Corporate Culture

CORPORATE CULTURE, PRACTITIONER, PROFESSOR, RESEARCH
SUMMARIES, RESEARCHER/BY ETHICAL SYSTEMS

The ethical culture in an organization can be thought of as a slice of the overall organizational culture.
So, if the organizational culture represents “how we do things around here,” the ethical culture represents “how
we do things around here in relation to ethics and ethical behavior in the organization.” The ethical culture
represents the organization’s “ethics personality” (Trevino & Nelson, 2011).

From an ethical systems perspective, creating and sustaining a strong ethical culture is fundamental to
creating an organization that supports people making good ethical decisions and behaving ethically every day.
There are several forces and factors that lead people to take ethical shortcuts. But when all relevant
organizational systems are pushing people in the same ethical direction, ethical failure is much less likely.

According to Treviño and Nelson, ethical culture should be thought of in terms of a multi-system
framework that includes formal and informal systems that must be aligned to support ethical judgment and
action. Leadership is essential to driving the ethical culture from a formal and informal perspective. Formally,
leaders provide the resources to implement structures and programs that support ethics. More informally,
through their own behavior, leaders are role models whose actions speak louder than their words, conveying
what is appropriate and acceptable behavior. Other formal systems include selection systems, policies and
codes, orientation and training programs, performance management systems, authority structures, and formal
decision processes. On the informal side are the organization’s role models and heroes, the norms of daily
behavior, organizational rituals that support or do not support ethical conduct, the stories people tell about the
organization and their implications for conduct, the language people use, and the confidence and ability people
have to be recognized and heard (i.e., Is it okay to talk about ethics? Is ethical fading the norm? Is there a strong
speak-up culture?)

ETHICAL CULTURE PAYS

Over half of senior executives believe that corporate culture is a top-three driver of firm value and 92% believe
that improving their culture would increase their firm’s value (Graham, Harvey, Popadak & Rajgopal, 2017).
Evidence from research suggests a strong ethical culture can provide significant benefits to an organization,
such as:
 Increased employee job satisfaction, affective commitment, and willingness to recommend their
organization to others.
  Reduced employee burnout and increased intention to stay.
  Decreased illegal activity and increased moral behaviors.
  Improved organizational performance, value, and innovativeness.  

https://www.ethicalsystems.org/corporate-culture/

Corporate Culture Definition, Characteristics, and Importance

By 
EVAN TARVER
 

Updated April 25, 2023

Reviewed by 
THOMAS BROCK
Fact checked by 
PETE RATHBURN
Investopedia / Paige McLaughlin

What Is Corporate Culture?

Corporate culture refers to the values, beliefs, and behaviors that determine how a company's employees and
management interact, perform, and handle business transactions. Often, corporate culture is implied, not
expressly defined, and develops organically over time from the cumulative traits of the people that the
company hires.

A company's culture will be reflected in its dress code, business hours, office setup, employee benefits,
turnover, hiring decisions, treatment of employees and clients, client satisfaction, and every other aspect
of operations.

KEY TAKEAWAYS

 Corporate culture refers to the beliefs and behaviors that determine how a company's employees and
management should interact and perform.
 It can affect employee hiring and retention, performance and productivity, business results, and
company longevity.
 Corporate culture is influenced by national cultures and traditions, economic trends, international trade,
company size, and products.
 Corporate culture represents the core values of a company’s ideology and practice.
 The four types of corporate culture are clan culture, adhocracy culture, market culture, and hierarchy
culture.

Corporate Culture

Understanding Corporate Culture

Awareness of corporate or organizational culture in businesses and other organizations such as universities
emerged in the 1960s. The term "corporate culture" developed in the early 1980s and became widely known by
the 1990s. Corporate culture was used during those periods by managers, sociologists, and other academics to
describe the character of a company.

Corporate culture emanated from generalized beliefs and behaviors, company-wide value systems,
management strategies, employee communications and relations, work environment, and attitude. It would go
on to include company origin stories put forth by charismatic chief executive officers (CEOs), as well as visual
symbols such as logos and trademarks.

By 2015, corporate culture was not only created by the founders, management, and employees of a company,
but was also influenced by national cultures and traditions, economic trends, international trade, company size,
and products.

There are a variety of terms that relate to companies affected by multiple cultures, especially in the wake
of globalization and the increased international interaction of today's business environment. These include:

 Cross-culture refers to people from different backgrounds interacting in the business environment.

 Culture shock refers to the confusion or anxiety people experience when conducting business in a
society other than their own.
 Reverse culture shock is often experienced by people who spend lengthy time abroad for business and
have difficulty readjusting upon their return.
Companies often devote substantial resources and effort to create positive cross-culture experiences and to
facilitate a more cohesive and productive corporate culture.

 
The awareness and importance of corporate culture is more acute now than ever. Big Four consulting firm
Deloitte found that over 90% of executives believed that strong corporate culture is imperative for business
success.1

Importance of Corporate Culture

A carefully considered, even innovative, corporate culture can elevate companies above their competitors and
support long-lasting success. Such a culture can:

 Provide for a positive workplace environment

 Create an engaged, enthusiastic, and motivated workforce
 Attract high-value employees
 Reduce turnover
 Drive and improve performance quality and productivity
 Result in favorable business results
 Underpin a company's longevity
 Strengthen return on investment (ROI)
 Provide an implacable competitive advantage
 Clarify for employees the goals of their positions, departments, and a company overall
 Contribute to the diversification of the workforce

Types of Corporate Culture

Clan Culture

Clan cultures are about teamwork and collaboration. In such a culture, those in management function as
enthusiastic mentors who provide guidance to subordinates. Good relationships, encouragement, trust, and
participation are key aspects. The contribution potential of every employee is a component of a clan culture.
Also, clan culture can easily adapt to change and implement needed action quickly.

Adhocracy Culture

Adhocracy culture creates an entrepreneurial workplace in which executives and employees function as
innovators and risk-takers. In this flexible environment, agile thinking is nurtured. Employees are encouraged
to pursue their aspirational ideas and take action to achieve results that can advance company goals. New and
unconventional products and services are the main outcome of the adhocracy culture.

Market Culture

Market culture is focused on meeting specific targets and bottom line goals. This culture creates a working
environment that's competitive and demanding. Management is most interested in business results. Employees
are encouraged to work hard and "get the job done" to enhance a company's market presence, profits, and stock
price. While employees may feel stressed in such a workplace, they can also feel enthusiastic and excited
about their work.

Hierarchy Culture

A hierarchy culture is a traditional corporate culture that functions according to a company's executive,
management, and staff organizational structure. That is, it follows the chain of command from top down,
where executives oversee employees and their work efforts to meet specific goals. The hierarchy culture prizes
stability and conventional methods of operation The work environment can be seen as more rigid than some
other cultures but employees can clearly understand their roles and objectives. They may also feel a sense of
security because of the more conservative approach to running a company.

Examples of Contemporary Corporate Cultures

Just as national cultures can influence and shape corporate culture, so can a company’s management strategy.
In top companies of the 21st century, such as Google, Apple Inc. (AAPL), and Netflix Inc. (NFLX), less
traditional management strategies that foster creativity, collective problem solving, and greater employee
freedom have been the norm. They are thought to contribute to business success.

Alphabet (GOOGL), the parent of Google, is well known for its employee-friendly corporate culture. It
explicitly defines itself as unconventional and offers perks such as telecommuting, flextime, tuition
reimbursement, free employee lunches, and on-site doctors.

At its corporate headquarters in Mountain View, Calif., the company offers on-site services such as oil
changes, car washes, massages, fitness classes, and a hairstylist. Its corporate culture helped it to consistently
earn a high ranking on Fortune magazine's list of "100 Best Companies to Work For."

Progressive policies such as comprehensive employee benefits and alternatives to hierarchical leadership (even
doing away with closed offices and cubicles) have been trends that reflect a more tech-conscious, modern
generation of corporate culture. These trends mark a change from earlier aggressive, individualistic, and high-
risk corporate cultures, such as that of former energy company Enron.

High-profile examples of alternative management strategies that significantly affect corporate culture
include holacracy. This has been put to use at shoe company Zappos, owned by Amazon (AMZN), and agile
management techniques applied at music streaming company Spotify.

Holacracy is an open management philosophy that, among other things, eliminates job titles and other such
traditional hierarchies. Employees have flexible roles and self-organization, and collaboration is highly valued.
Zappos instituted this program in 2014 and has met the challenge of transition with varying success and
criticism.

Similarly, Spotify, a music-streaming service, uses the principles of agile management as part of its unique
corporate culture. Agile management, in essence, focuses on deliverables with a flexible, trial-and-error
strategy that often groups employees in a start-up environment approach to creatively tackle the company’s
issues at hand.

Characteristics of Successful Corporate Cultures

Corporate cultures, whether shaped intentionally or grown organically, express the core of a company’s
ideology and practice. They affect every aspect of a business, from each employee and customer to a
company's public image.

The Harvard Business Review identified six important characteristics of successful corporate cultures in
2015.2 

Vision

First and foremost is vision. Whether communicated via a simple mission statement or a corporate manifesto, a
company’s vision can be a powerful tool. For example, Google’s famous slogan “Don’t Be Evil” is a
compelling corporate vision.

Values

Values, while a broad concept, can embody the thinking and perspectives necessary to achieve a company’s
vision. They can serve as a beacon for behavior necessary to progress toward all manner of success. Examples
of values include fairness, trustworthiness, integrity, performance excellence, teamwork, and a high-quality
customer experience.

Practices

Practices are the tangible methods, guided by ethics, by which a company implements its values. For example,
Netflix emphasizes the importance of knowledge-based, high-achieving employees and, as such, Netflix pays
its employees at the top of their market salary range, rather than through an earn-your-way-to-the-top
philosophy.

People
People come next, with companies employing and recruiting in a way that reflects and enhances their overall
culture. Plus, people are the key to bringing corporate culture to life and obtaining the high-value
performances that can lead to favorable business outcomes.

Narrative and Place

Lastly, narrative and place are perhaps the most modern characteristics of corporate culture. Having a powerful
narrative or origin story, such as that involving Steve Jobs and Apple, is important for growth and public
image. The place of business, such as the city of choice and also the office design and architecture, is one of
the most cutting-edge advents in contemporary corporate culture.

Other characteristics of corporate culture can include:

Teamwork

Employees should be encouraged and trained to work together with camaraderie and trust toward common
goals. The benefits of teamwork, such as problem-solving, the development of innovative ideas, and improved
productivity, should be demonstrated to the workforce.

Training and Education

Companies should provide the means for employees to improve their skills and enhance their knowledge so
that the vision and goals of the company can be more reliably reached. Training and education can also
provide employees with a path to new opportunities within their companies. This can motivate individuals to
learn and do more.

Innovation

Innovation is exciting and can underscore the spirit of a company's vision. It can instill pride, confidence, and
loyalty in the workforce.

Leadership

A company's management, including C-suite executives, should be accessible and open to providing assistance
that supports all employees.

How to Develop a Corporate Culture

There is no single strategy for building a corporate culture because companies, industries, and people can be so
different. However, the basic steps below may help you envision a corporate culture that spells success for
your employees, clients, and company.

1. Define a company vision, values, and behaviors.

2. Gather feedback from employees about your company's values, ideas, and work methods to improve
the workplace environment and performance.
3. Use small discussion groups, surveys, or town hall-type meetings to engage your employees and give
them a voice.
4. Establish methods, such as training at regular intervals, to communicate company values/behaviors and
determine how well they are understood.
5. Employ high-quality internal communications to maintain consistent contact with employees about
company goals, the working environment, and employees' roles in the company's success.
6. Establish guidelines that reinforce company values; e.g., a rule that employees should not be disturbed
by work phone calls, emails, or texts during vacations or other types of time off.
7. Recognize employees in a positive and public manner as a reward for their contributions to corporate
success.
8. Practice what you preach—ensure that management maintains a consistent behavioral approach to
operations rather than cutting corners when convenient.
9. Be approachable so that all employees may address their concerns and feel connected/of value.
10. Foster teamwork rather than silos and isolation.
11. Set goals for diversity and inclusion; celebrate the differences among people as you encourage
consistent behavior from all.
 What's Meant By "Corporate Culture"?

The term “corporate culture” refers to the values, beliefs, and practices associated with a particular
corporation. For instance, corporate culture might be reflected in the way a corporation hires and promotes
employees, or in its corporate mission statement. Some companies seek to associate themselves with a specific
set of values, such as by defining themselves as an innovative or environmentally-conscious organization.

What Are Some Examples of Corporate Culture?

There are many examples of companies with well-defined corporate cultures. Alphabet Inc., for example, is
known for its employee-centric culture and its emphasis on working in a creative and flexible environment,
whereas Amazon is known for its relentless pursuit of customer service and operational efficiencies. Often,
national cultures will play a role in determining the kind of corporate culture that is prevalent in society. For
example, Japanese corporations are known for having markedly different corporate cultures as compared to
those of American or European companies.

Why Is Corporate Culture Important?

Corporate culture is important because it can support important business objectives. Employees, for example,
might be attracted to companies whose cultures they identify with, which in turn can drive employee retention
and new talent acquisition. Fostering a culture of innovation can be critical to maintaining a competitive edge
with respect to patents or other forms of intellectual property. Similarly, corporate culture can also play a role
in marketing the company to customers and to society at large, thereby doubling as a form of public relations.

The Bottom Line

Corporate culture has become a vital, even essential, ingredient in the ongoing success of a business. It
represents the values, beliefs, and goals of a company, as well as the consistent behavior expected from all
employees, from top to bottom.

Not only is corporate culture an important key to attracting and retaining employees. It can also support high-
quality employee performance, ongoing achievement, and the longevity of a company.

https://www.investopedia.com/terms/c/corporate-culture.asp

Corporate Culture
By

 Mary K. Pratt
 Ivy Wigmore

Corporate culture is the collection of values, beliefs, ethics and attitudes that characterize an organization and
guide its practices.

To some extent, an organization's culture can be articulated in its mission statement or vision statement.
Elements of corporate culture include the organization's physical environment, human resource
management practices and staff work habits. Corporate culture is also reflected in the degree of emphasis placed
on various defining elements such as hierarchy, process, innovation, collaboration, competition, community
involvement and social engagement.

A corporate culture that reflects the broader culture is usually more successful than one that is at odds with it.
For example, in the current global culture, which values transparency, equality and communication, a secretive
company with a strictly hierarchical structure is likely to have trouble recruiting and retaining workers and
appealing to customers and partners.

However, some organizations create unique cultures that break from certain norms and expected best practices,
a move that can define the organizations as trailblazers and help them succeed in the marketplace.

All organizations, whether they are for-profit companies or nonprofit entities or even government agencies,
have a sense of self that can be called corporate culture.

Corporate culture is sometimes referred to as organizational culture or company culture.

Corporate culture is also sometimes considered to be synonymous with workplace culture. However, some
experts classify workplace culture as a separate idea that specifically and narrowly describes the conditions
under which employees conduct their work -- what has come to be referred to, in part, as the employee
experience. According to this view, workplace conditions are shaped by and ultimately reinforce the overall
corporate culture.

Many organizations determine and then develop the type of corporate culture they want, formalizing it through
statements of shared values and policies designed to effectuate those cultural values.

Others organizations see their culture evolve organically and by chance and circumstance over time. Such
organizations, however, may end up with a poor or even toxic culture because they weren't thoughtful or
attentive about fostering a more nurturing environment.

An organization's culture determines to a great degree the way workers behave and what they consider
acceptable ways of interacting with each other as well as with business partners and customers.

An organization's culture also greatly determines how it reacts to change, evolution and crises. It deeply impacts
the organization's ability to innovate and succeed in both the short term and the long term.

It's difficult, if not impossible, to establish specifically how the notion of corporate culture first took hold.

However, some credit Elliott Jacques, a corporate psychologist, researcher and consultant, for identifying the
phenomenon and labeling it in his 1951 book, The Changing Culture of a Factory. The concept of corporate
culture, and the study of it, evolved throughout the second half of the 20th century. It was influenced by related
academic disciplines such as business psychology and societal trends such as globalism.

During the past several decades, researchers began to study how certain traits influence an organization's overall
approach to work, the employees it attracts and public perceptions of the organization.

Researchers also started to explore why organizations with certain beliefs and practices tend to fare better on
key metrics such as innovation, recruitment, employee retention, public opinion and financial success.
Today executive advisors, management consultants, business schools and researchers are all engaged in
research to better understand corporate culture -- what defines it, what influences it and which traits can deliver
success.

Types of corporate culture

Experts have identified different types of corporate culture and established criteria for classifying them.

The authors of a 2018 Harvard Business Review article, "The Leader's Guide to Corporate Culture," built a
framework based on a horizontal axis (for how people interact) that runs from independence to interdependence
and a vertical axis (for how people respond to change) going from flexibility at the top to stability.

It listed two types of cultures in each of the quadrants. Starting in the upper right quadrant and moving
clockwise, they are:

 purpose and caring in the quadrant for flexibility and interdependence;

 order and safety in the quadrant for interdependence and stability;

 authority and results in the quadrant for stability and independence; and

 enjoyment and learning in the quadrant for independence and flexibility.

The authors described each of the eight classifications in depth, stating, for example, that a caring culture
focuses on relationships and mutual trust while a culture of authority is defined by strength, decisiveness and
boldness.

The authors cited online retailer Zappos as exemplifying a culture of enjoyment, the grocery chain Whole Foods
as a culture of purpose and Disney as one of caring. Meanwhile, financial firm Lloyd's of London is a culture of
safety and pharmaceutical company GSK is one of results.

In contrast, Robert Quinn and Kim Cameron of the University of Michigan at Ann Arbor identified four types
of corporate culture:

 clan, which exhibits a family-like atmosphere with a focus on mentoring, nurturing and togetherness;

 adhocracy, with a dynamic and entrepreneurial approach that values risk-taking and innovation;

 market, with a results-oriented bent that values competition and achievement; and

 hierarchy, with its structures and controls to ensure efficiency and stability.

Still others have assigned other classifications, including one described as elite for its focus on high-achieving
talent and trailblazing achievements; horizontal, with its collaborative, non-hierarchical structure; and
conventional, with traditional hierarchies and dress codes that reinforce a risk-adverse approach.

What shapes an organization's culture?

Building and maintaining a corporate culture can happen organically. In such cases various external and internal
factors influence and determine the organization's culture. For example, the prevailing values of the people in
the geographic location where the company is based will filter into the organization. So will the values of the
executives, managers and workers. Hiring practices as well as workplace expectations and habits will similarly
shape an organization's culture -- for good or bad.

However, organizational leaders who are strategic and thus seek to cultivate a culture that embodies certain
specific values can do so by implementing policies and procedures that support the culture they desire or bring
about culture change.

Experts advise such leaders to craft recruitment strategies, hiring practices and personnel policies that attract
and retain workers who exhibit the values and traits they want in their culture, such as making customer
service a priority. Hiring managers, for example, can seek out risk-takers at companies that want to have an elite
culture. Managers can devise incentives that reward employees for taking risks.Experts also recommend that
business leaders establish workplace rules and encourage practices that support the culture they want.
Executives who want a collaborative culture may want an open floor plan with flexible seating so workers feel
free to move around and form teams. Likewise, managers who want a casual corporate culture will want a dress
code that reflects that.

Executives and managers must also commit to sustaining their desired cultures by modeling the expected
behaviors and values. They should adjust organizational policies and procedures as needed to support the
desired corporate culture particularly during times of change, such as when integrating an acquired company
and its workforce.

The importance of developing a corporate culture

Culture can shape and influence almost all aspects of an organization, including organizational effectiveness,
overall success and the bottom line.

Researchers have found that organizations that have well-conceived cultures supported with good policies that
attract workers who fit well with the environment ultimately have more committed and productive employees.

Business partners, customers and the general public also often react to companies that are considered to have
positive corporate cultures, which in turn helps organizations succeed over time.

On the other hand, research has found that organizations that lack a defined culture or that have fostered a toxic
culture are at higher risk for poor economic results, higher employee turnover and even failure. In fact, experts
have found that negative corporate cultures have caused or at least contributed to criminal corporate activity and
other serious problems. For example, the late Edward Kennedy, the long-time U.S. senator from Massachusetts,
blamed the implosion of the energy company Enron in 2001 on "a crisis of corporate culture."

Examples of successful corporate cultures

Companies that have been recognized for articulating the kind of culture they want and then building to those
objectives include the following.
 Google, which attributes its focus on a fun, collaborative environment as having helped it grow into the
technology giant it is today.

 Ikea, the Swedish furniture and home goods retailer, has a corporate culture based on equality and
inclusiveness, which has helped it build a similar reputation among its customers who often say they value
the company and its products for those reasons.

 SpaceX, considered by some to be reckless, instead embraced its ambitious and bold culture, leading it to a
successful 2020 manned rocket mission to the International Space Station.

 Zappos, with its taglines "powered by service" and "delivering happiness," has become well-known for
both. It's also known for its use of an open management philosophy called Holacracy.

This was last updated in August 2020

https://www.techtarget.com/whatis/definition/corporate-culture

What Is the Relationship between Corporate Culture and

Ethics?
Osmand Vitez
Last Modified Date: June 20, 2023

Corporate culture and ethics are interrelated in many businesses because the former often
drives the latter. A company’s corporate culture is the ideas, beliefs and values that it strives to
create in its working environment and employees. Ethics typically are a large part of a company
culture. To make the connection between its culture and ethics prevalent, a company can create a
mission statement with a direct reference to ethics. Companies must then assess business activities
through the prism of its ethical code to determine the effectiveness of the corporate culture.

Ethics can be a difficult concept to define in business. In many ways, they will have a
different definition to different individuals. For example, adding morals to an ethical code of
conduct is possible under certain scenarios. A significant reason to link corporate culture and ethics
is to ensure the same definition and understanding of ethics among a group of people. Companies
can define a code of conduct based on their owners’ beliefs, the ethics of society or some other
basis.
A company’s corporate culture typically is an unseen part of a working environment. It
dictates how a company should act and react to both internal and external parties. For example,
buying low-cost materials and passing finished goods as high quality even though they contain
inferior materials might be unethical. Negotiating with other businesses will not be a hostile
process when a company desires a strong, ethical corporate culture. Companies foster this behavior
by creating a positive corporate culture.
Creating a bond between this culture and ethics starts with a company’s executive
management team. These individuals — such as the board of directors or chief executive officer —
might write an organizational mission statement and a code of ethics. These two statements should
reference what they want the company's culture to be as well as its ethics for the business. In some
cases, a well-established company might need to write or change its mission statement. This allows
the business to alter its corporate culture as necessary to improve its ethics.
Companies that have a strong corporate culture and ethics code often have increased
employee and customer loyalty. Individuals tend to look favorably on a business that self-governs
its operations. Customers might even pay a premium if a company has to charge more for products
because of its ethics code. Fostering these relationships can also result in a greater market
share and higher profits. Together, they can become a competitive advantage for a company.

The Effects of Negative Corporate Culture on

Ethical Behavior
 Small Business
 Business Models & Organizational Structure
 Corporations

ByStan MackUpdated January 25, 2019

https://smallbusiness.chron.com/effects-negative-corporate-culture-ethical-behavior-65787.html

Your company’s culture has a profound effect on the ethical behavior of your employees.
A positive corporate culture encourages employees to behave in responsible, ethical ways,
resulting in a happy workplace, team collaboration and employee empowerment. Negative
corporate cultures, on the other hand, can promote unethical behavior, causing a wide variety of
problems.

Lack of Moral Leadership

When managers are unethical, employees will emulate the bad behavior. Eventually, the unethical
environment will hinder business. For example, if managers take credit for subordinates’ work,
some employees will start to imitate the behavior. Honest employees will begin to protect
themselves by hiding their work from their colleagues and supervisors. The resulting lack of
teamwork and collaboration will limit the company’s potential.

In contrast, if managers model ethical behavior for employees and reward good behavior, the
positive corporate culture will instill how ethical behavior makes good business sense and helps
everyone succeed, according to the book “ORGB,” by Debra L. Nelson and James Campbell
Quick.

Hypercompetitive Co-Workers
If a company’s culture rewards employees who pursue personal advantage rather than focus on contributing
to the performance of the entire team, employees might overstep ethical boundaries to get ahead. For
example, suppose a manager rewards top performers without analyzing how they achieved their results. Some
employees might use unethical methods to move ahead, such as stealing others’ ideas. Once a few dishonest
employees prosper in this way, the rest of the employees will soon see that stealing others’ ideas is an
effective way to move up in your company.

Poor Discipline and Lax Culture

A lax corporate culture makes it easy for unethical behavior to prosper. If your company doesn't act quickly
to punish or remove unethical employees, they will run rampant over ethical employees. As a business owner,
you have a responsibility to maintain order within your organization by disciplining employees who are
ethically out of line and by rewarding ethical employees.

Lack of Discussion
Corporate cultures that discourage honest discussion allow unethical behavior to spread unimpeded. Instead, a
company should encourage employees to report unethical behavior before it becomes a widespread problem.
Providing whistleblowers with protection and encouraging employees to report problems help foster an
organization that is ethical from top to bottom, according to the book “Organizational Behavior,” by Don
Hellriegel and John W. Slocum.

Look to Your Leaders

The good news is that, if you notice unethical behavior among your staff as well as sense a negative culture,
you can assume the two are connected. Take steps to turn your negative culture towards a positive one, and
much of the unethical behavior will cease. Unfortunately, company culture usually is the result of the
attitudes of your leadership team, according to a Forbes article by Kerriann Worley, VP of sales for CBS
Radio.

Changes, therefore, need to come from them, and it's hard for people to change the way they think and act.
One way is to replace your current leaders with new ones who have positive attitudes. This person will
probably have to come from the outside, because team members will have the attitude of the culture around
them.

If you believe you have strong leaders and don't want to lose them, you can try to change some of their
behaviors. Be open with them about what you want to accomplish. Identify the negative behaviors and what
you want to substitute for them. For example, if hypercompetitiveness is a problem, team up rivals so they
have to work together towards a common goal.

Dealing with Unethical Practices

If unethical practices have been common, such as stealing from the supply room or taking two-hour lunches,
be up front about what you want to occur. Hold a workshop to explain what constitutes unethical behavior.
Let everyone know that these types of behaviors must stop, for the good of the company and fairness to co-
workers.

As measurable actions improve, such as an increase in billable hours now that lunches are back to one hour,
invite everyone to an impromptu celebration with light refreshments, and compliment them on beginning to
turn the culture around.

Examples of ethical behaviors in the workplace includes; obeying the company's rules,

effective communication, taking responsibility, accountability, professionalism, trust and
mutual respect for your colleagues at work. These examples of ethical behaviors ensures
maximum productivity output at work.Nov 20, 2019

What is an ethical corporate culture?

An ethical culture is one that supports employees' ability to do the right thing at work. It
means having clear expectations about what constitutes acceptable behaviour at all levels of
the organisation so everyone understands what's expected of them when it comes to
upholding ethical standards.Nov 30, 2022
Top 10 Characteristics of an Ethical Culture
 Edward Vesely
 

 January 6, 2019
 

 Newsletters, Uncategorized
We hear a lot these days about how organizations are striving to balance the need to reach lofty revenue and profit
goals with the desire to create a culture built on a foundation of ethics and integrity. This raises an important
question: What exactly is an “ethical” culture?

According to Dr. Albert C. Pierce, Director of the Institute for National Security Ethics and Leadership, the most
ethical organizations are the ones that are able to develop these four abilities in their employees: moral awareness,
moral courage, moral reasoning and moral effectiveness.

The National Association of State Boards of Accountancy views an ethical culture as one that is able to integrate two
distinct systems: ethical culture, which focuses on teaching employees specific organizational values and the
importance of “doing the right thing;” and ethical climate, which emphasizes the development of ethics-related
attitudes, perceptions and decision-making processes throughout the organization.

Regardless of how one defines the concept of an ethical culture, the organizations that have the most success in
creating and sustaining an ethics-based environment tend to adhere to best practices in the following 10 areas, as
identified by Kirk O. Hanson, Executive Director of the Markkula Center for Applied Ethics at Santa Clara
University:

1. Strong Values Statement

A values statement is a short, concise encapsulation of what the organization stands for, the values that its
employees are expected to embody and what its products/services are intended to contribute to the world. In
the most ethical organizations, these statements become deeply ingrained principles that serve as guideposts
for employee and organizational decisions and actions.

2. Well-Crafted Code of Conduct

A code of conduct is a written set of principles that works in tandem with the values statement to serve as an
ethical roadmap for the organization. The best codes of conduct are comprehensive, well-organized
documents that are written in plain, understandable language instead of legalese. Developing a code of
conduct is a multi-step process that typically requires extensive input from all areas of the organization.

3. Leading by Example: Executive Modeling

It is often said that ethics starts at the top. Even a well-crafted values statement and code of conduct won’t be
worth the paper they are written on unless top executives “live and breathe” the principles they espouse on a
daily basis. An excellent way for CEOs, CFOs and other key executives to set an ethical tone is by sharing
examples of situations they’ve faced that posed an ethical dilemma, and how they chose the proper path
when making their decisions.

4. Comprehensive Ongoing Ethics Training

Too many organizations only provide ethics training to brand-new employees. Ongoing training is also
essential for firmly embedding ethics into the culture. The training should consist of much more than an
online course that provides a quick review of fundamental ethics principles. It should encompass a thorough
review of the code of conduct and the organization’s specific ethics policies and procedures. It should also
include case studies and real-world scenarios that enlighten employees as to how to make ethical and values-
driven decisions relative to their specific job functions. It is also advisable to conduct separate training for
ethics and compliance.

5. Integration of Values into Work Processes

 Any work process that organizations develop should include references to values and how they impact the
decisions that pertain to the system. A good way to achieve this is by incorporating an ethics/values
component into the employee performance evaluation process with a focus on how workers have applied
ethics to their decision-making processes.

6. Establishment of a Confidential Reporting Mechanism

Even organizations that make ethics a top priority are likely to experience ethical breaches and instances of
inappropriate behavior at some point. Establishing an anonymous third-party reporting hotline provides
employees with a confidential mechanism for informing designated personnel within the organization
whenever they witness or are the victims of wrongdoing. A hotline can be an extremely effective tool for
stopping misbehavior in the early stages, before it can escalate into a major issue.

7. Transparent Investigative Process for Ethics Violations

Employees will be reluctant to use a hotline if they believe that their reports will simply disappear at the
bottom of a desk drawer. The most ethical organizations have a mechanism in place to conduct a prompt,
thorough, transparent investigation of all hotline reports so that the issue can be resolved in an equitable,
timely manner. The administration of fair, just disciplinary action is also critical. The organization’s values
message will surely be lost if top managers receive lighter punishments than front-line personnel for the
same inappropriate behavior. Providing protection for whistleblowers against retaliation is also essential
component of the investigative process.

8. Effective Ethics Governance

Best practices stipulate the appointment of a dedicated corporate ethics and compliance officer (CECO), a
senior executive who oversees the ethics function and plays a key role in establishing the organization’s
ethical compass. This individual should be given wide latitude to develop and implement ethics policies and
procedures. Creating an ethics committee that reports to the board of directors is another effective corporate
governance step.

9. Periodic Revision of Ethical Standards

It is important to review the ethical standards at periodic intervals to ensure they continue to meet the
organization’s needs and to gain a fresh perspective on the overall effectiveness of all ethics initiatives.
Hanson recommends a comprehensive revision of the standards every three years that takes into account any
new ethical challenges the organization faces. It should also include an evaluation of any ethical breaches
that may have occurred since the previous review.

10. Unwavering Focus on Constant Improvement

It’s easy for an organization to become satisfied with the status quo in terms of ethics, especially when no
significant breaches have occurred over an extended period of time. However, when an organization lets its
guard down and reduces the level of focus it places on ethics, it has the unwanted effect of fostering a culture
that invites unethical behavior. The most ethical organizations are constantly seeking ways to keep ethics and
compliance at the forefront of every action they take.
In conclusion, it should be noted that creating an ethical culture isn’t easy, and it doesn’t happen overnight.
However, those entities that stay the course and endeavor to adapt these 10 characteristics stand an excellent chance
of developing and implementing a culture of ethics that permeates every level of the organization.

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