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
"eterminants of Organizational Culture
Organizations founder #personal values and
beliefs$
%ymbols, stories, heroes, slogans, and
ceremonies that embody and personify the spirit of
the organization
Corporate success that strengthens the culture&
%hared e'periences that bond organizational
members together

Corporate Culture
(anaging Organizational Culture
)nderstand the current culture to decide
whether to maintain or change it
*rticulate the culture through slogans,
ceremonies, and shared e'periences
+eward and promote people whose
behaviors are consistent with desired
cultural values

Corporate Culture
Changing Organizational Culture
"evelop a clear idea of what ,ind of culture
you want to create
-ring in outsiders to important managerial
positions
*dopt new slogans, stories, ceremonies,
and purposely brea, with tradition

Ethics and Culture
Ethics
*n individuals personal beliefs regarding what is right and wrong or
good and bad&
Ethical Behavior
This behavior is in the eye of the beholder& .owever, it also refers to
behavior that conforms to generally accepted social norms&
/roblems occur in ambiguous situations that can be interpreted in
different ways&
Examples of Unethical Behavior
-orrowing office supplies for personal use, %urfing the 0et on
company time&
1iling falsified or inflated business e'pense reports&

Ethics and Culture
(anaging 2thical -ehavior
(ust begin with top management
Top management establishes the
organizations culture and defines what will
and will not be acceptable behavior
/rovide training on how to handle different
ethical dilemmas

Ethics and Culture
(anaging 2thical -ehavior #contd$
"evelop a written code of ethics
3
* formal, written statement of the values and
ethical standards that guides a firms actions
Individual issues
3
-ehavior and conscience
3
/rivacy

Employees Organization
Conflicts of interest
Secrecy and
confidentiality
Honesty
Hiring and firing
Wages and woring
conditions
!rivacy and respect
S"#$ect to ethical am#ig"ities
%dvertising and promotions
Ordering and p"rchasing
Bargaining and negotiation
&inancial disclos"re
Shipping and solicitation
Other #"siness relationships
Economic %gents
C"stomers
Competitors
Stocholders
S"ppliers
'ealers
Unions
(hree #asic 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*
Figure 4&5
Actors:

Individual Values
Individual Values
6
6
Organizational Values
Organizational Values
7
7
(anagerial Values
(anagerial Values
Ethics in Organizations

Applying Ethical Judgments
(odel for deciding whether or not a particular action
or decision is ethical
8ather relevant factual information&
"etermine the most appropriate moral values&
(a,e a 9udgment based on the rightness or wrongness of the
proposed activity or policy&
2thical 0orms *ffecting *ctions
Utility:act optimizes what is best for its constituencies
#benefits only or primarily those who are directly involved$
Rights:act respects the rights of others involved
Justice:act is consistent with what is considered fair
Caring:act is consistent with peoples responsibilities to
each other

Social Responsibility and
Organizations
%ocial +esponsibility
The set of obligations #to behave responsibly$ that an
organization has to protect and enhance the social conte't in
which it functions&
*reas of %ocial +esponsibility
%ta,eholders
3 Customers, employees, and investors
The natural environment
3 2nvironmentally sensitive products, recycling, public safety
The general social welfare
3 Charitable contributions, support for social issues such as child
labor and human rights

Arguments For and Against Social
Responsibility
+* B"siness creates pro#lems and
sho"ld therefore help solve them*
,* Corporations are citizens in o"r
society*
-* B"siness often has the reso"rces
necessary to solve pro#lems*
.* B"siness is a partner in o"r
society) along with the govern/
ment and the general pop"lation*
Social
0esponsi#ility
.* (he p"rpose of #"siness in U*S*
society is to generate profit
for owners*
,* 1nvolvement in social programs
gives #"siness too m"ch power*
-* (here is potential for conflicts
of interest*
+* B"siness lacs the expertise to
manage social programs*
%rg"ments &or Social 0esponsi#ility %rg"ments %gainst Social 0esponsi#ility
Figure 4&4

Approaches to Social
Responsibility
'egree of Social 0esponsi#ility
%ccommodative
stance
O#str"ctionist
stance
'efensive
stance
!roactive
stance
2owest Highest
Figure 4&;

Approaches to Social
Responsibility cont!d"
Obstructionist %tance #)nconcerned$
"o as little as possible to solve social or environmental
problems&
"efensive %tance #"amage Control$
"o only what is legally re<uired and nothing more&
*ccommodative %tance #Compliance$
(eet legal and ethical obligations and go beyond that in
selected cases&
/roactive %tance #2thical Culture$
Organization views itself as a citizen and proactively see,s
opportunities to contribute to society&

#o$ %usiness and the &o'ernment
(n)luence Each Other
(he
3overnment
B"siness
(he government infl"ences #"siness
thro"gh direct and indirect reg"lation4
Environmental protection legislation
Cons"mer protection legislation
Employee protection legislation
Sec"rities legislation
(he tax codes
B"siness infl"ences the government
thro"gh4
!ersonal contacts and networs
2o##ying
!olitical action committees 5!%Cs6
&avors and other infl"ence tactics
Figure 4&=

*anaging Social Responsibility:
Formal +imensions
>egal Compliance
2'tent to which the organization conforms to local,
state, federal, and international laws&
2thical Compliance
2'tent to which members of the organization follow
basic ethical?legal standards of behavior&
/hilanthropic 8iving
*warding of funds or gifts to charities and other
social programs&

*anaging Social Responsibility:
(n)ormal +imensions
Organizational >eadership and Culture
>eadership practices and the culture of the
organization can help define the social
responsibility stance an organization and its
members will adopt&
@histle -lowing
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
>eaders
/eople who can influence the behaviors of others
without having to rely on force
/eople who are accepted as leaders by others
@hat leaders actually do
)sing non!coercive influence to shape the groups
or organizations goals
(otivating others behavior toward goals
.elping to define organizational culture

Leadership
2eadership %ctivity 7anagement
Esta#lishing direction and
vision for the organization
Creating an agenda !lanning and #"dgeting)
allocating reso"rces
%ligning people thro"gh
comm"nications and actions
that provide direction
'eveloping a h"man networ
for achieving the agenda
Organizing and staffing)
str"ct"ring and monitoring
implementation
7otivating and inspiring #y
satisfying needs
Exec"ting plans Controlling and pro#lem
solving
!rod"ces "sef"l change and
new approaches to challenges
O"tcomes !rod"ces predicta#ility and
order and attains res"lts


Leadership
/ower and >eadership
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 e'pertise

Leadership
)sing /ower
>egitimate re<uest
3 Compliance by a subordinate with a managers re<uest
because the organization has given the manager the right to
ma,e the re<uest
Instrumental compliance
3 * subordinate complies with a managers re<uest to get the
rewards that the manager controls
Coercion
3 Threatening to fire, punish, or reprimand
subordinates if they do not do something
+ational persuasion
3 Convincing subordinates that compliance
is in their own best interest

Leadership
)sing /ower #contd$
/ersonal identification
3 )sing the referent power of a superiors desired
behaviors to shape the behavior of a subordinate
Inspirational appeal
3
Influencing a subordinates behavior through an appeal
to a set of higher ideals or values #e&g&, loyalty$
Information distortion
3
@ithholding or distorting information
#which may create an unethical situation$
to influence subordinates behavior

E,erting Strategic Leadership
%tay on top of how well things are going
%tay current with internal and e'ternal
information, reports, etc&
Communicate regularly with colleagues,
subordinates and customers
Aeep abreast of rivals initiatives
(-@*

E,erting Strategic Leadership
2stablish a strategy!supportive culture
%ta,eholders are ,ing
Challenge the status <uo
(anagement must listen to customers
%ell the strategic initiatives to groups and
individuals throughout the organization
+ecognize and reward those who lead the
change

E,erting Strategic Leadership
Aeep the organization responsive and
innovative
2mpower champions
3
2ncourage creativity and innovation
3
*llow champions to fail
3
Offer organizational support
3
(a,e rewards large and visible
>ead the process to develop new
capabilities

E,erting Strategic Leadership
2'ercise ethics leadership
>ead by e'ample
.ave written policies and guidelines
2nforce compliance
2ncourage whistleblowers
/romote good corporate citizenship
(a,e corrective ad9ustments as needed