Ethics as Organizational Culture Part 1 Geoffrey G. Bell, PhD, CA University of Minnesota Duluth November, 2003

Cookie-cutter approaches won’t work Fundamental assumption of chapter – ethics is an integral part of the organization’s culture.  Underlying assumption – organizations’ cultures differ greatly from each other. Thus, designing an ethical organization means analyzing all aspects of the organization’s culture and aligning them to support ethical behavior and discourage unethical behavior. “Cookie cutter” approaches can only address superficial problems.  Beware the consultant who generates a boiler plate report.

Common and distinct elements of ethical problems Common ethical problems may exist across organizations. However, organizations differ in terms of ethical problems that are most common or of most concern.

Beware “flavor of the month” ethics Employees will be able to sniff out a “flavor of the month” approach to ethical (or any other) problems.  Recall Al and making employees independent contractors.  This is really the “Dilbert-ization” of management and ethics. After a while, the attitude will become, “if we just keep our heads down long enough, it’ll go away, and we’ll be back to business as usual.” Unique plans are needed to solve unique organizational needs.

Organizations are interaction of formal & informal systems Formal systems Organization structure Methods of differentiation & integration, centralization, and formalization Planning, controlling, etc. systems Informal systems Informal peer-to-peer networks  E.g., who is friends of whom, who goes to whom for advice? Organizational norms, values, and beliefs.

All systems must be aligned to support ethical behavior Note that norms, beliefs, and values may make formal rules / structure unnecessary or inoperative.  E.g., if there is a norm that we always strive to help others, then a formal reward system for helping behavior is unnecessary.  E.g., if there is a norm to produce at any cost, then rules that “quality matters” may be ineffective. To create an ethical culture, the formal & informal systems must be aligned and sending the same message.

An introduction to organizational culture Culture is a body of learned beliefs, traditions, and guides for behavior shared among members of an organization. Expresses shared assumptions, values and beliefs of the organization. Note – neither strong culture nor weak culture by itself is either good or bad. However, strong & weak cultures determine where guides to behavior will occur.  In weak culture organizations, there is no dominant culture, so many different subcultures exist.

The role of socialization Socialization of newcomers occurs both formally and informally. Socialization teaches newcomers what the bounds of acceptable and unacceptable behavior are. The goal is that, at some level, newcomers will internalize cultural expectations. Importance of ensuring formal and informal socialization sends a consistent, positive message.

Organizational imprinting: the role of the founder Much organizational research suggests that an organization’s founder has a strong influence on the organization’s culture. Interestingly, research indicates that the imprinting is relatively indelible, and new leaders change it only with difficulty.  Change will involve a clearly articulated vision.

Executive leadership & ethics Leadership is a critical component of creating an ethical culture.  Note that changing culture is difficult. Tone at the top matters. See lesson plan. Moral person WeakStrong Moral manager Weak Strong Hypocritical leader Ethical leader Unethical leader ? Ethically neutral

Ethics and bureaucracy An organization has a formal power structure, and tendency toward obedience to authority can undermine an organization’s attempt to build in personal accountability. If employees don’t question authority, it means they’re not thinking for themselves. Managers can delegate responsibility to avoid blame for problems.

Diffusion of responsibility Managers (and employees) and the formal organization structure can also diffuse / fragment responsibility.  Key if you’re trying to take unpopular actions – make sure the blame is diffused.  Another key – make sure you’re in a position to control key bridges (structural holes) across fragmented responsibility.