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Week 7: Culture and/or Climate in the Workplace—Do They Matter?

Using this week’s lesson and resources as a start, locate three research studies that support the premise that better managers are those who pursue an understanding of the culture and/or climate of their organization. Why does it matter to gain insight about the culture and/or climate in the workplace? Use online, peer-reviewed journal research (case study research is preferred) to inform your writing. Summarize the takeaways from the articles that can support greater skill in managing people.

 

MGMT600 | LESSON 7 (this is this weeks lesson)

BUSINESS MODELS DEALING WITH ORGANIZATIONAL CULTURE RELATING TO CUSTOMER SATISFACTION AND EMPLOYEE RETENTION

INTRODUCTION

Welcome to module week 7. This week we will research and explore the subject of corporate culture. The culture of an organization is similar to the personality of an individual as we explored in module week 6. A healthy corporate culture is one build on trust, fairness, and high ethical standards. An unhealthy corporate culture leads to a multitude of problems. Let’s get started.

 

Assessing Corporate Culture

Few topics in the field of compliance and ethics have generated more interest, and provoked more questions and concerns, than the topic of corporate culture—and rightly so. Compliance and ethics officers have every reason to be concerned about the new emphasis on culture.

To many, the term itself is like air: It’s there, it’s vitally important, but it’s hard to describe and harder still to do much about. While it is true that corporate culture has long been recognized as having a critical impact on the effectiveness of compliance—the maxim that bad culture trumps compliance is, for example, well known—until recently few were held accountable for developing and maintaining an ethical corporate culture. That is beginning to change.

But do compliance and ethics officers have the clout, resources or allies to do what must be done? What exactly are they supposed to do? What is the objective? What specific actions are required?

In this article, we will examine specific steps that compliance and ethics officers can take to assess and improve their corporate culture. In Part I, we present suggestions for the initial phase of assessment: creating a process to identify your current corporate culture. In Part II, published in a subsequent issue, we provide a step-by-step process for evaluating the impact your culture has on the effectiveness of your compliance and ethics initiatives.

 

Holding Companies and Individuals Accountable

 

Paul Fiorelli, in a recent article in the Wake Forest Law Review (Fall 2004) summarized the increasing number of regulations and guidelines that refer to ethics and corporate culture and that are now being used to hold corporations and individuals accountable. The SEC, Congress, regulators, the Sentencing Commission, the New York Stock Exchange, the Department of Justice, rating agencies and others have all weighed in on the topic. For examples, consider just three recent business news headlines:

February 8, 2005

PERPETUATION OF A CORPORATE CULTURE

 

During the sentencing phase of the government trial against Qwest executives, the U.S. Attorney, in arguing for the imposition of the legal maximum, referred to the perpetuation of a corporate culture that urged employees to do whatever was necessary to hit or exceed revenue targets.

 
 

February 11, 2005

CULTURE OF AGGRESSIVE ACCOUNTING

S&P’s Rating Service downgraded Bally Total Fitness Holding Corporation’s credit rating in part due to Bally’s Audit Committee’s finding that the former CEO and CFO created a culture of aggressive accounting.

 

February 17, 2005

FIVE-POINT PLAN

Charles Prince, CEO of Citigroup Inc., announced a “five-point plan” to better align ethics and reputational concerns with the existing corporate culture.

 

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Every organization has an existing culture. For most, the good news is that their existing culture, while containing a few bad elements, is largely in good shape. The task, therefore, is not to create or invent a new culture, but to identify what exists, assess where improvements are needed, develop an action plan and implement it. This may seem obvious and yet the temptation may be strong to skip the preliminaries and jump right into action plans and implementation.

Too many organizations assume they know what their culture is. Often they think that it can be summed up in a slogan, like: “We have a culture of innovation” or “We’re an action-based culture.” Others assume their values statement adequately represents their unique culture. Ideally, your values statement should be an expression of your “shared values” and, as such, a concise description of your corporate culture. But don’t assume that it is. Nor should you assume that your views or the views of senior management accurately describe the existing corporate culture.

 

Step One: Describing Your Existing Culture

It may be best to begin by setting aside your values statement and your preconceptions. You need to hear directly from employees throughout your organization. There are a variety of means to gather this input, including surveys, focus groups, and formal and informal interviews. Use a variety of methods, but remember, your goal is to determine what people really think about the organization, what motivates them, what behaviors do they believe are rewarded and punished, what are the “unspoken rules” that everyone knows. For this reason, interviews and focus groups are by far the preferred method.

Your existing corporate culture is largely conveyed from one generation of employees to the next through corporate stories and the informal systems that convey values over time. You need to explore these stories and informal systems. When examining corporate stories, don’t focus exclusively on the official corporate history and folklore, though it may be of some interest. Instead, examine the stories that currently travel through the corporate grapevine. Is there a pattern to the type of stories that survive the longest and travel the furthest?

Do employees seem only too willing to believe a story about excessive executive perks, even if it’s not true? Or are stories of corporate good works, generosity and social responsibility foremost on everyone’s mind? Most importantly, you need to determine what lessons are drawn from these stories. If a senior executive has been fired and the speculation is that there was an ethics violation, is this interpreted as a reinforcement of “the way we do business here,” or are people surprised and skeptical about what “it really means.”

Beyond the Employee Base

You may want to go beyond your current employee base. In order to gain a broader perspective consider including former employees, former compliance and ethics officers, suppliers, consumers, competitors and third parties who have been in a position to observe your organization over time. They all have stories to tell and can help you fill out the complete picture.

If you choose to include third parties in your review, concentrate on the specific, first-hand stories that they tell—not on their opinion of your corporate reputation. Your reputation may not accurately reflect your current culture. Instead, your reputation may be sustained by public relations and marketing, or by academic case studies that no longer relate. The latter is particularly common if the case studies pertain to corporate social responsibility. Such cases have a long academic shelf life.

Another way to assess your current corporate culture is to determine what employees and others believe are the motivations behind your ethics initiatives. Do they believe they are just attempting to “cover” the corporation, and meet compliance requirements? Or do they see them as tools that help them to achieve business objectives in an ethical way?

 
 

Surveys can be helpful. One company asked employees to respond to the claim: “I would receive more criticism for violating an ethical principle than not meeting a deadline or target.” Another asks, “It is safe to voice my opinion…true or false?” These and similar questions can provide valuable data to supplement the interviews and focus groups.

Whether you employ interviews, focus groups, surveys, or all three, specific questions such as the following should be included in order to help gain insight into employees’ beliefs:

· Is the pressure to perform unreasonably?

· Is it sometimes difficult to ask questions or raise concerns?

· Is compliance, ethics or even legal issues ever denigrated or marginalized?

· Is bad conduct rewarded or tolerated?

· Is there a close tie between performance and rewards?

· Does short-term thinking dominate?

· Do employees identify sufficiently with the interests of shareholders?

· Do employees understand and sufficiently care about the needs of the customers?

· Is the quality of products and/or services a high priority? Are employees proud of the products and/or services? Are they proud of the organization?

 

Conclusion

I hope you found this lesson both interesting and informative. Often we just assume we know the culture of our organization or just assume it is healthy. However, the numerous examples highlight that often leadership does not have a pulse on the culture or have made incorrect assumptions. Now that you are aware of what a corporate culture is and is not, you may be in a position to make a positive change or at least influence on your own corporate culture. Next week is our final week.

References

Petry. (2011). Assessing Corporate Culture. www.ethikospublication.com