Exploring the link between organizational identity and organizational effectiveness

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Category: Organizational Systems

The degree to which organizational members integrate an organization's identity into themselves influences their loyalty, performance, and effectiveness within that organization. With the eyes of a dynamic external environment increasingly interested in and vocal about the internal operations and outputs of organizations, managers have to recognize the dynamic link between the organizational identity held by its members and the effectiveness of the organization and to develop strategies that allow the organization to adapt its internal image to the environment better.

This section investigates the connection between organizational identity and organizational effectiveness by defining organizational identity, exploring concepts of group dynamics to establish measurements for organizational effectiveness, assessing Social Identity Theory and frameworks for shaping organizational identity, and considering how organizational identity can hinder an organization's effectiveness.


Defining organizational identity

Organizational identity is the "shared beliefs and self-conceptions held by organizational participants" (Scott & Davis, 2007, p. 154). Organizational identity reflects the characteristics that define and differentiate the organization, influencing member perceptions, and behaviors. Organizational identification occurs when an individual integrates beliefs about one's organization into their identity (Pratt, 1998, p. 172). Organizational identification becomes a fundamental building block of organizational culture and socialization. Organizational leaders emphasize and promote differentiating characteristics like mission, philosophy, and values to influence how participants identify themselves with the organization. Kreitner and Kinicki (2007) offer Harley-Davidson motorcycles as an example of a company with such strong organizational identification that many of its employees have the company logo tattooed on their bodies. "Working at Harley Davidson is not just a job; it is a lifestyle," they say (p. 150).

Forms of organizational identity

From the perspective of organizational members, identity can take two forms: how the members perceive the organization and how they perceive non-members perceiving the organization. Elsbach and Kramer (1996) argue that members of an organization believe the organization reflects their personal identity. To maintain positive perceptions about their social identities, individuals attempt to maintain positive perceptions about the organizations to which they belong. Threats to the organization's defining characteristics challenge the organization's identity, affecting the social identity of its members. To maintain positive perceptions, members accentuate positive attributes of their identity, develop favorable status among peers, and build homogeneity among peers (Elsbach & Kramer, 1996).

Organizational identity and image

Organizational identity and image are interdependent, but not the same (Gioia, Schultz, & Corley, 2000). While some scholars view identity as fixed characteristics perceived by members (Kreitner & Kinicki, 2007), Gioia et al. (2000) argue that organizational members dynamically reconstruct organizational identity through their interpretations, actions, and interactions with the outside environment. Image is the internal and external perceptions that the organization sends and receives. Image can take various forms, including the image an organization creates and projects to target audiences, the corporate identity the organization manages through branding strategies, and the reputation the organization earns through its long-term actions and achievements. Image influences identity, rendering both concepts dynamic and interrelated. Such instability compels the organization to adapt to the demands of the dynamic environment. Maintaining a consistent organizational identity may not only be ill-advised; it might be impossible in a complex environment. Gioia et al. (2000) propose that organizations should stop attempting to preserve a consistent or fixed identity, but learn how to manage and balance a flexible identity to meet the demands of a dynamic environment.


Measurements of group effectiveness

Since the effectiveness of an organization depends mostly on the interaction among individuals, groups, and processes, a brief overview of group dynamics provides insight into the connection between organizational identity and effectiveness. Hackman (1987) proposes that an effective group process has three dimensions: input, process, and output. Input includes elements such as goals, tasks, technology, participants, size, and resources. The process is the way the group members work together. Output is what the group produces. However, an effective group is more than just a production model, as this simple model implies. Engleberg (2001) proposes that an ideal group succeeds because it has balanced task functions with social functions. A group's task dimension focuses on the job while the social dimension is concerned with the people. An effective group can balance the task needs of the organization with the social needs of the members. Hackman (1987) offers three dimensions for group effectiveness, as follows:

  • Accomplishes Goals. The group accomplishes the goals they set out to accomplish.
  • Satisfied Members. The members are relatively satisfied with the experience of being in the group.
  • Future cooperation. The members are willing and able to work together in the future.

In short, while simplistic, the measurements for effectiveness considered for this paper are goal accomplishment, member satisfaction, and organizational viability.


Insights from Social Identity Theory

Social Identity Theory (SIT) provides some insight into how organizational identity influences organizational effectiveness. SIT holds that individuals organize into social categories that allow them to define themselves and others relative to the social environment (Ashforth & Mael, 1989). Social identification is the perception that an individual belongs to a particular group. Individuals can have multiple social identities but tend to associate themselves more closely with the groups that they positively value or that they perceive bring them greatest esteem. When an individual asserts, "I am a member of this group," he or she socially identifies with that group. When socially identified, an individual shares the success and failures of the group, which can affect his or her sense of worth. Organizational identification is "a form of social identification" (Ashforth & Mael, 1989, p. 20) through which members integrate into their own identity the distinctiveness, prestige, and homogeneity of the organization. Ashforth and Mael (1989) identify three essential consequences of organizational identity related to organizational effectiveness: commitment, conformity, and loyalty.

Regarding commitment, members who identify with an organization tend to support and commit to the organization and choose activities that align with their own identity. Regarding conformity, the more members see themselves as similar to other group members, the more likely they are to conform to group norms. Regarding loyalty, the more an individual identifies with an organization, the greater their loyalty will be to that organization.

Social identity also influences the process that leads to effective group dynamics within an organization, specifically: socialization, role conflict, and intergroup relations. New members overcome insecurity and gain confidence by internalizing the values, beliefs, and norms of the organization. When managers properly manage the assimilation process, they can influence the loyalty and commitment of new members (Ashforth & Mael, 1989).

Integrating disparate beliefs, values, and identities into an organizational identity can cause conflict among members influence performance. Ashfort and Mael (1989) argue that this conflict must be resolved by ordering, separating, and acting on needs as they arise. However, this seems to be reactive while ignoring the importance of introducing and managing the conflict necessary for an effective group process. Intergroup conflict arises not only from competition for limited resources but also from a need to establish and maintain social identities through intergroup comparisons. Ashroth and Mael (1989) recommend that managers mitigate the differing status between competing groups. However, they still ignore the value of managing conflict for effective outcomes.


A framework for shaping organizational identity

Selective categorization helps "members make sense of threats to organizational identity while affirming positive organizational and social identities" (Elsbach & Kramer, 1996, p. 33). Categorization is a "fundamental building block" of the beliefs that members hold about their identity (Elsbach & Kramer, 1996, p. 33). In their research into how members react when something in the environment threatens how they perceive the organization's identity, Elsbach and Kramer (1996) found the following:

  • First, individual social identity and individual organizational membership are psychologically independent. Due to the intimate connection between an individual's social identity and self-esteem, the individual cares about how others perceive the organization and how it compares with other organizations.
  • Second, when faced with dissonance, members of an organization "maintain positive self-perceptions by confirming features of the organization's identity, they perceive the non-members have ignored." This "organizational identity affirmation" is different from "self-affirmation" because the individual is affirming organizational traits, not individual traits. When an organization's identity is threatened, individuals not only affirm positive organizational identities, they may also psychologically disengage from perceived threats to the organization to preserve social identity within the organization.
  • Third, organizational identity affirmation and individual image management are different processes. When image management is the primary concern, an individual may disassociate from the organizational identity to protect their self-image.

Contrarily, Elsbach and Kramer (1996) propose that members tend to highlight positive organizational dimensions when they perceive the organizational identity is threatened. Identity affirmation and organizational identity are not necessarily mutually exclusive. Both motives simultaneously shape and enhance the perceptions that members and non-members hold. Fourth, "individuals protect and affirm their social identities" by positively categorizing the organizations to which they belong, by tolerating inconsistencies in themselves, and by affirming positive aspects of themselves and the organization to which they belong (Elsbach & Kramer, 1996).

While helping members create perceptions about their organizations and their link with the environment, selective categorization helps organizations recognize emerging opportunities to influence perceptions and behaviors in its internal and external environment. Elsbach and Kramer (1996) propose integrating social identity and impression management theories to propose a framework model for managing organizational identity. The framework holds that members attempt to protect private and outside perceptions of the organization and self when they perceive the organization's identity is threatened. This framework can help organizations use categorization to shape their identities, align members to organizational goals, and communicate its identity to its audiences (Elsbach & Kramer, 1996).


Ethical considerations

While most organizational identity literature focuses on understanding and managing identity for organizational effectiveness, organizations should not dismiss the adverse outcomes familiar with group processes, which can hinder organizational effectiveness. The adverse outcomes of group dynamics that can damage the organization and its members include peer pressure, groupthink, Asch Syndrome, de-individualization, social loafing, and polarization (Jex, 2002). Also, the ethical considerations of identifying with an organization are profound.

At what point does company loyalty become blind obedience that can harm the individual, the members, and the organization? When individuals identify too closely with a group, they may suspend critical thinking and lose the objectivity necessary to make ethical choices or to engage in the functional conflict necessary for an effective group process. Religious cults, extreme political groups, and violent gangs succeed partially because their individual members lose the capacity to differentiate themselves and their behaviors from the organization and its members. This same level of organizational identity is evident in corporate environments and other collectives.

For example, a former Enron employee, Phyllis Anzoalone, admitted that her identity was so entwined with Enron's identity that she suffered emotional scars when the company melted under the weight of ethical violations (Kreitner & Kinicki, 2007). During a presentation on the "State of Ethics in American Society," Marriott School of Management Dean Ned C. Hill said that most of the Enron members involved in illegal activities justified their actions by saying, "I did not want to be accused of not being a team player." In other words, many of Enron's employees had such strong organizational identification that they "turned their backs on their personal ethical standards and values when working on clearly illegal deals" (Kreitner & Kinicki, 2007, p. 150). The strong organizational identity that contributed to the effectiveness of Enron led to the ruin of the company and its employees.


Conclusion

As the shared beliefs and self-perceptions held by members, organizational identification is a fundamental building block of organizational culture and socialization that significantly influences member commitment and organizational viability. As organizational members dynamically reconstruct organizational identity through their interpretations, actions, and interactions with the outside, managers must develop strategies that allow the organization to better adapt its identification to the demands of a dynamic environment. Understanding the psychological interdependence between organizational and individual identity provides managers with a framework for shaping organizational identities, aligning member activities with organizational goals, communicating its identity to the external public. For the long-term viability of the organization, however, managers must also consider the ethical implications of manipulating the psychological union between the organizational identity and the social identity of its members.


References

Ashforth, B. E., & Mael, F. (1989). Social identity theory and the organization. The Academy of Management, 14(1), 20-38.

Elsbach, K. D., & Kramer, R. M. (1996). Members' responses to organizational identity threats: Encountering and countering the Business Week rankings. Administrative Science Quarterly, 41(3), 442-476.

Engleberg, I. (2001). Working in groups. New Jersey: Houghton Mifflin Company.

Gioia, D. A., Schultz, M., & Corley, K. G. (2000). Organizational identity, image, and adaptive instability. The Academy of Management Review, 25(1), 63-81.

Hackman, R. J. (1987). The design of work teams. In J. W. Lorsche, Handbook of organizational behavior (pp. 315-342). Englewood Cliffs, NJ: Prentice-Hal.

Jex, S. M. (2002). Organizational psychology: A scientist-practitioner approach. New York: John Wiley & Sons.

Kreitner, R., & Kinicki, A. (2007). Organizational behavior (7th ed.). New York: The McGraw-Hill Companies, Inc.

Pratt, M. G. (1998). To be or not to be? Central questions in organizational identification. In D. A. Whetten, & P. C. Godfrey, Identity in organizations: Building theory through conversations (p. 308). Thousand Oaks: Sage Publications Inc.

Scott, W. R., & Davis, G. F. (2007). Organizations and organizing: Rational, natural, and open system perspectives. New Jersey: Pearson Prentice Hall.