COMPANY'S CULTURE AND WORK ETHICS

The moral standards of employees and stakeholders are influenced by a company's culture. Businesses that put forth effort to establish a strong ethical culture inspire employees to act and talk honestly and morally. Businesses that exhibit high ethical standards draw people to their goods and services. Knowing they are doing business with an honest company makes customers happy and confident. The majority of employees at ethical businesses stay with them for a long time, which lowers turnover expenses. Investors are at ease when they make investments in businesses that uphold high ethical standards because they know their money is safe. High share prices and protection against takeovers are two benefits of ethical behavior. One aspect of the entire organizational culture that can be thought of in an organization is the ethical culture. Therefore, while organizational culture refers to "how we do things around here," ethical culture refers to "how we do things around here with regard to ethics and ethical behavior in the organization." The "ethics personality" of the company is represented through its ethical culture.

From the standpoint of ethical systems, developing and maintaining a strong ethical culture is essential to building a company that encourages employees to make moral decisions and conduct themselves ethically on a daily basis. People who take unethical short cuts are often influenced by a number of causes and factors. However, ethical failure is considerably less likely when employees are being encouraged by all pertinent organizational structures to act in an ethical manner.

Programs for ethics and compliance that have been developed conventionally frequently fall short. According to Nicole Sanford, market leader for regulatory and operational risk at Deloitte Risk and Financial Advisory, Deloitte & Touché LLP, "organizations responsible for some of the most severe acts of misconduct had fairly remarkable, established ethical and compliance requirements." According to Ms. Sanford, "many regulators now understand that without a culture of integrity, firms are likely to consider their ethics and compliance programmes as a collection of check-the-box activities or—even worse—as a barrier to accomplishing their business objectives."

Without an ethical and compliant culture, firms will be at risk, according to the lessons learnt through scandals and organizational crises that date back to the early 2000s. Culture is becoming more and more something that needs to be defined, measured, and improved instead of being a vague, inspirational concept.

The U.S. Federal Sentencing Guidelines, for instance, make reference to culture and state that businesses should develop "an organisational culture that encourages ethical conduct" and "compliance with the law." A robust organisational ethics culture is crucial, as stated in the Convention on Combating Bribery of Foreign Public Officials in International Business Transactions of the Organization for Economic Cooperation and Development.

Corporate Culture History

The 1960s saw the emergence of corporate or organizational culture awareness in businesses and other organizations like universities. Early in the 1980s, the phrase "business culture" emerged, and by the 1990s, it was well-known. Managers, sociologists, and other academics used corporate culture during that time to describe a company's personality.

This includes prevailing attitudes and behaviors, company-wide value systems, management tactics, employee relations, communication within the workplace, and work environment. Corporate culture would later incorporate visual symbols like logos and trademarks, as well as company origin tales spread by charismatic chief executive officers (CEOs).

In 2015, national cultures and traditions, economic trends, global trade, firm size, and goods all had an impact on the corporate culture of a company in addition to the founders, management, and employees of the organization.

Many phrases are used to refer to businesses that are impacted by different cultures, particularly in the wake of globalization and the increased international engagement in today's corporate climate. As a result, "the interaction of people from different backgrounds in the business world" is referred to as cross-culture; "culture shock" is used to describe the confusion or anxiety people experience when conducting business in a society other than their own; and "reverse culture shock," which is frequently experienced by people who spend a lot of time abroad for work and struggle to adjust when they return.

Companies frequently invest extensive resources, including specialist training, that enhance cross-cultural business contacts in order to foster positive cross-cultural experiences and support a more unified and productive company culture.

APPLICATION IDEAS (based on research covered below)

Use these fundamental principles to create and preserve an ethical company culture. You'll see that they link to, overlap with, and support one another.

• Encourages moral conduct - Talk the talk and walk the walk are both required. Organizational structure and ethical culture communication should work together to promote good behavior (incentives, structure). Employees who spot misconduct should be praised for their bravery rather than disciplined and encouraged to behave in a way that promotes corrective action.
• Build with culture in mind, not compliance - Although it is obviously important to have a compliance infrastructure, organizations should put more work into developing the correct culture. Instead, success metrics should be focused on results. By effectively handling regular infractions and complaints and building a history of responsibility, the organization may regularly show its dedication to the culture it has professed.
• Prioritize ethical leadership above anything else- The sustained presence of perceived ethical leadership is crucial in establishing an ethical culture because it serves as the model for employee behaviour. A company performs better when its senior managers are viewed by their staff as honest and reliable.?
• Integrate moral principles across the entire enterprise- ?Every aspect of the business, including its rules, procedures, and practises, should be infused with core ethical ideals. When leadership genuinely wants ethical results, rules are empowered to support ethical behavior, communication is transparent, and ethical ideals are ingrained in personnel selection, it is clear that this holistic approach is being used. It is possible to guarantee that ethical ideals are propagated and promoted throughout the firm by using well-established communities, such as ethics ambassador networks (workers trained as liaisons for promoting company values).?
• Establish moral hiring criteria- To find and hire moral people, use ethical hiring procedures that are clearly established. Companies might, for instance, enforce rules relating to competence-based hiring, looking for applicants with ethics training, and educating applicants of business values prior to employment. Additionally, businesses may decide to make sure talent managers are properly trained to adopt an ethical framework in their various talent processes (such as recruiting managers and talent acquisition teams). This knowledge reinforces managers' responsibilities as moral guardians.
• Make ethical programmers official- For personnel at all levels of the organisation, create dynamic ethical programs—those that can adapt to changing circumstances and contain elements for ongoing improvement. A code of ethics, formal training, an ethics hotline, and staff members whose duties include adhering to ethical standards are some examples of these.
• Evaluate your company- To capture the climate of your company, use culture measurement tools. Regularly performed good measurements can highlight your areas of strength and weakness, reveal whether management shares the same perspectives as the workforce, and reveal whether departments or units are evolving over time. The effectiveness of your attempts to assess and improve the ethical culture of your firm will be significantly aided by good measurement.
• Evaluate your company- To capture the climate of your company, use culture measurement tools. Regularly performed good measurements can highlight your areas of strength and weakness, reveal whether management shares the same perspectives as the workforce, and reveal whether departments or units are evolving over time. The effectiveness of your attempts to assess and improve the ethical culture of your firm will be significantly aided by good measurement.

COMPARATIVE STUDIES?

• Failures

By Suraj Srinivasan and Jonah Goldberg, Recovering Trust After Corporate Misconduct at Wells Fargo (2020), is available through the Harvard Business School. This outlines the pervasive misbehavior at Wells Fargo Community Bank in the years prior to 2017 and the organization's subsequent efforts to enhance internal controls, company culture, and corporate governance.

Journalist Jack Ewing of the New York Times wrote a book titled Faster, Higher, and Farther: The Volkswagen Scandal (2017) that details the history of the automaker prior to the 2015 global emissions scandal and how top executives fostered a workplace culture that ultimately led workers to use illegal means.

Barbara Toffler's 2004 book Final Accounting describes the atmosphere she discovered at Arthur Andersen a few years before the firm's demise.

In his more recent book, What Happened to Goldman Sachs (2013), Steven Mandis describes how the company's culture altered during his tenure there, and how it did so negatively.

• Successes

Do Managers Matter? Google's Project Oxygen This case study, which was provided by Harvard Business Publishing Education, looks at how Google improved management practices while maintaining their highly regarded company culture that values technology.

In Zippos: Delivering Pleasure to Stakeholders, the Daniels Fund Ethics Initiatives explores Zippos' origins, basic principles, and distinctive business model, as well as how its ongoing commitment to stakeholder happiness has helped it succeed despite several commercial and moral difficulties.? The Harvard Business Publishing case study IKEA's Global Sourcing Challenge: Indian Rugs and Child Labor (A) shows how a company's adherence to its values might aid it in addressing the issue of child labour in the carpet-sourcing process.

The interactive HBS case, Fighting Corruption at Siemens, illustrates the company's efforts to change its culture in a systematic and sustained manner. It shows both failure (because the culture permitted bribery to persist long after the law in Germany had been changed to no longer permit it) and success (because it shows how the company changed its culture).

ADVICE FOR FUTURE RESEARCH

Investigating how hiring decisions impact a company's ethical culture. Can companies choose people and leaders who will be more moral, requiring less work to ingrain them in the culture? (Check out some inspiration on our Personality and Personnel page.)

The impact of instruction on actual ethical behavior should be evaluated. Which training programmers, and how they are delivered, are most successful at long-term behavior change, including perceptions.

Examine what happens when various organizational culture components—such as compliance policies, performance management, and leadership—are not in line with cultural message. You should also consider what factors are most important in shaping culture and how the various elements interact. Determine how cultural disparities in ethical training and culture affect the development of just and successful policies and interventions.

RESEARCH AREAS

Culture-based hiring and selection. There is evidence that suggests an organization's employees may be significantly impacted by its ethical culture. According to Ruiz-Palomino, Martnez-Caas, and Fontrodona (2013), it is positively correlated with employee job satisfaction, affective commitment, intention to stay, and desire to recommend the company to others. Higher job engagement and decreased employee burnout are two important elements that help firms keep a dedicated and motivated staff (Huhtala, Tolvanen, Mauno & Feldt, 2015). Organizations that encourage ethical practises also experience these benefits (Huhtala & Feldt, 2016).

When organizations use a defined ethical-hiring standard (specific ethical practices and aims which hiring managers are responsible for upholding), employers are more likely to recruit and hire ethical candidates. Better individual fit to an organization’s ethical values, known as ethical citizenship, appears to enhance or unlock the influence of ethical culture on intentions and behavior.

Studies examining modified recruitment techniques, such as those that incorporate ethical-hiring practices, suggest that these methods are effective in shaping organizational culture. Research by Villegas and colleagues identified six behaviors that organizations can practice to hire more ethically:

• Sincere introspection will help you identify unethical or less than ideal organizational activities.
• Create the fundamental values and guiding principles of the organization Establish ethical processes and practices that apply to all aspects of operation, such as hiring and human resource management. Additionally, this would cover internal policies that prohibit bias and discrimination in employment as well as diversity training strategies.
• By taking corporate and managerial activities, show that you adhere to and exemplify the organization's ethical principles.
• Make sure that each candidate is aware of the company's ethical standards.
• Employ and onboard the most morally competent applicant with the necessary abilities to succeed in the open position.