OB II Final
Chapter 10: Organizational Culture and Ethical Values
Organizational Culture -
What Is Culture? o
Social Capital (goodwill): quality of interactions and whether they share a common perspective
o
o
High degree of social capital are based on trust, mutual understanding
Culture: set of values, norms, guiding beliefs and understandings that is shared by members of an organization and is taught to new members
Unwritten feeling of the organization that everyone participates in
Usually goes unnoticed unless an implementation of new strategies/programs go against basic norms and values
Two levels of organizational culture: 1. Visible artifacts and observable behaviours (dress, act, symbols, stories, ceremonies) 2. Underlying values, assumptions, beliefs, thought processes
o -
Attributes of culture evolves from a patterned set of activities carried through social interactions (patterns can be used to interpret culture)
Emergence and Purpose of Culture o
Provides sense of identity and generates a commitment to beliefs and values that are larger than themselves
o
Begins with a founder or early leader who articulates and implements particular ideas and values as a vision, philosophy or business strategy
o
When ideas lead to success they become institutionalized and the culture reflects the vision and strategy of the founder
o
Two critical functions of culture: 1. Integrate members so that they know how to relate to one another •
Internal integration: members develop a collective identity and know how to work together effectively
Chapter 10: Organizational Culture and Ethical Values
o
Day to day working relationships and determines how to communication what is acceptable and how power and status is located
2. Help organization adapt to the external environment •
External adaptation: how to meet goals and deal with outsiders o
o
-
Helps guide daily activities to workers to meet certain goals
Guides employee decision making in the absence of written rules or policies; helps build social capital by forgoing positive or negative relationships (internal and external)
Interpreting Culture o
Rites and Ceremonies
Elaborate, planned activities that make up a special event and are conducted for the benefit of an audience
Special occasions reinforce values, creates a bond for sharing important understandings and anoint/celebrate heroes who symbolize important beliefs
Four Types of Rites 1. Passage (transition of employees into new roles) o
Induction/training
2. Enhancement (stronger identities and increases status) o
Annual award nights
3. Renewal (training and development activities that improve organizational functioning) o
Development activities
4. Integration (common bonds and good feelings among employees and increase commitment)
Chapter 10: Organizational Culture and Ethical Values
o o
o
Stories
Narratives based on true events that are frequently shared among employees and told to new employees to inform about organization
Heroes: models or ideals for serving cultural norms and values
Legends: when events are historic with some fictional details
Myths: consistent with values and beliefs but are not supported with facts
Symbols
o
Can be ceremonies, stories, slogans and rites as well as physical artifacts (powerful due to focus on attention on a specific item)
Language
o
Office holiday party
Specific sayings, slogans, metaphors to convey special meaning
Slogans, symbols and ceremonies are artifacts that reflect underlying values; these visible artifacts and behaviours can be used to shape values and strengthen culture
Organization Design and Culture -
Culture should reinforce the strategy and structural design needed to be effective its environment. Two specific dimensions: 1. The extent to which the competitive environment requires flexibility or stability 2. The extent to which the organization’s strategic focus and strength are internal or external
- Four categories of culture associated with these differences: 1. The Adaptability Culture (External strategic focus with flexible environment) o Entrepreneurial values, norms and beliefs that translates signals from the environment into new behaviour responses o Doesn’t react well to environmental change; it actively creates change o Innovation, creativity and risk taking are valued and rewarded 2. The Mission Culture (External strategic focus with stable environment) o Serving specific customer without the need for rapid change o Emphasis on clear vision, goals, growth and profitability
Chapter 10: Organizational Culture and Ethical Values
o Stable market allows measurable goals 3. The Clan Culture (Internal strategic focus with flexible environment) o Involvement of members and rapidly changing expectations from the environment o Focuses on needs of employees with a sense of responsibility, ownership and commitment of members 4. The Bureaucratic Culture (Internal strategic focus with stable environment) o Supports methodical approach of business with symbols, heroes, ceremonies supporting the tradition policies and practices to achieve goals o High level of consistency, conformity and collaboration o Very inflexible - Culture Strength and Organizational Subcultures o Culture Strengths: degree of agreement among members of an organization about importance of specific values (strong: cohesive) o Strong culture has frequent ceremonies, symbols, stories and slogans increasing commitment to values of the company o Subculture develop to reflect common problems, goals and experiences that members share or even physically separated segments of the company Includes basic values of dominant organizational culture but has additional values unique to the members Differences can lead to conflicts, especially if culture is weak Organizational Culture, Learning and Performance -
Corporate Culture and Performance by Kotter and Heskett o
Companies that intentionally managed cultural values outperformed similar companies that did not
o
CAP (Cultural Assessment Process) gave top executives hard data of money saved from cultural factors
-
Dangerous when a culture is set and fails to adapt to the environmental changes (the more institutionalized a culture is, the more detrimental it is to future performance when environment changes)
-
Values of strong adaptive cultures: o
The whole is more important than the parts and boundaries between parts are minimized
Chapter 10: Organizational Culture and Ethical Values
o
o
-
-
Emphasis on being aware of whole system and how it all fits together which reduces boundaries. Subcultures still reflect dominant culture with free flow of people, ideas and information
Equality and trust are primary values
Crease sense of community and caring for one another
Emphasis on treating everyone with care and respect which facilitates learning (safety, learning, mistakes, trust)
The culture encourages risk taking, change and improvement
Basic value to question status quo
Constant questioning of assumptions allows creativity and improvement with rewards and celebrations to creators and new ideas
Adaptive corporate cultures o
Managers concerned with customers and employees as well as internal processes that bring useful change
o
Flexible with managers initiating change when needed
Non-adaptive corporate cultures o
Managers concerned about themselves or own special projects with discouragements in risk and change
Ethical Values and Social Responsibility -
Sources of Individual Ethical Principles o
Ethics: code of moral principles and values that governs behaviour of person or group with respect o what is right or wrong
o
Each person has creation of their own ethical principles
o
History (religion, culture, geography) leads to societal morality (norms, values, laws, regulations) which shapes the local environment (organizations, regions, community, family/clan) which then shapes individual behaviour
Individual ethics can be influenced by peers, subordinates , supervisors and culture
Chapter 10: Organizational Culture and Ethical Values
-
-
Managerial Ethics and Social Responsibility o
Rule of Law: set of codified principles and regulations that describe how people are required to act, that are generally accepted in society and that are enforceable in courts
o
Ethical standards apply to behaviour not covered by the law and the rule of law applies to behaviours not necessarily covered by ethical standards
o
More than 54%of HR reported lying, falsifying reports, abusing drugs/alcohol
o
Managerial ethics: principle that guide decisions and behaviours of managers with regard to being right or wrong
o
Social responsibility: extension of managerial ethics and refers to obligation to make choices and take action in the best interest of stakeholders
o
Ethical dilemma: situation of right or wrong decisions are not clear and values conflict
Does It Pay to Be Good? o
Small positive relationship between ethical and socially responsible behaviour and financial performance
o
People prefer to work for ethical companies, therefore receive high quality employees as well as customers prefer to purchase from ethical companies
Sources of Ethical Values in Organizations -
Immediate forces affecting ethical decisions on organizations
1. Personal Ethics o
Value and beliefs
o
Moral development
o
Avoid physical punishment conform to others build self morals
Whether mangers have developed ethical framework
Chapter 10: Organizational Culture and Ethical Values
Utilitarian theory: ethical decisions should generate the greatest benefits for the largest number of people (consistent with cost/benefit)
Personal liberty: ensure greatest freedom of choice and liberty for individuals (freedom to act on conscience, freedom of speech etc)
Distributive justice: moral decisions promote equity, fairness and impartiality with respect to the distribution of rewards and administrative rules which are essentially for social cooperation
2. Organizational Culture o
Make ethics an integral part of the culture and can impact individual ethics because it helps guide daily decisions
o
Rituals, ceremonies, stories, language, history
3. Organizational Systems o
Basic architecture of the organization (ethical values incorporated into policies and rules, considered in selection and training)
o
Structure, policies, rules, code of ethics, reward systems
4. External Stakeholders o
Government regulations, customers (quality, safety, availability)
o
Special interest groups are concerned for sustainable development (dual responsibility of growth and environmental sustainability)
o
Global market forces
How Leaders Shape Culture and Ethics -
Values-based Leadership o
Relationship between leader and followers based on shared, internalized values that advocated and acted upon by the leader
o
Leaders influence cultural/ethical values by clearly communicating the vision throughout the organization and institutionalizing it through everyday behaviour
o
Employees are aware of their bosses ethical lapses
Chapter 10: Organizational Culture and Ethical Values
-
o
Value based leaders have a high level of trust and respect based on stated values as well as the courage and determination and self-sacrifice they demonstrate in upholding them
o
Managerial work can be managed as a myth, symbol because managers traffic so often in images
Formal Structure and Systems o
o
o
Structure
Managers assign responsibility for ethical values to a specific position which allocates time and energy to the problem but symbolizes the importance
Ethics committee: cross functional group of executives who oversee ethics
Chief ethics officer: heads the ethics committee and oversees all aspects of ethics including establishing and communication ethical standards, setting up training programs
Ethics hotlines: confidential ways that employees can seek guidance as well as report questionable behaviour
Disclosure Mechanisms
Need to establish policies and procedures to support and protect whistle blowers (employee disclosure of illegal, immoral, illegitimate practices in the part of the organization)
Encourage whistle blowers to stay with the organization and protect them from being demoted or fired
Code of Ethics
98% of Fortune 1,000 companies address issues of ethics and conduct formal policies
78% have separate codes of ethics that are widely distributed to employees
Code of ethics: formal statement of the company’s values concerning ethics and social responsibilities
Specifies types of behaviours expected to honour these values
Chapter 10: Organizational Culture and Ethical Values
o
-
They clarify and formally state values and expected behaviour however top managers support and reinforce must be in their actions including rewards and discipline systems
Training Programs
Learn through frameworks as they help managers act autonomously and still think their way through a difficult decision
Managers are taught about stages of moral development which helps bring them to a high level of ethical decision making
Training acts as a catalyst for establishing ethical behaviour and integrity as components of strategic competitiveness
When employees are convinced that ethical values play a key role in all management decisions and actions, they become committed to making them a part of their everyday behaviour
Corporate Culture and Ethics in Global Environment -
Organizations operating in different parts of the world find it hard due to various cultural and market factors needed to be dealt with regarding ethics
-
The more complex the environment the greater the chance of ethical problems or misunderstanding
-
Corporate culture and national culture are often intertwined making the building of a strong global culture difficult (national culture has a higher weigh than corporate culture on employees)
-
Must focus on multicultural rather than national values, bas status on merit not nationality, be open to new ideas from other cultures, show excitement rather than hesitation when entering new cultural environments, be sensitive to cultural differences without being limited by them
-
Global ethics challenges to think more broadly
-
Social audit: measures and reports the ethical, social and environmental impact of a company’s operations
-
Council on Economic Priorities Accreditation Agency: has a set of global social standards to deal with child labour, low wages, unsafe working conditions
-
Social Accountability 8000 (SA 8000) is the only auditable social standard in the world designed to work like the ISO 9000
Organizational Culture -
What Is Culture? o
Social Capital (goodwill): quality of interactions and whether they share a common perspective
o
o
High degree of social capital are based on trust, mutual understanding
Culture: set of values, norms, guiding beliefs and understandings that is shared by members of an organization and is taught to new members
Unwritten feeling of the organization that everyone participates in
Usually goes unnoticed unless an implementation of new strategies/programs go against basic norms and values
Two levels of organizational culture: 1. Visible artifacts and observable behaviours (dress, act, symbols, stories, ceremonies) 2. Underlying values, assumptions, beliefs, thought processes
o -
Attributes of culture evolves from a patterned set of activities carried through social interactions (patterns can be used to interpret culture)
Emergence and Purpose of Culture o
Provides sense of identity and generates a commitment to beliefs and values that are larger than themselves
o
Begins with a founder or early leader who articulates and implements particular ideas and values as a vision, philosophy or business strategy
o
When ideas lead to success they become institutionalized and the culture reflects the vision and strategy of the founder
o
Two critical functions of culture: 1. Integrate members so that they know how to relate to one another •
Internal integration: members develop a collective identity and know how to work together effectively
Chapter 10: Organizational Culture and Ethical Values
o
Day to day working relationships and determines how to communication what is acceptable and how power and status is located
2. Help organization adapt to the external environment •
External adaptation: how to meet goals and deal with outsiders o
o
-
Helps guide daily activities to workers to meet certain goals
Guides employee decision making in the absence of written rules or policies; helps build social capital by forgoing positive or negative relationships (internal and external)
Interpreting Culture o
Rites and Ceremonies
Elaborate, planned activities that make up a special event and are conducted for the benefit of an audience
Special occasions reinforce values, creates a bond for sharing important understandings and anoint/celebrate heroes who symbolize important beliefs
Four Types of Rites 1. Passage (transition of employees into new roles) o
Induction/training
2. Enhancement (stronger identities and increases status) o
Annual award nights
3. Renewal (training and development activities that improve organizational functioning) o
Development activities
4. Integration (common bonds and good feelings among employees and increase commitment)
Chapter 10: Organizational Culture and Ethical Values
o o
o
Stories
Narratives based on true events that are frequently shared among employees and told to new employees to inform about organization
Heroes: models or ideals for serving cultural norms and values
Legends: when events are historic with some fictional details
Myths: consistent with values and beliefs but are not supported with facts
Symbols
o
Can be ceremonies, stories, slogans and rites as well as physical artifacts (powerful due to focus on attention on a specific item)
Language
o
Office holiday party
Specific sayings, slogans, metaphors to convey special meaning
Slogans, symbols and ceremonies are artifacts that reflect underlying values; these visible artifacts and behaviours can be used to shape values and strengthen culture
Organization Design and Culture -
Culture should reinforce the strategy and structural design needed to be effective its environment. Two specific dimensions: 1. The extent to which the competitive environment requires flexibility or stability 2. The extent to which the organization’s strategic focus and strength are internal or external
- Four categories of culture associated with these differences: 1. The Adaptability Culture (External strategic focus with flexible environment) o Entrepreneurial values, norms and beliefs that translates signals from the environment into new behaviour responses o Doesn’t react well to environmental change; it actively creates change o Innovation, creativity and risk taking are valued and rewarded 2. The Mission Culture (External strategic focus with stable environment) o Serving specific customer without the need for rapid change o Emphasis on clear vision, goals, growth and profitability
Chapter 10: Organizational Culture and Ethical Values
o Stable market allows measurable goals 3. The Clan Culture (Internal strategic focus with flexible environment) o Involvement of members and rapidly changing expectations from the environment o Focuses on needs of employees with a sense of responsibility, ownership and commitment of members 4. The Bureaucratic Culture (Internal strategic focus with stable environment) o Supports methodical approach of business with symbols, heroes, ceremonies supporting the tradition policies and practices to achieve goals o High level of consistency, conformity and collaboration o Very inflexible - Culture Strength and Organizational Subcultures o Culture Strengths: degree of agreement among members of an organization about importance of specific values (strong: cohesive) o Strong culture has frequent ceremonies, symbols, stories and slogans increasing commitment to values of the company o Subculture develop to reflect common problems, goals and experiences that members share or even physically separated segments of the company Includes basic values of dominant organizational culture but has additional values unique to the members Differences can lead to conflicts, especially if culture is weak Organizational Culture, Learning and Performance -
Corporate Culture and Performance by Kotter and Heskett o
Companies that intentionally managed cultural values outperformed similar companies that did not
o
CAP (Cultural Assessment Process) gave top executives hard data of money saved from cultural factors
-
Dangerous when a culture is set and fails to adapt to the environmental changes (the more institutionalized a culture is, the more detrimental it is to future performance when environment changes)
-
Values of strong adaptive cultures: o
The whole is more important than the parts and boundaries between parts are minimized
Chapter 10: Organizational Culture and Ethical Values
o
o
-
-
Emphasis on being aware of whole system and how it all fits together which reduces boundaries. Subcultures still reflect dominant culture with free flow of people, ideas and information
Equality and trust are primary values
Crease sense of community and caring for one another
Emphasis on treating everyone with care and respect which facilitates learning (safety, learning, mistakes, trust)
The culture encourages risk taking, change and improvement
Basic value to question status quo
Constant questioning of assumptions allows creativity and improvement with rewards and celebrations to creators and new ideas
Adaptive corporate cultures o
Managers concerned with customers and employees as well as internal processes that bring useful change
o
Flexible with managers initiating change when needed
Non-adaptive corporate cultures o
Managers concerned about themselves or own special projects with discouragements in risk and change
Ethical Values and Social Responsibility -
Sources of Individual Ethical Principles o
Ethics: code of moral principles and values that governs behaviour of person or group with respect o what is right or wrong
o
Each person has creation of their own ethical principles
o
History (religion, culture, geography) leads to societal morality (norms, values, laws, regulations) which shapes the local environment (organizations, regions, community, family/clan) which then shapes individual behaviour
Individual ethics can be influenced by peers, subordinates , supervisors and culture
Chapter 10: Organizational Culture and Ethical Values
-
-
Managerial Ethics and Social Responsibility o
Rule of Law: set of codified principles and regulations that describe how people are required to act, that are generally accepted in society and that are enforceable in courts
o
Ethical standards apply to behaviour not covered by the law and the rule of law applies to behaviours not necessarily covered by ethical standards
o
More than 54%of HR reported lying, falsifying reports, abusing drugs/alcohol
o
Managerial ethics: principle that guide decisions and behaviours of managers with regard to being right or wrong
o
Social responsibility: extension of managerial ethics and refers to obligation to make choices and take action in the best interest of stakeholders
o
Ethical dilemma: situation of right or wrong decisions are not clear and values conflict
Does It Pay to Be Good? o
Small positive relationship between ethical and socially responsible behaviour and financial performance
o
People prefer to work for ethical companies, therefore receive high quality employees as well as customers prefer to purchase from ethical companies
Sources of Ethical Values in Organizations -
Immediate forces affecting ethical decisions on organizations
1. Personal Ethics o
Value and beliefs
o
Moral development
o
Avoid physical punishment conform to others build self morals
Whether mangers have developed ethical framework
Chapter 10: Organizational Culture and Ethical Values
Utilitarian theory: ethical decisions should generate the greatest benefits for the largest number of people (consistent with cost/benefit)
Personal liberty: ensure greatest freedom of choice and liberty for individuals (freedom to act on conscience, freedom of speech etc)
Distributive justice: moral decisions promote equity, fairness and impartiality with respect to the distribution of rewards and administrative rules which are essentially for social cooperation
2. Organizational Culture o
Make ethics an integral part of the culture and can impact individual ethics because it helps guide daily decisions
o
Rituals, ceremonies, stories, language, history
3. Organizational Systems o
Basic architecture of the organization (ethical values incorporated into policies and rules, considered in selection and training)
o
Structure, policies, rules, code of ethics, reward systems
4. External Stakeholders o
Government regulations, customers (quality, safety, availability)
o
Special interest groups are concerned for sustainable development (dual responsibility of growth and environmental sustainability)
o
Global market forces
How Leaders Shape Culture and Ethics -
Values-based Leadership o
Relationship between leader and followers based on shared, internalized values that advocated and acted upon by the leader
o
Leaders influence cultural/ethical values by clearly communicating the vision throughout the organization and institutionalizing it through everyday behaviour
o
Employees are aware of their bosses ethical lapses
Chapter 10: Organizational Culture and Ethical Values
-
o
Value based leaders have a high level of trust and respect based on stated values as well as the courage and determination and self-sacrifice they demonstrate in upholding them
o
Managerial work can be managed as a myth, symbol because managers traffic so often in images
Formal Structure and Systems o
o
o
Structure
Managers assign responsibility for ethical values to a specific position which allocates time and energy to the problem but symbolizes the importance
Ethics committee: cross functional group of executives who oversee ethics
Chief ethics officer: heads the ethics committee and oversees all aspects of ethics including establishing and communication ethical standards, setting up training programs
Ethics hotlines: confidential ways that employees can seek guidance as well as report questionable behaviour
Disclosure Mechanisms
Need to establish policies and procedures to support and protect whistle blowers (employee disclosure of illegal, immoral, illegitimate practices in the part of the organization)
Encourage whistle blowers to stay with the organization and protect them from being demoted or fired
Code of Ethics
98% of Fortune 1,000 companies address issues of ethics and conduct formal policies
78% have separate codes of ethics that are widely distributed to employees
Code of ethics: formal statement of the company’s values concerning ethics and social responsibilities
Specifies types of behaviours expected to honour these values
Chapter 10: Organizational Culture and Ethical Values
o
-
They clarify and formally state values and expected behaviour however top managers support and reinforce must be in their actions including rewards and discipline systems
Training Programs
Learn through frameworks as they help managers act autonomously and still think their way through a difficult decision
Managers are taught about stages of moral development which helps bring them to a high level of ethical decision making
Training acts as a catalyst for establishing ethical behaviour and integrity as components of strategic competitiveness
When employees are convinced that ethical values play a key role in all management decisions and actions, they become committed to making them a part of their everyday behaviour
Corporate Culture and Ethics in Global Environment -
Organizations operating in different parts of the world find it hard due to various cultural and market factors needed to be dealt with regarding ethics
-
The more complex the environment the greater the chance of ethical problems or misunderstanding
-
Corporate culture and national culture are often intertwined making the building of a strong global culture difficult (national culture has a higher weigh than corporate culture on employees)
-
Must focus on multicultural rather than national values, bas status on merit not nationality, be open to new ideas from other cultures, show excitement rather than hesitation when entering new cultural environments, be sensitive to cultural differences without being limited by them
-
Global ethics challenges to think more broadly
-
Social audit: measures and reports the ethical, social and environmental impact of a company’s operations
-
Council on Economic Priorities Accreditation Agency: has a set of global social standards to deal with child labour, low wages, unsafe working conditions
-
Social Accountability 8000 (SA 8000) is the only auditable social standard in the world designed to work like the ISO 9000
