Let us start with the conclusion: One of the primary responsibilities of executives is to shape and maintain the organizational culture. If they do not recognize this responsibility and act accordingly, the organization will fail. Permanently allowing full-time remote work makes it difficult, if not impossible, to build a healthy organizational culture.
It was therefore entirely predictable that even tech companies, at least those with capable leaders, would scale back their liberal remote work policies, Amazon and Twitter being two popular recent examples. And for most of them, that’s exactly the right thing to do. For companies in the warehouse automation industry (which is my home turf), this is even more important.
As with so many other things I learnt in college, when I started in my first real job (outside university, that is) I was assuming that the concept of organizational culture and its importance surely must be common knowledge among senior management and executives in any notable organization. Nothing seems to be further from the truth.1 I witnessed first-hand how incompetent executives destroyed in record-breaking time thriving organizations by dismantling their corporate culture. And they didn’t even notice it. They honestly thought they were doing a good job.
This article is about the importance of organizational culture to performance. And it is about what this implies for remote work policies and management.
Organizational Culture: What it is
One of the tricky things about managing organizations is that the time delays between cause and effect can be significant. Time delays inhibit learning.2 You can make a lot of silly decisions before the effects kick in. And all too often, people change positions or companies before they can see the results of their actions, so they never learn from their mistakes.
That effect will be seen only slowly is true especially for organizational culture. Culture changes slowly, and that’s one of the reasons why it is difficult to change purposefully. That is: unless you destroy it blindly, because that can be relatively quick. The reason for this lies in the very nature of the concept of culture. Part of organizational culture are “shared assumptions, values, and beliefs, which governs how people behave in organizations“ (Schein, 2010). Typically, assumptions, values, and beliefs remain tacit, i.e., they are not written down anywhere but reside solely within the organization’s workforce. As long as the workforce and the value system remain stable, so will the culture.
Sometimes, organizations hire consultants to hold expensive workshops with senior management to identify and write down “corporate values” which subsequently are put in those glossy brochures that are handed out during sales events, or they are framed and hung on the walls on the hallway to the bathrooms.3 And then nobody ever thinks about them again.
The Illusion of Permanent Remote Work
The importance of organizational culture is why, for most companies, the idea of employees being able to work from home permanently is really bad. It’s not just that physical separation hinders communication – there’s a big difference between asking something of someone you meet informally at the coffee machine and calling someone on Microsoft Teams in terms of psychological threshold. Moreover, you do not need a reason to talk to someone at the coffee machine; in fact, it’s expected. But you do need a reason to call someone through Teams. That’s obvious, right?
Even more important, however, is the impact of remote work on organizational culture. In fact, I am struck by how consistently commentators on this issue (on both sides) completely ignore the impact of remote work on organizational culture.
It’s difficult to impossible to build a healthy and productive organizational culture without frequent real-life interaction between employees. The domain matters, however: Programmers are less reliant on physical interaction because they are used to, and comfortable with, interacting digitally, and they have the personality to support it, but most companies are not made up mostly of programmers, including many tech companies. And even programmers might occasionally enjoy and benefit from the presence of other people, if they can muster the courage and discipline to go to the office. But have any of these „Remote Work Forever“ proponents ever thought about onboarding new employees and making them valuable members of the company? How would that even work without direct interaction with peers, supervisors, subordinates, mentors and role models? Seriously – how?
Organizational culture is the lubricant that touches every part of the organizational apparatus, be it product development, HR, sales, or leadership. If organizational culture goes down the drain due to myopic executives or sociopathic managers, the company’s finances will follow the downward spiral. Finances are the lagging indicator at the very end of a long causal chain. The health of the organizational culture is one of the most important leading indicators, even though it is very difficult to measure because much of it is neither tangible nor visible.
Without a strong organizational culture, companies cannot build loyalty among their employees. Without employee loyalty, companies are effectively fucked because then they have to join the rat race to increase salaries and other benefits and respond to every whim. They get caught in a classic prisoner’s dilemma where everyone would be better off if they abandoned their short-sighted workplace policies, but if everyone did that, that company offering purely remote work jobs could attract all the people who insist on such a setup (partly because they don’t understand what it will do to them in the medium term).
The number of people proclaiming on LinkedIn that the permanent remote work policy will prevail and that all those „backward“ companies that insist on physical presence will lose the race for capable employees is staggering. It’s one of those LinkedIn moments when you realize that most people have no fucking clue what they are talking about. Not that that’s surprising in any way, but when you are trying to go through the day with a positive attitude, it’s easy to forget that most people are simply repeating what they have heard from someone else (or seen someone else post on LinkedIn) without even attempting to think about it first. Thinking does not get you likes, but posting does, especially if it allows you to signal supposedly higher virtue and progressiveness. With that said, it’s not really hard to understand that full-time permanent work from home will hurt the organization. Which makes it all the more surprising that so many self-proclaimed „thought leaders“ on LinkedIn don’t get it.
There would be much more to say about this, especially since organizational culture is perhaps the most underrated concept in business. For some reason it never shows up in my LinkedIn feed, and I myself would probably have remained ignorant of it had I not had great luck with some of my mentors long ago who introduced me to the concept. It is taught in good business schools! But there’s no clear career path associated with it, which probably results in it having a less prominent place in people’s minds. And most executives and senior managers I have met don’t know about it.
Not surprisingly, though, the most successful companies I know that have healthy organizational cultures, high employee loyalty and retention, and good financial performance do not make excessive use of remote work.
Let me repeat: One of the primary responsibilities of executives is to shape and maintain organizational culture. Failure to recognize this responsibility and act accordingly, will result in the failure of the organization. This development is completely predictable, and I recommend that you do not try it; there are enough examples available to learn from. Shaping and maintaining culture requires bringing people together and giving them time to actually live the culture. For most of us, this is not going to happen in online-only relationships.
If companies feel pressured to allow everyone to work from home because otherwise they might lose employees to competitors, they have already lost. They may not know it yet, but they have lost. In this case, remote work, like high salaries, simply becomes a patch for an otherwise dysfunctional organization, for an engine that breaks down because it lacks lubricant.
Schein, E. H. (2010). Organizational culture and leadership (4th ed.). San Francisco, CA: Jossey-Bass.
1 This seems to be a common fallacy: students have a much higher opinion of business and management than is generally deserved. This is not surprising, since college textbooks often refer to businesses and how they solve problems using cutting-edge scientific and professional tools and concepts. It seems to me that college textbooks thereby paint a very one-sided, unrealistic and overly positive picture of most companies. After all, many of the Fortune 500 companies cease to exist not long after their heyday (and after being featured in countless case studies and management books). Students cannot help but think that these companies have it all figured out. I once started a job on the same day as a recent graduate of a Master’s program. We sometimes had lunch together. After a few weeks, she informed me that she was completely shocked at the lack of professionalism in our company. It is important to add that this was one of the better run companies I had seen from the inside, and it was quite successful financially. But her expectations were obviously different. Her story reminded me of my time as an intern at a well-known car manufacturer, where I had the same feeling.
2 This is another thing I assumed senior executives and leaders would be familiar with: be careful before drawing conclusions about the success of your actions. Organizations are systems, and as such, they are made up of numerous feedback loops. Especially in the project business, it can take a long time to get useful feedback on the impact of your actions due to sometimes significant lead times. This is obvious to anyone with a basic training in systems thinking, and I thought that surely this must be true for these highly paid managers as well. Again, I was very wrong.
3 To me, the attempt to write down corporate values indicates a certain helplessness on the part of management, which in turn suggests that the organization is already going down the drain. This is an unproven hypothesis, I would be happy to hear counter examples.