CULTURE, CLIMATE AND ETHICAL DECISIONS 2
Organisational Culture
Organisational culture is defined as a broad category of shared values and beliefs that impact the attitude and reactions of employees (Ostroff, Kinicki & Muhammad, 2013). The components of organisational culture include vision and values, practices and people, narrative and environment/ place.
Vision and values: They compose the backbone of the company because they determine an organisation’s survival rate in the market. Values indicate employee behaviours and goals needed to attain an organisation’s vision. Both values and vision regulate how employees are supposed to behave, communicate and lead.
Practices and people: People are the cultural determinants, which indicate how stakeholders perceive an organisation’s culture from their observations and interactions with employees (Trevinõ, 2008). Skills training can be utilised to improve employees’ behaviours to support a company’s culture.
Narrative: Narrative activities that enhance organisational culture include: company functions that remind staff members of critical company challenges and achievements and routines and rituals for example annual conferences that appreciate newly appraised employees.
Environment/place: The context in which staff members collaborate and implement decisions is a crucial component of organisational culture. Location can also assist to shape corporate culture.
Organisational culture is a vital key to the company’s success. Effects of weak organisational culture include poor workplace behaviours, low employee motivation and employee fraud/misconduct (Vardi, 2001). A corporate culture enhances employee trust and motivation thus improving the quality of work.
Companies are required to emphasize organisational culture in their work to attain success and company growth. In huge companies, low-level employees often feel less important to the executive and management team hence; they do not display a strong sense of motivation or commitment. Companies with weak ethical cultures indicate ten times the rate of misconduct than companies with proper ethical cultures. Employee misconduct resulted in company substantial losses and decreased productivity (Vardi, 2001). Open communication between managers or the executive team and employees enhances trust thus creating employee satisfaction and integrity which increases their commitment to the company.
Since the company under case study is a large enterprise similar to H&M, most employees who serve clients or work at the front end especially those in the lowest levels may feel irrelevant or unimportant because of the rare interaction opportunities between them and the leading executives or CEOs. Lack of employee motivation may lead to fraud such as internal theft. Managers should emphasise meeting employee needs and creating a positive environment where employees can feel appreciated thus improving work ethics.
The advantages of organisational culture include employee unity/collaboration, enhanced productivity, and improved marketability. The disadvantages of corporate culture are unhealthy competition, poor office engagement, tolerance for bad habits, poor communication, unhealthy competition, overly emphasis on profits, and lack of empathy, harmful gossip, micromanagement and poor management/leadership (Olson, 2013).
Disadvantages
Poor internal communication is toxic to organisational culture. The management should focus on maintaining a smooth flow of communication throughout the organisation to enhance respect and support among staff members. Micromanagement creates a lot of anxiety and pressure among employees which impacts their rate of productivity and quality of their work. The most favourable environment is one whereby all employees are conversant with their roles such that they can work without supervision.
Moderate competition among employees improves the quality of their output, however, unfriendly competition creates employee hostility which negatively influences work productivity. Bad habits can begin with the top level management, and if the senior executives display bad work habits such as getting to work late, employees will naturally emulate the same behaviour because their managers are tolerant (Weber, 2008). Companies that emphasize too much on profit rarely engage their employees, which lead to lack of employee motivation and satisfaction.
Gossip at the workplace encourages bullying and unnecessary work termination, which affects employee self-esteem and increases the risk of depression. Poor office engagement is one key reason why employees resign from their jobs, and it is one of the main drawbacks of a poor organisational culture (Vardi, 2001). The remedy is to restructure the company’s culture, for example, acknowledge employee birthdays. No empathy at the workplace makes employees feel undervalued. Employees should be shown that they are valued by highlighting their strengths and weaknesses.
It is the role of the management team to set a proper trend for the entire organisation. Poor leadership negatively affects organisational culture. Managers should establish the right paradigm for their employees.
Advantages
An effective workplace culture promotes employee productivity and commitment. Employees who are familiar with the organisational culture have a better understanding of their goals and can meet the needs of clients, colleagues, and managers. When companies share their workplace culture with potential employees, they increase their marketability because job seekers search for companies that can accommodate their lifestyles for example flexible working hours. Organisations with properly defined company cultures are known as favourable workplaces. When employees adapt their company’s culture, they share the norms of the organisation which enhances their bond. Hence, they become more concerned with the organisation’s success and not only achieving individual goals.
Some of the methods one can use to determine an organisation’s culture include observation tactic and comparison tactic.
One can observe the physical factors of organisational culture for example ways of communication between the management and employees and the methods implemented to ensure employees feel recognised such as celebrating birthdays and arranging weekly social gatherings (Ostroff et al., 2013).
One can also compare one’s organisational culture with that of another company to measure the effectiveness and identify drawbacks so that one can formulate a new restructuring strategy.
The two main types of organisational culture are results-oriented and people-oriented cultures.
The characteristics of outcome-oriented culture are:
Emphasis on results, actions, and success as important values, for example, sales performance.
Employees acquire training on how to successfully sell products.
Employees are assessed based on results and the achievement of daily objectives.
Both managers and employees are held responsible for success or failure, and systems promote employee rewards and group results.
Companies that have an outcome-oriented culture perform better than organisations that lack the culture.
People-oriented culture:
Emphasis is on supportiveness, respect for individual rights and fairness.
The atmosphere is whereby the work environment is fun and employees are not pressured to choose between work and their lifestyles.
Employees working in organisations with people-oriented cultures tend to stay longer than those in companies lacking this culture.
Organisational Culture of H&M Retail Company:
H&M categorises its values as the “H&M spirit.” It implements the people-oriented culture, whereby it believes in people, promotes team-work, constant improvement, open-mindedness, and an entrepreneurial spirit. The company creates a fun, innovative and dynamic work environment to foster employee commitment. The critical vision and values of H&M include the following: an inclusive workplace, teamwork, individual growth, work safety and health, open-door-policy, employee relations, sustainability, ethical practices, privacy, and confidentiality.
H&M recognises human rights and advocates for employee dignity, respect, humility, and integrity. It also promotes equality and diversity and follows all employment and labour laws. Teamwork is an integral part of H&M’s cultures. The management team serves as a role model for employees whereby leadership focuses on motivation, inspiration, feedback, and delegation. H&M values employee talent hence, great opportunities are offered through work rotation and internal recruitment. The company also takes measures to cater for the long-term healthcare and safety needs of employees and provides a safe workplace for them to thrive. Moreover, it promotes honest and open communications among all employees. The Open-Door-Policy enables all employees to openly disclose any issues at work with the management. All employee and client data are safeguarded and maintained confidentially thus respecting individual privacy.
Organisational Climate
Organisational climate is a set of concepts specific to a particular company that may be extracted from the way that organisation deals with its stakeholders and its environment (Ostroff eta l., 2013). Hence, organisational climate is a distinct quality of the internal environment that is experienced by individual company members, impacts their attitude and can be defined about the value of a specific set of characteristics of the company.
Organisational climate is an indicator of whether a company’s expectations, values, and beliefs are being fulfilled whereby organisational culture deals with the nature of expectations and assumptions about life in the workplace. The following aspects are utilised to determine the difference between regulatory climate and culture: concept, evolution, manipulation, focus, and perspective.
Organisation climate focuses on the current atmosphere of the company which offers opportunities for employees to perform their roles with respect to their skills and system for reward which motivates them. Organisational culture however focuses on the company’s atmosphere which takes several years to evolve. Hence, climate is short term whereas culture is long-term.
Organisation climate evolves in accordance with the requirements of the organisation to suit both the internal and external environment. Organisation culture helps a company earn its long-term reputation and goodwill.
Climate can change depending on how employees behave themselves however culture cannot be easily altered or manipulated. Hence, employees change their behaviour to suit culture whereby climate is changed by employee behaviour.
According to Trevinõ (2008, p. 777), organisation climate emphasises current work ethics of the company which are defined by the company’s norms and values. However, organisational culture defines these norms and values.
Climate defines daily work functions and how employees perceive their roles whereas culture determines the company’s positions as viewed by the management. The different types of organisational climate are socio-moral climate (SMC), safety climate, service climate, and ethical climate.
Socio-Moral Climate: It focuses on creating a work environment whereby employees desire to do the right thing (Olson, 2013). If the management suspects that there may be work conflict in the organisation, it may conduct a climate survey to identify the causes to implement the required changes.
Safety Climate: It refers to employee understanding of the company’s practices, procedures and policies about safety which are promoted, expected and rewarded from employees.
Service climate: Concerning employees, service climate indicates their perception of the company’s focus on quality service. For clients, service climate is the experience of quality service received from the company.
Ethical climate: It can be considered as group perceptions about what comprises morally correct behaviour and how ethical conflicts should be dispersed within the company.
The benefits of conducting climate surveys within an organisation are: to assess employee degree of motivation and satisfaction; giving employees an opportunity to share their opinions via an official tool and obtain internal company knowledge.
Organisations conduct climate surveys to acquire the level of employee motivation and satisfaction to enhance company systems for improved performance. Climate surveys also enable the collection of information which can be used to gain an innate understanding of the organisation that external stakeholders may be unable to contribute (Ostroff et al., 2013). Furthermore, climate surveys enable employees to express their issues through an official pathway. The management can, therefore, consider employee’s opinions and give them an assurance hence improving the work environment.
Business Ethics
Business ethics is a set of proper business practices and policies and the study of potentially controversial topics such as corporate social responsibility, bribery, corporate governance, discrimination, fiduciary duties and insider (internal) trading (Weber,2008). Business ethics serve to maintain trust between the business, its clients and other stakeholders.
The importance of ethical behaviour in business include the following:
Attract clients hence improving profits and turnover.
Increase employee motivation and satisfaction hence decreasing employee turnover and improving productivity.
Increase marketability by attracting more potential employees, hence reducing recruitment liabilities and assisting the company in acquiring the best talent.
Attract potential investors, therefore, maintaining a high share price of the company and shielding it from take-over.
Maintain the company’s high reputation in the market hence appealing to stakeholders and increasing profits.
A company that maintains ethical behaviour gives investors peace of mind that their capital is being invested in a manner that portrays their moral codes. Moreover, employees who work for an organisation with strong business ethics can be responsible because their actions are regulated and unethical practices cannot be tolerated (Trevinõ, 2008). Customers are also comfortable conducting business transactions with a company that sources its labour and products responsibly and ethically.
The categories of ethical theories are: deontology, virtue, relativism and teleology (consequentialist) theories.
Deontology: The theory states that an individual should restrict themselves to their roles or obligations when faced with decision making and ethics are required (Weber, 2008). An individual who follows the deontological theory will make consistent decisions that adhere to one’s set obligations.
Virtue: The theory evaluates an individual’s character rather than an action, which may deviate from his or her usual attitude. When an unethical behaviour occurs, virtue theory considers an individual’s motivation, morals, and reputation. However, it does not recognise an individual’s change in moral character.
Relativism: The theory indicates that no global ethical principle is wrong or right. Hence, no moral standard or value is better than others but rather the concepts of right or wrong evolve and vary in different cultures.
Teleology: The theory focuses on human actions and their consequences. Many firm situations apply the teleology or consequentialist theory. It is categorised into utilitarianism and egoism theories.
Egoism: It states that human nature is individual-centered hence people act to their self-interest. Egoism predicts that when people work in their interest, society will become more dependable. Thus it is ethically right to move for self-interest (Olson, 2013). Organisations use egoism to fulfil the needs of shareholders and maintain profitability.
Utilitarianism: It focuses on mutual benefits rather than individual welfare and working for the good of the community. Three critical elements of utilitarianism theory are: the consequences of an action determine whether it is right or wrong; the value of the outcome of a work is evaluated regarding wellness or happiness, and one individual’s happiness has no higher value than another’s and equal volumes of joy have the same amount.
The factors that affect ethical decisions in business are issue-related, organisational/ situational and personal difference factors.
Issue-dependent factors: The nature of issues determines their moral outcome. Issues with adverse consequences are more likely to attain the threshold intensity level. According to Weber (2008, p. 780), issues that are socially considered ethical or unethical are likely to arouse critical decision-making processes.
Situational factors: The ones that influence ethical decision-making are the organisational culture, business policies and processes, the workgroup, company codes of conduct, and the supervisor.
Individual difference factors: Every individual has their unique elements that may impact their response to ethical issues, their related behaviour, and perception about such matters. A critical individual difference factor is cognitive moral growth and the development stage where an individual lays that is, pre-conventional, convention and principled stages.
The factors to consider when establishing an ethical organisational culture include:
A written report of workplace ethics and conduct.
Standards training.
Organisational resources that offer direction on issues concerning ethics.
A confidential procedure for reporting potential ethical misconduct at the workplace.
Performance assessments of workplace ethics.
Disciplinary system for violators of office ethics.
H&M Company does not tolerate any discriminatory act or form of corruption as displayed in its Code of Ethics and anti-corruption programme. It strictly adheres to the “H&M way” with its business partners, clients, suppliers, and other stakeholders. Communication with stakeholders is characterised by sensitivity, objectivity, openness, and accessibility. H&M collaborates with its suppliers to maximise compliance with its Code of Ethics, and Code of Conduct.
Annotated Bibliography
Olson, S.D. (2013). Shaping an ethical workplace culture. SHRM Foundation: Alexandria, Va.
Organisational culture is described as a critical determinant of individual behaviour either ethically or not at the workplace. The paper evaluates the impact of corporate culture on ethics in the workplace. It estimates the unified culture cohesion model that is based on crucial model values as a solution to promoting ethical behaviour. The paper, however, questions the desirability and feasibility of this model about reliable results.
Ostroff, C., Kinicki, A. J., & Muhammad, R. S. (2013). Organizational culture and climate
(Chapter 24). In Erhart, M.G., Schneider, B., & Macey, W. H. (2013) Organizational climate and culture: An introduction to theory, research, and practice . Routledge. Retrieved from: https://goallab.psych.umn.edu/orgPsych/readings/15.%20Climate%20&%20Culture/Ostroff,%20Kinicki,%20&%20Muhammad%20%282012%29.pdf.
The hypotheses of organisational culture and climate have been used collaboratively for many decades with little distinguishing factors between the two. The authors integrate between organisational climate and culture to offer a broader understanding of how a company’s environment influences its performance and operations. They also provide recommendations on how leaders or managers can use the two concepts when performing organisation culture evaluations and implementing change strategies.
Treviño, L. (2008). Ethical culture and climate. In R. W. Kolb (Ed.), Encyclopedia of
business ethics and society (Vol. 5, pp. 777-778). Thousand Oaks, CA: SAGE Publications Ltd. doi:10.4135/9781412956260.n298
This paper identifies the characteristics of organisational culture and climate, discusses the factors that are crucial for developing such as culture and climate, describes the techniques of implementing ethical culture programs and outlines the role of business leaders in enacting an ethical organisational culture and climate. Hence, to assist a company develop an ethical culture; the management needs to implement several vital activities that are interrelated which are: updating the code of ethics, culture change strategies, formulation of an active program of ethics training for all employees of the organisation and motivation of ethical behaviours.
Vardi, Y. (2001). The effects of organizational and ethical climates on misconduct at work.
Journal of Business Ethics, 29 (4), 325–337. doi:10.1023/A:1010710022834
Questionnaire information was acquired from 97 employees in the management and non-management positions of a metal industrial organisation in Israel. The data was used to evaluate the interrelation between individual and organisational values and work-related misconduct. Organisational Misbehaviour (OMB) was described as pre-meditated actions that violate essential organisational morals. The study identified a critical negative correlation between OMB and corporate climate. Additionally, the acts of misconduct reported by both employees and managers were negatively linked to the regulations and caring-dimensions of an ethical environment.
Weber, J. (2008). Ethical decision making. In R. W. Kolb (Ed.), Encyclopedia of business
ethics and society (Vol. 5, pp. 779-781). Thousand Oaks, CA: SAGE Publications Ltd. doi:10.4135/9781412956260.n299
Inductive research of ethical decision making was implemented to create an understanding of how people make moral decisions at the workplace. The outcome of the study indicated that ethical decision making is more or less related to other decision making processes in an organisation.
References
Olson, S.D. (2013). Shaping an ethical workplace culture. SHRM Foundation:
Alexandria, Va.
Ostroff, C., Kinicki, A. J., & Muhammad, R. S. (2013). Organizational culture and climate
(Chapter 24). In Erhart, M.G., Schneider, B., & Macey, W. H. (2013) Organizational climate and culture: An introduction to theory, research, and practice. Routledge. Retrieved from: https://goallab.psych.umn.edu/orgPsych/readings/15.%20Climate%20&%20Culture/Ostroff,%20Kinicki,%20&%20Muhammad%20%282012%29.pdf.
Treviño, L. (2008). Ethical culture and climate. In R. W. Kolb (Ed.), Encyclopedia of
business ethics and society (Vol. 5, pp. 777-778). Thousand Oaks, CA: SAGE Publications Ltd. doi:10.4135/9781412956260.n298
Vardi, Y. (2001). The effects of organizational and ethical climates on misconduct at work.
Journal of Business Ethics, 29 (4), 325–337. doi:10.1023/A:1010710022834
Weber, J. (2008). Ethical decision making. In R. W. Kolb (Ed.), Encyclopedia of business
ethics and society (Vol. 5, pp. 779-781). Thousand Oaks, CA: SAGE Publications Ltd. doi:10.4135/9781412956260.n299
Memo
To: COO- Kate Lindsay
From: Independent Consultant
CC: File
Date: 30/01/2019
Re: Report on Culture, Climate, and Ethical Decisions
The issue at hand is employees at the organisation are presumably accused of theft against the company. There is a trend whereby a specific group of employees is regularly committing fraud on their expenditure reports to get extra reimbursement for their expenses such as four-star restaurant bookings and Caribbean vacations.
In my opinion, such employee misconduct occurs due to lack of ethics and a well-defined organisational culture and climate. The company’s management should consider restructuring its culture to enforce its vision and values. In the report, values are defined as factors that predetermine employee behaviour and goals, hence properly implemented values and perceptions ensure proper employee behaviour and communication. Another critical issue is communication between the executive team and employees. Findings indicate that in large enterprises where low-level employees rarely interact with the management team, the former do not display a strong sense of commitment or motivation, which leads to employee misconduct/fraud causing the company to incur substantial losses. The solution, in this case, is to encourage open communication between the management team and employees to ensure trust, therefore creating employee satisfaction and integrity which improves their commitment to the organisation.
The company can emulate the H&M Group whose central vision is to make a difference in the fashion industry by promoting fairness and equality. Among the values that it upholds include accountability, teamwork, empowerment, transparency, and integrity.
The advantages of enforcing a proper organisational culture are improved marketability, employee collaboration and increased productivity. The drawbacks however of a weak corporate culture are lack of empathy, unhealthy competition, management tolerance for bad habits, overly focus on profits, harmful gossip, poor office engagement, poor communication, and poor leadership. If the top executives display lousy working habits, the employees may copy such behaviour because of the bad example set by their leaders. Thorough investigation should be carried out to check executives’ workplace behaviour because poor leadership leads to tolerance for bad habits at the workplace. It is the responsibility of managers to set the right example for their employees. Furthermore, they should make their employees feel more valued by incorporating a new culture such as weekly social gatherings and regular performance evaluations.
The method used to evaluate this company’s culture is in comparison with the H&M Group. H&M implements the people-oriented culture which emphasizes respect, fairness and individual support. Employees can work in a fun environment without the pressure of choosing between their lifestyles and work. The management team also serves as a role model for employees; hence leadership is solely based on delegation, motivation, feedback and inspiration. This organisation should therefore implement the people-oriented culture for increased employee motivation and satisfaction.
The climate of this enterprise can be easily changed, unlike organisational culture that may take several months or years to restructure. Climate is easily influenced by employee behaviour because it is short-term. The areas of emphasis that the company needs to work on are socio-moral climate (SMC) and ethical climate because the former ensures that employees always desire to do the right thing and the latter enforces morally correct behaviour and offers guidance to how ethical issues should be dealt with at the company. Moreover, it is crucial to conduct regular climate surveys within the company to provide employees with a chance to express their views via an official procedure and to evaluate the employee level of motivation.
Business ethics ensure there is trust between the company’s executives, and its employees, customers, suppliers and other stakeholders. Among the benefits of ethical behaviour to an organisation are improved employee motivation hence reducing employee turnover and increasing productivity; increased marketability by attracting more talented employees and reducing recruitment liabilities and maintaining a high reputation of the company in the market.
The main ethical theories that this firm should uphold for more productive results are virtue and teleology theories. The virtue theory states that an individual’s ethical or unethical behaviour is governed by morals, reputation and motivation hence, unethical behaviour occurs due to employee lack of motivation and morals. The teleology theory emphasises on individual actions and their consequences. The utilitarianism consequentialist theory should be applied in this case whereby one acts for the benefit of others rather than for individual gain.
The initiatives that this firm can take to implement an ethical organisational culture include:
Make a written report of workplace ethics and conduct
Implement standards training
Invest in resources that address issues concerning ethics
Implement a confidential process for reporting ethical misconduct at the workplace
Conduct performance evaluations of workplace ethics
Enact a disciplinary system for violators of organisational ethics
The principle of these guidelines is to ensure that the company is productive in its effort to address employee fraud hence improving its reputation and marketability.
If you have any concerns, please feel free to ask me.