1. Corporate Culture, Ethics and Leadership

2. Corporate Culture Organizational Culture
Values, beliefs, behaviors, customs, and attitudes that help the members of the organization understand what it stands for, how it does things, and what it considers important

3. Corporate Culture The Importance of Organization Culture
Culture determines the overall “feel” of the organization, although it may vary across different segments of the organization
Culture is a powerful force that can shape the firm’s overall effectiveness and long-term success

4. Corporate Culture Determinants of Organizational Culture
Organization’s founder (personal values and beliefs)
Symbols, stories, heroes, slogans, and ceremonies that embody and personify the spirit of the organization
Corporate success that strengthens the culture.
Shared experiences that bond organizational members together

5. Corporate Culture Managing Organizational Culture
Understand the current culture to decide whether to maintain or change it
Articulate the culture through slogans, ceremonies, and shared experiences
Reward and promote people whose behaviors are consistent with desired cultural values

6. Corporate Culture Changing Organizational Culture
Develop a clear idea of what kind of culture you want to create
Bring in outsiders to important managerial positions
Adopt new slogans, stories, ceremonies, and purposely break with tradition

7. Ethics and Culture Ethics Ethical Behavior
An individual’s personal beliefs regarding what is right and wrong or good and bad.
Ethical Behavior
This behavior is in the eye of the beholder. However, it also refers to behavior that conforms to generally accepted social norms.
Problems occur in ambiguous situations that can be interpreted in different ways.
Examples of Unethical Behavior
“Borrowing” office supplies for personal use, “Surfing the Net” on company time.
Filing falsified or inflated business expense reports.

8. Ethics and Culture Managing Ethical Behavior
Must begin with top management
Top management establishes the organization’s culture and defines what will and will not be acceptable behavior
Provide training on how to handle different ethical dilemmas

9. Ethics and Culture Managing Ethical Behavior (cont’d)
Develop a written code of ethics
A formal, written statement of the values and ethical standards that guides a firm’s actions
Individual issues
Behavior and conscience
Privacy

10. Employees
Organization •
Conflicts of interest
Secrecy and
confidentiality
Honesty
Hiring and firing
Wages and working
conditions
Privacy and respect
Subject to ethical ambiguities
Advertising and promotions
Ordering and purchasing
Bargaining and negotiation
Financial disclosure
Shipping and solicitation
Other business relationships
Economic Agents
Customers
Competitors
Stockholders
Suppliers
Dealers
Unions
Actors:
Three basic areas of concern for managerial ethics are the relationships of the firm to the employee, the employee to the firm, and the firm to other economic agents.
Figure 4.1

11. Ethics in Organizations
Individual Values +
Organizational Values =
Managerial Values

12. Applying Ethical Judgments
Model for deciding whether or not a particular action or decision is ethical
Gather relevant factual information.
Determine the most appropriate moral values.
Make a judgment based on the rightness or wrongness of the proposed activity or policy.
Ethical Norms Affecting Actions
Utility—act optimizes what is best for its constituencies (benefits only or primarily those who are directly involved)
Rights—act respects the rights of others involved
Justice—act is consistent with what is considered fair
Caring—act is consistent with people’s responsibilities to each other

13. Social Responsibility and Organizations
The set of obligations (to behave responsibly) that an organization has to protect and enhance the social context in which it functions.
Areas of Social Responsibility
Stakeholders
Customers, employees, and investors
The natural environment
Environmentally sensitive products, recycling, public safety
The general social welfare
Charitable contributions, support for social issues such as child labor and human rights

14. Arguments For and Against Social Responsibility1.
Business creates problems and
should therefore help solve them. 2.
Corporations are citizens in our
society. 3.
Business often has the resources
necessary to solve problems. 4.
Business is a partner in our
society, along with the govern-
ment and the general population.
Social
Responsibility
The purpose of business in U.S.
society is to generate profit
for owners.
Involvement in social programs
gives business too much power.
There is potential for conflicts
of interest.
Business lacks the expertise to
manage social programs.
Arguments For Social Responsibility
Arguments Against Social Responsibility
Figure 4.4

15. Approaches to Social Responsibility
Degree of Social Responsibility
Accommodative
stance
Obstructionist
Defensive
Proactive
Lowest
Highest
Figure 4.5

16. Approaches to Social Responsibility (cont’d)
Obstructionist Stance (Unconcerned)
Do as little as possible to solve social or environmental problems.
Defensive Stance (Damage Control)
Do only what is legally required and nothing more.
Accommodative Stance (Compliance)
Meet legal and ethical obligations and go beyond that in selected cases.
Proactive Stance (Ethical Culture)
Organization views itself as a citizen and proactively seeks opportunities to contribute to society.

17. How Business and the Government Influence Each Other
The government influences business
through direct and indirect regulation: •
Environmental protection legislation
Consumer protection legislation
Employee protection legislation
Securities legislation
The tax codes
Business influences the government through:
Personal contacts and networks
Lobbying
Political action committees (PACs)
Favors and other influence tactics
Figure 4.6

18. Managing Social Responsibility: Formal Dimensions
Legal Compliance
Extent to which the organization conforms to local, state, federal, and international laws.
Ethical Compliance
Extent to which members of the organization follow basic ethical/legal standards of behavior.
Philanthropic Giving
Awarding of funds or gifts to charities and other social programs.

19. Managing Social Responsibility: Informal Dimensions
Organizational Leadership and Culture
Leadership practices and the culture of the organization can help define the social responsibility stance an organization and its members will adopt.
Whistle Blowing
The organizational response to the disclosure by an employee of illegal or unethical conduct on the part of others within the organization is indicative of the organization’s stance on social responsibility.

20. Leadership Leaders What leaders actually do
People who can influence the behaviors of others without having to rely on force
People who are accepted as leaders by others
What leaders actually do
Using non-coercive influence to shape the group’s or organization’s goals
Motivating others’ behavior toward goals
Helping to define organizational culture

21. Leadership

22. Leadership Power and Leadership
Legitimate power is granted through the organizational hierarchy
Reward power is the power to give or withhold rewards
Coercive power is the capability to force compliance by means of psychological, emotional, or physical threat
Referent power is the personal power that accrues to someone based on identification, imitation, loyalty, or charisma
Expert power is derived from the possession of information or expertise

23. Leadership Using Power Legitimate request Instrumental compliance
Compliance by a subordinate with a manager’s request because the organization has given the manager the right to make the request
Instrumental compliance
A subordinate complies with a manager’s request to get the rewards that the manager controls
Coercion
Threatening to fire, punish, or reprimand subordinates if they do not do something
Rational persuasion
Convincing subordinates that compliance is in their own best interest

24. Leadership Using Power (cont’d) Personal identification
Using the referent power of a superior’s desired behaviors to shape the behavior of a subordinate
Inspirational appeal
Influencing a subordinate’s behavior through an appeal to a set of higher ideals or values (e.g., loyalty)
Information distortion
Withholding or distorting information (which may create an unethical situation) to influence subordinates’ behavior

25. Exerting Strategic Leadership
Stay on top of how well things are going
Stay current with internal and external information, reports, etc.
Communicate regularly with colleagues, subordinates and customers
Keep abreast of rivals’ initiatives
MBWA

26. Exerting Strategic Leadership
Establish a strategy-supportive culture
Stakeholders are king
Challenge the status quo
Management must listen to customers
Sell the strategic initiatives to groups and individuals throughout the organization
Recognize and reward those who lead the change

27. Exerting Strategic Leadership
Keep the organization responsive and innovative
Empower “champions”
Encourage creativity and innovation
Allow champions to fail
Offer organizational support
Make rewards large and visible
Lead the process to develop new capabilities

28. Exerting Strategic Leadership
Exercise ethics leadership
Lead by example
Have written policies and guidelines
Enforce compliance
Encourage whistleblowers
Promote good corporate citizenship
Make corrective adjustments as needed