BUS208 Study Guide

Unit 3: Organizational Culture, Diversity, and Ethics

3a. Demonstrate an understanding of the role that cultural factors play in the workplace

Organizations, just like individuals, have their own personalities – more typically known as organizational cultures. Understanding how culture is created, communicated, and changed will help you be a more effective manager. But first, let's define organizational culture.

 

Organizational Culture

Organizational culture is a system of shared assumptions, values, and beliefs that helps individuals understand which behaviors are and are not appropriate within an organization. Cultures can be a source of competitive advantage for organizations. Strong organizational cultures can be an organizing and controlling mechanism for organizations. Organizational culture consists of three levels: assumptions that are below the surface, values, and artifacts.

 

Levels of Organizational Culture

Organizational culture consists of some aspects that are relatively more visible and aspects that may lie below one's conscious awareness. Organizational culture can be thought of as consisting of three interrelated levels.

  1. Assumptions - are taken for granted and reflect beliefs about human nature and reality.
  2. Values - are shared principles, standards, and goals.
  3. Artifacts - are visible, tangible aspects of organizational culture that are on the surface.

 

Dimensions of Culture

Which values characterize an organization's culture? Even though culture may not be immediately observable, identifying a set of values that might be used to describe an organization's culture helps us identify, measure, and manage culture more effectively. For this purpose, several researchers have proposed various culture typologies. One typology that has received a lot of research attention is the Organizational Culture Profile (OCP), where culture is represented by seven distinct values.

 

Dimensions of Organizational Culture Profile (OCP)

 

Source: Adapted from O'Reilly, C. A., III, Chatman, J. A., & Caldwell, D. F. (1991). People and organizational culture: A profile comparison approach to assessing person-organization fit. Academy of Management Journal, 34, 487–516.

  1. Innovative cultures are flexible, adaptable, and experiment with new ideas.
  2. Aggressive cultures value competitiveness and outperforming competitors; by emphasizing this, they often fall short in corporate social responsibility.
  3. Outcome-oriented cultures as those that emphasize achievement, results, and action as important values.
  4. Stable cultures are predictable, rule-oriented, and bureaucratic. When the environment is stable and certain, these cultures may help the organization to be effective by providing stable and constant levels of output.
  5. People-oriented cultures value fairness, supportiveness, and respecting individual rights. In these organizations, there is a greater emphasis on and expectation of treating people with respect and dignity.
  6. Team-oriented cultures are collaborative and emphasize cooperation among employees.
  7. Detail-oriented cultures are characterized in the OCP framework as emphasizing precision and paying attention to details. Such a culture gives a competitive advantage to companies in the hospitality industry by helping them differentiate themselves from others.

 

How do Organizational Cultures Change?

Achieving culture change is challenging, and many companies ultimately fail in this mission. Research and case studies of companies that successfully changed their culture indicate that the following six steps increase the chances of success.

 

Process of Culture Change

  1. Creating a Sense of Urgency - In successful culture change efforts, leaders communicate with employees and present a case for culture change as the essential element that will lead the company to eventual success.
  2. Changing Leaders and Other Key Players - to implement the change effort quickly and efficiently, a company may find it helpful to remove managers and other powerful employees acting as a barrier to change.
  3. Role Modeling - Role modeling is how employees modify their own beliefs and behaviors to reflect those of the leader.
  4. Training - Well-crafted training programs may help bring about culture change by teaching employees the new norms and behavioral styles.
  5. Changing the Reward System - by rewarding and promoting employees who embrace the company's new values and promoting these employees, organizations can make sure that changes in culture have a lasting effect.
  6. Creating New Symbols and Stories - the success of the culture change effort may be increased by developing new rituals, symbols, and stories.

 

3b. Examine the changing nature of a diverse workforce and how it can enhance the work environment

Organizations managing diversity effectively benefit from diversity because they achieve higher creativity, better customer service, higher job satisfaction,  higher stock prices, and lower litigation expenses.

At the same time, managing a diverse workforce is challenging for several key reasons. Employees are more likely to associate with those who are similar to them early in a relationship. The distribution of demographic traits could create fault lines within a group.  Stereotypes may act as barriers to advancement and fair treatment of employees. Demographic traits, such as gender, race, age, religion, disabilities, and sexual orientation face unique challenges.  Organizations can manage demographic diversity more effectively by building a culture of respect, making managers accountable for diversity, creating diversity-training programs, reviewing recruitment practices, and under some conditions, utilizing affirmative action programs.

 

Cultural Diversity in the Workforce

With the increasing prevalence of international business and the diversification of the domestic workforce in many countries, understanding how culture affects organizational behavior is becoming important. Individualism-collectivism, power distance, uncertainty avoidance, and masculinity-femininity are four key dimensions that cultures vary in.

 

Geert Hofstede's Tool for Understanding Different Cultures

 

Hofstede's culture framework is a useful tool to understand systematic differences across cultures.

Source: Adapted from Geert Hofstede's cultural dimensions. Retrieved November 12, 2008, from http://www.geert-hofstede.com/hofstede_dimensions.php.


3c. Describe and apply the essential concepts of ethical practices in business

While most organizations believe that their specific ethical dilemmas are unique, most dilemmas they face are similar to other organizations. Businesspeople face two types of ethical challenges: ethical dilemmas and ethical decisions.

An ethical dilemma is a morally problematic situation in which you must choose between two or more alternatives that aren't equally acceptable to different groups. Such a dilemma is often characterized as a "right-versus-right" decision and is usually solved in a series of five steps:

  1. Define the problem and collect the relevant facts.
  2. Identify feasible options.
  3. Assess the effect of each option on stakeholders (owners, employees, customers, communities).
  4. Establish criteria for determining the most appropriate option.
  5. Select the best option based on the established criteria.

An ethical decision entails a "right-versus-wrong" decision – one in which there's a right (ethical) choice and a wrong (unethical or downright illegal) choice. When you make a decision that's unmistakably unethical or illegal, you've committed an ethical lapse. If you're presented with what appears to be an ethical decision, asking yourself the following questions will improve your odds of making an ethical choice:

    1. Is the action illegal?
    2. Is it unfair to some parties?
    3. If I take it, will I feel bad about it?
    4. Will I be ashamed to tell my family, friends, coworkers, or boss about my action?
    5. Would I want my decision written up in the local newspaper?

According to J.O. Cherrington and D. J. Cherrington's (1992), a typology of 12 ethical lapses was created that are common in modern business:

  1. Stealing:
    • 30% of employees believe there is nothing unethical about taking office supplies for personal use
    • 66% of employees see no ethical problems with taking a sick day when they are not actually ill
    • 72% of individuals see no ethical problems with using company technology for personal use in the workplace
    • 4% of employees admit to misusing company finances
    • 15% of employees use social networking websites for personal reasons during work hours.
  2. Lying:
    • 13% of employees have admittedly lied about the number of hours they have worked on a timecard.
  3. False Impressions
    • 6% of employees have admittedly taken credit for someone else's work.
  4. Conflicts of Interest
    • 43% of full-time workers and 47% of part-time workers report that they make unethical workplace decisions because of financial rewards (e.g., bonus or salary increase).
  5. Hiding/Divulging Information
    • 84% of respondents believe that the openness of leadership with information contributes to an ethical workplace culture.
    • 15% of employees would have no problem posting company information online if they disagreed with their employer.
  6. Cheating
    • 65% of individuals note that leaders tend to set different rules for themselves when it comes to flex-time options.
    • 20% of employees have admittedly treated subordinates differently due to their personal relationships and not the subordinate's performance
  7. Personal Decadence
    • Only 33% of employees have never seen their supervisors performing unethical behaviors.
    • 24% of employees believe there is nothing unethical about coming into work hungover
  8. Interpersonal Abuse
    • 25% of employees believe it is ethical to tell a racist/sexist/heterosexist/ageist joke in the workplace.
    • 9% of employees have harassed a fellow employee at work
    • While 92% of individuals believe that having work-life balance leads to ethical behavior
    • 30% of employees believe that their job does not offer them enough time to achieve work-life balance
    • 28% of individuals believe their organization causes high levels of stress.
    • 13% of individuals report rigid, inflexible schedules.
  9. Rule Violations
    • 9% of individuals believe that their personal values conflict with their organization's values.
    • 67% of employees do not see an ethical problem with dating a subordinate in the workplace.
  10. Accessory to Unethical Acts
    • Employees regularly see a variety of ethical violations in the workplace: personal advantage (57%)
    • misuse of company property (51%)
    • taking credit for someone else's work (49%)
    • lying about worked hours (39%)
    • interpersonal abuse (32%)
    • misuse of company finances (18%).
    • 17% of employees would do nothing about the violation
    • 42% would inform an immediate supervisor
    • 17% would call a company ethics hotline
    • 4% would go so far as to contact someone outside of the organization.
  11. Moral Balance
    • This category is more difficult to quantify because the balancing of decisions is very much entrenched in many of the other categories.
    • According to the 2007 Deloitte & Touche USA LLP Ethics & Workplace Survey, workers engage in ethical behavior for five basic reasons:
      1. behavior of management (42%)
      2. behavior of direct supervisor (35%)
      3. positive reinforcement of ethical behavior (30%)
      4. compensation (29%)
      5. behavior of peers (23%)
    • The study also noted five basic reasons why employees engage in unethical behavior:
      1. lack of personal integrity (80%)
      2. job dissatisfaction (60%)
      3. financial rewards (44%)
      4. pressure to meet goals (41%)
      5. ignorance of ethical codes of conduct (39%)

 

Leadership and Ethics

Values-based leaders align their personal values with those of their organization. While it's acceptable to adjust a basic strategy or tactics to achieve a business goal, leaders should never compromise their fundamental principles or core values. Values-based leaders are selfless and driven by others' needs; they are not motivated by power, money, status, or fame. There are four key qualities of a values-based leader: self-reflection, balance, self-confidence, and humility.

 

Ethical Guidelines for Business Success

Ethics is all about doing the right thing. Corporations should create a code of conduct (or code of ethics) that describes acceptable and unacceptable behavior for the organization. Organizations must take steps to enforce their codes of conduct and follow through with consequences for non-compliance. Organizations that behave in an ethically positive way will enjoy a positive reputation among the public. Benefits of good corporate ethical behavior include increased customer loyalty, employee retention, fewer legal issues, and a good public image.

When you enter the business world, you'll find yourself in situations where you'll have to choose the appropriate behavior. You'll need to know how to distinguish a bribe from an acceptable gift. You'll encounter situations that give rise to a conflict of interest – situations in which you'll have to choose between taking action that promotes your personal interest and action that favors the interest of others. Sometimes you'll be required to choose between loyalty to your employer and loyalty to a friend or family member. In business, as in all aspects of your life, you should act with honesty and integrity. At some point in your career, you might become aware of wrongdoing on the part of others. You will have to decide whether to report the incident and become a whistle-blower – an individual who exposes illegal or unethical behavior in an organization.

Despite all the good arguments in favor of doing the right thing, some business people still act unethically (at least at times). Sometimes they use one of the following rationalizations to justify their conduct:

  1. The behavior isn't really illegal or immoral.
  2. The action is in everyone's best interests.
  3. No one will find out what I've done.
  4. The company will condone my action and protect me.

 

How to Maintain Honesty and Integrity