Corporate culture

Definition & meaning of Corporate Culture

Corporate Culture is the collection of beliefs, expectations, and values shared by an organization's members and transmitted from one generation of employees to another.

Every company treats multicultural marketing differently. "Some use it as a check-off box without really empowering it," -says NewmanCarrasco.

In six words, corporate culture is "How we do things around here."

Corporate culture is the collective behavior of people using common corporate vision, goals, shared values, beliefs, habits, working language, systems, and symbols. It is interwoven with processes, technologies, learning and significant events. In addition, different individuals bring to the workplace their own uniqueness, knowledge, and ethnic culture. So corporate culture encompasses moral, social, and behavioral norms of your organization based on the values, beliefs, attitudes, and priorities of its members.

Corporate culture can be transformed, but leadership to sustain anything that sweeping has to come from "the top."

Culture refers to an organization's values, beliefs, and behaviors. In general, it is concerned with beliefs and values on the basis of which people interpret experiences and behave, individually and in groups.

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Cultural

statements

become

operationalized

when

executives

articulate and publish the values of their firm which provide patterns for how employees should behave.

Employment Context The collection of beliefs, expectations, and values shared by an organization's members and transmitted from one generation of employees to another. The culture sets norms (rules of conduct) that define acceptable behavior of employees of the organization. It's important

for

job-seekers

to

understand

the

culture

of

an

organization before accepting a job.

It is something that managers have to establish and run all the way through a business, with clear values and beliefs, successful business principles and operations, and a suitable emphasis on human resources and customer satisfaction. To a large extent, those at the very top, with their example, words and actions, determine the goals, philosophy and principles of the organization.

Corporate culture, sometimes also called organizational culture, refers to the shared values, attitudes, standards, codes, and behaviors of a company's management and employees. Some would argue that the corporate culture extends to the broader circle of relationships a business maintains, such as with customers, vendors, strategic partners, and so forth. Corporate culture is rooted in an

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organization's

goals,

strategies,

structure,

and

approaches

to

business activities.

Organizations' cultures, of course, emanate largely from the mix of individuals—especially leaders—who are (or were) part of the organization and from the diverse personal histories and experiences they bring. To take a simplistic example, a business led for years by an impersonal, hierarchy-oriented owner or chief executive would be expected to have a different culture than one led by a very informal, nontraditional leader. Corporate cultures are also influenced by organizational history and the processes, market conditions, and other business factors specific to the company. Thus, for example, a relatively new company that has fought bitterly for its slim share of the market would be expected to possess a culture unlike that of its well-established,

industry-leading

competitor.

Finally,

when

considering multinational enterprises, corporate culture is also dictated in part by the broader values and customs of the country or region in which it is located.

Culture

shows

up

in

both

visible

and

invisible

ways.

Some

expressions of corporate culture are easy to observe. You can see the dress code, work environment, perks, and titles in a company.

This is the surface layer of culture. These are only some of the visible manifestations of a culture.

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Surface Layer of Corporate Culture: Visible Expressions

•

Dress Code

•

Work Environment

•

Benefits

•

Perks

•

Conversations

•

Work/Life Balance

•

Titles & Job Descriptions

•

Organizational Structure

•

Relationships

The far more powerful aspects of corporate culture are invisible. The cultural

core

is

composed

of

the

beliefs,

values,

standards,

paradigms, worldviews, moods, internal conversations, and private conversations of the people that are part of the group. This is the foundation for all actions and decisions within a team, department, or organization.

Core Layer of Corporate Culture: Corporate Culture

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Invisible Manifestations

•

Values

•

Private Conversations (with self or confidants)

•

Invisible Rules

•

Attitudes

•

Beliefs

•

Worldviews

•

Moods and Emotions

•

Unconscious Interpretations

•

Standards

•

Paradigms

•

Assumptions

Business leaders often assume that their company's vision, values, and strategic priorities are synonymous with their company's culture.

Unfortunately, too often, the vision, values, and strategic priorities may only be words hanging on a plaque on the wall.

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Corporate culture is actually the container for the vision, mission and values. It is not synonymous with them. In a thriving profitable company, employees will embody the values, vision, and strategic priorities of their company.

What creates this embodiment (or lack of embodiment) is the corporate culture energy field that permeates the employees' psyches, bodies, conversations, and actions. Companies need a good definition of corporate culture before they can begin to understand how to change the corporate culture.

DEFINING RELEVANT CATEGORIES Geert Hofstede, a respected Dutch organizational studies professor, published with three of his colleagues an important analysis of organizational practices. First published in 1990, the work focused on what the authors called the six dimensions that separate and define organizational cultures:

1.

Process oriented versus results oriented.

Process cultures emphasize low risk and repeating known methods, whereas results orientations place a premium on taking risks and finding new methods.

2.

Employee oriented versus job oriented.

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This

is

the

personal/impersonal

workplace

distinction.

Employee cultures make members of the organization feel personally valued, but job cultures are more concerned with simply having an effective person to do the necessary work.

3.

Parochial versus professional.

In parochial cultures, employees identify strongly with their company as the basis for their employment and perhaps even social status. Participants in professional cultures identify with their skill-set and occupation more so than with the particular company they exercise those skills at.

4.

Open system versus closed system.

This dimension considers communication and seniority-based favoritism. In an open system, new employees are acclimated quickly into the communications and social fabric of the company. However, in closed systems, there is greater secrecy and

exclusion

of

certain

members

of

the

organization,

particularly newcomers.

5.

Loose versus tight control.

Loose control cultures are informal ones in which employees and management tends to be laid back about the work, scheduling,

and

even

costs.

Tightly

controlled

cultures

emphasize formality, adherence to standards, punctuality, and so on.

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6.

Normative versus pragmatic.

Finally, normative cultures are concerned with doing things properly from an ethical or procedural perspective (similar to process orientation above), while pragmatic cultures are more competitive, market-driven, and results-oriented, e.g., making the sale even when it requires bending the rules. The key difference between the process/results dimension and the normative/pragmatic dimension lies in that the latter is meant to specifically describe the customer or market orientation of the business, rather than general internal processes that may not impact the customer.

By mixing and matching different combinations of the Hofstede dimensions, one can obtain reasonably detailed and specific profiles (64 unique combinations, to be exact) of corporate cultures. The recurring theme in this scheme, as in many others, is separating authoritarian and formal practices from democratic and informal ones. The essential issues are how the organization handles interpersonal relations and power. A secondary theme, also the focus of many other writings, is whether an organization's policies and practices are static or dynamic; that is, how easily is the corporate paradigm shifted or modified? This aspect affects everything from work procedures and processes to marketing strategy and new product conception.

Sub-Cultures Needless to say, not every individual in an organization shares in the dominant values. According to Edgar H. Schein, an oft-cited Corporate Culture

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management professor at the Massachusetts Institute of Technology, three core subcultures can be identified in most—indeed, he claims, every—business organization. They are:

I.

An operator culture, which is concerned with practical knowhow and getting the work done effectively;

II.

An engineering culture, which is a sort of technocratic approach to work emphasizing technical solutions and innovations to optimize the work process; and

III.

An executive culture, which takes a financial and public relations approach to problems.

One can easily surmise that other kinds of subcultures, either more specific or more general than these, also exist. Schein argues that his three subcultures could clash and lead to severe consequences for the business and this are particularly likely to occur when a business's technology or other process factors are in transition.

The Role of Corporate Culture in Ethical Decision Making

The term corporate culture is a set of values, beliefs, goals, norms, and ways of solving problems shared by the members (employees) of an organization. Corporate culture can be created by a founder and his or her values and expectations. Corporate culture includes Corporate Culture

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the behavioral patterns, concepts, values, ceremonies, and rituals that take place in the organization. It gives the members of the organization meaning as well as the internal rules of behavior. When these values, beliefs, customs, rules, and ceremonies are accepted, shared, and circulated throughout the organization, they represent its culture.

For example, McDonald’s, the fast-food giant’s support of and reputation for quality, service, cleanliness, and value derive from founder Ray Kroc. In recent years, however, these values may not have been implemented as well, as McDonald’s customer satisfaction scores are declining.

All organizations, not just corporations, have some sort of culture, and thus we use the terms organizational culture and corporate culture interchangeably. Although organizational culture is a broad and widely used concept, the term has a multitude of definitions, none of which has achieved universal acceptance. This range from highly specific to generically broad. For example, culture has been defined as the way we do things around here, the collective programming of the mind, and the social fiber that holds the organization together. Culture is also views as the shared beliefs top managers in a company have about how they should manage themselves and other employees, and how they should conduct their businesses.

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Mutual of Omaha defines corporate culture as the “personality of the organization, the share beliefs that determine hoe its people behave and solve business problems”. Mutual of Omaha executives believe that its corporate culture provides the foundation for the company’s work and objectives, and the company has adopted a set of core values called “Values for Success”. The company believes that these values from the foundation for a corporate culture that will help the organization realize its vision and achieve its goals.

Mutual of Omaha’s “values for Success”

• Openness and trustWe encourage an open sharing of ideas and information, displaying a fundamental respect for each other as well as our cultural diversity.

• Teamwork (win/win)We work together to find solutions that carry positive results for others as well as ourselves, cresting an environment that brings out the best in everyone.

• Accountability/ ownership-

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We take ownership and accept accountability for achieving end results, and empower team members to do the same.

• Sense of urgencyWe set priorities and handle all tasks and assignments in a timely manner.

• Honesty and integrityWe are honest and ethical with others, maintaining the highest standard of personal and professional conduct.

• Customer focusWe never lose sight of our customers and constantly challenge ourselves to meet their requirements even better.

• Innovation and riskWe question “the old way of doing things” and take prudent risks that

can

lead

to

innovative

performance

and

process

improvements.

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• Caring/attentiveWe take time to clear our minds to focus on the present moment, listening to our teammates and customers, and caring enough to hear their concerns.

• LeadershipWe provide direction, purpose, support, encouragement, and recognition to achieve our vision, meet our objectives and our values.

• Personal and professional growthWe challenge ourselves and look for ways to be even more effective as a team and as individuals.

A company’s history and unwritten rules are a part of its culture.

Some cultures are so strong that to outsiders they come to represent the character of the entire organization. Explicit statements of values, beliefs, and customs usually come from upper management.

Memos, written codes of conduct, handbooks, manuals, forms, and ceremonies are all formal expressions of an organizations culture.

Many of these statements can be found on company web sites, like Mutual of Omaha’s values for success.

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Corporate culture is often expressed informally- for example, through comments, both direct and indirect, that communicate the wishes of management. In some companies, shared values are expressed through informal dress codes, working late, and participation in extracurricular activities. Corporate culture can even be expressed through gestures, looks, labels, promotions, and legends.

For example, production workers at same companies have been asked to wear stickers on their hardhats to promote team building and group cohesiveness. On one offshore oil rig, workers’ hardhats sport the sticker “start to understand me”, with a pattern of colored dots that communicate to coworkers something of the personality under the hat.

This sensitivity training is intended to help workers understand one another and to create trust, respect, and understanding among employees. Even such subtle expressions of organizational values, such as the use of slogans and stickers in the work-place, indicate behavior expectations to employees.

Ethical Framework and Audit for Corporate Culture Corporate culture has been conceptualized in many ways. Authors N.K.

Sethia and

M.A.

Von Glinow

have proposed

two basic

dimensions to describe an organization’s culture: concern for people – the organizations efforts to care for its employees’ well being; and concern for performance- the organization’s efforts to focus on

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output and employee productivity. A two-by-two matrix represents the four general types of organizational culture.

High

Caring

Integrative

Apathetic

Exacting

Concern for People

Low Low

High

Concern for Performance

Fig: A framework of organizational culture typologies

In the above figure, we can see the organizational cultures are classifies as: apathetic, caring, exacting, and integrative.

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•

Apathetic culture: It shows minimal concern for either people or performance. In this culture, individuals focus on their own self interests. Simple gestures of gratitude, such as anniversary watches, rings, dinners, or birthday cards for family members, are being dropped. Many companies view long-serving employees as deadwood and do not take into account past performance. This attitude

demonstrates

the

companies’

apathetic

culture.

Apathetic culture can occur in almost all organizations. For example, apathetic culture is very much common in different government organizations like banks, LGRD, WASA etc.

•

Caring culture: It exhibits high concern for people but minimal concern for performance issues.

For example, this type of culture is

available in different social organization like UNDP, UNICEF, UNESCO etc.

•

Exacting culture: In contrast, this culture shows little concern for people but a high concern for performance; it focuses on the interests of the organization. For example, this type of culture can be seen in garments factory.

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•

Integrative culture: It combines high concern for people and for performance. An organization becomes integrative when superiors recognize that employees are more that interchangeable parts- that employees have an ineffable quality that helps the firm meet its performance criteria. For example, in private banks and multinational organizations we can see this type of culture.

Companies can classify their corporate culture and identify its specific values, norms, beliefs, and customs by conducting a cultural audit. A cultural audit is an assessment of the organization’s values. It is usually conducted by outside consultants but may be performed internally as well.

Ethics as a Component of Corporate Culture Corporate culture is a significant factor in ethical decision making. If a firm’s culture encourages or rewards unethical behavior, its employees may well act unethically. If the culture dictates hiring people who have specific, similar values, and if those values are perceived as unethical by society, society will view the organization and its members as unethical. Such a pattern often occurs in certain areas of marketing.

For instance, salespeople may be seen as unethical because they sometimes use aggressive selling tactics to get customers to bye things they do not need or want. If a company’s primary objective is to make as much profit as possible, through whatever means, its Corporate Culture

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culture may foster behavior that conflicts with stakeholders’ ethical values.

On the other hand, if the organization values ethical behaviors it will reward them. At Starbucks, for example, desired behaviors and goals are clearly articulated by management through the firm’s mission statement and guiding principles. The coffee retailer states that its mission is both to “establish Starbucks as the premier purveyor of the finest coffee in the world while maintaining our uncompromising principles while we grow” and to commit “to a role of environmental leadership in all facets of our business”. This strong corporate culture may help explain the company’s reputation for corporate citizenship.

Management’s sense of the organization’s culture may be quite different from the values and ethical beliefs that are actually guiding the firm’s employees. Ethical issues may arise because of conflicts between the cultural values perceived by management and those actually at work in the organization.

For example, managers may believe that the culture encourages respect for peers and subordinates. On the basis of the rewards or sanctions associated with various behaviors, however, the firm’s employees may believe that the company encourages competition among organizational members. A competitive orientation may result in a less ethical corporate culture. On the other hand, employees appreciate working in an environment that is designed to enhance workplace experience through goals that encompass more than just Corporate Culture

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maximizing profit. Thus, it is very important for top managers both to determine what the organization’s culture is and to monitor its values, traditions, and beliefs to ensure that they represent the desired culture. However, the rewards and punishments imposed by an organization need to be consistent with the actual corporate culture. As two business ethics experts have observed, “Employees will value and use as guidelines those activities for which they will be rewarded. When a behavior that is rewarded comes into conflict with an unstated and unmonitored ethical value, usually the rewarded behavior wins out.

The Role of Leadership in a Corporate Culture

Top managers provide a blue for what a firm’s corporate culture should be. If these leaders fail to express desired behaviors and goals, a corporate culture will evolve on its own but will still reflect the goals and values of the company. Leadership, the ability or authority to guide and direct others toward achievement of a goal, has a significant impact on ethical decision making because leaders have the power to motivate others and enforce the organization’s rules and policies as well as their own view-points. Leaders are key to influencing an organization’s corporate culture and ethical posture.

However, one poll found that less than half (47 percent) of employees in large (twenty-five hundred employees or more) organizations think their senior leadership is highly ethical.

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Fig: What employees in small, medium, and large organizations think about the ethics of their organizations?

Although we often think of CEOs and other top managers as the most important leaders in an organization, the corporate governance reforms make it clear that a firm’s board of directors is also an important leadership component. Indeed, directors have a legal obligation to manage companies “for the best interests of the corporation”. To determine what is in the best interest of the firm, directors can consider the effects that a decision may have not only on shareholders and employees, but also on other important stakeholders. Therefore, when we discuss leadership, we include the corporate directors as well as top executives.

In the long run, if stakeholders are not reasonably satisfied with a company’s leader, he or she will not retain a leadership position. A Corporate Culture

21

leader must not only have his or her followers’ respect but also provide a standard of ethical conduct to them.

For example, Sunbeam fired CEO Al Dunlap after the Securities and Exchange Commission (SEC) initiated an investigation into whether the firm had fraudulently manipulated its financial reports. Dunlap, nicknamed

“Chainsaw

Al”

for

his

track

record

of

aggressive

downsizing, wrote a book entitled Mean Business, which took a some-what

questionable

approach

to

achieving

organizational

profitability. He ultimately paid $500,000 to settle the SEC’s charges that he had defrauded investors by inflating the small appliance maker’s sales. He also paid $5 million to shareholders who filed a class-action suit on similar charges.

Leadership style influence ethical decisions Leadership style influence many aspects of organizational behavior, including employees’ acceptance of and adherence to organizational norms and values. Style that focus on building strong organizational values among employees contributes to shared standard to of conduct. They also influence the organization’s transmittal and monitoring of values, norms, and codes of ethics.

In short, the leadership style of an organization influence how its employees act.

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Six leadership styles that are based on emotional intelligence-the ability to manage ourselves and our relationship effectively-have been identified by Daniel Goleman.

1.

The coercive leadership:

The coercive leader demands instantaneous obedience and focuses on achievement, initiative, and self-control. Although this style can be very effective during times of crisis or during a turnaround, it otherwise creates a negative climate for organizational performance.

2.

The authoritative leadership:

The authoritative leader considered to be one of the most effective styles inspires employees to follow a vision, facilities change, and creates a strongly positive performance climate.

3.

The affiliative leadership:

The affiliative leader values people, their emotions, and their needs and relies on friendship and trust to promote flexibility, innovation, and risk taking.

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4.

The democratic leadership:

The democratic leader relies on participation and teamwork to reach collaborative decisions. This style focuses on communication and creates a positive climate for achieving results.

5.

The pacesetting leadership:

The pacesetting leader can create a negative climate because of the high standards he or she sets. This style works best for attaining quick

results

from

highly

motivated

individuals

who

value

achievement and take the initiative.

6.

The coaching leadership:

The coaching leader builds a positive climate by developing skills to foster long term success, delegate’s responsibility, and is skillful in issuing challenging assignments.

The most successful leaders do not rely on one style but alter their techniques based on the characteristics of the situation. Different styles can be effective in developing an ethical climate depending on the leader’s assessment of risks and desire to achieve a positive climate for organizational performance.

Another way to consider leadership styles is to classify them as transactional or transformational.

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Transactional leadership: Transactional

leaders

attempt

to

create

employee

satisfaction

through negotiating, or “bartering” for desired behaviors or levels of performance. Transactional leaders focus on ensuring that required conduct and procedures are implemented. Their negotiation to achieve desire outcomes result in a dynamic relationship with subordinates in which reactions, conflict, and crisis influence the relationship more than ethical concerns.

Transactional leaders produce employees who achieve a negotiated level of performance, including compliance with ethical and legal standards. As long as employees and leaders both find this exchange mutually rewarding, the relationship is likely to be successful.

Transformational leadership: Transformational

leaders

strive

to

raise

employees’

level

of

commitment and to foster trust and motivation. Transactional leaders communicate a sense of mission, simulate new ways of thinking, and enhance as well as generate new learning experiences. They consider employee needs and aspiration in conjunction with organizational needs. They also build commitment and respect for values that provide agreement on how to deal with ethical issues.

Transformational leaders strive to promote activities and behavior through a shared vision and common learning experience. As a result, they have a stronger influence on co-worker support for Corporate Culture

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ethical decisions and building an ethical culture than do transactional leaders.

The powers of leaders influence ethical decisions A second dimension of leadership is power and influence. Power refers to the influence that leaders and managers have over the behavior and decisions of subordinates. An individual has power over others when his or her presence causes them to behave differently.

There are five power bases from which one person may influence another:

1.

(1)

Reward power

(2)

Coercive power

(3)

Legitimate power

(4)

Expert power and

(5)

Referent power

Reward power:

Reward power refers to a person’s ability to influence the behavior of others by offering them something desirable. Typical rewards might be money, status, or promotion.

2.

Coercive power:

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Coercive power is essentially the opposite of reward power. Instead of rewarding a person for doing something, coercive power penalizes actions or behavior.

Coercive power relies on fear to change behavior. For this reason, it has been found to be more effective in changing behavior in the short run than in the long run. Coercion is often employed in situations where there is an extreme imbalance in power.

3.

Legitimate power:

Legitimate power stems from the belief that a certain person has the right to exert influence and the certain others have an obligation to accept it.

The titles and position of authority that organizations bestow on individuals appeal to this traditional view of power. Many people readily acquiesce to those who wield legitimate power, sometimes committing acts that are contrary to their beliefs and values.

4.

Expert power:

Expert power is derived from a person’s knowledge. Expert power usually

stems

from

a

superior’s

credibility

with subordinates.

Credibility, and thus expert power, is positively related to the number of years a person has worked in a firm or industry, the person’s education, or the honors he or she received for performance.

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Expert power can also be conferred on a person by others who perceive him or her to be an expert on a specific topic. A relatively low-level secretary may have expert power because he or she knows specific details about how the business operates.

5.

Referent power:

Referent power may exist when one person perceives that his or her goals or objectives are similar to another’s. The second person may attempt to influence the first to take actions that will lead both to achieve their objectives.

They share the same objective; the person influenced by the other will perceive the other’s use of referent power as

beneficial.

The five bases of power are not mutually exclusive. People typically use several power bases to effect change in others. Although power in itself is neither ethical nor unethical, its use can raise ethical issues. Sometimes a leader uses power to manipulate a situation or person’s values in a way that creates a conflict with the person’s value structure.

Motivating ethical Behavior

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Motivation is the force within the individual and that focuses his or her behavior toward achieving a goal. To create motivation, an organization offers incentives to encourage employees to work toward organizational objectives.

Understanding motivation is important to the effective management of people, and it also helps to explain their ethical behavior. From an ethics perspective, needs or goals may change as a person progress through the ranks of the company. This shift may cause or help solve problems depending on that person’s current ethical status relative to the company or society.

An individual’s hierarchy of needs may influence his or her motivation and ethical behavior. After basic needs such as food, working conditions, and survival are satisfied, relatedness needs and growth needs become important. Relatedness needs are satisfied by social and interpersonal relationships, and growth needs are satisfied by creative or productive activities.

Examining the role motivation plays in ethics offers a way to relate business ethics to the broader social context in which workers live and the deeper moral assumptions on which society depends.

Workers are individuals, and they will be motivated by variety of personal interest. While we keep emphasizing that managers are positioned to exert pressure and force individuals’ compliance on ethically related issues, we also acknowledge that an

individual’s

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personal ethics and needs will significantly affect his or her ethical decisions.

Organizational Structure and Business Ethics An organization’s structure is important to the study of business ethics because the various roles and job descriptions that comprise that structure may create opportunities for unethical behavior. The structure of organizations can be described in many ways. For simplicity

shake,

we

will

discuss

two

broad

categories

of

organizational structure.

•

•

Centralized structure

•

Decentralized structure

Centralized structure: In a centralized organization, decision making authority is concentrated in the hands of top-level managers, and little authority is delegated to lower levels. Responsibility, both internal and external, rests with top-level managers. This structure is especially suited for organizations that make high risk decisions and whose lower level managers are not highly skilled in decision making.

These organizations are usually extremely bureaucratic, and the division of labor is typically very well defined. Each worker knows his Corporate Culture

30

or her job and what is specifically expected, and each has clear understanding of how to carry out assigned tasks.

Centralized organizations stress formal rules, policies, and procedure, backed up with elaborate control system. Their codes of ethics may specify the techniques to be used for decision making.

Because of top-down approach and the distance between employee and decision maker, centralized organizational structures can lead to unethical acts if the centralized organization is very bureaucratic, some employees may behave according to the letter of the law.

Other ethical concerns may arise in centralized structure because they typically have very little upward communication. Top level managers may not be aware of problems and unethical activity.

Another ethical issue that may arise in centralize organizations is blame-shifting, or “scapegoat.� People may try to transfer blame for their actions to others who are not responsible.

•

Decentralized structure:

In a decentralized organization, decision making authority is delegate as far down the chain of command as possible. Such organizations have relatively few formal rules, and coordination and control are usually informal and personal. They focus instead on increasing the flow of information.

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One of the main strengths of decentralized organizations is their adaptability and early recognition of external change. With greater flexibility, managers can react quickly to changes in their ethical environment.

A parallel weakness of decentralized organizations is the difficulty they have responding quickly to changes in policy and procedures established by top management. In addition, independent profit centers within a decentralized organization may deviate from organizational objectives. It is also true that decentralized organized organizations may be able to avoid ethical dilemmas by tailoring their decisions to the specific situations, laws, and values of a particular community.

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Examples of centralized and decentralized corporate culture:

Company Nike

Organizational culture Decentralized

Southwest Airlines General motors

Decentralized

Microsoft

Decentralized

Creativity, freedom, informality Fun, teamwork orientation, loyalty

Centralized

Procter & Gamble

Characterized by

Unions, adherence to task assignments, structured Creative, investigative, fast-paced

Centralized

Experienced, history and powerful

dependable.

A rich tradition of products,

Structural comparison of organizational types:

Characteristics

Emphasis Decentralized

Centralized

Decentralized

Centralized

Flexibility

High

Low

Adaptability

High

Low

Problem recognition

High

Low

Implementation

Low

High

Good

Poor

Few and informal

Many and formal

Division of labor

Ambiguous

Clear-cut

Span of control

Few employees

Many employees

Minimal

Extensive

Informal and personal

Formal and impersonal

Hierarchy of authority

Dealing with changes environmental complexity Rules and procedures

in

Use of managerial techniques Coordination and control

Group Dimensions of Organizational Structure and Culture Corporate Culture

33

When discussing corporate culture, we tend to focus on the organization as a whole. But corporate values, beliefs, patterns, and rules are often expressed through smaller groups within the organization. Moreover, individual groups within organizations often adopt their own rules and values. We will therefore look next at several types of groups as well as the conflicts that can occur between the norms of these groups and individuals.

Types of groups There are two main categories of groups affect ethical behavior in business. These are1) Formal group; 2) Informal group.

1. Formal group: It is defined as an assembly of individuals that has an organized structure accepted explicitly by the group. This group can be divided intoI. Committees: A committee is a formal group of individuals assigned to a specific task. Often a single manager could not complete the task, or management may believe that a committee can better represent different constituencies and improve the coordination and

implementation

of

decisions.

Committees

may

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regularly to review performance, develop plans, or make decisions

about

personnel.

Most

formal

committees

in

organizations operate on an ongoing basis, but their membership may change over time. A committee is an excellent example of a situation in which coworkers and significant others within the organization can influence ethical decisions. Committee decisions are to some extent legitimized because of agreement or majority rule. In this respect, minority views on issues such as ethics can be pushed aside through the majority’s authority. Committees bring diverse personal moral values into the ethical decision making process, which may expand the number of alternatives considered. The main disadvantage of committees is that they typically take longer to reach a decision than an individual would.

Committee

decisions

are

also

generally

more

conservative than those made by individuals and may be based on unnecessary compromise rather than on identifying the best alternative. Also inherent in the committee structure is a lack of individual responsibility. Because of the diverse composition of the group, members may not be committed or willing to assume responsibility for the “group” decision.

Although many organizations have financial, diversity, personnel, or social responsibility committees, only a very few organizations have committees that are devoted exclusively to ethics. An ethics committee might raise ethical concerns, resolve ethical dilemmas in the organization, and create or update the company’s code of ethics.

For example- Motorola maintain a Business Ethics Compliance Committee, which interprets, classifies, communicates, and enforces the company’s code and ethics initiatives.

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35

An ethics committee can gather information on functional areas of the

business

policies,

and

dealing

examine

with

manufacturing

suppliers,

financial

practices, reporting,

personnel and

sales

techniques to find out whether the company’s practices are ethical.

Though much of a corporation’s culture operates informally, an ethics committee would be a highly formalized approach for dealing with ethical issues.

Ethics committee members may also fail to understand their role or function. If they attempt to apply their own personal ethics to complex business issues, resolving ethical issues may be difficult.

Because most people’s personal ethical perspectives differ, the committee may experience conflict. Even if the committee members reach a consensus, they may enforce their personal beliefs rather than the organization’s standards on certain ethical issues.

Ethics

committees

should

be

organized

around

professional,

business-related issues that occur internally. In general, the ethics committee should formulate policy, develop ethical standards, and then assess the organization’s compliance with these requirements.

Ethics committees should be aware of their industries’ code of ethics, community standards, and the organizational culture in which they work. For example-Fortune 500 companies, has an established employee-managed ethics committee at each of its facilities to stimulate employees’ “ownership” of their ethical conduct and to distribute accountability throughout the organization.

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36

II. Work groups and Team: Work groups are used to subdivide duties within specific functional areas of a company. For example-on an automotive assembly line, one work group might install all the dashboard instruments. This enables production supervisors to specialize in a specific area and provide expert advice to work groups.

Where as work groups operate within a single functional area, team bring together the functional expertise of employees from several different areas of the organization- for example—finance, marketing, and production- on a single project, such as developing a new product.

Many manufacturing firms,

including General

Motors,

Westinghouse, and Procter & Gamble, are using the team concept to improve participative management.

Ethical conflicts may arise because team members come from different functional areas. Each member of the team has a particular role to play and has probably had limited interaction with other members of the team. Members may have encountered different ethical issues in their own functional areas and may therefore bring different viewpoints when the team faces an ethical issue. For example-a production quality-control employee might believe that side –impact air bags should be standard equipment on all automobiles for safety reasons. A marketing member of the team may reply that the cost of adding the air bags would force the company to raise prices beyond the reach of some consumers. Such Corporate Culture

37

conflicts often occur when member of different organizational groups must interact.

2. Informal group: It is defined as two or more individuals with a common interest but without an explicit organizational structure. In addition to the groups that businesses formally organize and recognize-such as committees, work groups, and teams-most organizations have a number of informal groups. These groups are usually composed of individuals, often from the same department, who have similar interests and band together for companionship or for purposes that may or may not be relevant to the goals of the organization.

For example- four or five people who have similar tastes in outdoor activities and music may discuss their interests while working, and they may meet outside work for dinner, concerts, sports events, or other activities. Other informal groups may evolve to form a union, improve working conditions or benefits, get a manager fired, or protest work practices they view as unfair.

Informal groups may generate disagreement and conflict, or they may enhance morale and job satisfaction.

Informal groups help to develop informal channels of communication, sometimes called the “grapevine�, which are important in every organization.

Informal

communication

lines

on

a

company’s

organization chart. Information passed along the grapevine may relate to the job, the organization, or an ethical issue or it may simply be gossip and rumors. The grapevine can act as an early warning system for employees.

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38

The grapevine is also an important source of information for individuals to assess ethical behavior is to ask friends and peers in informal groups about the consequences of certain actions, such as lying to a customer about a product safety issue. The corporate culture may provide employees with a general understanding of the patterns and rules

that govern behavior, but informal groups make

this culture come alive and provide direction for employees’ daily choices. For example-if a new employee learns anecdotally through the

grapevine

that

the

organization

does

not

punish

ethical

violations, he or she may seize the next opportunity for unethical behavior if it accomplished the organization’s objectives.

Group Norms Group norms are standards of behavior that groups expect of their members. Just as corporate culture established behavior guidelines for

an

organization’s

members,

so

group

norms

help

define

acceptable and unacceptable behavior within a group. In particular, group norms define the limit allowed on deviations from group expectations.

Most work organizations, for example- develop norms that govern groups’ rates of production and communication with management, as well as providing a general understanding of behavior considered right or wrong, ethical or unethical, within the group. For example-an employee who reports to a supervisor that a coworker has covered Corporate Culture

39

up a serious production error may be punished by other group members for this breach of confidence. Other members of the group may glare at the informant, who has violated group norms, and refuse to talk to or sit by him or her.

Norms have the power to enforce a strong of conformity among group members. At the same time, norms define the different roles for various positions within the organization. Thus, a low-ranking member of a group may be expected to carry out an unpleasant task, such as accepting responsibility for someone else’s ethical mistake.

Sometimes group norms conflict with the values and rules prescribed by the organization’s culture. For example-the organization may value hard work done quickly, and management may use reward and punishment to encourage this culture. In a particular informal group, however, norms may encourage doing only enough work to meet quotas and avoid drawing management attention. For the various conflicts management should carefully monitor not only the corporate culture but also the norms of all the various groups within the organization.

Can people Control Their Own Action within an Organizational Culture?

Many people find it hard to believe that an organization’s culture can exert so strong an influence on individuals’ behavior within the Corporate Culture

40

organization. In our society, we want to believe that individuals control their own destiny. A popular way of viewing business ethics is therefore to see it as a reflection of alternative moral philosophies that individuals use to resolve their personal moral dilemmas.

As we observed that most new employees in highly bureaucratic organizations have almost no input into the basic operating rules and procedures, employees may be taught to ignore a design flaw in a product that could be dangerous to users. Although many personal ethics issues may straightforward and easy to resolve, individuals entering business will usually need several years of experience within a specific industry to understand how to resolve ethical close calls.

For example-what constitute false claims about a product? When Kellogg

co.

introduced

Heart

wise

cereal,

the

Federal

Trade

Commission insisted that the name be changed to fiber wise because there was no conclusive evidence that the cereal benefitted the heart. The branding of the cereal was a complex decision that required the judgment of many professional people on the cereal’s benefits. And some professional health experts do, in fact, believe that a high-fiber diet is related to good health, including a strong heart. There is no way to avoid such ethical problems. The only things that one person’s opinion is usually not sufficient. Group decisions are used when complex issues must be resolved.

If a person believes that his or her personal ethics severally conflict with the ethics of the workgroup and of superiors in an organization, Corporate Culture

41

that individual’s only alternative may be to leave the organization. In the highly competitive employment market of the twenty-first century, quitting a job because of an ethical conflict requires courage and, possibly, the ability to survive without a job. Obviously, there are no easy answers for resolving ethical conflicts between the organization and the individual. Our goal is not to tell you what you should do. But we do believe that the more you know about how ethical

decision

making

occurs

within

organization,

the

more

opportunity you will have to influence decisions positively and ethical conflict more effectively.

Case-Toyota The spiritual center of Toyota is Toyota City, a huge company town of 400,000 people outside the industrial city of Nagoya. Once in a while, Toyota employees from around the globe come to the company's Toyota City plant near Nagoya, Japan for indoctrination in the "Toyota Way."

The company's commitment to teamwork is exemplified on the factory floor, where workers grab parts from trolleys that move with the line, one of many timesaving innovations proposed by the workers themselves. Slogans written by employees hang from the ceiling, and each production team has its own melody that rings out when a member needs to catch management's attention. Toyota's devotion

to

"Kaizen,"

or

continuous

improvement,

shows

up

throughout the company and is a lesson that will serve all managers.

Corporate Culture

42

Toyota’s global competitive advantage is based on a corporate philosophy known as the Toyota Production System. Toyota's philosophy of empowering its workers is the centerpiece of a human resources management system that fosters creativity, continuous improvement, and innovation by encouraging employee participation, and that likewise engenders high levels of employee loyalty.

Three levels of Corporate Culture Edgar Shein describes the three levels of a corporate culture: 1.

Surface level: At this level, culture is both enacted and reinforced through visible appearances and behaviors, such as physical layouts, dress codes, organizational

structure,

company

policies,

procedures

and

programs and attitudes.

Corporate Culture

43

2.

Middle Level: Here, culture is manifested through our beliefs and values.

3.

Deepest Level: At this level, culture is manifested through basic assumptions–our long-learned, automatic responses and established opinions.

Studies of Corporate Culture An early and well-known examination of corporate culture was offered

in

William

Hollingsworth

Whyte's

1956

book

The

Organization Man. Its contribution was in taking a close look at how individuals shape and are shaped by the companies they work for. The book chronicled the lives of suburban middleclass employees —all men—of large corporations. Although often understood as a critique of the conformity Whyte's subjects displayed, the book was a rather ambivalent documentary about individuals who based a significant part of their identity on the companies they worked for and the surrounding social milieu. Perhaps with a hint of irony, Whyte labeled himself an organization man, too.

In the wake of The Organization Man, business scholars and social scientists alike have focused their attention on the nature and problems of corporate culture. There is general agreement that-

Corporate Culture

44

•

Corporate

culture

helps

determine

an

organization's

effectiveness from a business stand-point

•

Employees may be alternately motivated or disillusioned depending on the prevailing corporate culture (and both feelings can be experienced within the same culture)

•

Organizational cultures change over time and in response to various events

•

General patterns of power structure, interpersonal relations, and human-centered processes can be observed in different types of corporate cultures

Many of the writings on corporate culture have searched for a system that explains the main variations between different corporate cultures. As a result, numerous typologies or schemes of "culture types" exist, identifying several broad categories into which the different cultures fit. Although all of these classification schemes are open to interpretation and none may be considered comprehensive, they can provide a useful framework for understanding corporate culture.

Corporate Culture

45

How to Build a Positive Corporate Culture 1. ‘Culture Carriers’.

These are key people, usually managers, who represent and spread the core values of the corporate culture.

2. Stability of the group.

It is more difficult for a culture to emerge if people are changing all the time.

3. Stories.

A group packages up its culture into stories which are frequently told and re-told, and which typify the values of the group eg ‘the time we all stayed late on Xmas Eve to get the last orders finished and then has an impromptu party at the local.’

4. Heroes.

Individuals who typify to an extreme level of the values of the group.

5. Symbols.

These may be staff mottoes, the corporate mission statement or anything that symbolizes the core values.

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46

Corporate Culture

47

6. Rites.

These are specific occasions, such as the annual office party, when the core values are publicly displayed. Formal award ceremonies are another example. These are especially important for enculturing new staff.

7. Rituals.

This means a standard pattern of behavior at a specific occasion, such as the office party if things are always done in a particular pattern.

8. Courses.

Attending in-house courses is an important way of team-building and communicating the core values.

9. Cultural Networks.

This means the informal contacts between employees where they reinforce core values, especially by passing them from older to younger group members.

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48

Advantages of Strong Corporate Culture 1. Instructions are interpreted in a common way, so work is done to a similar standard and in a similar manner.

2. Loyalty is increased, and replacing workers is an expense to be avoided.

3. Motivation, and therefore productivity, is increased.

4. Management control is increased.

Criticisms of Corporate Culture 1. In a MNC (Multi-National Corporation) there will almost certainly be conflicts between the local national culture and the imported corporate culture. These conflicts are very difficult to manage and there is usually a shortage of managers with the necessary skills in ’multi-cultural management’. For example, in the Middle East family values are very important and an employee wouldn’t dream of staying late to finish work if this conflicted with a family duty.

This doesn’t mean, however, that their work-ethic is poor, it is just expressed differently and a Western manager would cause a lot of offence by suggesting otherwise.

Corporate Culture

49

2. Businesses are not places with a homogenous culture. Most businesses are too large for people to identify across the whole organisation. Instead, people identify with smaller sub-groups. So a business is, in fact, a mixture of sub-cultures some of which may even be deviant. There is also a strong likelihood of conflict between some of the different sub-cultures.

3. The relationship between a strong corporate culture and improved business performance is, as far as the data can tell, very weak. It may be then that corporate cultures are less about improved performance and more about making the managers feel they have achieved something; a cynic might argue that managers like to be surrounded by copies of themselves.

4. Business is rarely simple, clear and unambiguous enough to allow of one simple message of the kind envisaged by proponents of the corporate culture idea.

Corporate culture & change Many articles and books have been written in recent years about culture in organizations, usually referred to as "Corporate Culture."

The dictionary defines culture as "the act of developing intellectual and moral faculties, especially through education." This writing will use a slightly different definition of culture: "the moral, social, and behavioral norms of an organization based on the beliefs, attitudes, Corporate Culture

50

and priorities of its members." The terms "advanced culture" or "primitive culture" could apply to the first definition, but not the latter.

Every organization has its own unique culture or value set. Most organizations don't consciously try to create a certain culture. The culture of the organization is typically created unconsciously, based on the values of the top management or the founders of an organization.

Hewlett-Packard is a company that has, for a long time, been conscious of its culture (The HP Way) and has worked hard to maintain it over the years. Hewlett-Packard's corporate culture is based on I. Respect for others, II. A sense of community, and III. Plain hard work (Fortune Magazine, May 15, 1995). It has been developed and maintained through extensive training of managers and employees. HP's growth and success over the years has been due in large part to its culture.

"Another important thing is to spend a lot of time with your people and to communicate with them in a variety of ways. And a large part of it is demeanor. Sometimes we tend to lose sight of the fact that demeanor - the way you appear and the way you act - is a form of Corporate Culture

51

communication. We want our people to feel fulfilled and to be happy, and we want our management to radiate the demeanor that we are proud of our people, we are interested in them as individuals and we are interested in them outside the work force, including the good and bad things that happen to them as individuals."

In both of these examples, the top management of the companies was vigilant about maintaining their cultures. The behavior rules and boundaries are relatively clear and communicated often. However, this is not typical. I believe most organizations operate with a diversity of cultures. This is especially true considering the increasing worldwide mobility of people and cultures and values.

There have been some recent models created to attempt to study and classify cultural diversity. One model, the Hofstede Cultural Orientation Model, as reported in the Spring 1995 issue of the ACA Journal, classifies cultures based on where they fall on five continuums.

1. Individual vs. Collective Orientation The level at which behavior is appropriately regulated

2. Power-Distance Orientation

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52

The extent to which less powerful parties accept the existing distribution of power and the degree to which adherence to formal channels is maintained.

Corporate Culture

53

3. Uncertainty-Avoidance Orientation The degrees to which employees are threatened by ambiguity and the

relative

importance

to

employees

of

rules,

long-term

employment and steady progression through well defined career ladders.

4. Dominant-Values Orientation The nature of the dominant values- e.g., assertiveness, monetary focus, well-defined gender roles, formal structure - vs. concern for others, focus on quality of relationships and job satisfaction, and flexibility.

5. Short-Term vs. Long-Term Orientation The time frame used: short-term (involving more inclination toward consumption, saving face by keeping up) vs. long-term (involving preserving status-based relationships, thrift, deferred gratifications).

There's some debate over whether companies should design their personnel policies and reward systems around cultural values.

Currently companies tend not to, because of the concern about stereotyping certain cultures.

A popular trend is for companies to "reengineer" themselves, which involves an attempt to change their culture, usually to a team orientation. As reported in the ACA News (September 1995), studies Corporate Culture

54

indicate that the following are necessary for a company to change to a "team culture:"

•

Common and consistent goals

•

Organizational commitment

•

Role clarity among team members

•

Team leadership

•

Mutual accountability with the team

•

Complementary knowledge and skills

•

Reinforcement of required behavioral competencies

•

Power (real and perceived)

•

Shared rewards

The importance of corporate culture is growing as the result of several recent developments. Companies are encouraging employees to be more responsible and act and think like owners. In exchange for more flexible work schedules, employees are expected to always be "on-call." With the demise of more traditional communities (e.g. neighborhoods, etc.), companies are filling employees' need to belong to a community. At the same time companies are encouraging teamwork and the formation of teams.

Therefore, organizational leaders shouldn't ignore corporate culture.

Rather, it should be addressed in the organization's mission, vision, and goal statements, and emphasized in company sponsored training Corporate Culture

55

and company communication. The statements should include the following: To be financially successful, etc. (employees want to belong to a successful organization)

•

To be accepting of cultural (ethnic) diversity

•

To encourage employees to "have a life" outside the company (provide

sufficient

paid

time-off

benefits

and

encourage

employees to take the time)

Ten Parameters of good corporate culture The most intriguing thesis of the book was that actually most organizations are not sick, but not entirely healthy: the so-called lingering organizations. The other five types of organizations are: the dramatic organization, the depressive organization, the paranoid organization,

the

coercive

organization,

and

the

schizophrenic

organization.

•

The dramatic organization: This

type

of

organization

is

hyperactive,

impulsive,

very

adventurous and dangerously unrestrained. The decision-makers base their ideas on intuition and impressions instead of facts.

The leaders use their charisma to concentrate all the power in the top. They can therefore undertake very risky operations.

They

do

these

things

to

create

a

completely

different

Corporate Culture

56

environment without really considering the existing business environment. Their goal is unlimited growth. The man in the top wants to be the center of everything’s.

•

The depressive organization: This organization is characterized by apathy, lack of selfconfidence and conservatism. The communication climate is passive and aimless .The activities are implemented according to predetermined programs and routines. The employees are never asked to show initiative. In stable markets, long established companies can withstand many crises despite their depressive state. They can survive as long as the technology and the competitive pattern remain the same. The environment of these organizations is usually protected with trade agreements and fixed tariffs.

•

The paranoid organization: This organization is characterized by extreme suspicion at the top. This is mirrored by the extreme emphasis on procedures, which are aimed to collect information and exert control. A complex information system is created to analyze all the dangers of the outside world. Procedures are written down in detailed manner and everybody is obliged to continuously write reports.

This need to regulate everything and be alert all the time results in ‘the institutionalization of suspicion’. There are a lot of meetings to collect the same information from different people.

The advantage is that the leaders will get the right information, Corporate Culture

57

but the side effect is that mutual trust is diminishing. A lot of precious time and energy is lost while the morale is decreasing all the time.

•

The coercive organization: This type of organization is addicted to rituals. Every move is literally planned. The implementation of the plans is carefully monitored; all activities are usually routine activities. The emphasis is laid on correctness and completeness when the predetermined methods are used. Rituals have become norms.

Just like in the paranoid organization, the coercive organization depends on formal control and information systems. There is, however, one important difference; coercive organizations are really meant for monitoring budgets and productivity. The paranoid organization on the other hand, is mainly interested in things, which lie outside its span of control.

•

The schizophrenic organization: Like the depressed organization, the schizophrenic organization is suffering from lack of effective leadership. The leaders of a schizophrenic organization are not doing a good job. They are afraid

to

establish

new

contacts

because

they

had

bad

experiences in the past. These leaders have reached a stage in their career in which they are not interested in leading anymore.

If they are lucky, this problem is solved by the middle managers, but these middle managers are usually only interested in their own interests. The average middle manager will usually become Corporate Culture

58

servants who just want to win the favors of their directors. The directors are constantly in doubt, because they don’t know which proposals to accept from their subordinates. A consequence is that plans are implemented half-heartedly and actions depend on the mood of the day. Lack of consistent and consequent leadership

is

the

most

important

characteristic

of

the

schizophrenic organization.

•

The lingering organizations: Finally, usually have problems with the central values, norms, and beliefs. If the leaders are not trying to disseminate these aspects or are even against it, subcultures will be created which are

not

independent.

Other

characteristics

of

lingering

organizations are: internal company politics is more important than efficiency, promises and deals are oftentimes neglected and the leaders are not really interested of their employees.

So, what are then the characteristics of truly healthy organizations?

Here are ten parameters of good corporate culture: 1.

Pride of the organization: Employees defend their company against unjustified critique and they say that they like working for their company;

2.

Orientation towards (top) achievements:

Corporate Culture

59

‘In our company, everybody tries to do a better job’ and ‘our company is number one and that should stay so’;

3.

Teamwork and communication: Employees listen well and try to understand the ideas/opinions of others and employees and managers really try to help each other;

4.

Supervision and leadership: Managers are really interested in the problems of others and it is customary to ask help when needed;

5.

Profit orientation and cost awareness: All expenditures are evaluated if they are effective or not and all members are strongly thinking about profit;

6.

Employee relationships: Employees are not trying to better themselves from the mistakes of other employees and new employees are accepted quickly;

7.

Client and consumer relations: Everything is oriented towards a better service for the customer;

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60

Corporate Culture

61

8.

Honesty and safety: Safety rules are strictly implemented and everybody sees company properties as being sacred;

9.

Education and development: Everybody supports education and training programs and the company really tries to develop its employees.

10.

Innovation: Systems and procedures are constantly being pursued and new ideas are always welcome.

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Conclusion

Corporate culture refers to the set of values, beliefs, goals, norms and ways of solving problems that the members of an organization share. These shared values may be formally expressed or unspoken.

Corporate cultures can be classified in several ways and a culture audit can be conducted to identify an organization’s culture. If an organization’s culture rewards unethical behavior, people within the company are more likely to act unethically. A company’s failure to monitor or manage its culture may foster questionable behavior.

Leadership- the ability or authority guide others toward achieving goals- has a significant impact on the ethical decision- making process because leaders have the power to motivate others and enforce both the organization’s rules and policies and their own viewpoints. A leader must not only gain the respect of his or her followers but also provide a standard of ethical conduct. Six leadership

styles

based

on

emotional

intelligence

have

been

identified: coercive, authoritative, affiliative, democratic, pacesetting and

coaching.

Leadership

styles

may

also

be

classified

as

transactional or transformational. Leaders exert power to influence the behaviors and decisions of subordinates. There are five power bases from which a leader may influence ethical behavior: reward power, coercive power, legitimate power, and expert power and referent power. Leaders also attempt to motivate subordinates; motivation is an internal force that focuses an individual’s behavior toward achieving a goal. It can be created by the incentives that an organization offers employees.

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The structure of an organization may create opportunities to engage in unethical behavior. In a centralized organization, decision-making authority is concentrated in the hands of top managers, and little authority is delegated as far down the chain of command as possible.

Centralized organizations tend to be more ethical than decentralized ones because they enforce more rigid controls, such as codes of ethics and corporate policies on ethical practices.

In addition to the values and customs that represents the culture of an organization; individual groups within the organization often adopt their own rules and values, and even create subcultures. The main types of groups are formal groups-which include committees, work groups, and teams-and informal groups. Informal groups often feed an informal channel of communication called the “grapevine”. Group norms are standards of behavior that groups expect of their members. They help define acceptable and unacceptable behavior within a group and especially define the limits on deviating from group expectations.

Sometimes an employee’s own personal ethical standards conflict with what is expected of them as members of an organization and its corporate culture. This is especially true given that an organization’s ethical decisions are often resolved by committees, formal groups, and informal groups rather than by individuals. When such ethical conflicts are severe, the individual may have to decide whether to leave the organization.

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64