Psychoanalytic explorations of the role of affect in organizations to date have focused largely on anxiety, guilt, mourning and depression, anger and the expression of aggression and rivalry and envy. These affects tend to relate in large measure to the problems associated with intra-psychic conflict, rather than the fate of self-regard and associated affects. The affect of shame has been largely ignored, in spite of its potential relevance to a number of important organizational phenomena. The power of shame, as well as our potential to ignore that power emerges from several factors. First, the affect can and in many cases does go unnoticed (Morrison, 1984, Lewis, 1971). Shame is linked with a number of intra-psychic phenomena that are accompanied by other affects, such as guilt (Erikson, 1950, Lewis, 1971). However, the nature of shame is such that it supports the conscious and unconscious suppression of its experience, which supports its rather hidden expression. Second, as an affect associated with self-regard and therefore narcissism it is reflects both intra-psychic as well as social psychological factors.

Perhaps most importantly, the potential for shame is probably an inherent aspect of the relationship between individuals and organizations. Identification with an organization links organizational effectiveness and one’s personal sense of adequacy. If I am part of an organization, then the stature of the organization, its successes and failures, reflects heavily on me, particularly if work is an important part of my life. If my organization is inadequate, that maybe I am as well.

Shame motivates the need to hide one's vulnerabilities. Thus, when an organization is moving through uncharted waters, and people are feeling most vulnerable (during a needed organizational transition or the management of a failure) shame may impede the willingness of individuals to be open about their problems, with the result that important issues may not receive appropriate attention and learning may be inhibited. Most consultants, and leaders, know from experience that people tend to shut up when things aren't going well. However, this reaction is often attributed to organizational politics and the forces that drive organizational politics, such as performance appraisal and compensation systems. However, viewing this problem from the perspective of shame may add another dimension to our understanding of the challenges associated with helping organizations manage necessary transitions.

In the discussion that follows, I’ll first describe the phenomenon of shame and explore its underlying theoretical foundation. I'll then offer several brief examples organizational phenomena that illustrate the presence of shame. Two cases studies will describe the hypothesized impact of shame in more contextual detail and provide a rationale for what might be described as organizational shame and its relationship to leadership. Finally, I'll offer some tentative implications of this analysis for organizational actors, particularly leaders and consultants. One of the critical tasks of leadership is to help the organization face the truth about itself (Heifitz, 1994) so that it may adapt more effectively to its environment. It is, then, ultimately up to an organization’s leadership to come to grips with their own, and their organization’s real or imagined inadequacies and address those inadequacies. Not an easy task, to be sure. It may be that the health of an organization’s identity, which will be discussed in the concluding section, can serve as an indicator of the presence of organizational shame. Given that shame is an affect that is not been fully explored by psychoanalytically oriented organizational scientists, it is my hope that this paper will set the stage for further discussion and research of this most interesting and important affective experience.

The Nature of Shame

Shame has been viewed as a primitive affect (Tomkins, 1987), the expression of a drive like state (exhibitionism), a defense against the expression of exhibitionism, a reaction to the experience of an overwhelming sense of grandiosity, and tension between the ego ideal, particularly the ideal self, and the self (See Morrison for a comprehensive review of the theoretical foundations of the psychoanalytic study of shame, 1989). In this paper, the concept of shame will be closely linked with that of narcissism, and will be used to describe the affective experience of tension between the ego ideal (ideal self) and the self, as well as tension between the ideal self and the social or self-object milieu (Kohut, 1972). The question of whether or not shame can be experienced in isolation from the social psychological world, or whether shame is only a social affect experienced in response to "shaming" has bedeviled theorists for some time. Morrison (1984) has argued persuasively that this apparent dichotomy reflects in part an unhelpful tendency to bifurcate structural and self-psychological theories, and has endeavored to bridge the two. In this paper, I’ll draw heavily on Morrison’s view that an individual can experience shame both in response to interactions with the external world that leave her or him feeling a sense of inadequacy, as well as independently through the failure to attain important goals the are represented in the ego ideal.

Shame then represents the affective experience of the sense of inadequacy of the self, of not being up to the task or of being defective. Shame is then linked to the fate of narcissism (Kohut, 1972). Shame can accompany an inner sense of failed grandiosity in relation to very personal goals, as well as actual social failure. The individual experiences shame in response to a sense that he "is" a failure, not that he "has" failed. Likewise, shame has been associated with passivity, with an inability to respond robustly to challenge. Thus, shame signals not only that one is a failure, but also that there is little one can do about it. This sense of failure, of inadequacy, must be hidden to maintain one's sense of self and to guard against a catastrophic collapse of narcissism. Shame then functions as an affective barrier, hiding one's sense of inadequacy from the outside world, and potentially oneself.

Erickson has stressed the link between shame and self-consciousness. (1950). The experience of shame emerges when the infant feels, or is made to feel, inadequate to the task of autonomous control over his or her world. Expecting, trusting, that such control is possible, the infant feels that his or her inadequacy is exposed for the worse when others witness that inadequacy. A tendency toward control rather than playful experimentation results, accompanied by the presence of nagging doubt about whether or not one is capable of doing the “right” thing.

Importantly, shame can be conceptually, though not always experientially, distinguished from guilt (Lewis, 1971). Guilt represents the affective experience of tension between the punitive superego and the self in response to an action. Guilt occurs when I do something wrong. Shame, on the other hand, is likely to be experienced not just in response to an action, but rather as a statement about one's inadequacy when those inadequacies are exposed to the self, or to the world. Shame makes it painful to know the truth about oneself, not just about what one has done. Shame is then more intimately linked with personal identity than guilt (Morrison, 1989). It is in many respects a more primitive and more difficult to distinguish affect, as a result.

This gives rise to an important problem inherent to the study of shame, the ease with which guilt can obscure the experience of the affect. In essence, if I do something for which I am sorry, I am experiencing a sense of guilt. Addressing this transgression in psychotherapy should alleviate that sense of guilt, if that is the only self-perception with which I am burdened. Most therapists have experienced clients, however, who refute any effort to put their transgression into a proper perspective, feeling that it says something more about them that just that they have “sinned.” Shame operates “underneath the guilty ideation” (Lewis, 1971, p. 191).

Scholars and clinicians have noted other difficulties associated with trying to identify the experience of shame. Lewis’ discussion of the problem is informative: (1971, p. 197)

"Difficulties in identifying one's own experience as shame have so often been observed that they suggest some intrinsic connection between shame and the mechanism of denial. Denial seems to function in at least two ways, depending upon the availability or overt experience of affect. In the first pattern of denial, shame affect is overt or available to consciousness but the person experiencing it either will not or cannot identify it. At the moment that the person himself says, 'I am ashamed' shame affect is likely to be diminishing. An observer may identify that the other person is having a shame reaction or the person himself may identify it is receding, but while shame is occurring the person himself is unable to communicate. He often says only that he feels 'lousy' or 'tense' or 'blank'. This kind of shame experience I have called,'overt, unidentified shame.'

A second kind of denial operates to make shame affect unavailable. In this kind of pattern, which I have called “by-passed” shame, the person is aware of the cognitive content of shame-connected events, but experiences only a ‘wince’, ‘bolt’ or ‘jolt.’ In this pattern of by-passed experience shame, the person’s experience proceeds smoothing, except for a peripheral, nonspecific disturbance in awareness which serves mainly to note the shame potential of the circumstance.”

Thus, the experience of the actual affect of shame is typically powerful, but fleeting. It may be accompanied by either guilt or denial. (A range of other affects are associated with shame. These will be discussed further below.) Finally, given the hypothesized power of shame, and the fact that it is experienced at least unconsciously as an acutely painful affect, learning about one’s vulnerability to shame is inevitable, leading to shame anxiety. Shame anxiety evokes the defensive of hiding and withdrawal to protect against imminent rejection and abandonment (Morrison, 1984, p. 14).

Finally, shame is closely linked with rage (Morrison, 1984, Lewis, 1971). Not surprisingly, the fear of shame or the experience of shame is likely to evoke retaliatory rage against the “observer.” Shame brings with it an intense guardedness, which when shattered, leads to a narcissistically driven response. Rage reflects an effort to control the perceived social source of the injury, to put the self-object into its rightful place as a mirror of the individual’s grandiosity (Kohut, 1972). Of course, this expression of rage may then lead to a sense of guilt as well as a sense of helplessness in the face of one’s inability to control oneself (Morrison, 1984, Lewis, 1971).

Identifying the Impact of Shame in an Organizational Context

It is well understood that organizational arrangements can readily be utilized as defenses against anxiety (Menzies, 1984). The goals and boundaries of the organization can help individuals sublimate instinctual impulses and structural conflicts and in the process bind considerable anxiety. Simply put, organizations, particularly those that function relatively well, provide a sense of security, a sense that we are of value, a social fabric and rules for the control of aggressive impulses, and an opportunity to enhance one's self esteem. The presence of shame among significant numbers of organizational participants would suggest that the organization or its members are being experienced as inadequate. This inadequacy may be perceived in relation to the work or formal task of the organization as well as the defensive task, that of binding anxiety and assuring self-esteem.

How then might shame manifest itself as a tangible expression of affect? Given the propensity of shame to block access to itself, related affects are likely to serve as signals of the presence of shame and the ideational experience of the self as inadequate or defective. These expressions may emerge within individuals or among a group of individuals both independently and/or in a shared, contagious, fashion (Morrison, 1984). Affects associated with shame or shame-anxiety include anger/rage, contempt, disdain, depression, and humiliation. The following are vignettes, familiar to most consultants, in which shame; shame anxiety or related affects are hypothesized as playing an important role.

"He's driving this company into the ground. It is embarrassing to be associated with him." A statement such as this frequently accompanies a sense of disappointment in a leader's inadequacies in the face of organizational or personal demands. A rational, non-shame based response to such a perception might be to offer help, complain to higher authorities, or seek employment elsewhere. However, such statements can also be heard from individuals who stay with the organization, in spite of the apparent leadership failures, and do nothing, suggesting that the statement also reflects something about their own sense of inadequacy. Embarrassment and humiliation represent public experiences of shame (Morrison, 1984). In this case, the author of the statement is embarrassed at having to talk about his perception of a leader with whom he feels unfortunately associated, with another individual. However, his failure to act on that perception may also reflect an inner sense of shame driven by his sense of inadequacy in the face of the task of doing something productive about the situation.

(From a member of the senior management team): "Do you believe this place? These people here just can't make a decision." The speaker distances herself from the leadership’s failure to focus on important matters, take a risk and make a decision. Consultants will often note that not just one individual but many individuals, including some who are targets of such statements, may describe the same experience. The experience of inadequacy is widely noted and shared, but not discussed. Contempt for another helps to rid the individual of an unbearable sense of shame (Morrison, 1984) allowing for the projection of that sense of shame into the other. The individual making the statement is no longer the one who is inadequate, it is the other.

"Everything here is fine, that VPs comment, that we're having difficulties building our organization, was not on target." This vignette statement appears rational in the absence of data supporting the existence of a problem. Researchers and consultants have noted, however, that the minimization of problems, emphasizing the “ordinariness” of what is in fact a difficult situation, can also be a manifestation of denial (Trist, Higgin, Murray & Pollack, 1990). We tend to attribute such denial to the power of organizational politics and compensation systems, or moving closer to a shame based perspective, the need to save face. However, such a statement can also represent the impact of shame or shame anxiety manifesting itself through a denial mechanism powerful enough to suppress the conscious experience of problems. If one believes oneself to be thoroughly inadequate to the challenge of addressing the problems the organization faces, to admit that such problems exist represents a call for action. Inadequacy in the face of such a call could represent a catastrophic threat to self-esteem. Shame anxiety can provoke an unconscious denial reaction in an individual, and perhaps a team, preserving self-esteem.

The following two case studies demonstrate the hypothesized impact of shame during periods of both organizational decline, as well as rapid organizational growth.

Case Study: The Demise of the Digital Equipment Corporation

Organizations must undergo transformation over time, if they are to survive and to grow. While this represents a significant management challenge, with appropriate resources and leadership, we have come to expect that some firms will indeed evolve, though often not without the experience of crisis. Others will not. The churn in membership in the Fortune 500 reflects the significance of the challenge. Industry giants such as the Digital Equipment Corporation (at its peak only a short decade ago, with $14 Billion in revenues and 140,000 employees) no longer exist. Others, such as IBM, survive but with distinctly changed organizational identities and cultures.

The economic cause of Digital’s difficulties is well known. Digital had become a world leader in the development of mini-computers, particularly the VAX. The personal computer, however, disrupted Digital’s strategy and business model. The Company’s founder did not foresee or ignored the threat. After almost thirty years at the helm of Digital, in the face of large financial loses in a company used to showing consistent profitability, the Board fired Olsen and put in his place Robert Palmer. Palmer, a founder of the semi-conductor firm, Mostek, and Digital’s Vice-President of Manufacturing was promoted to the CEO position in 1992. The firm struggled for five years under Palmer, with only slight increases in revenue, essentially no profit and the layoff of over 70,000 employees. Digital was ultimately purchased by Compaq Computer in 1998. The purchase price was approximately $9 Billion.

Once a proud lot, employees and managers found themselves faced with quarter after quarter of disappointing financial results. Perhaps even more importantly, they reported that they had no idea how the situation would ultimately improve. "We have no strategy, at least none that we know of, for dealing with this" one manager reported to the author. What began as a bad year in 1992 wore on year after year leaving employees with the sense that the situation would not improve. (We fundamentally haven't got what it takes to recover - shame). Many employees left the company of course, both voluntarily and involuntarily. Many felt that, at its core, the business with which Digital identified, the design and manufacture of mini-computers, no longer represented the expression of a valid strategy. Digital employees were known from their strong identification with the vision of the firm. That identification was now viewed by all as a liability. The problem was not one of execution, getting a few things right. Everything had to change. The organization, and the people in it, now felt like the cause of the problem, rather than part of the solution.

Ironically, in the face of important improvements in the company’s product line, Digital leadership did little to contradict this experience. There was ample evidence that the Company was doing some things right. Digital had developed the world’s fastest semi-conductor, the alpha chip. Though the chip’s marketers had some difficulties in finding an appropriate market niche, one could only assume that ultimately it would.[i] Perhaps more importantly, Digital’s software engineers had developed the world’s fastest Internet browser, AltaVista. Digital had arguably developed the most effective and most profitable, service organization in the world. There were numerous other examples. In spite of its pain and occasional tension with its customers, Digital in all likelihood had the potential to resume its position as one of the world’s great technology companies.

Robert Palmer was noted in the press for his isolation, remaining an enigma to even those closest to him.[ii] Palmer was never, to the best of the author’s knowledge, accused of not having integrity and, one can imagine, was working hard in his office, in touch with those he felt were key stakeholders. However, he was not engaged in meaningful discussions with managers and employees about strategic change and the operational and human resource problems they were facing. Perhaps just as important, he was also not engaged in the affective task of helping the organization develop a sense that it was adequate to the task of transforming itself and dealing with market demands. His relationship with employees was marked by distance and the apparent need to differentiate himself from his employees. In a most tangible way, this differentiation occurred around dress. Digital, like most other high technology firms, was noted for its casual dress. Ken Olsen, the founder and CEO for nearly 30 years, was similarly noted for his informality of manner, being a “person of the people,” albeit one with a temper. Palmer, who grew up in Texas in a family of moderate means, was quite different.[iii]

“I always regretted not having serious money. Not having nice clothes. That sort of thing. One measure of success for me was to dress nicely when I could afford it. It makes me feel good. ….”

“I hope I am not in any way ostentatious. It is part of being an individual. But I think Oracle’s Larry Ellison (to whom Palmer sold parts of Digital) would run a good race on that one, too. He and I compete a bit. Whenever I am going to give a speech where Larry is, I try to pick one of my better suits. He’s not limited by pocketbook in terms of what he can afford. He has wonderful suits and dresses well.”

The interviewer then goes on to ask if his style of dress has ever caused him any difficulties at Digital. In fact, he has received some negative feedback, which he described as a “bizarre criticism.” His dress was the mark of his individuality and he was not going to be pulled into altering that statement of his individuality because of his current position. His dress and his lack of sensitivity to its meaning (there are other examples, such as his cars and his office and office furnishing) clearly indicate his lack of understanding the power of symbols in the hands of an organizational leader. More importantly, however, his attitude suggests that he was not going to help the firm deal with its sense of failure by publicly sharing responsibility for it. The CEO of a failing but once proud company, having laid off over 50,000 employees chose to allow himself to be interviewed about his dress by a major business magazine, just over a year before the Company’s independence was lost. Meanwhile, he continued to blame the Company’s previous management, now gone five years, for his inability to turn Digital around.

Throughout his tenure at Digital, Palmer had a “musical chairs” senior staff, with frequent arrivals and departures of key executives. Few stayed around long enough to get to know one another. He repeatedly re-organized the firm, moving away from its traditional functional structure, but doing so in a fashion that was extremely “top down,” manipulating the component parts mechanically, rather than involving himself more deeply with the key talent in the various divisions.[iv]

Ultimately, no one seemed to want to be part of the Digital Equipment Corporation. It’s identity had eroded to the point at which it was associated in inadequacy, an inadequacy that probably was not a valid assessment of its potential, but never the less became part of the identification that all shared. Organizational participants, did not, for the most part, feel like talking about the problems they faced, and learning from those problems. Rather, they wanted to distance themselves from the problems and ultimately from the organization itself.

Contrast this with the fate of IBM, which, with the assistance of leadership from outside the industry in the person of Lew Gerstner, was able to transform itself. In part, IBM was successful because it was able to built its transformation on existing product and service lines. Gerstner relentlessly put forth the message that the core of IBM was adequate to the tasks they faced, execution was the key.

Comparison of Digital and IBM suggests that the management of shame during times of organizational transformation may be an important task of leadership. The layoffs and other painful aspects of restructuring that often accompany efforts to transform an organization in relation to its market may evoke anger, guilt and mourning. However, as we can see in the case of Digital, such actions are by no means a guarantee of success. The organization and the individuals with in must both learn about a pathway toward strategic success and recover a sense of adequacy to help them deal with the challenges they face. A bold strategy for recovery not only has pragmatic value but also may be required to address socially experienced organizational shame. A task of leadership is to then help organizational participants redefine their identity as one that is adequate to the challenges they face.

Case Study: X.com

One might expect that a sense of inadequacy and the shame associated with such a self-perception might readily emerge under the conditions previously described. Certainly, the failure of Digital was a public failure. Employees experienced the social dynamic of shaming each time they talked with family members and employees from more successful competitors. However, experience suggests that shame may, in fact, emerge as a powerful force under any circumstances in which people are expected to effectively perform in relation to goals that are meaningful to them. Shame can potentially emerge even in the absence of a public failure.

The X.com company (disguised in name and industry) created very promising marketing tools for use on the World Wide Web. X.com grew from the ideas of a marketing professor turned web entrepreneur, in 1997. Wisely realizing that he was not cut out to run a company, he worked with a venture capitalist to attain adequate financial resources for a start-up, and a team of managers with both marketing and operational experience. Not a young group by any means, the new senior management team’s average was about 43 years. This was in stark contrast to the 50 employees of the firm, whose average age was 25. The group of senior managers did bring with them a depth of experience, at least on paper, that should have been adequate to guide the firm in through a phase of rapid growth. The new CEO had twenty years of progressive operating experience in technology companies. The sales and marketing VP's each had approximately 15 years of experience. Human resources, product development and strategic alliance directors were likewise highly qualified, and well respected. The senior management team members had not known each other until coming on board at X.com.

After the first year, a series of management problems began to emerge. The business model and strategic plan needed redefinition on several occasions, not unusual for a .com organization. Young individuals were put into management positions with no prior experience, with the result that their treatment of those reporting to them was often arbitrary, capricious and at times quite negative. In a context in which the shortage of labor was their biggest bottleneck to growth, the firm started to experience a higher than expected levels of turnover. Turnover occurred in spite of the awarding of substantial pre-IPO stock options that would likely become very valuable at some point in the future, according to the venture capitalists involved with the start-up. People were not clear about their roles and responsibilities throughout the organization, which resulted in a rather substantial level of stress, internecine turf wars, and unnecessary and useless conflict.

Senior management staff were not helpful in addressing these problems. Their weekly meetings were devoid of dialogue and were dominated by quiet but persistent finger pointing. There were obvious sub-groupings within the senior management team. These subgroups tended to socialize together and blame the other subgroup for the difficulties that the organization was experiencing. However, the blaming was very cautiously articulated and the meetings were characterized by a very proper decorum, and little or no exploration of problems or morale. The members of the senior management team did not talk with one another informally, except when socializing in their subgroups. The CEO was often too busy to talk. He was extensively involved in a variety of product related issues because he felt it was so important to "get everything right from the start." The VPs and Directors tended to stay in their cubicles and focused on the concerns of their own staffs.

In this context, an HR consultant had been called in to help deal with operational issues, but ended up gaining access to the problems of the senior management group. The consultant became quite concerned that the senior managers’ inability to come together, develop a shared organizational (as opposed to product) vision and strategy and unify the company could seriously jeopardize what should have been a very successful business.

In his meetings with the CEO he asked for permission to share some feedback based on his observations. Initially, the CEO eagerly accepted the consultant’s offer to help. However, the CEO replied that he was aware of the problems but didn't feel that there was time to deal with them, given their need to focus on the challenges of growth. He also implied that he wasn't exactly sure what to do, as he had never confronted a challenge like this before. He was uncomfortable dealing with all the young people and didn’t really feel as though he could identify with their concerns. He hoped that others on the management team could.

While apparently well qualified, his experience had actually been in the development of product visions. He had never built and organization before. He did ask the consultant to talk with the other members of the senior management team. They relayed a similar perspective, agreed that the problems existed, but felt uncertain as to how to proceed. Several complained that so much had changed since they began their careers. They also agreed that they hadn't run into a market or industry like this before, in spite of their otherwise impressive records of previous accomplishments. They were hoping for the best, but several were also considering whether or not they should stick with the firm. Members of the team were not enthusiastic in their response to suggestions from the consultant that they confront the issues in a senior management staff retreat.

Ironically, all of this was said with a sense of regret, because the product was useful, probably could sell well, could be helpful to customers and generate substantial wealth in the new economy. The consultant's observations were shared with the CEO, who rather quickly changed the subject and suggested that the consultant refocus in the operational issues for which he had been hired. He wanted the consultant to work on hiring more engineers with the right technical competency. The consultant challenged the CEO with the statement "why should someone want to come and work here if the senior management team isn’t sure what kind of organization they are trying to create?” He went on to say that he didn't feel that these problems were lethal if dealt with. Some of these problems are typical, in fact, for a new team. However, “they need to be solved." The CEO became quite angry and told the consultant to let him worry about that. The CEO felt that he knew what he was doing and he knew that these problems would work out. Some members of the senior management team and other key contributors to the organization began to drift away over the next several months. Most expressed a feeling of regret in exit interviews, but also a sense of relief. Although never the kind of organization that former employees would say they “hated,” most also expressed the feeling that the organization “never came together.” The organization never became something that one could identify with. People never really got to know one another, and were not quite sure why.

Discussion: Leadership, Organizational Shame and Organizational Identity

These case studies suggest that shame inhibits the ability of individuals, teams and even organizations to confront the problems they face, learn from those problems, and feel confident that they and their organization “have what it takes” to adapt to current realities. Shame then has the potential to disrupt organizational learning when it could be most essential, during times of organizational transformation (Senge et al, 1999). It should be noted, however, that in both cases, there is evidence that the sense of inadequacy was wide spread: at Digital, among employees and perhaps even among the leadership, and at X.com, among the senior management team. Shame seemed to have an impact in several ways.

At the individual level, shame accompanies a sense of personal inadequacy. Employees’ inability to articulate a plan that they felt could help the organization solve its problems led to embarrassment, anger, contempt for leadership, and ultimately depression and departure. The data from the Digital case suggest that shame began here as a social experience, a public failing, rather than as an intra-psychic experience of the failure to live up to individual goals. However, shame for at least some of the employees was likely intensified as some failed to act, perhaps out of a sense of helplessness, to address the problems they faced individually and collectively.

Importantly, this sense of inadequacy and shame was not addressed by the organization’s leadership. We tend to avoid talking about that which is shameful to us. Rather, the leadership withdrew. We don’t have data to help us better interpret this withdrawal. As such we don’t know whether or not it was driven by shame and if so whether or not the shame related to a long standing need on the part of the leader to distance himself from the identity of his origin, or simply shame in the face of his inability to turn the company around. Both hypotheses have some theoretical merit, however.

At X.com, there was no social failure. Rather, the senior management team, hired for their supposed expertise, individually and collectively avoided addressing the need to develop and execute an organizational vision. Individual members of the senior management team felt inadequate in the face of the demands of growing the business and the youth of their employee group, and as a result, felt a personal sense of inadequacy. Their inability to talk about it, driven by shame anxiety, led to a sense that real failure may in fact occur. Comfortable and confident in their ability to deal with the product, they avoided the human side of their enterprise. Running a growing, entrepreneurial firm is certainly a challenge. That challenge is more acute in a labor market in which technologically skilled professionals can command almost any price. This “bottom up” reality can potentially lead to an even greater sense of helplessness and inadequacy on the part of the management team, and therefore a greater sense of shame. Shame and shame anxiety drive the individuals on the team to avoid admitting that the problems exist, discussing the problems and even each other.

Note, however, that with the exception of some of the employees at Digital, no one in these cases expressed a sense of shame or public humiliation. Rather, they displayed anger and withdrawal. Withdrawal ultimately meant actual resignation from the firm, but prior to that time, affective withdrawal. Commitment to both firms suffered, as employees distanced themselves from their organizations. It has been noted that one impact of shame is to disrupt the individual's psychological presence in the organization (Kahn, 1992). A sense of inadequacy and the need to hide that sense of inadequacy lead to denial and defensive maneuvers in an effort to maintain self-esteem. This distancing or withdrawal phenomena would suggest that employees do not feel safe in allowing the organization to function in healthy, yet defensive fashion, as described by Menzies (1984).

Without a critical sense of safety, organizational participants cannot engage in the kinds of open dialogue necessary to help develop or maintain the organization’s effectiveness. However, most organizational participants on some level know that a vicious cycle has developed in which employees’ bad feelings about the organization and their participation in it promotes further withdrawal, and which then further undermines the ability of the organization to develop. They don’t want to be part of something that will potentially fail, and therefore the risk of failure increases.

Organizational identity theory draws our attention to the broader question that organizational stakeholders implicitly ask: “who are we?” (Albert, Ashforth & Dutton, 2000). An organization experiencing a wide-spread sense of shame will have a great deal of difficulty developing an affirmative, robust, answer to that question. Indeed, at Digital, many employees ultimately came to answer that question as follows: “we are losers, inadequate to compete in a PC dominated world. We just weren’t smart enough to see what was happening. We are also associating with others in the firm who weren’t smart enough to see what was happening” or worse yet, “I don’t want to talk about it.”

Brown has theorized that the vicious cycle described in the previous paragraph undermines the ability of individuals to invest narcissistically in the organization, and that this then robs the organization of its identity and its legitimacy (2000). Narcissistic investment is not feasible because the organization shows no potential to help support individual’s efforts at self-esteem regulation. This exploration of the problem of shame presented in this paper is consistent with that view. Shame may have its most destructive impact by encourage people to avoid the question: “Who are we?” or answer that question in the negative.

The concept of shame brings with it an awareness of just how difficult it is for leaders, employees, or consultants, those tasked with helping the organization, to see what is happening. There may be few obvious warning signs that a shared sense of shame has emerged. This challenge is made that much more daunting by compensation systems that re-enforce the importance of impression management, making sure that the market place doesn't associate you with the problem.

If one impact of shame is to promote the withdrawal of a narcissistic investment by employees, and therefore a withdrawal of commitment, to the organization, the consequences could be disastrous, as the cases illustrate. Leadership, often caught up in task related activities, may not be sensitive to this impact until it is too late. There are at least some warning signs that may help. In the tight labor market of the United States, retention and turnover rates, x-interview data, and recruiting data are now the subject of senior management interest in firms hoping to grow. Unfortunately, this data may be lost during times of organizational transformation, and may seem meaningless during a downsizing. However, this analysis suggests that recognizing these potentially concrete manifestations of organizational shame may not be enough.

Leaders themselves may need to pay careful attention to the issue of organizational identity. They need to have a good sense of how they think and feel about their organization, honestly; how they feel about the problems they face, and whether or not they feel, as a group, able to address those problems. Likewise, through organizational sensing, they need to have a good understanding of how employees at all levels feel about the organizations and whether or not employees have some sense that the direction in which the firm is going is ultimately going to be helpful: whether or not the important problems can be addressed and are being addressed.

The problem ultimately calls upon us to rethink our heroic conceptualizations of both leaders (Bradford & Cohen, 1998) and organizations. Lawrence has noted that the wish for omnipotent leadership may in fact promote a sense of dependency among followers (1998) and a tendency to project omnipotence into a firm’s leadership. Leaders accept this projection and a sense of hubris results. The leader unfortunate enough to fail must ask for salvation (expiation of guilt, sorry I was wrong) rather than engage in revelation: openly engaging all organizational participants in an opportunity to learn from experience. Such openness requires that the leader tolerate significant personal vulnerability (Hirshhorn, 1997). The experience and working through of personal failure may in this regard be a most important aspect of a leader’s resume. The executive development process too often re-enforces a sense of omnipotence on the part of future leaders by offering pat answers, helping the leader avoid failure at all costs, hiding failures when they do occur, and punishing those who are caught. In the succession planning process, we tend to look for leaders with a proven track record of success and as few failures as possible. Leadership without the experience of and tolerance of a sense of inadequacy may be particularly likely to foster an inappropriate idealization of both the leader and the organization on the part of employees. Failure ceases to be an option, to paraphrase Apollo 13. The organization then cannot develop insight into the affect of shame and its impact.

[i] Indeed, Compaq has now entered into an agreement with IBM to mass produce the chip for use in high end servers, Boston Globe, May 29, 2000, page D-1.

[ii] “Note a pretty picture” by Geoffrey James, Upside Magazine, September 1997, pp. 98 – 108.

[iii] The following quotations are taken from an extended interview with Palmer, conducted by Gene Koprowski and published in Forbes Magazine, June 3, 1996.

[iv] Geoffrey James, Upside, September 1997, pp. 98 – 108.

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