The Bottom Line

You'd think that organizations would work harder to earn their workers' allegiance; after all, no psychological force helps or hinders the achievement of organizational goals more than employee's identification with the organizations that they work for. Employee initiative, risk-taking, productivity, and creativity can all be linked to identification, and result in a more powerful company.^[3] Cross-cultural evidence from nations as widely separated as the United Kingdom and Japan shows that employee turnover is diminished when their organizational identification is strong, resulting in major financial benefits to employers.^[4]

The power of employees' organizational identification as a social adhesive with bottom-line consequences is also evident in Fortune's report of the 100 best companies to work for in America. Comparing the average annual return to stockholders generated by firms that were nominated for the list by their employees with that of firms that were not shows that investors were better off holding stock in companies that received employees' endorsements. Over a five-year period, these employee-approved companies returned 27.5% to investors, compared with only 17.3% for those not elected to the “Best 100.” And over a 10-year period, those nominated returned 23.4% to investors, compared with only 14.8% among the unendorsed. This means that if $1,000 were invested in a firm boasting the emotional attachment of its employees, in eight years that money would have grown to $8,188. But if the same $1,000 were invested in a firm in which employees lacked such ties of allegiance, it would have grown to only $3,976 in the same amount of time.^[5]

Rates of in-company theft and sabotage—a high eight-figure cost to corporations around the world—are also vivid illustrations of how employee behavior, devoid of organizational identification, is detrimental to the bottom line. The facts tell us that these crimes cannot be dismissed simply as economically motivated efforts to make up for deficient wages: Workers at all income levels steal, and what's commonly stolen tends to be petty and of little or no value to the thief; and sabotage, a common crime in organizations, never provides offenders with economic gain. Indeed, the most convincing evidence shows that employees tend not to steal from employers who treat them respectfully.^[6] In short, workers are much more likely to give in to malevolent temptation if it means robbing or harming one of them rather than one of us.

When companies are relegated to they, there is no feeling of worker–employee oneness, no merging of personal and organizational goals, and no vicarious experience of organizations' ups and downs. And when it comes to making decisions at work, self-interest—instead of the psychological golden rule of organizations—is the most accurate predictor of employees' behavior.

Despite these bottom-line consequences, the data concerning organizations' efforts to earn the allegiance of their workers are not encouraging. Recently, the U.S. Department of Labor estimated that only 4% of American businesses are involved in employee inclusion-inducing activities.^[7] Edward Lawler reports that although a study conducted by the University of Southern California's Center for Effective Organizations showed that 68% of Fortune's “Fortune 1,000” claimed that they used self-managed teams, additional evidence revealed that the activities touched a mere 10% of the employees.^[8]

Discouraging data also come from managers surveyed by the Boston-based consulting company Rath and Strong. Eighty percent of these bosses asserted that employees should have a voice in mapping company change, but this positive assertion was quickly mitigated when 40% of them added that they did not believe that their own employees had anything valuable to contribute.^[9]

Evidence from employee surveys supports the view that organizations' public pronouncements, boasting about their use of employee inclusion-inducing approaches, contain exaggeration. In 1997, an annual survey of 3,300 employees conducted by Towers Perrin showed increases in both employees' feelings of disenfranchisement and the number of workers—about one third—claiming that their bosses ignored their interests when making decisions.^[10] Data from senior level managers also provide little reason to be cheery about organizations' efforts to gain their employees' allegiance. A survey of 196 executives of “40-something” age found that more than half of these senior-ranking workers felt less committed to their employers than they had five years earlier.^[11]