Corporate Culture, Ethics

and Leadership
Corporate Culture
Organizational Culture
Values, beliefs, behaviors, customs, and
attitudes that help the members of the
organization understand what it stands for,
how it does things, and what it considers
important
Corporate Culture
The Importance of Organization Culture
Culture determines the overall feel of the
organization, although it may vary across
different segments of the organization
Culture is a powerful force that can shape
the firms overall effectiveness and long-
term success
Corporate Culture
Determinants of Organizational Culture
Organizations founder (personal values and
beliefs)
Symbols, stories, heroes, slogans, and ceremonies
that embody and personify the spirit of the
organization
Corporate success that strengthens the culture.
Shared experiences that bond organizational
members together
Corporate Culture
Managing Organizational Culture
Understand the current culture to decide
whether to maintain or change it
Articulate the culture through slogans,
ceremonies, and shared experiences
Reward and promote people whose
behaviors are consistent with desired
cultural values
Corporate Culture
Changing Organizational Culture
Develop a clear idea of what kind of
culture you want to create
Bring in outsiders to important managerial
positions
Adopt new slogans, stories, ceremonies,
and purposely break with tradition
Ethics and Culture
Ethics
An individuals personal beliefs regarding what is right and wrong or
good and bad.
Ethical Behavior
This behavior is in the eye of the beholder. However, it also refers to
behavior that conforms to generally accepted social norms.
Problems occur in ambiguous situations that can be interpreted in
different ways.
Examples of Unethical Behavior
Borrowing office supplies for personal use, Surfing the Net on
company time.
Filing falsified or inflated business expense reports.
Ethics and Culture
Managing Ethical Behavior
Must begin with top management
Top management establishes the
organizations culture and defines what will
and will not be acceptable behavior
Provide training on how to handle different
ethical dilemmas
Ethics and Culture
Managing Ethical Behavior (contd)
Develop a written code of ethics
A formal, written statement of the values and
ethical standards that guides a firms actions
Individual issues
Behavior and conscience
Privacy
 Conflicts of interest
Secrecy and
confidentiality
Honesty

Actors: Employees
Hiring and firing
Organization

Wages and working

Three basic areas of
concern for managerial
ethics are the
relationships of the firm
to the employee, the
employee to the firm,
and the firm to other
economic agents.
conditions
Privacy and respect
Subject to ethical ambiguities
Advertising and promotions
Ordering and purchasing
Bargaining and negotiation
Financial disclosure
Shipping and solicitation
Other business relationships

Economic Agents
Customers
Competitors
Stockholders
Suppliers
Dealers
Unions
Figure 4.1
Ethics in Organizations

Individual Values
+
Organizational Values
=
Managerial Values
Applying Ethical Judgments
Model for deciding whether or not a particular action
or decision is ethical
Gather relevant factual information.
Determine the most appropriate moral values.
Make a judgment based on the rightness or wrongness of the
proposed activity or policy.
Ethical Norms Affecting Actions
Utilityact optimizes what is best for its constituencies
(benefits only or primarily those who are directly involved)
Rightsact respects the rights of others involved
Justiceact is consistent with what is considered fair
Caringact is consistent with peoples responsibilities to each
other
Social Responsibility and
Organizations
Social Responsibility
The set of obligations (to behave responsibly) that an
organization has to protect and enhance the social context in
which it functions.
Areas of Social Responsibility
Stakeholders
Customers, employees, and investors
The natural environment
Environmentally sensitive products, recycling, public safety
The general social welfare
Charitable contributions, support for social issues such as child
labor and human rights
 Arguments For and Against Social
Responsibility
Arguments For Social Responsibility Arguments Against Social Responsibility

1. Business creates problems and 1. Business lacks the expertise to

should therefore help solve them. manage social programs.

2. Corporations are citizens in our 2. Involvement in social programs

society. gives business too much power.
Social
Responsibility
3. Business often has the resources 3. There is potential for conflicts
necessary to solve problems. of interest.

4. Business is a partner in our 4. The purpose of business in U.S.

society, along with the govern- society is to generate profit
ment and the general population. for owners.

Figure 4.4
Approaches to Social
Responsibility
Degree of Social Responsibility

Obstructionist Defensive Accommodative Proactive

stance stance stance stance

Lowest Highest

Figure 4.5
Approaches to Social
Responsibility (contd)
Obstructionist Stance (Unconcerned)
Do as little as possible to solve social or environmental
problems.
Defensive Stance (Damage Control)
Do only what is legally required and nothing more.
Accommodative Stance (Compliance)
Meet legal and ethical obligations and go beyond that in
selected cases.
Proactive Stance (Ethical Culture)
Organization views itself as a citizen and proactively seeks
opportunities to contribute to society.
How Business and the Government
Influence Each Other
The government influences business
through direct and indirect regulation:
The Environmental protection legislation
Government Consumer protection legislation
Employee protection legislation
Securities legislation
The tax codes

Business influences the government

through:
Personal contacts and networks
Business
Lobbying
Political action committees (PACs)
Favors and other influence tactics

Figure 4.6
Managing Social Responsibility:
Formal Dimensions
Legal Compliance
Extent to which the organization conforms to local,
state, federal, and international laws.
Ethical Compliance
Extent to which members of the organization follow
basic ethical/legal standards of behavior.
Philanthropic Giving
Awarding of funds or gifts to charities and other
social programs.
Managing Social Responsibility:
Informal Dimensions
Organizational Leadership and Culture
Leadership practices and the culture of the
organization can help define the social
responsibility stance an organization and its
members will adopt.
Whistle Blowing
The organizational response to the disclosure by an
employee of illegal or unethical conduct on the part
of others within the organization is indicative of the
organizations stance on social responsibility.
Leadership
Leaders
People who can influence the behaviors of others
without having to rely on force
People who are accepted as leaders by others
What leaders actually do
Using non-coercive influence to shape the groups
or organizations goals
Motivating others behavior toward goals
Helping to define organizational culture
Leadership

Leadership Activity Management

Establishing direction and Creating an agenda Planning and budgeting,
vision for the organization allocating resources

Aligning people through Developing a human network Organizing and staffing,

communications and actions for achieving the agenda structuring and monitoring
that provide direction implementation

Motivating and inspiring by Executing plans Controlling and problem

satisfying needs solving

Produces useful change and Outcomes Produces predictability and

new approaches to challenges order and attains results
Leadership
Power and Leadership
Legitimate power is granted through the organizational
hierarchy
Reward power is the power to give or withhold rewards
Coercive power is the capability to force compliance by
means of psychological, emotional, or physical threat
Referent power is the personal power that accrues to
someone based on identification, imitation, loyalty, or
charisma
Expert power is derived from the possession of
information or expertise
Leadership
Using Power
Legitimate request
Compliance by a subordinate with a managers request because
the organization has given the manager the right to make the
request
Instrumental compliance
A subordinate complies with a managers request to get the
rewards that the manager controls
Coercion
Threatening to fire, punish, or reprimand
subordinates if they do not do something
Rational persuasion
Convincing subordinates that compliance
is in their own best interest
Leadership
Using Power (contd)
Personal identification
Using the referent power of a superiors desired
behaviors to shape the behavior of a subordinate
Inspirational appeal
Influencing a subordinates behavior through an appeal
to a set of higher ideals or values (e.g., loyalty)
Information distortion
Withholding or distorting information
(which may create an unethical situation)
to influence subordinates behavior
Exerting Strategic Leadership
Stay on top of how well things are
going
Stay current with internal and external
information, reports, etc.
Communicate regularly with colleagues,
subordinates and customers
Keep abreast of rivals initiatives
MBWA
Exerting Strategic Leadership
Establish a strategy-supportive culture
Stakeholders are king
Challenge the status quo
Management must listen to customers
Sell the strategic initiatives to groups and
individuals throughout the organization
Recognize and reward those who lead the
change
Exerting Strategic Leadership
Keep the organization responsive and
innovative
Empower champions
Encourage creativity and innovation
Allow champions to fail
Offer organizational support
Make rewards large and visible
Lead the process to develop new
capabilities
Exerting Strategic Leadership
Exercise ethics leadership
Lead by example
Have written policies and guidelines
Enforce compliance
Encourage whistleblowers
Promote good corporate citizenship
Make corrective adjustments as needed