Creating an organizational culture


The content and strength of a culture influences an organization’s ethical climate and the ethical behavior of its members.

An organizational culture most likely to shape ethical standards is one that’s high in risk tolerance, low to moderate in aggressiveness, and focuses on means as well as outcomes. Managers in such a culture are supported for taking risks and innovating, are discouraged from engaging in unbridled competition, and will pay attention to how goals are achieved as well as to what goals are achieved.

A strong organizational culture will exert more influence on employees than a weak one. If the culture is strong and supports high ethical standards, it should have a very powerful and positive influence on employee behavior. Johnson & Johnson, for example, has a strong culture that has long stressed corporate obligation to customers, employees, the community, and shareholders, in that order. When poisoned Tylenol (a Johnson & Johnson product) was found on store shelves, employees at Johnson & Johnson across the United States independently pulled the product from these stores before management had even issued a statement concerning the tampering. No one had to tell these individuals what was morally; they knew what Johnson & Johnson would expect them to do. On the other hand, a strong culture that encourages pushing the limits can be a powerful force in shaping unethical behavior. For instance, Enron’s aggressive culture, with unrelenting pressure on executives to rapidly expand earnings, encouraged ethical corner-cutting and eventually contributed to the company’s collapse.

What can management do to create a more ethical culture? We suggest a combination of the following practices:

Be a visible role model:
Employees will look to top-management behavior as a benchmark for defining appropriate behavior. When senior management is seen as taking the ethical high road, it provides a positive message for all employees.

Communicate ethical expectations:
Ethical ambiguities can be minimized by creating disseminating an organizational code of ethics. It should state the organization’s primary values and the ethical rules that employees are expected to follow.

Provide ethical training:
Set up seminars, workshops, and similar ethical training programs. Use these training sessions to reinforce the organization’s standards of conduct; to clarify what practices are and are not permissible; and to address possible ethical dilemmas.

Visibly reward ethical acts and punish unethical ones:
Performance appraisals of managers should include a point-by-point evaluation of how his or her decision measure up against the organization’s code of ethics. Appraisals must include the means taken to achieve goals as well as the ends themselves. People who act ethically should be visibly rewarded for their behavior. Just as importantly, unethical acts should be conspicuously punished.

Provide protective mechanisms:
The organization needs to provide formal mechanisms so that employees can discuss ethical dilemmas and report unethical behavior without fear of reprimand. This might include creation of ethical counselors, ombudsmen, or ethical officers.

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