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WEEK 4

(BUS 1)
Prof. Restie Torres

Chapter

10

Corporate Culture: Impact


and Implication

What is Corporate Culture??


Beliefs and behaviors that
determine how a companys
employees and management
interact and handle outside
business transactions.
The culture shapes the people who
are members of the organization.

A firms culture can be its


sustaining value
which offers it direction and
stability during challenging
times.
Can be a constraint also

Culture is implied, develops


organically over time from the
cumulative traits of the people the
company hires.
It is reflected in its dress code,
business hours, office setup,
employee benefits, hiring decision,
treatment of clients, client
satisfaction and every other aspect

How corporate culture impacts


ethical decision making

Corporate Culture
A shaped of pattern of beliefs,
expectations and meanings that
influence and guides the thinking
and behaviors of the members of
that organization.

How it influence ethical decision making ?

Decision making in the firm is


influenced, limited and shaped and
in some cases virtually determined
by the corporate culture of the firm.
Individuals can be hindered or
helped in making the right or the
wrong , decision by the expectations,
values and structure of the
organization on which they work.

In situation where the law where the


law is an incomplete guide for
ethical decision making , the
business culture is likely to be the
determining factor in the decision.
Ethical businesses must find ways to
encourage, to shape, and to allow
ethically responsible decisions.

&
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t
Cul

Chapter

10

s
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Eth

What is Culture?
Values, norms, guiding beliefs, and
understandings that are shared by
members of an organization
Organizational culture exists at two
levels
Observable symbols
Underlying values
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2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Levels of Corporate Culture

2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Strong adaptive cultures


often incorporate the
following values:
1. The whole is more important than
the parts
2. Equality and trust are primary
values
3. The culture encourages risk taking,
change, and improvement

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2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Constructive Versus
Non-Constructive Cultures

16
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Ethics
Ethics refer to the code of moral
principles and values that govern the
behaviors of a person or group with
respect to what is right or wrong

18

2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Sources of Individual Ethical


Principles and Actions

19

Common Workplace Ethics

20

Responsibili
ty

Punctuality

Integrity & Loyalty

22

Teamwork

23

24

Professionalism

Performance feedback sessions should be


corrective in nature.

26

Good Behavior should


be acknowledged.

27

Role model

Seniors behaving in a morally upright manner will


set an example for employees to follow.

28

The Effects of Negative Corporate


Culture on Ethical Behavior

1. Lack of Moral Leadership


When managers are unethical, employees
will emulate the bad behavior.

2. Hypercompetitiveness
If a companys culture rewards employees
who pursue personal advantage rather
than focus on contributing to the
performance of the entire team,
employees might overstep ethical
boundaries to get ahead.

3. Poor Discipline
A lax corporate culture makes it easy for
unethical behavior to prosper.

4. Lack of Discussion
Corporate cultures that discourage honest
discussion allow unethical behavior to
spread unimpeded.

Compliance Based Culture

Culture of an organization can


generally be characterized as either
Compliance-based Culture or Rulesbased
Ethical- based Culture or valuesbased

Rule based
rule itself is the ultimate basis of
decisions
invites legalistic orientation where
obedience to the letter of the law is the
objective
there is a minimalist attitude

Values based
dominated bycore ethical beliefs and
convictions which underlie each rule or
policy
rules and policies are interpreted and
applied in relation to traditional ethical
values such as honesty, respect,
fairness and responsibility

Rules Based
based

vs.

Value-

quite enough that


employees know and follow
the rules

employees are expected to


know and follow rules and
policies

if its legal its ethical

they are expected to make


good faith effort tohonor the
spirit of the rules

lawful but awful

values about what is right


and good

Characteristics associated with


compliance-based programs:
Development and communication of clear
policies and guidelines to ensure
compliance
Education to ensure awareness of rules
Management direction and supervision
Monitoring of employee behavior
Sanctions for non-compliance

Values-based programs are


generally associated with:
Development of higher standards of
behavior through shared values
Encouragement of dialogue to interpret
shared values
Enabling responsible conduct by providing
support for employees' ethical aspirations
Managerial responsibility for implementation

Both compliance and values-based programs


are associated with the following outcomes:

Reduced unethical behavior


Ethical advice seeking
Awareness of ethical issues
Perceptions of better decisionmaking

Which culture do you think is most likely to win the


loyalty and trust of employees and customers?
Which culture do you think is less likely to suffer a reputationdamaging resource-draining scandal?
Establishing a sustainable, high performance values-based
culture requires sincere commitment based on the
conviction that it is worthwhile, not because it will produce
better results and higher morale (which it will) but because
it is simply the better way to be.
An organization that truly wants to be good will be
excellent.
Good ethics is not simply a risk-management strategy
(though it is an effective one), it is the only foundation that
can sustain a good life or a great company.

VALUES-BASED
CULTURE

Definition of Business Ethical Values


Business ethical values vary by company,
and are defined largely by the behaviors
and values that govern a business
environment. In general, business ethical
values are a set of guiding principles that
encourage individuals in an organization to
make decisions based on the companys
stated beliefs and attitudes toward
business practices within its industry

Corporate Culture
Companies that define key elements of
a corporate culture communicate their
core values, beliefs and preferred
approaches to handling common and
uncommon business situations.
Employees with a firm grasp on a
companys values will make the most
appropriate choices when facing a
business dilemma.

Conveying Company Culture


Managers define ethical business behavior in
their workplaces by explaining to employees
how behavior and action affects the business
overall mission. An example is demonstrating
the link between respectful workplace
relationships and low turnover, or lenient return
policies and increased customer satisfaction
surveys. This approach helps employees
understand the link between ethical business
behavior and corporate success.

Creating an Ethical
Workplace
While there are many shades of gray in
business dealings, companies can
define ethical business values by
outlining clear examples of right and
wrong behavior as it applies to them.
This can be achieved by role-playing
scenarios such as customer
interactions, employee disputes or
negotiations with vendors and
contractors.

Fair Treatment
A business can define ethical behavior by
outlining what it considers fair and just
treatment of employees and customers. This
includes goodwill among coworkers and toward
customers, a willingness to give back to the
community and the self-control to avoid
situations where unethical behavior could
occur. When employees understand how a
company defines business ethical values, they
become more likely to comply with corporate
policies and management decisions.

Acting with Integrity


A company that defines business
ethical values as a core element of a
corporate culture encourages
employees to perform their job
responsibilities accordingly. This often
involves doing whats right for the
business, without regard to personal
outcomes or ulterior motives.

Dealing with Unethical Business


Values
Many poor personal and professional decisions
are based on a rationalization of the ethics
involved. For example, a person who embezzles
from his company may fully understand the
behavior was unethical, but he justifies it by
saying he was under-paid, so the company got
what it deserved. Truly defining business ethical
values in a workplace environment involves
following examples of ethical behavior and fair
treatment, starting from management and
trickling down.

The Evolution of Compliance


Programs Into Values-Based Programs

Thank You!

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