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DQ 1. Can a leader change an organization's culture from toxic to ethical? Why or why not?

DQ 2. Does having a code of ethics guarantee ethical behavior within an organization? Why or why not? What happens to the organization when its ethics code fails to achieve ethical behavior within the organization?

Creating an Ethical Organizational Culture

Introduction

What is an organizational culture? Those who have had more than one job know that there are as many company cultures as there are companies. This seems obvious enough because companies are not unlike the people that populate them. Each has grown up being influenced by a variety of values, opinions, ceremonies, behaviors, and ideas that have shaped their personalities.

The company personality continues to evolve, whether or not specific persons are there. There are formal environments, and there are informal articulations of this culture. Formal articulations include memos, written codes of conduct, handbooks, manuals, forms, and ceremonies as well as statements of values, beliefs, and customs that come from upper management. The informal articulations consist of comments that communicate the wishes of management, informal dress codes, working late, participation in extracurricular activities, and even gestures, looks, labels, promotions, and legends (or the lack of these).

The Role of Leadership

An organization's leaders do not just influence the ethics of the company; they are the key to influencing the organization's culture. The board of directors is included in this. In these days of governmental oversight, boards are recognizing this often-ignored principle of ethics. If they are not recognizing it for the sake of doing the right thing, they are doing it for the sake of their jobs.
Studying styles of leadership is a fascinating pastime. Publications such as Forbes and The Wall Street Journal often highlight a company's CEO or chairperson in a sort of business version of People magazine. The strong personality types are the easiest to write about because their styles are dramatic and their personalities dominant. However, more often a company's culture is affected by leadership that guides small steps that are taken slowly.

One thing is clear: leaders must tell employees what is expected. Thus, communication is critical. As obvious as that seems, the lack of communication by leaders most often negates a push for ethical behavior in the company. Determining effective ways of informing employees what is expected enhances their motivation. With ineffective communication, employees may choose to ignore out of spite. Effective communication with employees also signals a level of respect. It is the duty of upper management to see that this respect is transmitted all the way down the management chain and to insure that the message from the top reaches the bottom intact and with the same respect with which it began.

Interpersonal Relationships

The chief executive officer and other top managers at the executive level set the ethical tone for the entire organization. Lower-level managers take their cues from the top, yet their personal value systems also have an influence on the organization. This interplay between corporate culture and executive leadership helps determine the ethical value system of the firm.

It is unrealistic to think that a homogeneous, unified ethical culture can emerge from a workplace with as many moral philosophies as there are employees. Worker stress arising from disagreement over the ethics of a particular decision is common in groups and will often lead to dysfunction that stymies the entire decision-making process. Groups that function unmonitored by management may appear useless because the members are not smart enough or motivated enough to reach a solid decision for the company. The real reason may be internal conflict that can no longer be resolved internally.

Groups and Norms

Groups and the norms that arise from them are powerful motivators. Norms have the power to enforce a strong degree of conformity among group members. They also define different roles for various positions within the organization.

Because many decisions, or at least recommendations, are made by groups rather than by individuals within the organization, the effect of groups on the company culture cannot be underestimated. The impact of informal groups can also be significant in both positive and negative ways. Thus, management must constantly tend to employee morale and motivation since it is within groups where negativity often finds its seed.

The Role of Conflict

Conflicts of interest are of particular interest these days. Conflictoccurs when it is not clear whether the goals or values of the individual, the organization, or the society take precedence. This is a disconnect for many companies. It is, of course, impossible for an ethics policy to address every situation and grey situations occur in every department of every corporation every day. Add to this that there are as many moral philosophies as there are employees, and you have a recipe for ethical disaster. It does not have to be this way. By recognizing that there are variations in employee ethical conduct in every organization, a company can develop policies to prevent improper behavior and encourage employees to support an ethical work environment. By communicating clearly to employees that conflicts are serious organizational crossroads and that the employees are free to seek advice (no questions asked) if they have any question about which road to take encourages workers to consider consequences rather than plowing ahead, uninformed, and hoping for the best.

Can the Process Be Improved?

If managers and coworkers can provide direction and encourage ethical decision making, they become a force to help coworkers make better ethical decisions. Organizations with a culture that results in managers and employees acting contrary to their individual ethics need to understand the costs of unethical behavior. Some employees succumb to organizational pressures rather than follow their own values, rationalizing their decisions by maintaining that they are simply agents of the corporation. Understanding the influence of interpersonal relationships within the organization provides insights into the ethical decision-making process. Although employees may abide by their own personal value systems in extreme situations, in most day-to-day matters they tend to go along with the group on decisions that appear to be defined and controlled by the work group.

Conclusion

Organizational structure and culture operate through significant others in the ethical decision-making process. It is also vital that leaders examine interpersonal relationships in organizations and clearly note how employee conduct and role relationships affect organizational decision-making and culture.

Electronic Resource1. Enron's "Code of Ethics"
Enron's "code of ethics." (2000). The Smoking Gun.
http://www.thesmokinggun.com/file/enrons-code-ethics?page=0

e-Library Resource1. Organizational Philosophy, Policies, and Objectives Related To Unethical Decision Behavior: A Laboratory Experiment
Hegarty, W. H., & Sims, H. P. (1979, June). Organizational philosophy, policies, and objectives related to unethical decision behavior: A laboratory experiment. Journal of Applied Psychology, 64(3), 331-338.

https://lopes.idm.oclc.org/login?url=http://search.ebscohost.com/login.aspx?direct=true&db=pdh&AN=apl-64-3-331&loginpage=Login.asp&site=ehost-live&scope=site

2. When Followers Become Toxic

Offermann, L. (2004). When followers become toxic. Harvard Business Review, 82(1), 54-60.
https://lopes.idm.oclc.org/login?url=http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=11800957&loginpage=Login.asp&site=ehost-live&scope=site