Chapter 9

"'Culture'

"'Culture' has become a common way of thinking about and describing an organization's internal world—a way of differentiating one organization's 'personality' from another."

ethical problem

An ethical problem is a situation with a potential course of action that, although offering potential benefit or gain, is also unethical, in that it would violate one or more of the standards described above

Ethical leadership

Behaviors violating legal standards are, by definition, illegal as well as unethical. The key question for the human resources manager or other business leader when presented with an ethical dilemma is: "What do you do?" It is one's behavior that determines one's reputation for ethicality, after all. Ethical leadership is exhibited when ethical dilemmas are resolved in an appropriate manner

accommodative strategy

Organizations pursuing an accommodative strategy ("Do the minimum ethically required") accept their social responsibilities. They try to satisfy economic, legal, and ethical criteria. Corporate behavior at this level is congruent with society's prevailing norms, values, and expectations, but at times it may only be so because of outside pressures....

Four Component Model-3

The person must give priority to moral values above other personal values such that a decision is made to intend to do what is morally right

flaws in corporate culture

There are also flaws in corporate culture, which lead even "good" people to make poor ethical judgments. Weaknesses in corporate culture include indifference, a lack of knowledge or understanding of standards on the part of employees; poor or inappropriate incentive systems; and poor leadership, including the use of "mixed signals"

ethical pressures on business enterprises

These include the globalization of business, work force diversification, employment practices and policies, civil litigation and government regulation, and concerns about environmental stewardship.

character.

Why do people sometimes make poor choices when faced with such ethical problems? One set of reasons has to do with flaws of character. character defects include malice (intentional evil); sociopathy (lack of conscience); personal greed; envy, jealousy, resentment; the will to win or achieve at any cost; and fear of failure

There are five key elements of any organization's culture:

• Core values—Beliefs about the right ways to behave. • Stories—Tales about events conveying core values. • Heroes—People (past and present) who display core values. • Symbols—Language and other symbols conveying core values. • Rites and rituals—Celebration of heroes and events displaying core values. (Shermerhorn, 2005, p. 97)

obstructionist strategy

An obstructionist strategy ("Fight the social demands") reflects mainly economic priorities; social demands lying outside the organization's perceived self-interests are resisted. If the organization is criticized for wrongdoings, it can be expected to deny the claims

five "hallmarks" of a firm that has succeeded in this integrated ethics

1. The guiding values and commitments [of the firm] make sense and are clearly communicated. 2. Company leaders are personally committed, credible, and willing to take action on the values they espouse. 3. The espoused values are integrated into the normal channels of decision making and are reflected in the organization's critical activities. 4. The company's systems and structures support and reinforce its values. 5. Managers throughout the company have the decision-making skills, knowledge, and competencies needed to make ethically sound decisions on a day-to-day basis

Protect whistle blowers.

A "whistle blower" is a person within the firm who points out ethically questionable actions taken by other employees—or even by managers—within the organization. (The term is borrowed from the athletic arena, where referees "blow the whistle" when a foul is committed.) Too often corporate whistle blowers are ignored—or even punished—by those who receive the unfortunate news of wrongdoing within the business.

Ethics

Ethics has to do with behavior—specifically, one's moral behavior with respect to society. The extent to which one's behavior measures up to societal standards is typically used as a gauge of one's ethicality. There are a variety of standards for societal behavior, of course, so ethical behavior is often characterized with respect to certain contexts.

twelve important steps for businesses to take in order to be in compliance with government regulations and recommended "best practices" in business

1. Assure commitment from top management for an organizational culture of ethicality; 2. Construct a written code of standards for behavior; 3. Communicate the standards of conduct effectively throughout the organization; 4. Conduct ongoing training and education programs with respect to business ethics; 5. Designate a compliance officer with clear responsibility for enforcing the standards; 6. Establish a process for reporting violations of the standards of conduct; 7. Maintain confidentiality and "whistle blower" protection; 8. Actively investigate all reported violations; 9. Ensure effective enforcement, compliance, and discipline; 10. Assure due diligence and active investigation by the organization's board of directors; 11. Monitor and audit business transactions and other operations; and 12. Attend carefully to the law and make certain that all business actions, policies, and procedures are conducted lawfully

elements believed to be essential in leaders of character

: (a) humility, (b) the ability to hear others while also stating one's own views, (c) fact-based thinking, (d) skills in creating better processes, (e) a tendency to give recognition rather than seek it, (f) strong ability to build a quality executive team, and (g) a commitment to shaping basic business realities for the long term.

Four Component Model-2

The person must have been able to make a judgment about which course of action was morally right (or fair or just or morally good), thus labeling one possible line of action as what a person ought (morally ought) to do in that situation.

"Business Ethics

"Business Ethics refers to clear standards and norms that help employees to distinguish right from wrong behavior at work" (Joseph, 2003, p. 2). In the context of doing business, ethics has to do with the extent to which a person's behavior measures up to such standards as the law, organizational policies, professional and trade association codes, popular expectations regarding fairness and rightness, plus one's own internalized moral standards -"Business ethics," then, is not an element distinct from ethics in general, but a subfield of the broad area of study known as "ethics"

"ethical sensitivity,"

"ethical sensitivity," has to do with recognizing that an ethical problem exists, while the second requires choosing the morally

Conduct a social audit

. Most businesses are familiar with the process of financial audits. This concept can be employed in the context of ethics and corporate responsibility as well. From time to time the human resources manager and other leaders of the business might invite responsible parties to examine the organization's product design, purchasing, production, marketing, distribution, customer relations, and human resources functions as well, with an eye toward identifying and correcting any areas of policy or practice that raise ethical concerns. Similarly, programs of corporate responsibility (such as those mentioned in step five) should be reviewed for effectiveness and improved as needed.

understanding ethical challenges faced by modern business leaders; all of them deserve consideration when seeking to understand the nature of modern business ethics

1. Corporations are persons only in a legal sense. 2. Business organizations are typically established to make a profit, and this can affect their moral culture. 3. Most large business corporations are organized as bureaucracies; this tends to distribute authority in ways that may be counterproductive. 4. Business managers, particularly those at the middle levels and below, have little control over their own time. 5. Many corporate managers have a very short-term time perspective. 6. Problems of psychological distance and multiple stakeholders also diffuse responsibility within the bureaucratic business firm.

defensive strategy

A defensive strategy ("Do the minimum legally required") seeks to protect the organization by doing the minimum legally necessary to satisfy expectations. Corporate behavior at this level conforms only to legal requirements, competitive market pressure, and perhaps activist voices. If criticized, intentional wrongdoing is likely to be denied.

Take a proactive strategy.

Businesses that wish to establish a reputation for ethicality and good corporate citizenship in the community will often organize and support programs intended to give something back to the community. Programs that promote continuing education, wholesome recreation, good health and hygiene, nutritious diet, environmental quality, adequate housing, and other community benefits may be undertaken in an effort to demonstrate the extent to which the business promotes care and concern for human welfare. Seeking out and adopting best practices from other businesses in the community is also a proactive strategy.

Character:

Character: Moral firmness; self-control; integrity -are truly committed to ethical conduct [and] make ethical behavior a fundamental component of their every action. They put a stake in the ground, explicitly stating what the organization intends and expects. Value statements and codes of ethical conduct are used as a benchmark for judging both organizational policies and every individual's conduct.

Compliance:

Compliance: The act of doing as another wishes; the act of yielding to a request or command -would be expected to exhibit behaviors associated with the defensive and accommodative strategies of corporate social responsibility. Their leaders and members may not agree with the legal and ethical standards they are forced to operate within, but they would take actions designed to meet their legal and ethical standards.

Defiance:

Defiance: Standing up against authority and refusing to recognize or obey it; open resistance -An organization displaying a culture of defiance would be expected to exhibit behaviors aligned with the obstructionist strategy of corporate social responsibility. More bluntly, this organization would be likely to scorn the law and other ethical standards and seek to resist

Provide ethics training.

From time to time the human resources manager should conduct ethics training sessions. These may be led by experts in business ethics, or they may be informal in nature and led by the HR manager and/or employees themselves. A highly effective way to conduct an ethics training session is to provide "what if..." cases for discussion and resolution. The leader would present a "real world" scenario in which an ethical problem is encountered. Using the organization's code of ethics as a guide, participants would explore options and seek a consensus ethical solution. This kind of training sharpens the written ethical code and brings it to life.

Neglect:

Neglect: Lack of proper care or attention in the performance of a task, the carrying out of an obligation, and the like; giving too little care or attention to one's duty or work or leaving it undone. -culture of neglect is all too often a tragic case. The leaders of the organization may be seeking to follow a strategy of accommodation or even proaction, but one or more flaws in the culture lead to a failure to achieve the goals of this strategy.

CREATING AN ETHICAL ORGANIZATIONAL CULTURE

Probably the best place to start is for HR professionals and their organizations to find answers to the following questions: • What are the dimensions of ethical behavior? • What is the relationship between an individual's evaluative criteria and his or her moral development? • What are the causes/factors of ethical behavior? • How can ethical behavior be predicted? • What are the best training/evaluation methods?

Empower the guardians of integrity.

The business leader's chief task with respect to establishing a culture of ethicality is to lead by example and to empower every member of the organization to take personal action that demonstrates the firm's commitment to ethics in its relationships with suppliers, customers, employees, and shareholders. Turn each employee of the firm, no matter what that individual's position in the organizational hierarchy, into a guardian of the firm's integrity. When maliciousness and indifference are replaced with a culture of integrity, honesty, and ethicality, the business will reap long-term benefits from all quarters.

. Adopt a code of ethics.

The code need not be long and elaborate with flowery words and phrases. In fact, the best ethical codes are stated simply in language anyone can understand. A good way to produce such a code is to ask all employees of the firm (or a representative group of them) to participate in its creation (Kuchar, 2003). Identify the commonly-held moral beliefs and values of the members of the firm and codify them into a written document which all can understand and support. Post the code of ethics in prominent places around the worksite. Make certain that all employees subscribe to it by asking them to sign it and abide by it

Four Component Model-1

The person must have been able to make some sort of interpretation of the particular situation in terms of what actions were possible, who (including oneself) would be affected by each course of action, and how the interested parties would regard such effects on their welfare.

Four Component Model-4

The person must have sufficient perseverance, ego strength, and implementation skills to be able to follow through on his/her intention to behave morally, to withstand fatigue and flagging will, and to overcome obstacles.

proactive strategy

The proactive strategy ("Take leadership in social initiatives") is designed to meet all the criteria of social performance, including discretionary performance. Corporate behavior at this level takes preventive action to avoid adverse social impacts from company activities, and it even anticipates or takes the lead in identifying and responding to emerging social issues

Correct unethical behavior.

This is the complement of step three. When the organization's ethical code is breached, the employee(s) responsible must be punished. Many business organizations use "progressive discipline," with an oral warning (intended to advise the employee of what is and is not acceptable behavior) used as the first step, followed by a written reprimand, suspension without pay, and termination as further disciplinary action if unethical behavior persists. Of course, some ethical lapses are so egregious that they require suspension—or even termination—following the first offense. Through consistent and firm application of sanctions to correct unethical behavior, the human resources manager will signal to all emp

Hire and promote ethical people.

This, in concert with step four below, is probably the best defense against putting the business at risk through ethical lapses made by employees with character flaws. When making human resources decisions it is critical to reward ethical behavior and punish unethical behavior. Investigate the character of the people you hire, and do your best to hire people who have exhibited high moral standards in the past. Remember that past behavior is the best predictor of future behavior, so check references carefully. Formal background investigations may be warranted for positions of fiduciary responsibility or significant risk exposure. Base promotional decisions on matters of character in addition to matters of technical competence. Demonstrate to your employees that high ethical standards are a requirement for advancement in the firm

organizational culture

organizational culture as "the system of shared beliefs and values that develops within an organization and guides the behavior of its members" (p. G-12). "Whenever someone, for example, speaks of 'the way we do things around here,' they are talking about the culture," -The internal culture has the potential to shape attitudes, reinforce beliefs, direct behavior, and establish performance expectations and the motivation to fulfill them

sampling of some of the ethical problems that frequently arise in the business setting

• Providing a product or service you know is harmful or unsafe; • Misleading someone through false statements or omissions; • Using "insider information" for personal gain; • Playing favorites; • Manipulating and using people; • Benefiting personally from a position of trust; • Violating confidentiality; • Misusing company property or equipment; • Falsifying documents; • Padding expenses; • Taking bribes or kickbacks; • Participating in a cover-up; • Theft or sabotage; • Committing an act of violence; • Substance abuse; • Negligence or inappropriate behavior in the workplace.