Sense of Identity: Economic Implications
Organizational culture has been described as: "The set of beliefs, values, and norms - together with symbols, dramatized events, metaphors and personalities - that represents the unique character of an organization, and provides the context for action in it and by it." It constitutes in effect a pattern of shared core assumptions that the organization learns and codifies as it solves its problems of adapting effectively to the external environment and integrating individuals into an effectual whole. And it provides the stage where members of the organization perform.
Culture, Identity & Performance
It is a generally accepted principle that people invest more effort and produce better results when they identify with an organization’s values. In fact, there is evidence that satisfaction with one's workplace, as characterized by the results of polls concerning "best places to work", is related positively to economic performance. Similarly, there is evidence that dissatisfaction with one's workplace, as resulting from a prevailing threat (subtle or overt) of losing one’s job, is related negatively to economic performance. Culture and its accompanying values create the platform and environment to perform. The bottom line is this: The organization’s culture and values, as expressed through its prevailing behaviors and messages, affect its economic performance… for better or worse.
In a recent article in The New York Times, economist Robert J. Shiller addresses the question of whether U.S. citizens who have experienced little loyalty on the part of their employers can continue to identify with their organizations and, in a broader sense, with the economy of their nation. He concludes that while in general job satisfaction may not be construed as a life-or-death matter, “… a relatively uninterested, insecure work force is unlikely to bring about a vigorous recovery.” Shiller closes by stating that “Solutions for the economy must address not only the structural instability of our financial institutions, but also these problems in the hearts and minds of workers and investors - problems that may otherwise persist for many years."
The Macro-Effect
Expanding on Shiller’s suggestions, a new book by economists George Akerlof and Rachel Kranton, Identity Economics: How Our Identities Shape Our Work, Wages, and Well-Being, takes a macro-economic view at this issue. The authors suggest that an organization – and a society - works well when their constituents personally identify with it to the extent that their self-esteem is tied up with its activities. This sense of “identity” helps explain why people do things that aren't in their immediate best interest and which may entail significant sacrifices.
In times of crisis, as they struggle to survive, organizations both in the private and the government arenas may end up - unconsciously and involuntarily - deforming their declared values. The posters in the wall may still proclaim the same values of yesteryear, but reality shows otherwise. And people will see through the rhetoric and empty talk and act accordingly. They will decide who they want to be. They will disengage and weaken their sense of identity with the organization. Unity and willingness to work for the good of the whole will be lost. And economic results will reflect this.
Akerlof and Kranton’s suggest that this damaging morphing may actually happen at society’s level. We can thus reason that if, through some ill-conceived or awry strategies, a government in fact ends up feeding an "identity” crisis among its constituents, that country’s economic recovery may be lethargic and sluggish. If rather than connecting their constituents collective self-esteem with its decisions and actions, a government ends up nurturing mistrust and segmentation, society’s structural instability will just grow. Society identity will end up modified, and not for the better. Economic performance will suffer.
The Role of Leadership
The aforementioned arguments beg the question of whether organizations need to put in place motivators to retain their employees’ hearts and minds and generally improve employees sense of "identity.” But probably the best motivators will be the day-to-day actions of the leaders of the organization. There are leaders who will invigorate their organization (peers, workers, customers, and other stakeholders) by what they communicate and – more importantly – by what they do in the midst of some unusually tough times. Their examples of solidarity, unity and integrity, together with a long-term perspective that promotes loyalty, will inspire the organization. Unfortunately, other leaders will do just the opposite. They will exemplify selfishness, disarray and deceit, and will operate with a very short-term horizon looking for the easy and rickety profit.
So, beware, make sure that you – as a high-ranking executive officer in your organization – deliberately specify and model the kind of leadership behaviors you require to distinguish your organization’s culture. You need to make sure that by fostering a stronger sense of “identity” you will have people that will make the right choices to deliver superior performance, leading to superior economic results.
Summing Up
People's identity – their conception of who they are, who they choose to be with, and how they relate to their particular organizational culture – is a most important factor affecting their wellbeing and economic performance. The degree of identity they develop depends upon the strength of their relationships with their superiors, their intrinsic rewards and recognition, the structural stability of their work environment, and the transparency of the culture they function in. Attaining a strong degree of identity is possible through an unfaltering and responsible exercise of leadership by those in charge of the business and political systems. | 
