Narcissistic Process and Corporate Decay: The Theory of the Organizational Ideal
Ultimately, therefore, their loyalty appeared to be directed at themselves. Over time, trying to be a good empiricist, I came to take their stories about organizational life increasingly seriously. I made the assumption that organizational life was just what my students, whom I came to consider my research subjects, and sometimes informants, appeared to be living. Relegating what I had learned in graduate school to the status of a fantasy, I tried to fashion a theoretical conception that would explain this organizational reality.
Also by Howard S. Schwartz
Following Shorris , I called the syndrome "organizational totalitarianism" Schwartz, a. I first understood organizational totalitarianism in moral terms, in terms of the psychological damage done to the individuals involved Schwartz, a. But as time went by it became more and more clear to me that the processes I was coming to understand must have practical consequences as well—consequences for the effective functioning, the efficiency, the profitability, the competitiveness of organizations.
In a word, it did not seem to me that organizations as I understood them could possibly be successful even in terms of the narrowest economic criteria, without regard to the moral costs involved. So, when American industry seemed to be incapable of competing with foreign enterprises, I did not find myself at all surprised. Getting beyond my students' accounts to gain evidence of the systemic effects of the process, however, proved to be a problem.
There is a kind of "uncertainty principle" that applies here.
Narcissistic Process and Corporate Decay
Organizational participants who are in a position to be able to describe these systemic effects have given up the moral autonomy that would have enabled them to perceive them. Participants who insist on retaining their moral autonomy are typically excluded from important positions in the system precisely because of that insistence. Thus, the closer one is to the data, the less likely one is to be able to see it. Accordingly, in the present paper I am going to rely heavily on one of the very few accounts that I know of by a highly positioned insider who became alienated from the system and reported on its processes to the outside.
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This is a book by John Z. De Lorean , co-written by J. There are two problems with using De Lorean's testimony, arising primarily from his subsequent problems with the law and from the apparent mismanagement of his own car company. Fortunately, therefore, there is a more recent account of GM by Maryann Keller , which bears none of his taint. I will be using her work to lend secondary support to my case. An independent source for a description and explanation of the process of decay is a remarkable book by Robert Jackall called Moral Mazes: The World of Corporate Managers Unfortunately, I came upon this book too late to integrate it into the present paper.
Jackall's approach is sociological, and takes for granted that "striving for success My concern is to reveal the psychodynamics of this striving and to show how decay follows from these psychodynamics. Aside from that, and from my increased emphasis on the loss of reality that follows from this, I see our approaches as being strikingly complementary. I might add that the high degree of descriptive and explanatory agreement between these two entirely independent works represents a satisfying level of mutual confirmation and cross-validation.
Organizational Totalitarianism and the Theory of the Organization Ideal. The theory I shall use to discuss organizational totalitarianism begins with the premise that, for people like my students, the idea of the organization represents an ego ideal—a symbol of the person one ought to become such that, if one were to become that person, one would again be the center of a loving world as one experienced oneself as a child. The ego ideal represents a return to narcissism Freud, , ; Chasseguet-Smirgel , It represents an end to the anxiety that entered our lives when we experienced ourselves as separate from our apparently all-powerful mothers.
With regard to organizations, this means that individuals redefine themselves as part of an organization, conceived of as perfect. An image of an organization serving as an ego ideal may be called an "organization ideal" Schwartz, a,b,c. The organization ideal, thus, represents a project for the return to narcissism. The problem with the organization ideal, like any ego ideal, is that it can never be attained.
It represents a denial of our separation, finitude, vulnerability and mortality; but these remain with us by virtue of our existence as concrete individual human beings Becker, ; Chasseguet-Smirgel , ; Schwartz, b. Given the importance of maintaining belief in the possibility of attaining the ego ideal, organizations often attempt to generate a way of preserving the illusion of the organization ideal in the face of the failure of the organization to exemplify it. The attempt to manage an organization by imposing this illusion is what I call "organizational totalitarianism.
Organizations attempt this imposition in a number of ways. As Klein and Ritti observe, they give and withhold information to create a myth of the organization as more effective than it really is. They impose patterns of speech and behavior on participants that make them seem more integrated than they really are. They promote the attribution that their problems are due to forces which do not belong in the world, which is to say to "bad" forces.
And they generate an image of a gradient of Being, an "ontological differentiation," in the organization Schwartz, a,b,c; also see Sievers , , and Schwartz, d which idealizes the higher figures in the organization Klein and Ritti , as individuals who have fulfilled the project of the return to narcissism and become centers of a loving world. This provides the drive to climb the hierarchy that my students experience as the central spirit in their moral world Schwartz,a. Moreover it delegitimates those who are farther down Sennett and Cobb, This makes it possible for organizations to maintain the idea of the perfection of the organization's core and blame its imperfections on peripheral elements.
Organizational Decay. The problem is that such symbolic manipulation places falsehood right at the core of organizational functioning and therefore cannot help but lead to a loss of rationality. For the return to narcissism is impossible, short of psychosis Chasseguet-Smirgel , , and therefore organizational totalitarianism means the superimposition of a psychosis upon organizational functioning. Ultimately, whatever the gains in motivation, such a loss of rationality leads to generalized and systemic organizational ineffectiveness.
Moreover, I suggest that this condition of generalized and systemic ineffectiveness has a unity to it, and therefore represents something like an organizational disease. I would like to give it the name "organizational decay," with the intention being to convey the impression of an internal process of rot, not occasioned by outside forces; and with the intention as well to give the impression of a holistic process, not taking place in isolated parts of the organization but typically and increasingly sapping the vitality of the organization as a whole.
This decay eventually may manifest itself in any of a number of ways. I shall discuss a few of them, relying on De Lorean's and Keller's books about General Motors to provide illustrations. Some Causes of Decay. Commitment to bad decisions. Perhaps the most obvious symptom of organizational decay is the commitment to bad decisions. Staw has noted that the tendency to justify past actions can be a powerful motivation behind organizational behavior and can often run counter to rationality.
As he notes, the justification process leads to escalating commitment. When mistaken actions cannot be seen as mistaken actions, the principle on which they are based is not seen as being mistaken. Worse yet, our feeling that it is a valid principle becomes enhanced through our need to defend our decision and subsequent decisions made on the basis of it. This process must be especially lethal in the case of the totalitarian organization, where the idea of the perfection of the organization provides the organization's very motivational base. Here, the assumption of the identity of the individual decision maker and his or her organizational role turns the tendency to justify past actions from a defensive tendency on the part of individuals to a core organizational process—a central element of the organization's culture.
The case of the Corvair illustrates the process of commitment to bad decisions. Modeled after the Porsche, the Corvair was powered by a rear engine and had an independent, swing-axle suspension system. According to De Lorean , any car so powered and so suspended is going to have serious problems—problems which were well known and documented by GM's engineering staff long before the Corvair was offered for sale.
Engineers put up a desperate fight against the design but:. Get on the team, or you can find someplace else to work. Advancement of participants who detach themselves from reality and discouragement of reality-oriented participants who are committed to their work. When core organizational process becomes the dramatization of the organization and its high officials as ideal, the evaluation of individuals for promotion and even for continued inclusion comes to be made on the basis of how much they contribute to this dramatization. This means that, increasingly, promotion criteria shift from achievement and competence to ideology and politics .
Thus, De Lorean says that whether or not someone was promoted often depended on something other than competence:. That something different was a very subjective criterion which encompassed style, appearance, personality and, most importantly, personal loyalty to the man or men who was the promoter, and to the system which brought this all about. There were rules of this fraternity of management at GM. Those pledges willing to obey the rules were promoted. In the vernacular, they were the company's "team players. It didn't mean he was doing a poor job. It meant he didn't fit neatly into a stereotype of style, appearance and manner.
He didn't display blind loyalty to the system of management, to the man or men doing the promoting. He rocked the boat. He took unpopular stands on products or policy which contradicted the prevailing attitude of top management. Keller adumbrates this point in a number of places, for example this about recently retired chairman Roger Smith:.
For thirty-one years, Smith moved up through the ranks of GM as the consummate corporate player—the GM culture coursed in his veins. Admiration for and loyalty to the organization was at the core of his being. He was one of a new breed of corporate politicians whose success depended on their ease in wearing the corporate mantle. Translated, that meant, "Above all, be loyal to your superior's agenda.
One result of this will be that those individuals who are retained and promoted will be those who will know very well how things are supposed to look, according to the viewpoint of the dominant coalition, but who will know less and less about reality insofar as it conflicts with, or simply is independent of, this viewpoint. The problem is, of course, that since no organization is, or can be, the organization ideal, this means that those individuals who are retained and promoted will be those who can cut themselves loose from discrepant reality.
Another result of this sort of selection must be that realistic and concerned persons must lose the belief that the organization's real purpose is productive work and come to the conclusion that its real purpose is self-promotion. They then are likely to see their work as being alien to the purposes of the organization and must find doing good work increasingly depressing and useless.
De Lorean gives this example of the clash between the incompetent who have been promoted and their competent but discouraged subordinates:.
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Increasingly, group and upper managers seemed to look upon their jobs in such narrow terms that it was impossible to competently direct broad corporate policy. Often misplaced, unprepared or simply undertalented , these executives filled their days and our committee meetings with minutiae. After one particularly frustrating meeting of the Administrative Committee, John Beltz and I were picking up our notes when he looked down at the far end of the conference table at the corporate management and said to me, I wouldn't let one of those guys run a gas station for me.
A third effect, made obvious by this point, is that higher management is effectively isolated from criticism,  or even serious discussion, of its thought and actions. De Lorean gives this account:. Original ideas were often sacrificed in deference to what the boss wanted. Committee meetings no longer were forums for open discourse, but rather either soliloquies by the top man, or conversations between a few top men with the rest of the meeting looking on.
In Fourteenth Floor meetings, often only three people, Cole, Gerstenberg , and Murphy would have anything substantial to say, even though there were 14 or 15 executives present. The rest of the team would remain silent, speaking only when spoken to. When they did offer a comment, in many cases it was just to paraphrase what had already been said by one of the top guys.
Indeed, as organizational promotion and retention criteria shift toward the dramatization of the perfection of the organization, this shapes the very job of the subordinate into what Janis calls " mindguarding "—the suppression of criticism. Keller also comments on the conflict between what one needs to do to get promoted and the quality of one's work:. One retired executive rails against a system that creates vertical thinkers and cautious leaders. You continue to want to make vertical decisions: 'What is it that I should decide that will be good for me.
Never make a horizontal decision based on what is good for the company. I want to get promoted. I can go through a litany of those clowns. They go from this plant to that complex and then, all of a sudden, they've got plaques all over the walls that say how great they've done—but the plant's falling apart and the division's falling apart. The Creation of the Organizational Jungle. The more successful the organization is at projecting the image of itself as the organization ideal, the more deeply must committed participants experience anxiety.
For the image projected, the image of the individual as perfectly a part of the perfect organization, is only an image; and the more perfect it is, the more acute the discrepancy between the role and the role player. Given the importance of the organization ideal in the individual's self-concept, some way must be found in which the individual can reconcile the discrepancy between the centrality in a loving world he or she is supposed to be experiencing and the wretchedness he or she in fact feels. As we have seen above, the typical way is to attempt to deepen the identity of self and organization by rising in the organization's hierarchy and by fighting off what are perceived as threats to the organizational identity one has attained—perceived threats which are often projections of one's own self-doubts.
The result of this is that individuals become obsessed with organizational rank. They become compelled to beat down anyone who threatens or competes with them in their pursuit of higher rank or who is perceived as threatening the rank they have already acquired. Thus, ironically, behind the display of the organization ideal, of everyone working together to realize shared values, the real motivational process becomes a Hobbesian battle of narcissism project against narcissism project.
De Lorean says:. Once in a position of power, a manager who was promoted by the system is insecure because, consciously or not, he knows that it was something other than his ability to manage and his knowledge of the business that put him in his position He thus looks for methods and defense mechanisms to ward off threats to his power. Isolation of Management and Rupture of Communications. A related problem is that the greater the success of the totalitarian manager, the more the manager is isolated from his or her subordinates.
The world that the subordinates live in is the world of the organization ideal as created by the totalitarian manager. The world that the totalitarian manager lives in is the world of the construction of the image of the organization ideal. These two worlds are incommensurable and it cannot help but happen that communication and trust must break down between them.
For communication and trust mean two different things to these groups. Indeed, for totalitarian management, communication to subordinates is not communication at all—it is deception. This must make a mockery of all attempts to break down status barriers that stand in the way of effective communication—as appears to be the idea behind various "quality of working life" efforts.
Development of Hostile Orientation Toward the Environment.
If the totalitarian manager is successful, as we have seen, organizational participants take the organization as an organization ideal. It must follow, in their thinking, that such an organization will be successful in its dealings with the world. This poses a difficulty of interpretation for the necessarily problematic relationships between the organization and its environment. Thus, in the nature of things Katz and Kahn, the environment places constant demands on the organization. Failure to meet them will result in the organization's death.
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But from the standpoint of the totalitarian manager committed to portraying the organization as the organization ideal, this sort of reasoning cannot be acknowledged. From this point of view it is the organization that is the criterion of worth. The environment is not conceived of as existing as an independent environment at all; it exists only in order to support the organization.
From this standpoint the demands of the environment must be presented as hostile actions on the part of bad external forces—hostile actions to which a legitimate response is equally hostile action. Sending private detectives to find out the dirty details of his private life suggests something about their attitude toward him. It suggests that they expected to find something to show that he was a bad person. He had to be a bad person: he had attacked GM, hadn't he?
Criticism from the outside is generally viewed as ill-informed. General Motors management thinks what it is doing is right, because it is GM that is doing it and the outside world is wrong. It is always "they" versus "us. And when Peter Drucker , wrote The Concept of a Corporation , a work which was generally regarded as decidedly pro-business and pro-GM, "he was resoundingly criticized within the company for daring to criticize the organization of the corporation.
Thus, the picture of the organization as organization ideal leads to an orientation toward the world that can best be described as paranoid. It is clear enough that such a conception must degrade the relationships with the environment that ultimately the organization requires for its survival. The Transposition of Work and Ritual. When work, the productive process, becomes display, its meaning becomes lost. Its performance as part of the organizational drama becomes the only meaning that it has. Accordingly, the parts it plays in the organization's transactions with the world become irrelevant.
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When this happens, it loses its adaptive function and becomes mere ritual. At the same time, those rituals which serve to express the individual's identification with the organization ideal, especially those connected with rank, come to be infused with significance for the individual. They become sacred. Thus, reality and appearance, signified and signifier, trade places. The energy that once went into the production of goods and services of value to others is channeled into the dramatization of a narcissistic fantasy in which the organization's environment is merely a stage setting.
Consider how this shows up in the matter of dress. One can easily make a case that patterns of dress among organizational participants often have some functionality. But when the issue comes to be invested with great meaning, one must suspect that ritual has supplanted function.
Thus, De Lorean describes how half of his first meeting as a GM employee was taken up in a discussion of how a vice-president had been sent home for wearing a brown suit. The dynamics of the ways in which ritual comes to assume the importance work should have helps to explain the dynamics of the ritualization of work.
For the willingness to allow one's behavior to be determined by meaningless rituals comes to be justified by an idealization of the organization that elevates its customs above, and discredits, one's values—one's sense of what is important. This willingness to subordinate and delegitimate , in a word to repress, one's own sense of what is important, even about matters that should be within the competence of anyone's judgment, must have its consequences magnified when the matters in question become more abstruse and difficult to make judgments about, as is the case with real executive work.
Then the repression of one's values deprives one of any basis for making such judgments, and leads naturally to a superimposition of the rituals with which one is familiar, even where, patently, they do not belong. I saw that the job Some of these things, which had little or no impact on the business, were an insult to a person's intelligence As I recall, [for example, my boss] asked me to catalogue service parts numbers and to prepare reports on the size of parts inventories.
De Lorean , feeling that a person at his high level should be involved in planning, rather than in trivia, set up a meeting with Vice-Chairman Thomas Murphy to straighten out his job assignment. But Murphy found nothing peculiar, and:. I suddenly realized that what I felt was a weakness of life on the Fourteenth Floor, he and others thought was "business as usual.
Loss of Creativity. The delegitimation of one's sense of what is important gives rise to a special case of the ritualization of work—the loss of creativity. Thus, Schein describes the condition of "conformity" which follows from an insistence by the organization that all of its norms be accepted as being equally important. Under that condition, the individual. And he notes:. The conforming individual curbs his creativity and thereby moves the organization toward a sterile form of bureaucracy, p. Mas low gives us insight into the psychodynamics of this when he observes that creativity is characteristic of both ends of the continuum of personality development, but not of the stages in the middle pp.
Creativity, this suggests, is a function of spontaneity, a function of taking seriously our actual affects and interacting in the world in consideration of our spontaneous feelings. But as the self comes to be dominated by a concern for how things appear to others, which is characteristic of the middle stages of personality development Schwartz, , creativity disappears as a mode of interacting with the world.
As the organization requires that the individual subordinate his or her spontaneous perception to an uncritical acceptance of the ideal character of the organization, it thus determines that the affective basis of creativity will be repressed. The lack of creativity, since it is a lack of something, cannot be positively demonstrated.
As an experience, it makes itself known as a feeling of missing something different that has not occurred, even though one does not know what the different element would have been. Thus, De Lorean found himself introducing a "new" crop of Chevrolets that were not really new at all:. This whole show is nothing but a replay of last year's show, and the year before that and the year before that. The speech I just gave was the same speech I gave last year, written by the same guy in public relations about the same superficial product improvements as previous years Almost nothing has changed In benign times, one may experience boredom: the consciousness of a sameness, a lack of originality.
When circumstances are harsh, partly as a result of the lack of creativity that the organization needed if it was to have adapted, one may simply experience the intractability of the situation. Adding up the figures in the usual way simply shows one, again and again, how hopeless the situation is. One may then experience the loss of creativity as a wish for a savior who will make the organization's problems disappear.
In the hard times, I suspect, one rarely comes to recognize that the ideas that the organization needed in order to have avoided its present hopeless state may have been upon the scene a long time ago. But the individuals who had them might have been passed over for promotion because they were not "team players," or perhaps they were made to feel uncomfortable because they did not fit it in, or maybe they were scapegoated whenever the organization needed a victim.
Indeed, ironically, the very ideas that were needed might have been laughed at or ignored because they were not "the way we do things around here. Dominance of the Financial Staff. To include a comma in your tag, surround the tag with double quotes. Please enable cookies in your browser to get the full Trove experience. Skip to content Skip to search. Schwartz, Howard S. Language English. Author Schwartz, Howard S.
Subjects United States. National Aeronautics and Space Administration. General Motors Corporation -- Management. United States. National Aeronautics and Space Administration -- Management. Challenger Spacecraft -- Accidents. Challenger Spacecraft General Motors Corporation. Unternehmensorganisation -- USA. Challenger Raumtransporter Raumfahrtunfall. Corporate culture -- United States. Organizational behavior -- United States. Corporate culture. Organizational behavior. Schwartz shows how American industry is in a process of decay unable to cope with foreign competition and stagnant in technological development.
He attributes this Organizational Decay to a reluctance in the part of corporate members to deal with reality. Notes Includes bibliographical references pages and index. Bibliography: p View online Borrow Buy Freely available Show 0 more links PDF Show 0 more links Set up My libraries How do I set up "My libraries"? Monash University Library.