Will COVID-19 change corporate culture?
Friday, July 17, 2020
Will the COVID-19 pandemic impact corporate cultures? If so, how?That is a deceptively hard question. The quick answer is that it already has.
A brief read of the headlines tells the shockingly somber story: according to the Brookings Institution, over 37 million Americans work within industries immediately impacted by COVID. Nearly every job that can be performed remotely in every industry now is. The value of Zoom’s stock has more than tripled since the start of 2020. Our daily work lives are characterized by constant uncertainty, unpredictability, and anxiety. Our lives have been indelibly changed, perhaps forever.
But underneath these surface realities lies a more complicated answer. To get at it, we need to answer two questions. First, what is culture? And second, how is culture changed by events like pandemics?
The Culture “Crisis”
Companies have been preoccupied with culture for over 40 years, and it remains one of the most popular business topics today. Type in “corporate culture” on Amazon and you will get over 50,000 hits. Yet for all our preoccupations, we know woefully little about it or how to effectively deal with it. So, figuring out how cultures might be changed by COVID is not a straightforward endeavor.
The problem is that after 40 years of preoccupation we are still naïve about what culture means — corporate values? Norms? Attitudes? How we feel? How we “do things around here?” We greatly oversimplify the concept, reducing it to a single dependent variable, such as values, leadership behavior, or language. We believe culture is something that can be managed, controlled and manipulated, much like machinery or real estate. And as with many things in business, we want quick and easy answers.
We only need to scan a few pre-pandemic statistics to get sober about how our lack of understanding has had significant consequences:
- A majority (51%) of the U.S. workforce is not engaged. Other studies put that number as high as 68 percent.
- Two thirds of Canadian and U.S. employees are actively looking for or would consider a new job opportunity if approached.
- 46% of nonunion workers say they would like to be in a union, up 32% since 1995.
- A seemingly never-ending stream of corporate scandals relate to culture, including Kay Jewelers, Volkswagen, Boeing, Wells Fargo, Enron, GM, and Equifax — to name just a few.
- 80% of surveyed firms spend on average $2200 per employee per year on “culture management.” Extrapolated to the Fortune 1000, that’s a staggering amount of money.
Bad Science, Dumbed-Down Solutions
The problem is that most of our current approaches to culture are based on outdated or pseudo-scientific misconceptions, half-truths, or just wishful thinking. The zeal of MBA programs, consulting firms, and managers to provide simplistic and readily consumable answers to hard problems — and the fact that culture is the most complex phenomenon of organizational life — have gotten us to where we are today. We are spending literally billions, with little to show for it.
Ironically, the last 30 years of interdisciplinary work in the cognitive sciences are yielding many new insights about culture, with the potential to transform the field. Unfortunately, much of this knowledge is not yet in the mainstream. Understanding a bit about this new science will give us a much more robust way to think about the question.
The New Science of Culture
Cognitive science is showing that culture is background knowledge — an operating system we use to make sense and successfully function in any society or community. We call this a “reference system” because we continually but unconsciously draw from it many times a day. Culture is a reference system.
Think of what happens after thousands of hours of playing the piano, arguing legal briefs, or solving hard engineering problems. Just as individual neural pathways are shaped by repeated and habitual experience, so are a group’s neural pathways shaped by the brain’s inherent neuroplasticity. Reference systems evolve out of successful adaptive responses to environmental challenges over time, and the sustained and meaningful experience a group has in successfully solving difficult problems.
The DNA of Culture
These experiences create shared mental representations — or dominant logics — used by the collective to explain, rationalize, justify, and idealize. These logics are the DNA or source code of culture and underpin the reference system. They show up as shared assumptions, lived norms, and common standards for what is considered good (reference systems also are made up of organizational practices and adaptations, but the core are dominant logics).
What this means is that to understand how a pandemic or any other massive ecological or societal change impacts culture, we have to understand whether that core is impacted.
Culture Follows Task
What you habitually and repeatedly do shapes how you think. Culture follows task. This explains why cultures are so hard to change. What makes you successful largely determines how you collectively see the world. Think of a core problem the organization solved to survive and thrive — being the “airline for the common man” at Southwest; developing the personal computer operating system at Microsoft; inventing search at Google — and you will come close to understanding that company’s dominant logic, or at least one of them. (Organizations have several dominant logics underwriting their reference systems.)
The more successful the organization, the more hardened the logic. Think how hard it is for industrials to turn themselves into digital and data-science companies, or for a successful start-up to scale in such a way that the “magic” of its early days is retained and felt.
To change culture, you have to get at these logics. That requires changing what you habitually and repeatedly do. Great corporate visions, moving CEO speeches, compelling values, and all the rest of the ways companies usually go about trying to shape culture won’t do it. Interventions need to be at the level of core everyday practices — the informal and formal everyday routines, processes, and habits (e.g. planning, resource allocation, innovation, customer) by which the organization runs its business.
Does COVID Change Your Cultural DNA?
So, the real question is, does the pandemic change your core dominant logics? The jury is still out.
In some industries like airlines or hotels, the pandemic might change business models and practices forever. Think of airlines changing seating configurations or route structures, or hotels changing how communal space is organized. These practices might shift cultures if they fundamentally change how these companies operate. But that is not a given.
The likelier scenario, and one we see unfolding now, is that the pandemic is actually strengthening and reinforcing dominant logics. As happens when we’re under any stress, our habituated defenses — dominant logics— will be triggered by an environmental stressor like COVID.
Think of the company that runs on logics of risk mitigation and shareholder returns through predictable quarterly earnings. That company will use such logics to justify cutting expenses and laying off workers, though other strategies such as furloughing or salary reductions could achieve the same goal. Or the environmental cleanup company with a dominant logic of assuring community safety that is banning all travel for its employees across the board until 2021 — a ban is the only way to guarantee safety. In these cases, the pandemic is strengthening the logics already in place.
One thing is clear: managers are having to learn to be much more adaptive to an ever-changing environment. To the extent adaptiveness changes business practices, that will impact cultural logics. But beyond that, whether COVID-19 touches dominant logics at the heart of a company’s culture will be a matter of how long and far reaching the pandemic’s impact on society and business proves to be.
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