Home | MIT Sloan Fellows | Leadership Blog

Tag Archives: Work and Organization Studies

Uncovering the truths of workplace culture

Johanna Hising DiFabio
Assistant Dean, Sloan Fellows & EMBA

In this issue of the MIT Sloan Fellows MBA Program Newsletter, we explore the workplace of today and get an evocative glimpse of the workplace of tomorrow. Five experts on the subject from the MIT Sloan Fellows community share their ideas about how workplaces are rapidly becoming more human-centric.

And no, human-centric does not have to disadvantage the bottom line—in fact, building a human-centric workplace can be a profitable move in an increasingly competitive marketplace. Enthusiastic, well-trained employees do better work and impress customers. And people-oriented workplaces have a greater chance of holding on to their most talented employees.

Workplace culture has other ramifications, too. It can have an outsized impact on your reputation score. MIT Sloan Management Review recently introduced a tool designed to make corporate culture transparent to the outside world, including to potential employees, investors, and customers. It’s called Culture 500, and it’s a fascinating web interface that measures the corporate cultures of leading global corporations.

The rankings on Culture 500 are based on anonymous reviews by 1.2 million employees posted on the job-search site Glassdoor, the largest repository of corporate data in the world. The metrics examined are traits that encourage innovation, collaboration, and better financial performance. The results are often eye-opening. Microsoft, for example, gets high marks on innovation, but low marks on agility. Apple and Walmart are both high on innovation as well, but very low on mutual respect among workers. Costco ranks high on collaborative spirit, but very low on execution—that is, employees are given the freedom to implement their ideas, but not the resources to do so.

In addition to those case studies, I encourage you to delve into the field studies below of work life in the 21st century. We are grateful to MIT Sloan professors Zeynep Ton and Tom Kochan and MIT Sloan Fellows MBA alumni Brian Halligan ’06, Mauricio Chapa ’19, and Katie Luby ’18 for helping us pull together answers to our core question: What exactly goes into the making of a human-centric organization?

The pioneering “Good Jobs Strategy” is heading mainstream

Zeynep Ton,                MIT Sloan Professor

After MIT Sloan Professor Zeynep Ton published The Good Jobs Strategy: How the Smartest Companies Invest in Employees to Lower Costs and Boost Profits in 2014, executives en masse began reaching out to her for guidance in implementing the concepts in their own organizations. A subsequent TEDx talk, celebrated presentation at the Aspen Institute, cover story in Harvard Business Review (“The Good Jobs Solution”), and numerous reviews and interviews in major publications only boosted the number of leaders who wanted to learn more about the Good Jobs model. In response, Ton co-founded the nonprofit think tank Good Jobs Institute  with Roger Martin, Director of the Martin Prosperity Institute at the University of Toronto. The goal: to help companies thrive by giving them the tools to create something completely counter to the presiding corporate standard—great jobs.

What is the Good Jobs Strategy (GJS)? Why did it go viral? And why is it fast becoming the best practice for a happy, productive workplace? At the root of the GJS is a relatively straightforward philosophy: mutual appreciation. Companies raise their expectations about the potential of their employees, and employees raise their expectations about the potential of their company—and their ability to add to that potential. Companies that adhere to the GJS, according to Ton, put their customers first, and they value their employees as their most important resource for putting customers first.

The smartest investment of all
The GJS is all about investing in people. That means recruiting, training, establishing career paths, creating high performance standards, and offering fair wages and predictable schedules. “It’s time to end the myth that bad jobs are good for the bottom line,” Ton says. “People are finally coming around to the realization that the traditional corporate model is not sustainable, especially when it comes to low-wage jobs (less than $15 an hour)—and a stunning 47 million Americans are working in low-wage jobs.”

Ton adds that among the losing propositions for low-wage workers is an unpredictable schedule. “What I’ve found over 15 years of research into the plight of low-wage workers is that instability in their schedules can make it impossible for them to earn a living wage.” Often, she says, employees are not making enough money at a low-wage part-time job but can’t take on another because their work hours are unpredictable at the first job, limiting their ability to make other commitments. Employers, wanting to stay lean and mean, wish to keep their options open on who works when.

So, what makes a good job? According to the GJS, a good job is work that provides basic needs (fair pay, benefits, job security, predictable schedule, ascendant career trajectory) but also less tangible needs. The work should be meaningful and give the employee enough responsibility to derive a sense of achievement. It should include paths for personal growth, learning, and advancement, and it should engender team spirit and a sense of pride and belonging.

How it works
Ton and GJI executive director Sarah Kalloch, MBA ’16, have gone to considerable lengths to make the Good Jobs Strategy accessible to all. The GJS website includes a diagnostic tool that managers can use to measure their company against four core principles:

1. Focus and simplify
Don’t try to be all things to all customers. Ton points to the pet supply website Chewy and the grocery chain Trader Joe’s as examples of enterprises that know who they are and what their customers want. They have worked to become the best in their particular niches by focusing on narrow product offerings within their specific realms. This model also allows employees to become truly knowledgeable about the limited number of products or services they sell, thus providing greater value to customers. And greater value to customers means repeat customers and, eventually, loyal customers.

2. Standardize and empower
Standardize routine processes and empower employees to shape those standards. Employees should be tasked with making decisions that improve customer service and reduce costs. Shouldering that responsibility gives them a sense of ownership and pride. Once again, having too many products or services is a detriment to this practice. “Too much self-inflicted variability,” Ton says, “means that there are necessarily too fewer standards, because standards become unwieldy when you sell 100 different brands of toothpaste, 20 different varieties of motor oil, and trips to Cancun.”

3. Cross training
Prepare employees to perform a variety of tasks so that they can pivot according to needs. Cross-training gives workers a greater repertoire of skills—valuable both to the company and to the worker. It means that employees are able to respond to customer needs more quickly and more broadly. And if workers are skilled in many different areas, companies are more inclined to give them regular schedules because they are less likely to prove superfluous during their work hours. Cross-training also improves employees’ motivation because they feel more integral to the success of the company. At Costco, a GJS success story, Todd Minor worked for more than a decade in the meat department of another supermarket without advancing. At Costco, he was paid more at the outset, trained in all areas of the unit, then promoted to a more challenging position within six months.

4. Operate with slack
The GJS maintains that if you staff your unit with more labor hours than you expect, your customers will get better service and your employees will make fewer errors. When employees have the skills and the time necessary to solve a customer’s problem, they feel a sense of satisfaction and pride. Just as important, they have strengthened the company’s relationship with the customer. In addition, operating with slack relieves managers from having to continually intervene when overstretched workers don’t have the skills or the bandwidth to handle anything other than rote assignments. This model also results in employees working to more regular schedules, allowing them to make plans in their personal lives without the worry that they may end up forfeiting potential work hours.

But do good jobs pay off?
The Good Jobs Strategy purports to create superior value for employees, customers, and investors by combining investment in employees with operational choices that increase employee productivity, contribution, and motivation. But does it work? Anticipating the question, Ton and Kalloch offer detailed case studies outlining successes at companies like Quest Diagnostics, Mud Bay, and Toyota.

Ton notes that higher-wage jobs are already improving, but she is optimistic that lower-wage jobs will follow suit. She points out that the financial incentives (greater customer loyalty, greater employee retention) and competitive advantage (better service and reputation scores) will eventually prove to resistant companies that the more human-centric approach is actually the less risky way to proceed.

Ton believes that more and more companies are looking beyond the bottom line. “To my delight, I see more corporate leaders thinking about the moral implications of their business models. They want to offer more humane working conditions and provide a living wage so that people can afford to feed their families. And they’re motivated by ethics—their moral compasses are pointing them in the right direction.” And that, she says, is definitely a win for the Good Jobs movement.

Only we can bind ourselves to technology

Tom Kochan,          George Maverick Bunker Professor of Management at MIT Sloan

“The media landscape is full of futurists, academics, and members of think tanks making erratic predictions about robots eating jobs,” says Tom Kochan, George Maverick Bunker Professor of Management at MIT Sloan. “Even the World Economic Forum has published some wild numbers about anticipated job loss and job creation linked to advanced technologies. The problem is that few of those forecasters are managers in the workplace, and managers will have the greatest influence on how this plays out.”

What the alarmists are missing, in Kochan’s view, is that technology tends to move relatively slowly through organizations, and that human integration is essential to making the most of automation. “General Motors learned this lesson the hard way in the 1980s,” Kochan says. “In an effort to catch up with more efficient Japanese competitors, GM invested nearly $50 billion in robots. Rather than becoming more competitive, the company ended the decade as a high-cost producer because it failed to upgrade its workforce and change its work practices in ways that made the new technologies pay off.”

Déjà vu all over again
Thirty years later, Tesla demonstrated the relevance of that lesson to contemporary manufacturing. The company’s total automation strategy resulted in production shortfalls, investor dissatisfaction, and a push by workers to unionize in the face of what they viewed as persistent safety problems, overwork, and low wages.

“Ironically,” says Kochan, “the Tesla failure happened at the same plant in Fremont, California where Toyota achieved high levels of productivity with its gradual process of introducing technology and working with workers and their union.” Tesla’s founder, Elon Musk, ultimately conceded that “humans are underrated” and that successful automation is a complex balancing act of human and machine skills, among other factors.

We’re all in this together
“My experience is that corporate leaders, MBA students, and mid-career managers have much the same goals for their organizations as the people who work at lower levels of their companies,” Kochan says. Rather than surrendering to the self-serving vision of a technology creator or salesperson, executives and managers must think hard about what problems any given technology can solve within their organizations.

“The choices are ours to make, and history shows us that when companies think carefully about what problems a particular technology can solve, more people up and down the line feel invested and the outcomes are more productive. You must never let technology box you into organizational practices that don’t work for your company.”

The future of work
Kochan and co-teacher Elisabeth Reynolds, executive director of the MIT Task Force on the Work of the Future, tackled those challenges head on with their new online course Shaping the Work of the Future. Offered on the edX platform during Sloan Innovation Period (SIP), the course is free and open to the public.

“A key goal of the course is to communicate to a broad spectrum of workers around the world—young and experienced, frontline and leaders in business and government—that they can affect the future of work‚” explains Kochan. “There are no iron-clad laws of technology and globalization. If we take active roles in managing these things, we can influence how they turn out.”

Key insights from a global cohort
Kochan notes that the first cohort of course participants related strongly to the idea that leaders engaging with new technologies must be systems integrators and organizational change agents for their companies. Participants also affirmed that a new social contract must be forged between management and workers.

“In industry after industry, two dominant themes emerged,” says Kochan. “First, company leaders must invest in training and preparing their workers to be continuous learners, and these efforts must be supported with resources from the government and education sectors. Second, organizations must give workers a meaningful voice in decisions about introducing new technologies into existing organizational practices. This should include rebuilding unions in a modern way that engages women, minorities, and younger workers. We know from countless examples—both positive and negative—that genuine engagement on substantive issues across all levels of an organization leads to the most creative and productive outcomes.”

Kochan is the first-ever winner of the International Labour and Employment Relations Association Academic Excellence Award. The award was created in 2017 to recognize outstanding academic achievements in the field of labor and employment relations. His latest book is Shaping the Future of Work: A Handbook for Action and a New Social Contract.


Scaling company culture in a worker-defined workplace

Brian Halligan,              SF ’06

The organizational culture at HubSpot that everyone is talking about, wasn’t supposed to be talked about at all, according to the company’s CEO and cofounder Brian Halligan, SF ’06. His initial approach to company culture was inspired by the Fight Club credo—the first rule about culture is that you don’t talk about culture. Halligan decided to break that rule, however, after a chat with Colin Angle ’89, SM ’91, chairman, CEO, and founder of iRobot. “Colin convinced me that to scale our hiring, we had to figure out culture,” he says.

HubSpot’s pivot paid off. Its culture flourished through the challenges of its 2014 IPO and an explosive workforce expansion (roughly tenfold in five years). Today, the company is setting the standard for a worker-defined workplace. It was just rated the #1 Best Place to Work in 2020 by Glassdoor’s Employees’ Choice Award, and the review platform Comparably placed HubSpot on several of its 2019 “best” lists— including Best Companies for Women, Best Companies for Diversity, Best Company Culture (#5), and Best CEO (#2).

Documenting conversations about culture
How did HubSpot do it? After the conversation with Angle, inspired Halligan to reenvisioned HubSpot’s culture through an inbound marketing lens. “A great product acts like a magnet that attracts customers,” he says. “In a similar fashion, a vibrant and healthy culture is a magnet that helps attract and retain employees who, in turn, recommend us to their network of talented professionals. It encourages a virtuous cycle.”

Halligan’s rethink—and the company initiatives it inspired—led to publication of The Culture Code, HubSpot’s culture document that has attracted more than three million views on SlideShare. “Discussing and documenting our culture made it actionable,” notes Halligan.

Those early conversations and surveys also revealed a surprising sore spot among employees with one to two years of tenure. “We learned that our ‘mid-life’ staff members had serious concerns about career advancement within HubSpot,” Halligan says. “We immediately ramped up our efforts to communicate existing opportunities for career development, and we tailored new opportunities for this segment of our workforce. We made sure we expanded their opportunities for learning and advancement before they began to think of expanding them somewhere else.”

Driving culture
That is not to say that creating culture was a one-shot deal at HubSpot. To ensure the continued evolution and growth of the company’s culture, executives created the position of Chief People Officer in 2015. Katie Burke, MBA ’09, took on the role in 2017 and now oversees the global People Operations organization including the company’s recruiting, HR, learning and development, culture, and employer brand teams. Burke’s tenure is also notable for an emphasis on diversity and inclusion programming and a 20% increase in women in leadership. Fortune.com recently placed HubSpot on its “100 Best Workplaces for Women” list.

Burke believes the future workplace will become increasingly human-centric. “We see more and more top candidates in the job market demand more human-centric environments,” she says. “They’re asking questions about how we prioritize mental health, for example, and how we implement gender pay equity. They also want to understand how community impact factors into our mission.”

Transparency will continue to drive company cultures forward, Burke says. “Sites such as Glassdoor and Comparably are changing the game. Employees and candidates don’t just request transparency, they demand it. That’s pushing organizations beyond superficial notions of diversity toward making true inclusion and belonging a business priority. And when people of all backgrounds feel that they can grow personally and professionally in your company, everybody wins.”

Creating a human-centric organization in a volatile global arena

Reaching back to his childhood in Monterey, Mexico, Mauricio Chapa, SFMBA ’19, can remember the ways the company he works for now shaped his life. Chapa is Division Vice President for Talent and Compensation at Sigma, a division of ALFA, the seventh-largest company in Mexico. Chapa worked at ALFA for six years before transitioning to its subsidiary and says the company’s powerful commitment to community is one of the factors that motivates him to remain part of the team.

Mauricio Chapa    SFMBA ’19

As a child, Chapa’s parents took him to the elaborate family-oriented complex that ALFA developed for the community, which includes gardens, an aviary with rare birds, and the state-of-the-art science museum and planetarium that fostered Chapa’s appreciation for science and technology. In fact, it led him to pursue his MBA at MIT.

When Chapa was a student in the MIT Sloan Fellows MBA Program, he was taken aback at the astonishment of his classmates when he talked about ALFA’s commitment to community. “ALFA has always believed that what’s good for the community is good for ALFA—that the success of both are inextricably linked.”  Chapa explains that the company’s core ethos hasn’t changed since it was established as a brewery at the close of the 19th century. ALFA’s generosity of spirit makes his life as an HR executive more rewarding, he says. The challenges of motivation and retention, for example, are easier when employees feel that the company is invested in their wellbeing.

Redefining community in a global organization
But community in 2020, he points out, has very different ramifications than it did back in 1890. Today, workplace culture must transcend physical location. ALFA and its subsidiaries have a footprint in more than 25 countries. Employees in Argentina, Poland, and India, for example, can’t take advantage of the extensive amenities available to its employees in Monterey. How do you instill a shared, cohesive culture and a strong sense of community across so many different time zones?

In addition, ALFA has in its stable a very diverse set of industries—aluminum auto components, petrochemicals, oil and natural gas, and refrigerated foods—each with its own subculture. How do you retain a unified corporate culture across industries and continents? “It’s all about technology,” says Chapa. “ALFA is launching a digital platform to bring together everyone under one umbrella so they can bond, interact, collaborate on a project, converse, share ideas—even recipes. The generations that are coming into the workplace now are comfortable forging strong communities through social media platforms.”

Merging companies and company cultures
Chapa notes that during his career in HR, he has been especially aware of the challenge of preserving culture following a merger or acquisition. “It’s one thing to merge two companies—quite another to merge two company cultures. It’s essential to respect the existing culture of the company that is being acquired but, at the same time, make sure the employees of the new entity share the values of the company they are now a part of. The challenge requires awareness and sensitivity. There are no two scenarios alike, so it’s important to take each case separately and deal with it thoughtfully.”

It’s a delicate but crucial balance, Chapa says, and one that requires careful thought and strategy. “When do you centralize, and when do you decentralize? That is one of the key challenges of multinational companies. How do you get the most out of diverse synergies while reinforcing common values and avoiding cross-cultural misunderstandings and mismatches?”

He cites another human resources challenge for multinational companies—working from home. “The ability to work remotely is actually mandated by the government in some countries,” he notes, “while workers in other countries simply don’t have access to an infrastructure that makes working remotely possible. You want to have a policy that applies equally to all employees, but sometimes that simply isn’t possible. You have to find a way to mitigate that inequality.”

Your employees are your customers
Bottom line, Chapa says: A good human resources department regards its employees as its customers. “Organizations should want to establish a healthy relationship with its employees from the outset and work continually to keep them happy. There used to be a sense that the company was doing you a favor by employing you. That mindset has been turned on its head. We are continually refining how to connect with workers.”

What that signals, Chapa says, is that the era of the one-size-fits-all benefit plan is over. “HR must connect with employees, understand their personal situations, and be able to work with them to provide individualized benefits that enable them to do their best work. Maybe they need housing closer to work or help finding childcare. As with any customer, it helps to know who you’re serving, what they need, and what motivates them. The result? Happier employees who are invested in the company. In the end, they just perform better.”


A human-centric organization is a productive organization

Katie Luby SFMBA ’18

Katie Luby, SFMBA ’18, believes that employees are more motivated and invested when they know their work will make a person’s life better. Director of the Customer Success Group at Salesforce, Luby has learned over the course of her career that innovating in a vacuum does not engender the visceral satisfaction of creating an improvement to human quality of life.

 That connection—the employee’s task and the human impact—is not always straightforward, so Luby believes it’s essential for managers to make clear how a worker is improving the human condition. Most organizations serve people in some capacity, whether providing a product or service, and a customer-centric workplace is a human-centric workplace. “When you are focused on making life better for the customer, you are part of something bigger than yourself. It humanizes the work. Burn out and ennui are less likely. Workers are excited to think they are doing something that will change how people can be successful.”

Luby adds that customer service has evolved accordingly. “Customer service equals all the ways a customer deals with a brand. It’s not how long a customer is on the phone with the call center. It’s about quality, about truly satisfying the customer, not meeting artificial metrics.” Customers, she notes, are continually creating data, and workers need to be responsive to that data and communicate in an authentic way. “The goal is not to sell them something. Where do they need help…or want to be delighted? Data can be vivid if you know how to interpret it and roll it into a customer-centric strategy.” Luby adds, “When, as workers, we know more about the customer through extensive data collection, they become more human to us, and we care more about their needs. That ultimately makes for happier employees who are more committed to their work, more intent upon getting it right.”

Cross-functional teams are the most creative
The structure of how people work in a human-centric company, Luby points out, is necessarily different from one that isn’t. To meet the needs of customers, she points out, teams are formed around outcomes, not functions. “We form teams to create value for customers. That means that rather than being organized by business need or technology, we bring together teammates from different functions who can introduce a distinct and valuable perspective to a solution.”

For Luby, a human-centric workplace also means giving workers the freedom to create—and to fail. “Iterating is crucial to finding a successful solution. We need to offer a judgment-free path to getting to that solution. Teams must have room to experiment and to fail, to test things in the marketplace, get feedback, and adjust as necessary. In the past, workers were expected to bring only proven winners to market, so they had to be very sure of any new product before releasing it.”

A setback in this innovation culture, Luby says, is a step on the road to winning—and successful products get to the marketplace sooner. It also creates a culture where employees are invested and excited to experiment. Not long ago, she notes, a large corporation would segregate its innovation arm to an offsite skunk works with its own free culture—a freedom that the C-suite didn’t want to contaminate the rest of the operation. Luby says that rather than segregating the innovators, the entire operation should share this culture of creativity. “To keep organizations nimble, these innovation practices need to be more core.”

Luby notes that lessons learned from failures and successes alike should be rolled into a company’s overall strategy. “That practice is not only important for the success of the company. It’s good for morale. With rapid results, data-driven decision-making, and a culture of human-centric innovation, teams see that the impact of their work has actually guided the direction of the company, giving them a true sense of being invested in the organization’s success.”


Anatomy of a Great Professor: Meet Jackson Lu

Jackson (Guannan) Lu, Assistant Professor of Work and Organization Studies at MIT Sloan, just made one of the most enviable honor rolls in academia—Poets & Quants “Best 40 under 40 Professors.” At 29, he is one of the youngest to make the list.

Jackson Lu

Lu’s research focuses on the upsides and downsides of globalization for individuals, groups, and organizations. One of his projects focuses on astrological stereotypes and discrimination in China, where western astrological signs have become increasingly popular because of globalization. Virgos, for example, are now often discriminated against in job recruitment—and in dating—because they are stereotyped as having disagreeable personalities. Although Lu’s extensive data gathering has made clear that astrological signs do not predict personality, he is concerned that astrological stereotyping will become accurate over time through self-fulfilling prophecies.

Lu, who teaches Power and Negotiation at MIT Sloan, tells Poets & Quants that he resolved to become “not only an intellectual scholar but also someone who helps inform policies and practices in the real world.” Among his many nominators, a colleague noted that Lu “puts in great effort to ensure that the lectures are not only engaging and fun but evidence-based and practical. He is very receptive to student feedback and the efforts he puts toward the quality of his lectures show how much he cares about students’ experiences in the classroom.”

In its citation, Poets & Quants makes the point that youth, in Lu’s case, is not to be equated with inexperience: “Don’t let the age fool you. Lu has already been published in premier scientific journals such as Nature: Human Behaviour, Proceedings of National Academy of Science, Journal of Applied Psychology, Journal of Personality and Social Psychology and has earned top marks in student reviews in the classes he has taught since earning his Ph.D. in Management from Columbia Business School. His research has been covered in publications like Wired, Pacific Standard, Forbes, and Quartz, among others.”

One of his nominators underlined the point. “Jackson is simply a superstar. He has published as much as anyone at this career stage and nearly all of his articles are big, impactful ideas. He also knocked it out of the park on his first try at teaching, getting 4.9/5 evaluations for both sections. He is a perfectionist and is committed to excellence in all that he does.”

When asked what he enjoys most about teaching MBAs, Lu quipped, “My students are smarter, cooler, and funnier than me.” Clearly, many of his students would take exception.

Read more about Jackson Lu’s research.