The effects of Covid19 pandemic on organisational change and culture: possible implications based on concrete cases.

I. Introduction

It’s common knowledge that Covid19 pandemic changed our lives and the way we approach the world. Individuals as well as organisations had to redesign themselves in order to be able to face new challenges. The virus brought a huge wave of news, and everybody was forced to react and find new solutions under unexpected constraints. The goal of this essay is to critically analyse the effects of pandemic on organisational change and culture, by relying on academic researches. The idea is to try to clarify a bit the different traits related to these two topics, because the literature offers an interesting debate about positive and negative aspects of Covid19 in the renewed lifestyle and routines of companies and individuals, but there is no shortage of contradictions.

By arguing in favour and against, we are going to base our analysis on cases of well-known academic relevance, such as IBM, Buffer and GitLab.

II. Managing organisational change during pandemic

The way organisations reacted to pandemic can be categorised in two macro groups: somebody adopted short-term solutions, by postponing activities that have to be done in the office, such as update the document library, while others opted for a radical change of all the processes, by redesigning deeper traits of the company, such as structure, business model and culture. When pandemic begun, most of the firms moved to short-term solutions, and later on, only a few of them decided to adopt deeper measures.

Some researches argue that organisational benefits would be visible starting from the medium term. Boosts of digitalization, gains in efficiency, and redesigns of customers’ lifestyles, that might better match firms market approach[1], would lead to a gain in efficiency by simplifying complex processes and removing all the overlaps. The outcome might be a general standardisation, specialisation and simplification of each duty. Then is this remote working really a good thing? Or we are just taking a step back towards Taylorism[2], because of more individualism and need of strict control to ensure productivity? Let’s find out.

III.  Organisational jolts and culture: the example of IBM

To try to understand what will happen in the medium-long term, we can take the example of IBM, a globally widespread American company in the IT sector. In 1979 the firm started to strongly push for remote working, and in 2009 the saving was approximately $2 billion[3]. IBM was really satisfied about the visionary idea they had, they considered themselves as innovators by showing all the potential of digital tools. But in March 2017, things started to go wrong: economic performance deteriorated, and the organisation wanted all its workers back in the office; it was the end of a terrible experience for IBM.

Nevertheless, the question is if we are sure that the bad performance was related to remote working program, or instead to other reasons. From the Financial Statements of the company, we can say that economic indicators became even worse in the following years, thus, probably home working wasn’t the ground. What seems to be happened is that IBM overreacted to embrace a new culture and new values totally different from the previous ones, and this led to an “alienation effect” and presumably to a decrease in performance[4]. Sudden jolts as a result of a management decision, which are symptoms of unpleasant capability in handling organisational changes, can make internal human resources defensive and spawn hostility, with further impact on firm efficiency[5].

On the other side it’s also necessary to consider the large number of academic researches against remote working, on which IBM based its decision. They highlighted a general increase in individualism and in the need of closer control of employees, together with more difficulty of bringing organisational culture outside the company, a lack of accuracy from workers side, and a loss in efficiency due to the troubles of managing teamwork[6].

So, to tackle pandemic, is it better to adopt short-term strategies, and to come back to previous situations, e.g. by preferring physical offices rather than online ones, or not? Well, it’s not possible to answer in a unique manner; the response is “it depends”. Let’s find out on what.

IV.  Organisational culture as approach to organisational change

The McKinsey podcast asks “How can we learn to be better learners?”[7]: this is a question to which all the organisations have to deal with. Each of them reacts to daily obstacles in a very different way, and most of traits of this response can be found in their organisational culture. The two opposite hemispheres are identified on one side by a radical-conservative culture (generally more hierarchical), and on the other one by a flexible-lean culture (generally fast-changing). According to Winkler, following economic shocks, cultures tend to become more conservative[8], moving towards the first hemisphere, and this would bring them to act defensive, be more hypocritical, overreact and radicalise themselves[9] (pretty much what happened to IBM). The results are more institutionalised organisations, older values and taken-for-granted principles.

Considering Covid19 scenario, a radical-conservative culture will engender many troubles to firm deeds, because the strong focus on short-terminism will not be able to face a situation that lasts for many months. An unrestricted company culture would instead generate an organisation daily used to redesign and discuss its processes to better perform in the evolving environment. Many academic studies pointed out that the latter approach is more efficient and can potentially assure long-term survival of institutions if it is based on three pillars: periodical procedures of self-mirroring, tests and action[10], under the premise of a high degree of psychological safety of employees[11] so that they don’t fear the transition; constant stimulus to labourer to push them to analyse on a critical angle ex-ante values and conjectures[12]; and finally the adoption of “cultural toolkits” to generate and submit new principles to top management in order to create a revamped corporate culture[13]. In the following paragraphs we are going to see some practical examples of applications of these pillars

V.   Smart solutions are possible

Some companies were able, before the pandemic, to embrace in a positive way challenges that other firms were forced to deal with due to Covid19 crisis, especially related to remote working. The first farsighted that we analyse is Buffer, a company that offers social media management support. Instead of moving all its offices online, the firm allowed employees to design their workday (remote and in presence) on their own, while keeping transparency. This was possible thanks to a constant dialogue within organisational levels, and the use of shared-flexible principles. They adopted remote-friendly productivity performance indicators starting from the assumption that if we only consider the number of hours the workers are sitting at their desk, we cannot really understand what they are accomplishing. Buffer found out that employees that combine travel with work, experience a positive impact on mental wellness and personal fulfilment[14].

The second example of a successful change, which can be used as a reference point for an efficient response to Covid19 organisational issues, is represented by GitLab, a global IT firm with a flexible culture. Here remote working is highly implemented, and there is the risk of losing human contact between employees. Together with them, top management adopted an interesting possibility: “If you want to visit a colleague in another part of the world or promote GitLab at events in another country, then present your travel plan to your manager or the CEO, and you can receive up to $2,000 in support for your plan”[15]. That’s the chance to make workers feeling part of the company and equip them with more flexibility and autonomy.

VI.   Conclusion

Covid19 crisis affected both organisational approach to change and culture. Some firms preferred short-terminism, instead of adopting more radical measures, but probably they will pay the price in the medium term. Redesigning and leaning the processes instead can potentially provide the basis for a long-term growth, however it’s not a strict rule, it really depends on the business and the sector.

Organisational culture is also an essential tool to face pandemic and its new challenges such as remote working. The desire of flexibility is more and more spread within workers, and it is today a standing point for attracting talents in a difficult labour market[16].

Thank you for your attention! Let me know your opinions in the comments!

References

[1] ‘Identifying the positive impact of COVID-19 in organizations and society’, Printec Group, https://blog.printecgroup.com/identifying-the-positive-impact-of-covid-19-in-organizations-and-society (accessed 29/04/2021).

[2] F. W. Taylor, The Principles of Scientific Management, Harper & Brothers Publisher, 1911.

[3] J. Useem, ‘When working from home doesn’t work. IBM pioneer telecommuting now wants people back in the office’, The Atlantic, November 2017, https://www.theatlantic.com/magazine/archive/2017/11/when-working-from-home-doesnt-work/540660/ (accessed 29/04/2021).

[4] T. Hallett, ‘The myth incarnate: Recoupling processes, turmoil, and inhabited institutions in an urban elementary school’, American Sociological Review, 75, 2010, p. 52-74.

[5] D. Elliott, D. Smith, ‘Cultural readjustment after crisis: Regulation and learning from crisis within the UK soccer industry’, Journal of Management Studies, 43, 2006, p, 289-317.

[6] J. Useem, ‘When working from home doesn’t work. IBM pioneer telecommuting now wants people back in the office’, The Atlantic, November 2017, https://www.theatlantic.com/magazine/archive/2017/11/when-working-from-home-doesnt-work/540660/ (accessed 29/04/2021).

[7] K. McLaughlin, ‘COVID-19: Implications for business’, McKinsey, https://www.mckinsey.com/business-functions/risk/our-insights/covid-19-implications-for-business (accessed 28/04/2021).

[8] M. Winkler, Shocks and Norm Conformity, working paper, University of Zurich, 2020.

[9] A. Spicer, ‘Organizational Culture and COVID-19’, Journal of Management Studies, vol. 57, no. 8, 2020, p. 1737-1738.

[10] K. D. Elsbach, I. Stigliani, ‘Design thinking and organizational culture: A review and framework for future research’, Journal of Management, vol. 44, 2018, p. 2274-2306.

[11] A. Edmondson, ‘Psychological safety and learning behaviour in work teams’, Administrative Science Quarterly, vol. 44, 1999, p. 350-383.

[12] M. Alvesson, A. Spicer, ‘A stupidity-based theory of organizations’, Journal of Management Studies, vol. 49, 2012, p. 1194-1220.

[13] J. Howard-Grenville, ‘How to sustain your organization’s culture when everyone is remote’, MIT Sloan Management Review, 2020, p. 1-4.

[14] C. BasuMallick, ‘IBM cancelled remote work, but why are these companies embracing it’, HR Technologist, https://www.hrtechnologist.com/articles/mobile-workforce/remote-working-company-examples/ (accessed 08/05/2021).

[15] GitLab official website, https://about.gitlab.com/blog/2016/03/04/remote-working-gitlab/?zd_source=hrt&zd_campaign=5395&zd_term=chiradeepbasumallick (accessed 08/05/2021).

[16] C. BasuMallick, ‘IBM cancelled remote work, but why are these companies embracing it’, HR Technologist, https://www.hrtechnologist.com/articles/mobile-workforce/remote-working-company-examples/ (accessed 08/05/2021).