requires managers to assess

their current culture and whether it fits the competitive situation. If a change is
needed, managers must carefully consider the techniques for transforming it.
However, it’s important to note that there isn’t one right culture for every
organization. Therefore, whether an organization should change its culture or not
depends on its specific circumstances and strategic objectives.

An organization should consider changing its culture when it no longer fits the
competitive situation. For example, if a company with a networked culture,
characterized by high sociability and low solidarity, finds itself in a highly competitive
market where achieving common goals quickly and effectively becomes paramount, it
might need to transition towards a more mercenary culture with low sociability and
high solidarity. This could involve implementing new performance metrics, redefining
roles and responsibilities, or introducing new team structures to foster greater focus
on shared objectives. Culture can hold back the pressures for corporate disintegration
if managers understand what culture means—and what it means to change it.

Steps to increase sociability:

 Promote the sharing of ideas, interests, and emotions by recruiting compatible

people—people who naturally seem likely to become friends.
 Increase social interaction among employees by arranging casual gatherings inside
and outside the office, such as parties, excursions—even book clubs.
 Reduce formality between employees.
 Limit hierarchical differences.
 Act like a friend yourself and set the example for geniality and kindness by caring for
those in trouble.

Steps to increase solidarity:

 Develop awareness of competitors through briefings, newsletters, videos, memos, or

E-mail.
 Create a sense of urgency.
 Stimulate the will to win.
 Encourage commitment to shared corporate goals.
 Build the right community.

BRITISH AIRWAY CASE STUDY:

Organizational Setting

At the beginning of the 1980s British Airways faced serious difficulties and financial analysts
claimed that the airline vas losing money at the rate of $ 200 per minute. The conservative
government sought to privatize the airline and, under the direction of Lord King the newly
appointed chairman. The dramatic turnaround was initiated. There was a drastic reduction
in staff numbers from 60,000 to: 38,000. Unprofitable routes were abandoned and surplus
assets, particularly aircraft, were sold off.
Despite significant reduction is cost, however, many costs, such as aviation fuel and airport
charges were outside the company's control. Customer service was critical factor that could
give a competitive edge but could not be easily duplicated. Colin Marshall, who was
appointed as CEO of BA in February 1983, recognized the problems as those of an
organization that had become demoralized and that lacked any real appreciation of what the
customer wanted. At all levels, he emphasized individual responsibility and risk-taking. He
provided the training of how to serve a customer. In March 1983, he announced that we
might need to put people through refresher courses to really concentrate on teaching staff
how to sell the airline and its services. This led to a campaign that became known as Putting
the Customer First" (PPF).
The importance of the PPF programme was in what it said about management attitudes and
intentions. It tried to provide an ' emotional context for people to respond to and to change.
A further aspect of PPF was that staff became actively involved in developing ideas for
improving customer service. Customer Firsts Team, using the techniques of quality circles,
were formed in many departments across the airline.
Initially, the changes that took place in the airline were directed at improving customer
service but it was recognized that 'managers needed to alter their style if they were to
support the change programme effectively. The dominant style of the organization was seen
to be bureaucratic with emphasis on the rationality and dependability of the system. In
1985, however, a week-long residential programme for managers was introduced:
"Managing
People First". This was originally targeted at middle managers but later was extended to
junior managers and supervisory grades.
Managing people first ran for five years and, during that time, 2,000 managers attended the
course. At the same time, the cultural change programme sustained by a number of
interventions throughout the 1980s. PPF. and "Managing People Firsts' concentrated on the
individual but, in November 1985, a third major corporate programme was launched, "A Day
in the Life". The purpose of this programme was-to give emphasis to the benefits of
collaborative working. Unlike PPE, this event was run entirely by BA staff for BA staff, The
main feature of the programme was the appearance of the CEO Or one of director to
endorse the commitment of the top management to the programme.
However, the reaction to the past decade of change has not all been positive. Some staff
found it difficult to reconcile the values promoted by the culture change with their
experiences in the work place. There was some frustration and disillusionment as a result of
the conflicts between caring values and profits, and between espoused values and the need
for work place expediency. The emotionally charged programmes of the 1980s have now
been superseded by more commercially focused and strategic programmes, such as the "Fit
for business" programme launched in 1989. At the same time, the theme of caring for the
individual and corporate pride has been carried forward. In 1992, a new suite of programme
is to be introduced to revitalize and augment the change programme.

The Problem
It is 8.30 AM and a group of about thirty middle managers have arrived for a three-day
workshop, 'Visioning the future'. Outside in the lounge area the participants are milling
around
drinking coffee and waiting for the workshop to begin. At sharp 9.00 AM, the doors to the
conferences room are opened and the. managers are ushered in. People find their seats and
focus their attention on the large screen. Somewhere in the darkness,
Mike Riley, Flight Crew Scheduling Manager, turned to Deborah Davies, Cabin Crew
Training, and whispered, I think I have seen all this somewhere before. Deborah, "Yes, the
live Aid concert, I think. It is all save the world stuff....British Airways togetherness...like Coca
Cola?. I meant on one of the earlier programmes- making it happen, We can be heroes, We
are the champions... something like that, "I wonder if all those who left the company earlier
this year feel like that," she said cuttingly, I would ask you again in the break.
During the one and half hour presentation, Deborah' mind was tom between the evident
sense of pride she felt working for such a successful company and an uncomfortable feeling
that her emotions were being played on in a rather manipulative way.
At coffee time, Deborah asked Mike what he made of 'all the corporate hype'. She further
said uneasily, do you remember one of the earlier programme called "The Love Bath" Mike
pondered for a second and then smiled, Oh God, yes. It was dreadful. What is was? It was
supposed to make you feel better about yourself. It was embarrassing. We all had to sit
round in a circle group of us-and each of us in turn had to sit in the middle. It was really
humiliating when everybody had to say something nice about the person in the middle.
Gillian Roper, a purchasing manager in her 30s had come over to join them. She listened o
Mike's remarks and laughed. "Come off it"! She sneered. It was wonderful and one of the
best experience in my life. She further remarked, "what we were earlier how these different
programmes really made us customer focused, like Managing People First. Also there is no
place for cynicism if you want to bring about change and you have got to admit that we
needed change."
Mike replied, Look, I know you felt like that and I know that a lot of other people did as well
but, you know, there were other people who were far from happy with the changes and, in
particular, the style of the changes. I mean at the end of the day, it was all about increasing
motivation and commitment not about making us "better" people. I am glad you're more
motivated and committed but don't you accept that a lot of this-like this morning-is just
evangelism. I have worked for this company now for nearly twelve years and I have seen the
whole lot. I can't say actually that it makes me feel more committed. I felt quite a few rows
at home over my working hours.
'As a matter of fact so do I", this time it was it was Deborah who spoke. 'I am 32 now, I feel I
am getting a bit old but Bob and I still want to start a family. I am afraid that once 1 go out
on maternity leave I will never get back and, well, there is the money. L am not sure I can
afford to give up work. The company says a lot about encouraging people to consider the
family and it claims that does a lot for women, but I just don't trust that message.
'That is nonsense and paranoia.' Gillian 's response was ardent. "You are the company-who
are all these people that you seem to be afraid of? You.do. what you want, Don't invent a
corporate demon to justify your apprehensions. The message of all these programmes has
been taken responsibility for your own actions.
In fairness, Mike continued, to retrieve the situation, no one ever said that the culture
change programme was philanthropic. At every turn we were told that the company needed
to change to survive. "Putting people first" is just a good business practice. We talk about
caring but I see bullies who are very successful. We talk about risk but you try it. I would be
scared enough about making a taking risks and surviving. I can't see me taking risks and
surviving. I honestly don't think anyone was taken by the culture change.
'The thing that gets me', Deborah interjected, 'is the fact we have just shed about four and a
half thousand jobs in the early part of' 91 and I wonder how those people who have left the
company feel about values and caring. What price commitment and loyalty when the chips
are down? It is all about or at least survival at the end of the day.
Gillian said, the company comes first, Deb- these are necessary sacrifices. Would you have
preferred to go. instead? There were a lot of things that were outside the company's control
like gulf war. What can you expect?
'Well, yes but it did give the company a wonderful opportunity for radical surgery as far as
getting rid of staff is concerned' Deb replied.
Finally, Mike drew the conversation to a close, 'I think that although individuals felt bad
about the cuts and may even have felt betrayed, in the main most people I have spoken to -
whether they were leaving or staying - felt that the relationship between commitment and
values was never such big issue. We know it is hype-they know it hype. It is okay. It is
reassuring, I makes you feel good. But do I believe in it - well that's totally a different
question.
In the conference room, the chairs and tables were being rearranged. After the coffee break
one of the trainers was running a session on "Facing up to feedback." It was to be a long day

Think as a newly appointed HR manager in BA, and answer these questions:

1. What do you see as the main issues in the discussion between Mike, Deborah and Gillian?
What views, if any, they hold in common and what are the chief differences in their
perspectives? What does this suggests about employee behaviour?

2. TO what extent would it be true to say that culture change programmes change
appearances and promote conformity but do not affect the inner experience of employees?

ANSWERS
1. The main issues in the discussion between Mike, Deborah, and Gillian revolve around the
culture change programs at British Airways and their impact on employees. They all agree
that the culture change programs have had a significant impact on the company and its
employees, but they differ in their perspectives on these changes:

Mike seems sceptical about the culture change programs. He acknowledges that they were
about increasing motivation and commitment, but he questions whether they have truly
made him feel more committed. He also expresses concern about the work-life balance and
the potential risks of taking on more responsibilities.

Deborah has mixed feelings. She feels pride in working for a successful company but is also
uncomfortable with what she perceives as manipulation of her emotions. She is also
concerned about the company’s support for women, particularly in relation to maternity
leave and work-life balance.

Gillian, on the other hand, is more positive about the changes. She believes that the
programs have made them more customer-focused and encourages taking responsibility for
one’s own actions. She views cynicism as a barrier to change and defends the company’s
actions as necessary sacrifices.

This suggests that employee behaviour and attitudes towards organizational change can vary
widely, influenced by individual experiences, perceptions, and personal circumstances.

2. Culture change programs can indeed change appearances and promote conformity, but
their impact on the inner experience of employees can vary. On one hand, such programs
can foster a sense of unity and shared purpose, improve customer focus, and encourage
individual responsibility. On the other hand, they can also lead to feelings of manipulation or
scepticism if employees perceive a disconnect between the company’s espoused values and
their actual experiences. For example, Deborah’s concern about maternity leave suggests
that she does not fully trust the company’s message about supporting women. Similarly,
Mike’s comments indicate that he does not feel more committed despite the culture change
programs. Therefore, while culture change programs can influence behaviour and
appearances, their impact on employees’ inner experiences can depend on how
authentically they perceive these changes to be implemented.