Chapter 4
The Corporate Culture—Impact and
Implications
What Is Corporate Culture?
Organizational culture is a system of shared:
– Assumptions
– Values
– Beliefs
which govern how people behave in
organizations.
What Is Corporate Culture?
These shared values have a strong influence on
the people in the organization and dictate how
they:
– Dress
– Act
– Perform their jobs
What Is Corporate Culture?
Cultures in organizations encourage and support
individuals in making ethically responsible
decisions—or they do not!
What Is Corporate Culture?
While culture shapes the people who are
members of the organization, it is also shaped
by the people who make up that organization.
What Is Corporate Culture?
The cultural elements includes various
characteristics such as:
• Language
• The use of space
• Perceptions of time
• The interpretation of nonverbal behaviors
• The importance of hierarchy
• The definition of gender roles
• Criteria for success
What Is Corporate Culture?
• Geert Hofstede organized national cultures
into six “dimensions” or categories of
predispositions.
What Is Corporate Culture?
1. Power distance: The distance between
individuals at different levels of a hierarchy
(more equal = low power distance).
2. Individualism vs. collectivism: The degree to
which people prefer to act individually or in
groups.
What Is Corporate Culture?
3. Uncertainty avoidance: The extent to which
people are comfortable with uncertainty, ambiguity,
change, and risks.
4. Time and order orientation: A high long-term
orientation (LTO) suggests a comfort with long-term
commitments, traditions, and rewards linked to
hard work, strong relationships, and status. A low
LTO indicates that change may occur more rapidly.
What Is Corporate Culture?
5. Masculinity vs. femininity: A low masculinity
score indicates:
– Greater equality
– Stronger maintenance of warm personal relationships
service
– Care for the weak
– Solidarity
A high masculinity score suggests a strong culture
of assertiveness, success, and competition.
What Is Corporate Culture?
6. Indulgent vs. restrained: The extent to which
people try to control their desires and impulses.
What Is Corporate Culture?
• Just as there are national cultures, businesses
also have unspoken, yet influential standards
and expectations.
What Is Corporate Culture?
• Example: IBM was once famous for a culture
in which highly starched white shirts and ties
were part of the required dress code. To the
contrary, many software and technology
companies today have reputations for cultures
of informality and playfulness.
Google Culture
Google Culture
Google Culture
What Is Corporate Culture?
• Cultures change; but modifying culture is a bit
like moving an iceberg.
• One person cannot alter its course alone; but
strong leaders can have a significant impact on
a culture.
What Is Corporate Culture?
• Some corporate cultures are defined from the
top-down, others are developed by the
employees themselves.
What Is Corporate Culture?
• Defining the specific culture within an
organization is not an easy task since it is
partially based on each participant’s
perception of the culture.
Perception May Impact The Culture In
A Circular Way
A culture
exists
We impact We perceive
others’ it to be a
experience of certain type
the culture of culture
We respond
to the culture
on the basis
of our
perception
What Is Corporate Culture?
Elements that compromise a culture:
• Attitudes
• Behaviors
• The organization’s approach to humor
• Methods of problem solving
• The competitive environment
• Incentives
• Individual autonomy
• Hierarchical structure
Culture and Ethics
• In situations where the law provides an
incomplete answer for ethical decision
making, the business culture is likely to be the
determining factor in the decision.
• Ethical businesses must find ways to:
– Encourage
– Shape (setpuidlines or rules and regulations)
– Allow ethically responsible decisions
Culture and Ethics
• An ethical environment, or culture, would be
one in which employees are empowered and
expected to act in ethically responsible ways,
even when the law does not require it.
(personal or
professionally (
Culture and Ethics
The key components to creating an effective
organizational culture include:
• Strong, focused leadership
• Being proactive rather than reactive
(i)
• Creating habits that place stakeholder
satisfaction at the heart of the organization’s
mission
Compliance and Values-Based Cultures
+ & 1 s
,
.
There are two types of corporate culture:
(by law/barzominimum)
.
7
1. Compliance-based cultures: A corporate
culture in which obedience to laws and
regulations is the prevailing model for ethical
behavior.> There
-
plenty
are bingsof covered
that are not
2. Values-based cultures: A corporate culture in
which conformity to a statement of values
and principles rather than simple obedience
to laws and regulations is the prevailing
model for ethical behavior.
Compliance and Values-Based Cultures
• Compliance culture is only as strong and as
precise as the rules with which workers are
expected to comply.
• A firm can have only a certain number of rules
and the rules can never unambiguously apply
to every situation.
Compliance and Values-Based Cultures
• A values-based culture recognizes that where
a rule does not apply, the firm must rely on
the personal integrity of its workforce when
decisions need to be made. Ishould be monitored
and
updated rapidly/yearly)
Ethical Leadership and Corporate
Culture
• Ethical leaders say no to conduct that would
be inconsistent with their organization’s and
their own personal values.
• If they demonstrate this courage, they are
sending the message that this is the way to
succeed in this culture.
(if not efficial stop and
say not
* even
law in lebanon is questionable
Ethical Leadership and Corporate
Culture
(found in America)
• Ethics officers: Individuals within an
organization charged with managerial
oversight of ethical compliance and
enforcement within the organization.
Ethical Leadership and Corporate
Culture
What is the difference between the effective
leader and the 1ethical, effective leader? is better >
-
• One key difference lies with the means used
to motivate others and achieve one’s goals.
it's not to be effective leader it's
* imp ,
better to be elical effective leader.
Ethical Leadership and Corporate
Culture
• Effective leaders might be able to achieve
their goals through:
– Threats
– Harassment
– Coercion (015])
– Persuasion ( , 4% )
-
– Using the impact of their institutional role
Ethical Leadership and Corporate
Culture
• Ethical leadership is determined by the
methods used in leading.
• Creating a corporate culture in which
employees are empowered and expected to
make ethically responsible decisions is a
necessary part of being an ethical business
leader.
Building a Values-Based Corporate
Culture
Develop a Develop a
Identify Clear Achieve a code
mission vision
Steps of conduct
statement statement
Building a Values-Based Corporate
Culture
• Code of conduct: A set of behavioral
guidelines and expectations that govern all
members of a business firm.
• Mission statement: A formal summary
statement that describes the:
– Goals
– Values
– Institutional aim of an organization
Building a Values-Based Corporate
Culture
%
G
Culture Integration: Ethics Hotlines,
Ombudspersons, and Reporting
• Communication of culture must be
incorporated into the firm’s vocabulary,
habits, and attitudes to become an essential
element in the corporate life, decision making,
and determination of success.
Culture Integration: Ethics Hotlines,
Ombudspersons, and Reporting
• Childhood memories of “tattletales” or
“snitches,” along with a general social
prohibition against informing on others, create
barriers to reporting unethical behavior.
• Individuals often pay a real cost when they
report on unethical behavior especially if
workplace superiors are involved in the report
of wrongdoing.
Culture Integration: Ethics Hotlines,
Ombudspersons, and Reporting
• Whistle-blowing: A practice in which an
individual within an organization reports
organizational wrongdoing to the public or to
others in position of authority.
• Whistle-blowing can occur both internally and
externally.
• [Link]
8kkA
Culture Integration: Ethics Hotlines,
Ombudspersons, and Reporting
• Whistle-blowing can expose and end unethical
activities.
• It can also seem disloyal; it can harm the
business and sometimes it can exact
significant costs on the whistle-blower.
Culture Integration: Ethics Hotlines,
Ombudspersons, and Reporting
• If we do not measure, assess, or monitor
culture, it is difficult to encourage others
throughout the organization to pay attention
to it.
• Monitoring and an ongoing ethics audit allow
organizations to uncover silent vulnerabilities
that could pose challenges later to the firm.
Culture Integration: Ethics Hotlines,
Ombudspersons, and Reporting