Case Study Analysis: Poisoned by a Toxic Brand

Organizational change occurs all of the time in the modern business world (Hattori & Lapidus, 2004; Konopaske et al., 2018; McShane & Von Glinow, 2005). The nature of rapid shifts in the business landscape and seemingly consistent changes to the business environment demands that a company be prepared to adapt to the everchanging tides of the industry (McShane & Von Glinow, 2005). Mark and Toelken (2009) conducted a case study that examined how a non-compatibility between leadership models, resistance to internal change, and a lack of investment and understanding in how important the employee branding and value ethos was to the company’s rank and file. This study looked at a Fortune 100 Information Technology Company that, from the beginning, set itself as a client-centric business that was also very selective in its hiring of employees (Mark & Toelken, 2009). The company established a value base and workforce within itself and was very reflective of an organization and value set that would be found within the armed forces (Mark & Toelken, 2009). Over the years, the business grew and more complex. These changes led to the independent, flexible nature of the company becoming a hindrance to operations (Mark & Toelken, 2009). Leadership continued to hold on to the old way of conducting business and failed to adapt to new challenges even as the environment around them changed (Mark & Toelken, 2009). When a larger conglomerate company purchased them, the business found itself in a position where the values of the new owner did not mesh with the business's value system (Mark & Toelken, 2009). The change that the organization had to endure with the change in management did not turn out well for the small value-based organization (Mark & Toelken, 2009).

The organization has been a staple of the information technology industry for decades and managed to keep a nondescript footprint and grow steadily (Mark & Toelken, 2009). The company’s corporate culture has unique for businesses within this field as it drew many of the identifying attributes from the military (Mark & Toelken, 2009). This culture gave the company a planning and security structure similar to a military platoon while keeping the organizational structure flexible and decentralized (Mark & Toelken, 2009). The company's organizational leadership was built on the idea that each business segment needed to remain independent to mobilize quickly, make decisions, execute actions, and produce consistent results (Mark & Toelken, 2009).

One of the most significant fundamentals that the founding leadership invested in was within the realm of employee branding (Mark & Toelken, 2009). Each new employee would sign an agreement that included a code of conduct and a non-disclosure statement (Mark & Toelken, 2009). They would also be told to think like an owner and given a salary instead of a commission or wage (Mark & Toelken, 2009). This design indoctrinated the employee into a mindset that the company leaders would use to “align strategies, people, systems, and processes across the organization” (Mark & Toelken, 2009). Wirtenberg et al. (2007) point out that these employee branding initiatives enhanced productivity, increased profitability, and ensured that business ethics remained accountable. The company specifically selected individuals that had served in the armed forces for the sole reason that they had already been socialized to understand how dedication, duty, honor, and service were core values that also applied to the company and everyone within that organization (Mark & Toelken, 2009).

Interestingly enough, these values were extolled through oral tradition by telling stories of heroics and creating a foundation that worked to clarify and solidify the company’s mission and values (Mark & Toelken, 2009; McShane & Von Glinow, 2005, 2005; Wirtenberg et al., 2007). Mark and Toelken (2009) write that previous leadership idolized individual responsibility and accountability for the group good and established that glory and honor were a primary concern. These concerns resulted in the hiring and retaining eagles that would do whatever it took to take care of the client (Mark & Toelken, 2009). One previous leader was quoted as saying that they motto and mission was.

Our people, our clients, our business. A strong belief was perpetuated through action, verbally through stories, and in mediated communication, such as monthly company newsletters and year end statements. We believed that if we do what is right for our customers, and our business will take care of itself (Mark & Toelken, 2009, p. 24).

???????????As the company continued to grow, its business model changed and became more complex. The leadership that founded the company left during this time, and a new CEO was hired (Mark & Toelken, 2009). The new leadership was considered an outsider who could bring a new perspective (Mark & Toelken, 2009). Although initially, the change in leadership seems to be met with positive reactions, the reality of the situation was that the company was quickly becoming insolvent and moving away from its core ethos (Mark & Toelken, 2009). It was generally seen that this leadership change failed to understand the founding principles that the organization was built upon (Mark & Toelken, 2009). However, because of the honor-bound employee philosophy and military-like structure within the employees, they persevered (Mark & Toelken, 2009). Soon after this change, it was apparent that leadership within the company failed to address this change and adapt to the new environment, instead choosing to remain true to their individual and decentralized business approach that had worked well before this point (Mark & Toelken, 2009). The employees could see this change happening, but leadership continued to discount the changes because the business continued to grow and produce results (Mark & Toelken, 2009). The leadership failed to realize that these successes were happening at the cost of employee morale and commitment. Instead of addressing the employee’s concerns, the leadership would compliment them for being the best workforce ever but continue to ask more and more (Mark & Toelken, 2009). The lack of investment in the operations of the business in the face of this change would have eroded a typical workforce away, but because of the nature of the initial employee branding and value structure built into the work environment, the employee persevered (McShane & Von Glinow, 2005; Miles & Mangold, 2004).

???????????Sometime after this growth, the company was purchased by a larger conglomerate (Mark & Toelken, 2009). This takeover only exacerbated the already struggling organizational structure (Mark & Toelken, 2009). The new owners ran a tight ship with a rigid leadership style (Mark & Toelken, 2009). This style clashed heavily with the small company’s flexible and empowered individual groups (Mark & Toelken, 2009). While the senior executives continued to use the narratives and branding established previously, they failed to build the support structures and corporate infrastructure that they needed so badly (Mark & Toelken, 2009). This untenable situation progressed into a disconnection between the senior executives and the subordinate company’s leadership. The senior executives would continue to award themselves large bonuses while the smaller company struggled to keep up (Mark & Toelken, 2009). The company's founding principles seemed to be the only reason that any progress was being made and that clients were being taken care of. One example of the chasm between what the rank and file were dealing with and what the senior executives prioritized was that during the Y2K bug scare, the employees successfully fixed the issues and created much money for the company (Mark & Toelken, 2009). The reward for that good job was the business decision to conduct organization lay-offs during the following year (Mark & Toelken, 2009).

In a general sense, the employees for the smaller company continued to hold of their founding principles and their ethos always to epitomize honor, duty and to put the customer first. The new leadership failed to recognize the changing environment and adapt accordingly. However, they also sought to capitalize on that founding branding that made that company successful, all the while looting and plundering the company for all that it was worth.

Literature Review

???????????Mark and Toelken (2009) present a case study that examined what happens when employee branding starts as a good foundation for a company and turns toxic due to outside factors. Throughout the case study, Mark and Toelken (2009) show examples of how the small company's employee branding worked to their benefit as long as the leadership continued to support it by fulfilling specific relational and transactional psychological contracts. Even though various organizational changes, the branding continued to endure and present itself in an intended way. The study works through the process of how the company initially strived to hire those with military experience and provided a workplace that was built upon the value systems and mission that they were used to during their service (Mark & Toelken, 2009). The built employee branding schema was supported by their previous experiences and through a system of stories about heroics and honor (Mark & Toelken, 2009).

???????????The notion of employee branding and its effect on the social and business values within an organization are explained by Wirtenberg et al. (2007). The branding’s ability to build identification and demonstrate value only strengthens the employee’s ability to weather change and support the target core values (McShane & Von Glinow, 2005; Wirtenberg et al., 2007). The ability of employee identification to be resilient in the face of organizational change is commonly studied with the armed forces (Box, 2012; Chua & Murray, 2015; Davis, 2016; Reed, 2015; Reed & Bullis, 2009; Swecker et al., 2000). While the ability to build a solid identification to a culture or organization can result in positive outcomes and result in a more robust organization following the change, the opposite effect has also been observed (Davis, 2016; Reed, 2015; Reed & Bullis, 2009; Swecker et al., 2000). Incidents of leaders and followers within the military covering up or ignoring terrible events because of honor, brotherhood, and organizational indemnification are common enough to garner the attention of the media and politicians (Davis, 2016; Reed, 2015; Swecker et al., 2000). The comparison of Mark and Toelken’s (2009) case study and behaviors that have been studied within the military show how the internalized value systems that the employees carried over from the time in the armed forces became toxic when the leadership failed to understand and integrate them into the required organizational change plans. Similar actions studied outside the military typically result in similar resistance to change by the employees (Chua & Murray, 2015; Gladson, 2010; Khan et al., 2017)

Organizational Change Issue Presented

???????????The most significant change that the organization had to work through was a substantial change in senior leadership and direction (Mark & Toelken, 2009). Any organizational change presents challenges to the entire organization (McShane & Von Glinow, 2005). For the employees to meet these challenges, the organization must have the skills to adopt the change, have clear roles, and establish a well-articulated forward vision. The company had the skills and roles in making the change happen, which is evident throughout the change; the employees still successfully made the company mission happen (Mark & Toelken, 2009). McShane and Von Glinow (2005) write that every successful change requires a clear vision to establish a sense of direction and identify checkpoints throughout the change that can signal success or failure in the change. Within the multiple changes that the organization had to endure, the new leadership established any vision or built a structure that could be used to transfer the company from one state to another. McShane and Von Glinow (2005) discuss the importance of a change agent during a significant organizational change. This person champions the change and has the knowledge and power to see it to a successful outcome. This agent should also be a transactional leader to align the behaviors of the organization and reward those that adopt the changes (McShane & Von Glinow, 2005). By not having the proper change agents, the direction of effort that the employees are making can become erratic (Khan et al., 2017). Other employees may decide to actively resist the change because of the lack of vision (Pardo del Val & Martínez Fuentes, 2003).

Another concern that the case study presents is how the original employee branding, company culture, and psychological contract established between the eagle employees and the familial leadership was violated by the new leadership through incompetence and malevolence (Mark & Toelken, 2009). The founders established a combination of a transactional and relational contract with the employees. A transactional contract is defined around the idea that one side will provide something of benefit, and in return, the other side will provide something equally as valuable (McShane & Von Glinow, 2005; Rousseau & McLean Parks, 1993). The company provided the workforce with salaried pay, individual autonomy, stability, and a values-based system to operate within. In exchange, the employee was expected to think like an owner, always put the client customer first, extol the company's values, and do whatever it took to be successful.

The nature of the relational contract is common within the military community (Reed, 2015). This contract is defined by its basis that the relationship between the employer and employee is likened to a marriage contract (McShane & Von Glinow, 2005). The relationships are based on the notion that if the employee is treated like family, they would be more inclined to contribute their time and effort to the company without expecting anything in exchange (McShane & Von Glinow, 2005; Rousseau & McLean Parks, 1993). The founders hired veterans with the expectation that the innate nature of the military family and the values that the armed forces instill would carry forward into the company (Mark & Toelken, 2009).

?The new CEO failed to understand how the relational contract applied to the corporate culture. The case study noted this because he was considered an outsider that would bring in a new perspective (Mark & Toelken, 2009). The new leadership did keep the company’s transactional contract intact, and it seems like this is why there was an initial optimism about the change (Mark & Toelken, 2009). The new boss failed to connect to the employees at a level considered on par with a family. Because of this, the relationship between the two sides never solidified and eventually grew apart. The corporate executives that took control of the company following the takeover never honored either contract. They attempted to take advantage of the transactional contract by continuing to support the old ways but never invested in the company's structure. The employees continued to give their obligated efforts, but the senior executives never reciprocated. There is always a give and take action within any social or psychological contract between parties (Konopaske et al., 2018; McShane & Von Glinow, 2005; Rousseau & McLean Parks, 1993). There is always an expectation that for the contract to execute, both parties must fulfill their agreed-upon requirements (Konopaske et al., 2018; McShane & Von Glinow, 2005; Rousseau & McLean Parks, 1993). The new leadership failed to understand these psychological contracts fully and never fulfilled their end of the bargain. This is evident because they failed to invest anything into the company and never established that the company’s value system was important to them.

The senior executives also violated the relational contract by viewing the employees as a line item on a budget instead of a family (Mark & Toelken, 2009). Their layoffs highlighted this following a significant successful effort to ensure that the company was successful in light of the Y2K crisis (Mark & Toelken, 2009). The hybrid approach of the two contracts ended up becoming toxic to the company. The employee’s branding that honor, duty, and a do whatever it takes, no matter what attitude was critical to the company’s success, allowed the break in the transactional contract to become a one-way street. In a typical transactional contract, if one side fails to fulfill their end of the deal, the contract fails to execute (Konopaske et al., 2018; McShane & Von Glinow, 2005). The employee branding failed to allow the contract obligations to become null, becoming one-sided (Mark & Toelken, 2009). The employees continued to provide their end of the deal even when they were not receiving reciprocal value. The breaking of the relational contract and the employee branding let the relationship become toxic and non-reciprocal (Mark & Toelken, 2009). The employees were promised familial stability and commitment from within the company, which senior leadership failed to fulfill (Mark & Toelken, 2009). The tragedy is that even though the employees could see that they were being mistreated, they continued to abide by the branding, value systems, and identification applicable to a leadership style that was long gone.

Theories and Concepts of Case Study Findings

The overarching concept that is addressed is the issue that directly impacted the organizational change the company endured. The concept that encompassed the case study was employee branding (Miles & Mangold, 2004). The idea of branding is a commonplace occurrence in business when applied to products and offerings (Miles & Mangold, 2004). This same concept often applies to the employees of a company as they are usually the face of the organization to the public (Miles & Mangold, 2004). Miles and Mangold (2004) write how it is essential to understand how employee branding directly affects an organization's employee and service experience. The organization's service experience can only be delivered to the customer by the employee; therefore, the company, its values, and mission are typically shown to the customer through those employees (Miles & Mangold, 2004). Therefore, the company's goal must be to internalize the company's intended image within the employees so that their demeanor, appearance, and manner of interaction all reflect the organization (Miles & Mangold, 2004).

This concept became extremely important within the employee/employer relation scope and how the employees interact with the company and the customers (McShane & Von Glinow, 2005). The interviews revealed that the company's founders put much effort into establishing value systems and organizational culture that set them apart from the competition (Mark & Toelken, 2009). Overall, the founders were highly successful with their branding. Through a military-centric hiring system, using a familiar organizational structure (to the hired veterans), and a value system similar to those in the armed forces, they were able to build and maintain a workforce that would not seem out of place within a military signal brigade. Piggy backing on the armed forces’ internalization of these structures and values, the employee branding simply became an extension of what their recruits were used to existing within. This ensured that the employees would put always put the mission first, epitomize the company’s values, and always put the customer first over everything else (Mark & Toelken, 2009). This prioritizing of branding over everything else worked well for decades because the leadership was on board with it, understood the ethos behind it, and supported investing in it. Once the leadership changed out, the support, investment, and understanding of the importance behind that branding were lost (Mark & Toelken, 2009). One would expect large amounts of resistance to any changes at this point, but the toxicity of the branding kept that resistance from manifesting itself.

Maintaining this level of branding takes continuous effort and support (Miles & Mangold, 2004). The leadership must remain vigilant of a specific level of coordination when balancing the values-based ethos with the business’ needs for capitalistic growth (Miles & Mangold, 2004). The decision to hire an outsider was not the issue at hand. The issue was that the new CEO had not been exposed to the company’s unique type of branding and did not understand its importance with the employees (Mark & Toelken, 2009). McShane and Von Glinow (2005) write how every organizational change requires a change agent to manage and lead the required efforts. To be a change agent, the person(s) must be very knowledgeable of the organization and the change required (McShane & Von Glinow, 2005). The new CEO did not meet this requirement; therefore, they would not be an effective change agent (Konopaske et al., 2018; McShane & Von Glinow, 2005). That lack of knowledge led to them not maintaining the brand image and investing in its survival. All the while, the employees could not let the mission fail; therefore, they persevered.

When the conglomerate took over control of the company, they too did not understand the importance of branding (Mark & Toelken, 2009). This was apparent in that they failed to identify that the company operated independently that was employee-centric and prioritized the client. Mark & Toelken (2009) write how the senior executives moved employees into the company that did not fit the mold of what their employees looked like. They also were not branded into the culture of the company (Mark & Toelken, 2009). When a leadership change occurs, the leadership should acclimate to the organization's existing structure or risk employee resistance out of the gate (Konopaske et al., 2018; McShane & Von Glinow, 2005). Finally, when the Y2K crisis occurred, the kept true to their branding and provided the clients with solutions that solved their concerns which in turn, brought the company healthy profits. The reward for their success was a series of lay-offs the following year. The senior executives failed to honor the transactional contract that the company founders had established with the employees. Just as before, the employees could not let the mission fail, therefore they persevered on.

Validity

???????????The idea of the psychological contract and the organizational outcomes are well studied within the scope of organizational behavior and leadership (Chua & Murray, 2015; Gladson, 2010; Konopaske et al., 2018; McShane & Von Glinow, 2005; Reed, 2015; Reed & Bullis, 2009). Many of the effects shown in the case study have also been found in other similar studies that examined toxic leadership and behaviors in the military (Box, 2012; Davis, 2016; Reed & Bullis, 2009; Swecker et al., 2000). This would be expected because of the nature of the branding that the company instilled in its workforce. The hiring of military veterans and the internalization of military-like value systems would suggest that the behaviors and effects that occurred within the company would reflect those found within the armed forces.

Conclusion

While the employee branding had successfully established a level of resilience in the company for years prior, it ended up being used by management and leadership later on to take advantage of the workforce and squeeze them for every bit of productivity they could produce. The employee’s internalization of the branding kept them psychologically from being able to see their plight. The employees held on to the psychological contract even while their leadership threw it to the wind. Therefore, what was once a good thing, became toxic.

References

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