Tight Times a Test for Rah-Rah Firms ; High-Loyalty Companies Work Hard to Build a Familial Culture. It Can Be Tough to Maintain

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On a hot, muggy, summer night, more than 100 buses pull up in front of Radio City Music Hall. Thousands of revelers in red boas, sequined hats, and flashing bow ties gather outside the theater.

With their party horns and shrieks, the crowd looks and sounds as if it's gearing up for a wild New Year's Eve celebration - about six months too early.

In fact, this is a company party: Commerce Bancorp's Fifth Annual WOW! Awards Ceremony. And the employees seem unanimously enthusiastic about their jobs.

Commerce Bank is among many companies trying to foster a high- loyalty, employee-friendly culture. Working for one of these firms can be a heady, fulfilling experience.

But before you join such an organization, know the pitfalls, corporate experts warn. Such cultures are difficult to maintain. Corporate loyalty can blind workers to corporate misdeeds a la Enron.

And if things go wrong, even for reasons outside the company's control, the backlash from the workforce can be enormous.

That has made corporate-culture building a complicated - but often effective - undertaking.

"It's the oldest trick in the hills, and it works," says Robert Sutton, professor of organizational behavior at Stanford University's graduate business school in California.

Not surprisingly, these cultures are particularly evident in family businesses and direct-sales organizations, says Nicole Biggart, dean of the management school at the University of California at Davis.

Organizations such as Mary Kay and Amway don't manage with rules and regulations and hierarchy. Instead, they foster an emotional and social commitment to the organization, she adds. "That commitment keeps people working and attached to the organization."

Some larger companies, such as Microsoft, General Motors, and Marriott International, also have excelled at developing "strong- pride-builder cultures," says Jon Katzenbach, senior partner at Katzenbach Partners, a strategic and organizational consulting firm in New York.

When it works, benefits flow both to employee and employer. For workers, the rewards extend beyond their earnings.

"Money doesn't motivate," Mr. Katzenbach says. Instead, personal connections and the pride employees feel about their jobs power their loyalty.

That pride, he says, mirrors how a parent's praise might feel.

"Your mom probably didn't reward you with money," he says, "but she made you feel proud when you did get better grades."

When employees believe their employer has their interests at heart and when they're consistently rewarded for small successes, "that's a very powerful motivator for many people who don't get that praise or recognition in their everyday lives," says Dr. Biggart. "People still want to feel important and that they're part of something useful."

Companies also benefit from these strong cultures. For example, employees at organizations with strong cultures typically require little supervision, says Dr. Sutton of Stanford. At a traditional plant, an employee's job is "do your job and fool the boss," he says.

But in one of these more culturally controlled organizations, he says, "peers watch one another and keep each other in line." The net result is that employees will either do what's right, or they'll leave.

Employee turnover also tends to go down. People don't leave companies where there's trust and passion, Katzenbach says.

The average tenure at Southwest Airlines, for example, stands at about seven years, according to a company spokesperson.

There can be such a thing as too much of a good thing, however. In the case of Enron, the company's pride had negative effects, says Katzenbach. …