Each company has its own “culture,” by which I mean the way the company is run, the values and ethics that will define the company, what is and what isn’t appropriate and/or acceptable behavior at work. Basically, organizational culture defines how you work together in your organization. A healthy culture comes from a combination of lived core values and unity around a common goal, purpose, or cause. Another sign that your organization has an attractive corporate culture is its ability to attract and retain highly motivated employees. If such a corporate culture is in place, it is more likely that the people in the company know how to manage for sustainability. These kinds of companies can be what’s sometimes described as a force for good.
There’s no doubt that companies that are able to articulate a clear and compelling vision for the future will be very attractive to their employees. These organizations provide their people with meaning—and creating meaning makes a great difference. As I have stated elsewhere, most people are looking for something greater than themselves to believe in. It gives them a sense of purpose. Another binding factor that creates an attractive corporate culture is whether an organization serves its employees’ needs for order and structure, while providing a sense of belonging.
That being said, there is a fine line between a strong corporate culture and fully fledged, cult-like, organizational practices. Although I believe that a strong organizational culture is essential for corporate success, there is a likelihood that truly successful organizations will take on cult-like characteristics. The word “culture” cannot be spelled without the word “cult.” One organizing form can easily slide into the other, begging the question of what turns a great corporate culture into a cult.
In my opinion, the major differences between a high-performance organization and a cult depend on how qualities such as transparency, accountability, and dialogue are dealt with. Cult-like organizations deal with these qualities in a very different manner from more traditional organizations. The fine line between culture and cult will be crossed when mind control has too prominent a role, when a company seeks to influence too much of its members’ thinking and behavior. When this happens, many corporate cultures turn into thinly veiled fronts for cults, due to their indoctrination, motivational, and recruitment practices. It could be argued, however, that using the terms “cult” or “cult-like” is simply a way of describing the far end of a spectrum that ranges from low levels of internal cultural controls by a group of people that work together, to extremely high levels of commitment. From what I have seen, several highly successful companies—like Apple, Tesla, Zappos, Southwest Airlines, Nike, Nordstrom, and Harley Davidson—have managed to build a cult-like following among their employees and customers. To be frank, “cultish” behavior is a fact of life in many corporations. Many of the very best companies like to develop a cult-like commitment from their employees. It becomes a problem, however, when there is such a fanatical devotion to “culture” that it becomes overly embedded in every aspect of the company’s operations—processes, policies, the way people speak to each other, patterns of decision-making, evaluations, hiring, and termination practices. As a result, these companies become too inward-looking.
Although there is always the danger of this downward slide toward rigid controls, some companies have intentionally adopted a cult-like approach to dealing with their employees. They try to reposition the workplace as a replacement for family and community. Consciously or unconsciously (and in that respect behaving very much like a cult), they aim to isolate their employees from their families, communities and, most importantly, from having a more open-minded perspective toward their work. The goal of leadership in these organizations seems to be to make the lives of their employees centered entirely around their jobs. They want their employees to become completely emotionally bound to the organization. If they are successful, work becomes more important for their employees than their family or community. The result is that many of the employees in these organizations—in a misplaced quest for emotional support and self-esteem—pledge their deep commitment to the organization, a commitment that is not necessarily reciprocal.
Many of these cult-like organizations excel in behavior and thought control. They often use the same manipulation and control techniques that I described being used by cults (see Chap. 24). Like cults, they try to recruit or attract the vulnerable by targeting their sense of alienation, offering them some form of structure and a sense of belonging. A number of these cult-like organizations even go so far as to regulate their employees’ physical reality, including where they should live, what they should wear, and how much time they should spend at work. Unfortunately, as their employees invest increasing amounts of time and energy in the corporation, they do so at the expense of their families and communities. Consequently, they have little time for leisure, entertainment, or vacations. When that is the case, the company starts to replace the family.
The employees in these cult-like organizations are expected to accept whatever organizational doctrine prevails, a doctrine reinforced through indoctrination sessions and group rituals. Individualism is discouraged, while group think prevails. What’s more, these organizations are often heavily dependent on the messianic charisma of the leader to whom the employees pledge unconditional obedience. Also, from a more characterological perspective, the organizations’ leadership emphasizes people being “good culture fits” when discussing the recruitment of prospective employees. Frequently, various types of personality tests are used to put employees in “boxes,” and decisions are made based on each employee’s personality type.
Another give-away that an organization is entering cult-like territory is the kind of language used. Like many cults, many of these organizations have their own unique lingo and bizarre euphemistic terminology for internal communications. For example, Disney created an internal language to reinforce its company’s ideology. Employees are referred to as “cast members” and customers are called “guests.” As an employee, when you are inside the park, you are “on stage.” When an attraction is broken down, the code “101” is used.
Nowadays, in most Western companies, it is no longer in vogue to hold mass singsongs to encourage a sense of community at work. These practices are not such distant memories, however. Many years ago, an executive at IBM gave me a remarkable book of songs devoted to its “prophet,” Thomas Watson Sr., the charismatic builder of the company. America’s Walmart has a company culture (described by many as “soul-crushing”) that still features a compulsory company cheer. It also retains the Walmart pledge: “I solemnly promise and declare that every customer that comes within 10 feet of me, I will smile, look them in the eye, greet them, and ask if I can help them, so help me Sam.”
Generally speaking, I suggest that red flags should go up when you are exposed to too many pep talks, slogans, special lingo, podcasts, YouTube clips, motivational team building activities, singsongs, and charismatic CEOs. When a company’s culture has a mind-control quality with respect to the thinking and behavior of its members—when some people feel excluded because of how they think or feel—the organization has entered cult territory.
Some might wonder whether there is really anything wrong about these cultural practices. Why object to a company’s sports facilities, laundry services, company bars, or restaurants? Why not have a special lingo? What’s wrong about having a company-constructed purpose in life? Why object to inclusive company social activities? Wouldn’t all of us be happy to work in a place that’s so attractive that you love working overtime, on weekends, or giving up on your vacations? Don’t both parties would benefit from that?
Some skeptics would suggest that these “perks” are not just altruistic gestures on the part of the organization. On the contrary: they’re deliberately designed to brainwash employees to devote more and more time, talent, and emotional allegiance to the corporation, at the expense of their private life, family, and community. Isn’t it true that many of the employees in these companies are vulnerable? Is it possible that top management is taking advantage of them, preying on their vulnerabilities?
In situations where employees don’t have much of a personal support structure, an all-encompassing corporate environment is a way to fill this void. Like it or not, cult-like work organizations—like cults—have always recruited or attracted the vulnerable. By targeting their sense of alienation, they offer them a sense of belonging. Again, like true cults, they use various indoctrination methods to make their employees emotionally bound to their firms, to the point that their work becomes more important than family and community.
I have learned from experience that when the organizational culture controls every aspect of its people’s lives, it stifles innovation, endangering the company as a whole. Excessive cultural indoctrination is not the way to manage for sustainability. In other words, cults are not good for business.
If you’re a senior executive, you need to recognize this very real danger and ask yourself if aspects of your organizational culture have become psychologically coercive. Have you created a place of work where employees genuinely believe in the corporate vision, or are they merely parroting the party line? Are your people encouraged to have a personal life? Or are they expected to sell their soul to the corporation? Do they stay because they want to, or because they’re afraid of what would happen if they left? If they left, would they feel completely lost?
Cult-like Experiences
Let me share a recent experience I had with a leading US tech company, where I was invited by the CEO to a rather unusual weekly “get-together.” I must admit that, after meeting this CEO, I was initially charmed by him. After a polite conversation about mutual acquaintances, he gave me a rave review of the success of his company. At the end of our discussion, as it was late Friday afternoon, he suggested that I accompany him to the company’s auditorium. He told me that the company’s employees had a get-together every week.
On entering the auditorium, I was rather surprised to find it packed with a seemingly upbeat crowd. After the introductory “cheer”—during which the crowd screamed out the company name, letter by letter, three times—the CEO handed out the weekly service awards. All the recipients received deafening applause. As each of the candidates walked onto the podium, they were also welcomed with cheers about the company being number one. The ritualistic element reminded me of an evangelical revival meeting. Subsequently, I found much of the commentary about each recipient hard to understand. I figured that for many organizational practices the company had developed its own vernacular. Looking at the audience, I was struck by their rather monotonous dress code. Like the CEO, most people were dressed in black and gray. I also found it interesting, how after the session, all the employees gathered in the company’s dining room for a barbecue of sausages, chicken, and beer. All in all, the whole experience felt like a creepy organized fun exercise.
Still, I have to say that I was impressed by the enthusiasm of all the people present. I was also quite taken by the charismatic company CEO. The following week, however, when I spoke to a number of executives, I became less enthusiastic. I understood that many of the company’s employees didn’t seem to have much of a private life. The company appeared to be the sole provider of purpose and community. Although to all appearances, the company made a valiant effort to create a super-friendly work environment, many of its employees had no time for significant relationships outside work. And if such relationships had once existed, they had been broken off. Family and community seemed to be expendable. Many of the people I dealt with were separated or divorced. Time spent in the company was increased by the unwritten rule that people would work after office hours several times a week. One person even joked to me that he went home only to change clothes—he could stay just as well at work using the facilities in the wellness center. As far as outside activities were concerned, there were occasional company outings, but that was it.
From what I could understand, most of the company’s employees were highly dependent on the whims of the CEO. From their comments, I gathered that many looked at him as some kind of “deity.” Their main task seemed to be to cater to his wishes. Given the dominant role he played in the organization, I could discern very little independent thinking, which I could see—given the high-tech industry they operated in—was going to cause trouble in the future. Their competitors were not exactly sitting on their hands.
In contrast to this particular organization, companies with great corporate cultures have thoughtful leaders who encourage critical thinking, prize sound judgment, value individuality, and radiate authenticity. They know how to tap into their employees’ strengths and knowledge. They don’t use a cookie-cutter approach toward how their employees should think and behave. A great workplace culture has transparency and encourages dialogue and give-and-take relationships of mutual respect. In these organizations people have voice and know that they can make a unique contribution. In contrast, in cult-like organizations, too many of the goings-on are about the ego of its leadership.
Executives looking for long-term, outstanding organizational performance must be constantly aware of the cult trap. Enron has given us important lessons about the dangers of this that go beyond the issue of suspect accounting and financial reporting techniques. Enron is a sad tale that illustrates how an organization can descend into a cult-like behavior pattern, encouraging its employees to act in illegally.1 The case represents one of the most spectacular failures in business history. Enron was once ranked by its corporate peers, in the annual Fortune magazine poll, as the most innovative company in America. It was seen as a new-economy, paradigm-shifting organization. But in reality, it turned into a get-quick-rich cult enabled by digital technology, deregulation, and globalization.
Enron’s craziness was propagated by two charismatic leaders, Kenneth Lay (Enron’s founder and chairman) and Jeffrey Skilling (its CEO), who promoted a messianic vision of the future. They nurtured a quasi-religious belief in the company’s mission and its leaders’ greatness. (Lay would convince the world that he had mystical business genius.) The consistent message to employees was that they were the brightest and the best; that they were greatly favored by being selected to work at Enron; and that they were now charged with an evangelical mission to transform the way business conducted itself throughout the world.
Lay and Skilling were masters in self-promotion, encouraging hagiographic accounts of their accomplishments, including in an influential book written by the management guru Gary Hamel, entitled appropriately enough Leading the Revolution .2 The faculty of the Harvard Business School produced no fewer than 11 case studies about the company, applauding its innovativeness and recommending its business model to others. The Enronites were seen as the new “revolutionaries.” Meanwhile, journalists who dared to criticize Enron could expect to receive piles of angry mail from within the Enron ranks.
Skilling was sometimes also known as “The Prince,” after Machiavelli’s famous study. In fact, new recruits were encouraged to read The Prince from beginning to end as part of an indoctrination method, to prepare them for what was coming.3 The wealth that could be made within Enron encouraged employees to feel that they faced a much more exalted destiny than people who worked for other, more humdrum companies. Given these kinds of expectation management techniques, excessive working hours were seen as normal, and 84-hour weeks were the norm. Clearly, Enron employees were prepared to sacrifice today in the hope for a better tomorrow. Many of the people hired were very young, and more malleable, better placed to work to these excessive demands. Dissenting behavior was not tolerated. Giving bad news would hurt people’s careers.
The carrot of being able to make lots of money enabled Enron’s senior management to establish a harsh internal culture. Those who achieved the agreed objectives were eligible for huge bonuses. But the opposite was also the case. Anything gained could be taken away at the whim of senior management. The organization’s HR appraisal system became known as “rank and yank,” as people were graded on a scale of 1 to 5, and then divided into one of three groups—“As”, who were to be challenged and given large rewards; “Bs”, who were to be encouraged and affirmed; and “Cs”, who were told to shape up or ship out, the latter the most likely outcome. Anyone who didn’t put body and soul into the job would get fired.
Enron’s cult-like practices, fueled by greed, ultimately led to the slippery slope of unethical, criminal behavior. Ironically, to the outside world, Enron continued to present a heavily promoted code of ethics, known as RICE, standing for Respect, Integrity, Communication, and Excellence. Also, it ran elaborate motivational sessions, where moderators would distribute inspirational rocks bearing the words “Integrity,” “Respect,” and “Enron.” But the reality was quite different. Enron’s leadership discarded RICE completely, in favor of misinformation and deception, and the company became a glaring example of the use of double standards. Eventually, the bubble burst, showing that the emperor had no clothes and that its top management had been engaged in criminal accounting practices. Several of Enron’s executives were charged with conspiracy, insider trading, and securities fraud. Skilling served 12 years in Federal prison, while Lay died of a heart attack prior to sentencing. Enron’s shareholders lost $74 billion in the four years leading up to its bankruptcy, and its employees lost billions in pension benefits.
Resist the Siren Call of Cult-like Behavior
Some still argue that it is good business practice to look for cult-like devotion from employees but, apart from asking for commitment and cheerleading, most companies will benefit from a dose of skepticism and dissent. An organizational culture where people don’t push back when asked to act in cult-like ways, or where they aren’t engaged in robust debate, always leads to serious problems. Employees should never be afraid to rock the boat. They should feel safe to speak their mind. There should be two-way dialogue. If not, the company will end up stuck and its growth will be stifled. Thus, although it is commendable to overtly promote a culture where employees understand and buy into the company’s goals and expectations, it’s not a good idea to enforce a company’s cultural practices through fear and intimidation. Ideology always kills creativity. Some business leaders pick this up. Memorably, William Clay Ford Jr., the former Executive Chairman of the Ford Motor Company, said: “Nobody’s irreplaceable, including me. I think for too long we’ve had a cult of personality in this company and in this industry, and frankly, I’d like to see that diminish.”
A healthy workplace culture is based on shared values that team members genuinely believe in and which are expressed in their day-to-day work. It is a place where employees show up to do good work, not to pledge undying allegiance. It is also a place where people are expected to give their talent, not their soul. Instead of introducing cult-like practices, companies should encourage individuality and non-conformism—key ingredients for innovative breakthroughs. We need to be vigilant to resist the siren call of cult-like organizations. Everyone, who works in an organization should be able to distinguish demagoguery from fact. The acid test of good leadership is the ability to unlock the potential of followers and get the best out of them, not to create a corporate culture that enslaves them. A great organizational culture is about learning from the past, aligning teams with their core values, finding people who both complement and challenge their thinking, where there is open communication, where people have fun, and work constructively together. In these team-oriented organizations, people should feel free to share ideas, opinions, and criticisms. In such cultures, as the dramatic case of Enron shows, staying quiet is not an option. Everyone should have the courage to speak their mind, when needed. Everyone in the organization should have voice, not become one among many in an echo chamber. An organizational culture where people know that they will have voice will provide the ultimate competitive advantage.