Business Ethics Test #2 Chapter 5

Other Formal Culture Systems

-Selection systems -Values and mission statements -Policies and codes -Orientation and training programs -Performance management systems -Organizational authority structure to support responsibility -Decision-making processes

Assumptions about People

-Self interested and opportunistic.

Orientation and Training Programs

-Socialization into ethical culture is often started through formal orientation programs for new employees and is reinforced through training.

Norms

-Standards of daily behavior that are accepted as appropriate by members of the group.

Ethical Climates

-Fairness -Benevolence -Self-Interest -Principles

Culture

-A body of learned beliefs, traditions, and guides for behavior shared among members of a society or a group. -The idea of culture has been particularly useful for understanding and differentiating among work organizations and the behavior of people in them. -It is​ a way of differentiating one organization's "personality" from another.

Formal Systems

-Executive Leadership -Selection System -Policies/Codes -Orientation/Training -Performance Management -Authority Structure -Decision Processes

Role Models and heroes

-A lot of socialization that involves ethics is informally conducted by role models and mentors. -Heroes generally personify the organization's values.

Ethical Culture Change pt 2

-Audit of the ethical culture -A culture system view -A long-term view -Assumptions about people -Diagnosis: The ethical culture Audit -Ethical culture change

Organizational Climates

-Benevolent climate organization that cares about multiple stakeholders -Self-interested climate- people protect their interests. -Rule-based climate- an organization where employees follow both laws and the organization's​ rules when making decisions.

Becoming a more Ethical Culture

-Changing organizational ethics in a positive direction involves simultaneously developing or changing multiple aspects of the organizations ethical culture.

Leaders Maintain or Change Organizational Culture

-Current executive leaders can also influence culture in some ways. They can help maintain the current culture, or they can change it by articulating a new vision and values; by paying attention to, measuring and controlling certain things; by making critical policy decisions; by recruiting ​and hiring personnel who fit their vision of the organization; and by holding people accountable for their actions. -Keeping a company on top: execution, growth, great people, and virtue. -Most people do not​ expect the word "virtue" to be associated with companies that earn billions on the social responsibility front. -Companies are obligated to provide solutions to the world's problems---not to just make money for shareholders and obey the law. "Good leaders give back...It is up to us to use our platform to be a good citizen."

Diagnosis: the Ethical Culture Audit

-Diagnosing culture calls for time concerning techniques, such as auditing the content of decision making, coding the content of decision making, coding the content of organizational stories and anecdotes, and holding open ending interviews with employees at all levels.

Ethical Culture

-Encourage respect for humanity and nature and to create a better world. -Ethical culture is a multi-system framework because it is composed of formal systems and informal systems. Formal systems are done by executive leadership, and informal is done by role models. -Ethical culture is created and maintained through a complex interplay of formal and informal organizational systems through a complex interplay of formal and informal organizational systems.

Ethically Neutral or "Silent" Leadership

-Ethically neutral or "silent leadership" are people who are not strong leaders either ethically or unethically. -They do not provide explicit leadership in crucial areas of ethics. -An example of a Silent Leader are top managers -Being tone deaf on ethics issues is exactly what ethically neutral leadership is about. -Research has found that executive ethical leadership is critical to employees.

Leadership

-Executive Leaders Create Culture -Leaders Maintain or Change Organizational Culture -Ethical Leadership and Ethical Culture: ~Ethical Leadership ~Unethical Leadership ~Hypocritical Leadership ~Ethically Neutral or "Silent" Leadership

Executive Leaders Create Culture

-Executive leaders affect culture in both informal and formal ways. -Senior leaders can create, maintain, or change formal and informal culture systems by what they say, do, or support. -Formally, their communications send a powerful message about what's important in the organization. -They influence some other formal culture dimensions by creating and supporting relevant formal policies and programs with resources, and they influence informal culture by role modeling, the language they use, and the norms their messages and actions appear to support. -The founder of a new organization is thought to play a particularly important culture-creating role. Often, the founder has a vision for what the new organization should be. he or she often personifies the culture's values, providing a role model for others to observe and follow, and guides decision making at all organizational levels.

Policies and Codes

-Formal ethics policies (also called codes of ethics or codes of conduct) are more detailed than value/mission statements. -Provide guidance about behavior in multiple specific areas.

Ethical Culture Change

-From ethical to unethical -From unethical to ethical

Value and Mission Statements

-General statements of guiding beliefs

Internalization

-In internalization, people combine their own beliefs with culture. The ethical culture of an organization is a part of the larger organizational culture. -They may come into the organization sharing its values and expectations, thus making for a very smooth transition. Alternatively,​ they may internalize cultural expectations over time.

Performance Management

-Involve the formal process of articulating employee goals, identifying performance metrics, and then providing a compensation structure that rewards individual----and frequently team---effort in relation to those goals. -To get results fast: 1. Focus on the mechanics 2. Marry the what with the how

Hypocritical Leader

-Leader who tells employees to do an ethical thing, but he/she does unethical thing. (A leader that expects his employee to do as they are are expected but they do not do the same.) -Leads to employees not trusting leaders. -"Do as I say not as I do" and "walk the talk".

Executives Ethical Leadership Rests on Two Pillars: Moral Person Moral Manager

-Moral Person: Tells followers how a leader behaves -Traits include honesty, integrity, trust -Behaviors include openness, concern for people, personal morality -Decision-making includes values-based and fairness -Moral Manager: tells followers how they should behave and holds them accountable -Role modeling: takes visible ethical action -Rewards/Discipline: holds people accountable for ethical conduct -Communicating: Sends an "ethics and values" message

The Moral Manager (extended)

-Moral managers, they must focus on the "leadership" part of the term ethical leadership by making ethics and values an important part of their leadership message and by the importance of ethical conduct in a variety of ways. -Most of the messages employees recieve in business are about bottom-line goals. Therefore, senior executives must make ethics a priority of their leadership if ethics is to get attention from employees. Moral managers do this by being visible role models of ethical conduct, by communicating openly and regularly with employees about ethics and values, and by using the reward system to hold everyone accountable to the standards. -"Live with integrity" and "Integrity builds the trust in senior management ​that is critical for high-performing organizations."

Ethical Culture Change Intervention

-Once the audit is complete, the data should be discussed with employees, who then can be enlisted in developing a culture change intervention plan.

Myths and Stories

-Organizational myths and stories explain and give meaning to the organizational culture

Decision Making Process

-Organizations formal decision-making process are another important part of the ethical culture.

Informal Culture Systems

-Role Models and heroes -Norms: "The way we do things around here" -Rituals -Myths and stories -Language

Informal Systems

-Role Models/ Heroes -Norms -Rituals -Myths/Stories -Language

A long Term View

-The development of organizational culture takes place over a number of years (6-15 years)

Selection Systems

-The formal systems in place for receipting and hiring new employees. -Vital to hiring people who fit the culture of the firm. -Example: All Southwester employees must have good personalities.

The Moral Person (extended)

-The moral person dimension represents the "ethical part of the term "ethical leadership" and is vital to developing a reputaion for ethical leadership among employees. -As a moral person, the executive is seen first as demonstrating certain individual traits (honesty, integrity, trustworthiness). -Showing visbile behaviors rather than being one that would be refered​ to as being squeaky clean.

Rituals

-They tell people symbolically what the organization wants them to do and how it expects them to do it. -Is a way of affirming and communicating culture in a very tangible way.

Employees brought into the organization's culture through a process called enculturation, or socialization.

-Through socialization, employees learn "the ropes" with either formal training or mentoring. -Socialization can occur through formal training or mentoring, or through more informal transmission of norms of daily behavior by peers and superiors. -With socialization, people behave in ways that are consistent with the culture because they feel they are expected to do so.

Alignment of Ethical Culture Systems

-To create a consistent ethical culture message, the formal and informal systems must be aligned (work together) to support ethical behavior. To have a fully aligned ethical culture, the multiple formal and informal systems must all be sending employees consistent messages that point in the direction of ethical behavior.

Organizational Authority Structure

-To support responsibility

Unethical Culture

-Unethical behavior is an action that falls outside of what is considered morally right or proper for a person, a profession or an industry. Individuals can behave unethically, as can businesses, professionals, and politicians.

Unethical Leaders

-Unethical leaders can just as strongly influence the development of an unethical culture. -Unethical leaders have reputations as weak moral persons and weak moral managers. -Al Dunlap-he was famous for helping struggling companies best known for being an unethical leader. He would become violent, demanded employees to do certain tasks, but they would be greatly rewarded.

Language

-Use language to communicate values to employees.

Alignment and Misalignment

-With alignment, all systems are "pushing" employees in the same direction- ether ethical or unethical -With misalignment, employees get mixed messages about expectations

A culture Approach to Changing Organization

Audit of the Ethical Culture: -Only way to determine if the culture is aligned to support ethical behavior is to conduct regular, comprehensive audits of all relevant cultural systems.

Internalization and Socialization

Both internalization and socialization explain how a company would come about to be ethical or unethical.

Socialization (extended)

Through socialization employees learn the ropes.

Organizational Culture

​-Expresses shared assumptions, values, and beliefs and are the social glue that holds the organization together. -It is "how we do things around here." -Strong: assumptions, values, beliefs widely shared -Weak: subgroup norms more influential -To understand and access an organizations culture it requires knowledge of the organization's history and values, along with a systematic analysis of multiple formal and informal organizational systems. -To create a consistent ethical culture, the same standards must apply to everyone from the top of the company to the bottom. -In a weak culture, strong subcultures exist and guide behavior -In a strong culture, standards are shared. Ethical culture is a major influence on employee's ethical awareness, judgment, and action.