1. What does this story tell you about the effect of top management on organizational culture?

2. How can you determine when a line has been crossed between a fun and informal culture, and one that is offensive and inappropriate?

Like many newspapers, the Chicago Tribune is in trouble. The 165-year-old paper was bought by real estate mogul Sam Zell in 2007, who promptly filed for bankruptcy. That didn’t surprise experts. What Zell did next did. Zell hired Randy Michaels as the Tribune Company’s CEO. Soon after Michaels arrived, he launched an attack on the Tribune’s culture. In an informal meeting with a group of fellow Tribune executives, Michaels said, “Watch this” and offered the waitress $100 to show her breasts.

The group was dumbfounded. But Michaels hardly stopped there. Michaels was fond of a culture that included “sexual innuendo, poisonous workplace banter, and profane invective.” One press release announced the hiring of Kim Johnson, who, it was said, was “a former waitress at ’Knockers—The Place for Hot Racks and Cold Brews.’” Another executive reporting to Michaels sent links to raunchy Web sites in e-mail messages. Michaels was heard loudly discussing with other executives he had brought with him the “sexual suitability of various employees.” When some complained about the change in the culture, Michaels rewrote the employee handbook. “Working at Tribune means accepting that you might hear a word that you, personally, might not use,” the new manual stated. “You might experience an attitude you don’t share. You might hear a joke that you don’t consider funny. That is because a loose, fun, nonlinear atmosphere is important to the creative process.” It then concluded, “This should be understood, should not be a surprise, and not considered harassment.”

Eventually Michaels was forced out, but the damage had been done. The Tribune continues to operate in bankruptcy and more than 5,000 employees have lost their jobs. In retrospect, Zell has called his purchase “the deal from hell.” It appears he appointed a CEO to match the deal.