(FORTUNE Magazine) – It's certainly awkward when your boss walks by naked as a jaybird at the gym. Do you wave? Give a cool nod? Where do you look? Now imagine this: You, your boss, and a whole bunch of your colleagues stripping, sweating, and beating the tar out of yourselves with tree branches. Wouldn't that be hell? Actually, that would be Finland, land of swift reindeer, slick cellphones, and the business sauna.

In Finland, notes Lauri Kivinen, Nokia's senior vice president of communications, "the sauna is almost holy." "Sauna," in fact, is a Finnish word. It evokes notions of intense cleansing, both physical and mental. Finland has two million of them, for a population of just over five million. The Finnish Parliament has a sauna, as do the residences of both the President and the Prime Minister. Nokia has an entire sauna facility.

In a country where golfing can be a frigid experience, the sauna has a reputation as a place where negotiations happen and deals are struck. Throughout much of the Cold War--during which Finland remained the only autonomous state on the Soviet Union's western border--Finnish President Urho Kekkonen entertained Soviet apparatchiks with elaborate sauna parties that are now legend. "The whole sauna culture evolved to a different level" during this period, says the Finnish trade commissioner, Lasse Baldauf.

But the steam-filled room, like the smoke-filled one, has lately been under attack. The Finnish IT boom of the '90s and the rise of Nokia as the world's leading producer of cellphones have brought more foreign visitors--many from countries in which the words "nudity" and "client" can't happily coexist in one's brain. "Our customers and partners come from all around the world," acknowledges Nokia spokeswoman Paivyt Raisanen, "and it makes really no sense to force the sauna experience, however exotic, on them."

That experience contains a series of subrituals. Self-flagellation with the sauna whisk, a duster of birch branches, gets the circulation going. Visitors may then get the question "Mennaanko avantoon uimaan?", Finnish for "Shall we go into the hole in the ice for a swim?" Rolling around in the snow is optional. "If the environment and the moment is right," says Kivinen, "there are few better things than a sauna in an evening program while visiting Finland."

Do you have to be naked? "The sauna is the place for total relaxation," explains Jari Sinkari, Finland's deputy consul in New York, "so to keep the bathing suit on is not the perfect relaxation, because you feel kind of sweaty--sweaty in an unnatural way." The Finns, visitors will find, are adamant on this point.

Which creates a second problem. Finnish saunas are sex segregated; a lot of business takes place in saunas; almost half of Finland's workforce is female--you see the problem. The country's second-biggest company, papermaker Stora Enso, suggested in its 2002 corporate-responsibility report that sauna and moose-hunting evenings were blocking women's paths to advancement. As one female manager said, "The sauna door is closed."

Finnish companies have had to adapt. Nokia's Raisanen says that the company mainly uses its corporate saunas for "small internal events like team-planning days or team building when it is feasible."

In a culture where lolling around naked on hot wooden benches is considered as basic as brushing one's teeth, though, the forces of modernity may simply drive the sauna culture underground. "Officially people don't meet in the sauna," says Reetta Raty, a political journalist at Helsingin Sanomat, the country's leading newspaper. "But unofficially they do." --Jennifer Bensko Ha