From HBR.org
Executive Summary
Healthy company cultures build a sense of community, shared purpose, and collaboration among employees. But they also give people space to be individuals and encourage a life outside the company. Sometimes, however, the effort to create alignment around a shared vision goes too far, and the company starts to discourage individuality and involvement in life beyond the company. In these situations, where the company comes to resemble a religious cult, creativity and innovation are endangered and the company’s long term future is imperiled. Executives need to be on the watch for signals that this is happening – an abundance of company rituals, pep talks, and insider jargon are all potential signals that your company’s culture may be turning into a corporate cult.
Each company has its own “culture” – the values and norms that define what is and isn’t appropriate behavior for the organization. Culture guides how you work, and a healthy one enables companies to attract and retain highly motivated employees and unite them around a common goal, purpose, or cause in pursuit of sustainable performance.
But what starts out as a voluntary alignment sometimes end up looking like something more sinister. Healthy corporate cultures can easily turn into corporate cults, whether leaders intend for it to happen or not. Many of the companies we celebrate are treading that fine line; Apple, Tesla, Zappos, Southwest Airlines, Nordstrom, and Harley Davidson are a few examples. They have all built a cult-like following among their customers and, increasingly, are encouraging cultish behaviors in their workforces as well.
What characterizes corporate cult is the degree of control management exercises over employees’ thinking and behavior. This starts with recruitment, where employees are screened for their “fit.” Once in, they then see that on-boarding processes and incentive systems tend to reinforce the need for alignment. This drives the way people communicate, make decisions, evaluate each other, as well as hiring, promotion and termination decisions. In such a climate, individualism is discouraged, and group-think prevails.
Some cult-like companies go so far as to position the workplace as a replacement for family and community, isolating their employees (perhaps unintentionally, perhaps deliberately) from those support networks. They encourage people to center their lives around their jobs, which leaves little time for leisure, entertainment, or vacations.
How can you tell when a company is becoming a cult? Language is a big clue. Corporate cults typically create their own terminology to reinforce the sense of belonging. In Disney, for example, employees are “cast members” and “customers” are “guests.” And, when inside the park, you are “on stage.” When an attraction breaks down, you use the code “101.”.
Rituals are another warning sign – not always problematic but sometimes so. Many years ago, when working with IBM, I was given a remarkable book of songs commissioned by, dedicated to, and almost deifying its legendary first CEO Thomas Watson Sr. At the U.S. retail giant Walmart, a compulsory company cheer is still part of the deal. Although these rituals may seem a bit dated to American or European eyes, they remain a feature in many Asian companies. Yamaha Motors staff continue to sing its company song, which was written 1980. At Horiba, a precision instrument maker, employees happily sing the song “Joy & Fun,” while a musical number called “Romantic Railways” can be heard during lunchbreaks at JR Kyushu, a railroad company.
When I recently attended the weekly “get-together” of a leading US tech company, I found a packed auditorium and an audience who started the session with what I later learned was the standard introductory “cheer”: people screamed the company’s name three times. After this, the CEO, who had invited me, handed out the weekly service awards, and each recipient received a deafening applause. I felt as if I were at some evangelical revival meeting. A barbecue followed the prize-giving and nearly everyone attended, all dressed (like the CEO) in black and gray.
The enthusiasm of the people present was undeniably impressive, but over the course of the following week, as I interviewed a number of executives and employees, I began to wonder. It became clear, after some prompting, that people didn’t seem to have much of a life outside the company. Many were separated or divorced. One executive claimed that he only went home to change clothes, adding that he might just as well stay at work using the facilities in the wellness center. In this context, corporate jollities like the weekly get-together took on more sinister colors.
Red flags should go up when there are too many pep talks, slogans, special lingo, podcasts, YouTube clips, motivational team-building activities, and sing-songs. Any time there’s a potential for people to feel excluded for how they think or feel, the organization has entered cult territory. And ultimately that will be bad for business. The rigidity of cult behavior stifles innovation, thereby endangering the company’s future.
If you’re a senior executive, therefore, you should always be on the lookout for signs that your culture has become psychologically coercive. Ask yourself: Do employees believe in the company’s vision because they understand and agree with it or because that’s what they’re supposed to do? Does the company encourage them to have personal lives? Most importantly, does it encourage the individuality and non-conformism that drive breakthroughs?
The acid test of good leadership is the ability to unlock the potential of followers to get the best out of them, not to create a corporate culture that enslaves them.
This requires managers at every level to encourage critical thinking, prize sound judgment, value individuality, radiate authenticity, and tap into their employees’ unique strengths and knowledge. To be sure, alignment matters – and a great culture will involve learning from the past, agreeing on core values, finding people who both compliment and challenge one another, engaging in open communication, having fun, and working as a team. But it is equally about healthy debate – in which people can debate certain values and norms and differ in their opinions. When a culture ceases to embrace diversity and dissent, it becomes a cult.