TOPIC:ETHICAL ISSUES IN ORGANIZATIONAL CULTURE.

organizational culture
Definition
Pervasive, deep, largely subconscious, and tacit code that gives the 'feel' of an organization and determines what is considered right or wrong, important or unimportant, workable or unworkable in it, and how it responds to the unexpected crises, jolts, and sudden change. All new employees must assimilate this code ('learn the ropes') to know the correct way to behave and what to expect from other employees. Organizational culture is the sum total of an organization's past and current assumptions, experiences, philosophy, and values that hold it together, and are expressed in its self-image, inner workings, interactions with the outside world, and future expectations. It is based on shared attitudes, beliefs, customs, express or implied contracts, and written and unwritten rules that the organization develops over time and that have worked well enough to be considered valid. Also called corporate culture, it manifests in (1) the ways the organization conducts its business, treats its employees, customers, and the wider community, (2) the extent to which autonomy and freedom is allowed in decision making, developing new ideas, and personal expression, (3) how power and information flow through its hierarchy, and (4) the strength of employee commitment towards collective objectives. It is termed 'strong' or 'weak' to the extent it is diffused through the organization. It impacts the organization's productivity and performance, and provides guidelines on customer care and service; product quality and safety; attendance and punctuality; and concern for the environment. It extends also to productionmethods, marketing and advertising practices, and to new product creation. Expressed commonly as "It's how we do things here," it is unique for every organization and one of the hardest thing to change. IMPOTANCE OF ORGANIZATIONAL CULTURE

As organizations adapt to be more effective in dynamic and competitive environments, the role of their organizational culture in either supporting or resisting internal changes is critical. The organization's leadership must seek a culture that fits with new strategic demands, and that culture itself may need to change as the strategy evolves. Helping leaders manage culture change effectively is the focus of this research. Changing a culture generally means changing some of the organization's values, beliefs, and customary ways of doing things. Such changes are often disruptive. They can violate implied (or actual) contractual agreements with various stakeholders based on established routines and patterns of past

behaviors. It is like one team changing the rules of a game during the game. Depending on how this is done and communicated to the stakeholders (e.g., fans, referees, the other team), some parties to the game may view the changes as unfair, or even unethical. Leaders must be able to see, understand, and attend to these changes to reduce the likelihood of dysfunctional stakeholder behavior. We discuss culture as a strategic variable and consider the ethical dimension of culture change. By sharing an example of cultural change and misalignment in one organization, we are able to explore its process of coming to understand its culture and then begin to create a new culture to support its competitive strategy

ORGANIZATIONAL CULTURE AND ETHICAL BEHAVIOR "Do organizations vary in the 'ethical climates' they establish for their members? The answer to the question is yes, and it is increasingly clear that the ethical tone or climate of organizations is set at the top. What top managers do, and the culture they establish and reinforce, makes a big difference in the way lower-level employees act and in the way the organization as a whole acts when ethical dilemmas are faced. For example, there was no doubt in anyone's mind at Johnson & Johnson what to do when the infamous Tylenol poisoning took place. Company executives immediately pulled their product from the marketplace they knew that "the J & J way" was to do the right thing regardless of its cost. What they were implicitly saying was that the ethical framework of the company required that they act in good faith in this fashion. The ethical climate of an organization is the shared set of understandings about what is correct behavior and how ethical issues will be handled. This climate sets the tone for decision making at all levels and in all circumstances. Some of the factors that may be emphasized in different ethical climates of organizations are (Hunt, 1991; Schneider and Rentsch, 1991): * Personal self-interest * Company profit * Operating efficiency * Individual friendships * Team interests * Social responsibility * Personal morality

* Rules and standard procedures * Laws and professional codes As suggested by the prior list, the ethical climate of different organizations can emphasize different things. In the Johnson & Johnson example just cited, the ethical climate supported doing the right thing due to social responsibility--regardless of the cost. In other organizations-perhaps too many--concerns for operating efficiency may outweigh social considerations when similarly difficult decisions are faced. When the ethical climate is not clear and positive, ethical dilemmas will often result in unethical behavior. In such instances, an organization's culture also can predispose its members to behave unethically. For example, recent research has found a relationship between organizations with a history of violating the law and continued illegal behavior (Baucus and Near, 1991). Thus, some organizations have a culture that reinforces illegal activity. In addition, some firms are known to selectively recruit and promote employees who have personal values consistent with illegal behavior; firms also may socialize employees to engage in illegal acts as a part of their normal job duties (Conklin, 1977; Geis, 1977). For instance, in his account of cases concerning price fixing for heavy electrical equipment, Geis noted that General Electric removed a manager who refused to discuss prices with a competitor from his job and offered his successor the position with the understanding that management believed he would behave as expected and engage in price-fixing activities (Geis, 1977, p. 124; Baucus and Near, 1991). Pressure, opportunity, and predisposition can all lead to unethical activities; however, organizations must still take a proactive stance to promote an ethical climate. The final section provides some useful suggestions available to organizations for creating a more ethical climate. PROMOTING AN ETHICAL CLIMATE: SOME SUGGESTIONS AND STRATEGIES One of the most basic of management principles states that if you desire a certain behavior, reinforce it. No doubt, how ethical behavior is perceived by individuals and reinforced by an organization determines the kind of ethical behavior exhibited by employees. As a result, if business leaders want to promote ethical behavior they must accept more responsibility for establishing their organization's reinforcement system. Research in ethical behavior strongly supports the conclusion that if ethical behavior is desired, the performance measurement, appraisal and reward systems must be modified to account for ethical behavior (Hegarty and Sims, 1978, 1979; Trevino, 1986; Worrell et al., 1985). According to Nielsen (1988, p. 730): In many cases, mangers choose to do, go along with or ignore the unethical...because they want to avoid the possibility of punishments (or) to gain rewards. Organizations and their managers must understand that the above recommendations are key components in the development and maintenance of an ethically-oriented organizational culture. Organizations can also enhance an ethically-oriented culture by paying particular attention to principled organizational dissent. Principled organizational dissent is an important concept linking organizational culture to ethical behavior. Principled organizational dissent is the effort

by individuals in the organization to protest the status quo because of their objection on ethical grounds, to some practice or policy (Graham, 1986). Organizations committed to promoting an ethical climate should encourage principled organizational dissent instead of punishing such behavior. Organizations should also provide more ethics training to strengthen their employees' personal ethical framework. That is, organizations must devote more resources to ethics training programs to help its members clarify their ethical frameworks and practice self-discipline when making ethical decisions in difficult circumstances. What follows is a useful seven-step checklist that organizations should use to help their employees in dealing with an ethical dilemma (Schermerhorn, 1989; Otten, 1986): (1) Recognize and clarify the dilemma. (2) Get all the possible facts. (3) List your options--all of them. (4) Test each option by asking: "Is it legal? Is it right? Is it beneficial?" (5) Make your decision. (6) Double check your decision by asking: "How would I feel if my family found out about this? How would I feel if my decision was printed in the local newspaper?" (7) Take action. An effective organizational culture should encourage ethical behavior and discourage unethical behavior. Admittedly, ethical behavior may "cost" the organization. An example might be the loss of sales when a multinational firm refuses to pay a bribe to secure business in a particular country. Certainly, individuals might be reinforced for behaving unethically (particularly if they do not get caught). In a similar fashion, an organization might seem to gain from unethical actions. For example, a purchasing agent for a large corporation might be bribed to purchase all needed office supplies from a particular supplier. However, such gains are often short-term rather than long-term in nature. In the long run, an organization cannot operate if its prevailing culture and values are not congruent with those of society. This is just as true as the observation that, in the long run, an organization cannot survive unless it produces goods and services that society wants and needs. Thus an organizational culture that promotes ethical behavior is not only more compatible with prevailing cultural values, but, in fact, makes good sense. Although much remains to be learned about why ethical behavior occurs in organizations and creating and maintaining organizational cultures that encourage ethical behavior, organizations can benefit from the following suggestions: ** Be realistic in setting values and goals regarding employment relationships. Do not promise what the organization cannot deliver.

** Encourage input throughout the organization regarding appropriate values and practices for implementing the cultures. Choose values that represent the views of employees at all levels of the organization. ** Do not automatically opt for a "strong" culture. Explore methods to provide for diversity and dissent, such as grievance or complaint mechanisms or other internal review procedures. ** Insure that a whistle-blowing and/or ethical concerns procedure is established for internal problem-solving (Harrington, 1991). ** Provide ethics training programs for all employees. These programs should explain the underlying ethical and legal (Drake and Drake, 1988) principles and present practical aspects of carrying our procedural guidelines. Understand that not all ethical situations are clear-cut. Like many basic business situations, the organization should recognize that there are ambiguous, grey areas where ethical tradeoffs may be necessary. More importantly, some situations have no simple solution (Cooke, 1991). ** Integrate ethical decision-making into the performance appraisal process. In conclusion, even though ethical problems in organizations continue to greatly concern society, organizations, and individuals, the potential impact that organizational culture can have on ethical behavior has not really been explored (Hellreigel et al., 1989). The challenge of ethical behavior must be met by organizations if they are truly concerned about survival and competitiveness. What is needed in today's complicated times is for more organizations to step forward and operate with strong, positive, and ethical cultures. Organizations have to ensure that their employees know how to deal with ethical issues in their everyday work lives. As a result, when the ethical climate is clear and positive, everyone will know what is expected of them when inevitable ethical dilemmas occur. This can give employees the confidence to be on the lookout for unethical behavior and act with the understanding that what they are doing is considered correct and will be supported by top management and the entire organization.