Business Ethics Chapter 6 PDF

How Does Culture Determine Organizational Ethics? Whether you work for a small business, a non-profit, a branch of government, or multinational firm, your organization’s culture shapes employees’ job satisfaction and productivity. Company culture isn’t concerned...

How Does Culture Determine Organizational Ethics? Whether you work for a small business, a non-profit, a branch of government, or multinational firm, your organization’s culture shapes employees’ job satisfaction and productivity. Company culture isn’t concerned only with the “what” of daily operations—it’s the whole vibe: how it feels for everyone to spend the majority of their waking hours. Just as every organization wants to have a positive culture, they also want to have an ethical culture that goes beyond the employee handbook and sets the tone for employees to do the right thing. An ethically sound culture in your organization is just as important as the industry you operate in, the products or services you offer, and buy in from your shareholders.  What Is Culture in Business? Culture from an anthropological perspective is defined as: “a body of learned beliefs, traditions, and guides for behavior shared among members of a group.” In business, culture is akin to a company’s personality— it’s what sets the organization apart from others. It’s both a reflection of the company’s founders and history, and their values and beliefs. Everything from dress code, language, stories and rituals comprise a workplace’s culture. Your organization’s culture is expressed through formal and informal systems, and affects every step toward an individual taking ethical action, seen below. Culture may emerge within an organization either as a strong or weak force. Individual Differences Ethical Ethical Ethical Action Awareness Judgment Ethical Culture Expressions of Organizational Culture Look at the difference in the employee “uniform” between tech giants Apple & IBM. IBM employees were known to wear the formal suits, white shirts, and polished shoes. Apple employees wore tennis shoes, t-shirts and jean. Apple IBM  Strong vs. Weak Culture Strong Weak Creates a common, uniform sense No single standard or behavioral of identity for all associates. consistency across the organization Reinforces ethical behavior even Expressed usually as a set of in challenging situations, usually subcultures throughout different seen as a point of pride among departments or institutions Usually seen in branches ofwith the employees. organization. diverse departments, such as universities. Standards and guidelines are consistent How Do Associates “Learn” Your Company Culture? There are generally two ways your company’s culture proliferates among its associates: Socialization and Internalization. Socialization Is interaction with other employees and managers. This can be through training, mentoring or just chatting in the lunch room. Socialization teaches people how to dress, what type of language to use, and how to act. Internalizatio n This is where associates have internalized the cultural norms of the company as their own. The company’s culture becomes aligned with their own beliefs. This can occur from the start, i.e., the employee is a “perfect fit” for the company and their internal values already match the company’s, or can happen over time. The Framework of Ethical Culture Depicted below are the formal and informal systems in how culture disseminates through the various levels of a company. FORMAL INFORMAL SYSTEMS Executive Role SYSTEMS Leadership Policies/codes Models/Heroes Ethical and Norms Orientation/training ` Performance Unethical Rituals Behavior management Myths/stories Authority Structure Decision processes Language Alignmen t?  Who Creates A Company’s Culture? Executive leaders are cultural leaders. They create company culture both formally, through newsletters, announcements, and town hall addresses, and informally, via backstory behind the founding of the company, inspirational anecdotes, or other cultural milestones. A shining example of this is founder of Southwest Airlines, Herb Kelleher. Many cite Southwest’s culture as one of the pillars that enabled it to not only thrive during the tumultuous era after the September 11, 2001 attacks, which bankrupted other airlines. The culture Kelleher established combined efficiency with a sense of playfulness that resulted in employees stepping out of their normal roles, such as pilots helping load baggage or clean the plane, and helping operations run more smoothly.  Moral Leadership Matrix Moral Person Weak Strong Because employees rarely get to Strong know a senior executive in person, Hypocritical Ethical they only have a sense of them leader leader based on several degrees of Manager separation such as word of mouth, Moral townhall meetings, email announcements, etc. Pictured to the right, a senior Weak manager’s reputation depends on Unethica Ethically two criteria: how they are viewed l leader silent as a moral person, as well as a leader moral manager.  Unethical Leadership The following traits of unethical leaders bleed through into the company’s culture, sowing discord and eroding associates’ confidence Leading Through These managers may seem effective on a surface level, with Fear and Disrespect quotas and goals being met, but rumors swirl as they are known to chastise, threaten, or downplay the achievements of others. This style of leadership may work in the short- term, but never leads to good things in the end. Hypocritical “Do as I say, not as I do,” is not an effective mantra to follow Leadership for parenting, and neither does it inspire employees. Nothing stifles morale and undermines ethical messaging more than finding out an executive has engaged in the very activity they admonished in the company newsletter. “Silent” Leadership These are the leaders that those who know them personally may sing their praises, how they care about employees and family. But it takes more than being a good person to be a good leader. A good leader must stand up for what’s right, even if it threatens the bottom line.  “Can You Interview for Integrity?” Prospective employees may ask you one or several of these questions to get a sense of your ethical temperance: 1. We sometimes have to choose between what we think is right and what’s best for the company. Can you give an example of such a time and tell how you handled it? 2. Can you describe your current employer’s ethics” Are there things you feel good about? Bad about? 3. Please provide an example of an ethical decision you’ve made at work and tell how you handled it. What factors did you consider? 4. Can you provide an example of some past work behavior that you’ve regretted? How would you behave differently today? 5. Have you ever felt the need to exaggerate or bend the truth to make a sale? 6. Have you ever observed someone else stretching the rules at work? What did you do, if anything? Policies and Codes Think of a University without good-faith policies in place. What kind of institution would that be? Would people trust the research and papers that university published? The same question can be asked for private-sector businesses. For a company’s credibility, beyond just an overall mission statement, they must have a published Code of Ethics. This is true across all industries, where the majority of private-sector businesses now have a formal policy manual, detailing what constitutes “respectful treatment” of management and fellow employees alike, how to accept gifts and more. When a code of ethics is aligned with the company’s culture, and not mere “window dressing,” studies report associates do report to a published code of ethics when faced with a dilemma, are less likely to commit unethical acts, and more likely to seek advice before making a decision about an ethically sensitive issue.  Make “How” As Important As “What” A Performance Management System (PMS), usually presented in the form of a web portal, offers employees a way to access feedback, evaluations, set goals, and even earn rewards for different metrics. Savvy managers recognize PMS are a key component in an organization’s culture to encourage ethical behavior. Due their nature, a PMS at the end of the day is still about “making the numbers,” and can result in employees ignoring the non-financial aspects of ethical standards, defeating the purpose. A key aspect of making a PMS work as part of an ethical company culture is marrying the what –goals, business results, etc., with the how— acting with integrity, inspiring trust, talking openly and honestly, etc. Encourage Reporting of Ethical Issues In Chapter 5, we discussed “whistleblowing,” or reporting unethical practices. Can you think of a word with positive connotations along these lines? We have snitching, tattling, ratting, squealing, crying wolf… none of those sound nice. There’s an inherent culture of “just keep your mouth shut,” that can result in smaller problems becoming bigger ones because everyone is too afraid to talk about it. An ethical organization needs to view employees not as snitches, but as concerned corporate citizens who are trying to do the right thing. Managers need to step up and address that the company’s culture not only won’t punish associates who speak up, but given their intentions are for the greater good, are rewarded.  Informal Cultural Systems In your first week in a new workplace, what’s that feeling in the air you notice? Maybe you’ve read the notice boards, employee handbook, code of conduct, etc., but it’s the unwritten rules that tend to be what really show us “the ropes.” The informal systems of stories, rituals, role models, and social norms may things we don’t even give a second thought, but they matter.  Norms, Rituals, & Stories Standards of daily behavior Includes meetings, Highlight key events, that influence individual ceremonies, and team- stories of founders or behavior and shape building events that employees, and organizational culture promote values such as reinforce the orgs responsibility or importance values Can support either ethical of family or unethical behaviors Create and reinforce depending on what sorts of Leaders need to evaluate ethical culture norms are encouraged whether these rituals are inclusive or only for Leaders should identify Informal norms at times individuals who “make the and promote stories override formal rules, numbers. that align with the creating ethical orgs., ethical values misalignment Norms Rituals Stories  Role Models and Heroes An ethical workplace culture needs venerable people whom we aspire to be alike. Ethical behavior in a workplace is learned through socialization, ideally with figures of authority in the form of senior managers, supervisors, or veteran associates. When senior leaders act with integrity, it reinforces that the Mentors company’s ethical standards are not Heroes merely spoken, but lived. Informally share knowledge and Has garnered some kind of career advice with junior public recognition by associates embodying the company’s values Should stress integrity and Can be current leaders or live resisting unethical practices (but don’t always) in memory, such as the founder When You Need An Ethical Culture Audit Think of your company’s culture like a garden. A garden needs regular water, tending, pruning, and mending of fences to prevent animals and insects from ruining it. Your company’s culture is much the same: when you see some weeds starting to sprout up, you pull them out right away. If it becomes apparent your company’s culture is fostering unethical behavior, a few seminars and training programs aren’t going to fix your problems. It’s going to require a whole systemic rework that, depending on the size of the company, could take from 6 to 15 years. Questions for Auditing Company Culture 1. Do you get a clear message of what’s expected of you ethically from your managers? 2. When orienting new employees into your organization, is emphasis placed on integrity and values, or are results the only thing that matters? 3. Does your organization have a formal code of ethics? If so, how is it distributed, or displayed? Is it given its own plaque, or relegated to the inside of a dusty binder? 4. How is ethical misconduct treated in your organization? Is it dealt with swiftly and seriously, or is it brushed off? 5. Are ethical considerations part of the onboard training process, and during the planning phases of new projects??  Key Takeaways Company culture disseminates through socialization, interacting with peers and superiors, and internalization, where the company’s values become intertwined with the individual’s. We need heroes in our lives, and our work lives are no exception. Having individuals for associates to look up and aspire to are as valuable as any tangible asset. Our obsession with quantifying everything can be a detriment to people acting in an ethical manner for the result rather than the process taken to achieve the result. A healthy ethical culture is much like a garden: it requires thoughtful planning for what goes into it, and then regular tending to ensure no invasive forces come in to change it Performance Management Systems are great for keeping track of goals and metrics, but also need to consider unquantifiable such as integrity, respect, and consideration in order to maintain an ethically aligned culture.  References Trevino; Nelson. “Managing Business Ethics: Straight Talk about How to Do It Right” 8th Ed. Wiley, 2021