Chapter 17

Organizational Culture and

Ethical Behavior

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 What is Organizational Culture?

 Shared values, beliefs, norms

– influence the way employees think, feel,
and behave towards each other and
towards people outside the organization

 Pattern of shared basic assumptions

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 Building Blocks of
Organizational Culture
 Characteristics of people within the
organization
 Organizational ethics
 Employment relationship
 Organizational structure

 National culture

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 What are Organizational Values?

 Guiding principles
– behaviors, events, situations, and
outcomes are desirable or undesirable
 Types
– Terminal
– Instrumental

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 Terminal and Instrumental Values

Terminal Instrumental
 Quality  Working hard
 Responsibility  Respecting traditions
 Innovativeness  Respecting authority
 Excellence  Being conservative
 Economy  Being frugal
 Morality
 Being creative
 Profitability
 Being honest

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 Figure 17.1 Terminal and
Instrumental Values

Organizational Values

Terminal Instrumental
Values Values

Specific norms,
rules, and SOPs

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 Figure 17.2 Ways of Transmitting
Organizational Culture
Formal socialization
practices

Ceremonial
Employees The
Rites
learn organizational
and
through: language
Ceremonies

Signs, symbols, stories

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 Ceremonial Rites

 Rites of passage

 Rites of integration

 Rites of enhancement

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 Figure 17.3 Where an Organization’s
Culture Comes From
Characteristics of People
Within Organization

Nature of
Organizational Organizational
Employment
Ethics Culture
Relationship

Design of
Organizational Structure

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 Figure 17.4 Sources of
Organizational Ethics

Organizational Ethics

Societal Professional Individual

Ethics Ethics Ethics

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 Adaptive versus Inert Cultures

Adaptive Cultures Inert Cultures

 Values and norms  Values and norms fail
help organization to motivate or inspire
build momentum, employees
grow, and change to  Stagnation
achieve goals  Minimal investment
 Investment in in employees
employees  Little incentive for
 Merit rewards improvement

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 Hofstede’s Model of
National Culture
 Dimensions
– Individualism vs Collectivism

– Power Distance
– Achievement vs Nurturing Orientation
– Uncertainty Avoidance
– Long-term vs Short-term Orientation

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 Individualism vs Collectivism

Individualism Collectivism
 Individual  Group harmony
achievement  Cohesiveness
 Freedom  Consensus
 Competition  Cooperation
 Example  Example
– United States – Japan

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 Power Distance

High Low
 Inequalities exist  Social welfare
 Gap between rich programs reduce
and poor gaps
 Example  Example
– Guatemala – France
– Malaysia – Germany

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 Achievement vs Nurturing
Orientation
Achievement Nurturing
 Assertiveness  Quality of life
 Performance  warm personal
 Success relationships
 Competition  Service
 Results-oriented  Caring
 Example  Example
– Japan – Denmark
– United States – Sweden

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 Uncertainty Avoidance

Low High
 Easygoing  Rigid
 Value diversity  Intolerant
 Tolerant of  Conformity
differences  Structure
 Example  Example
– United States – Japan
– Hong Kong – France

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 Long-Term vs Short-Term
Orientation
Long-term Short-term
 Thrift  Personal stability
 Persistence  Happiness
 High savings rate  Living in the present
 Patience  Example
 Example – United States
– Japan – France
– Hong Kong

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 Table 17.1 Culture Dimensions

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 Creating an Ethical Culture

 Establish rules and norms that outline

organization’s ethical position

 Demonstrate commitment to following

rules

 Reduce incentives for unethical behavior

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 Creating an Ethical Culture

 Develop fair and equitable HR

procedures

 Provide access to upper-level managers

 Encourage employees to voice concerns

 Create a strong board of directors

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 Why Does Unethical Behavior Occur?

 Lapses in Individual Ethics

 Ruthless Pursuit of Self-Interest

 Outside Pressure

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 Opening Case: How 3M Built a
Culture for Innovation
 How does 3M’s culture affect creativity?
 Cultural values and norms
 Empowerment
 Recognition
 15% of time for personal projects

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