Ethical Organizational Culture

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Ethical Organizational Culture

Ethics refer to the moral and behavioral codes of conduct that every individual working within an organization must follow. These codes are meant to prevent malpractices, such as corruption and fraud, in organizations.

Ethics are integral to any organizational culture and therefore, are reflected in the behavior of employees. An ethical organizational culture is one that influences employees to abide by the codes of conduct.

Ethical organizational culture varies from organization to organization. For example, in some organizations, giving nonmonetary rewards to clients to gain business is considered ethical, while in some, the same practice is considered to be unethical.

Ethical organizational culture does not develop on its own. For this, top executives design a code of ethics that describes principal values and ethical rules. These are expected to be followed by all employees in the organization.

While developing an ethical organizational culture, both formal and informal systems must be aligned. The formal system in an organization includes organizational arrangement, reward systems, decision-making processes, and training and orientation programs. On the other hand, the informal system comprises norms, idols, customs, language, myths, etc.

To develop and support an ethical culture in an organization, both formal and informal systems must convey similar messages to employees. For example, employees in financial institutions are required to exhibit honest and prudent behavior by providing accurate financial information to their shareholders.

The same value must be present in the informal behavior of top managers. This will in turn convey to the employees the same message of being honest with respect to corporate policies, vision, and management’s behavior. Thus, both systems must go hand-in-hand to support and encourage the same ethical cultural values.

It should be noted that the employees look at the behavior of the top management for defining their appropriate behavior. Thus, senior management should always strive to provide a positive message to the employees. Let us now study how an organization can create ethical organizational culture.

Creating an Ethical Organisational Culture

The prime requirement to imbibe ethical values in an organization is the management’s commitment to the beliefs and values of the organization. Robbins and Judge have provided a list of some important practices to create an ethical organizational culture.

Become a Role Model

Employees always learn from the behavior of senior-level managers. The attitude and deeds of senior managers explain the type of behavior acceptable in the organization. Thus, if the senior management adopts a behavior that is high on ethical values, a positive message is communicated to all employees.

Communicate Ethical Expectations

Sometimes, inadequate communication confuses employees regarding ethical values at the workplace. To reduce ethical ambiguities, organizations must develop and disseminate an organizational code of ethics. This will help the employees to know the primary values and ethical rules to be followed.

Impart Ethics Training

No work culture can be incorporated unless the employees are trained. Therefore, various ethical training programs, seminars, and workshops must be conducted to reinforce the organization’s standards of conduct.

Training programs help employees to get a clear picture of the ethical practices that are permissible at the workplace. From these programs, employees also learn how to address ethical dilemmas.

Adopt a Fair Reward System

While assessing an employee’s performance, managers must offer ratings for his/her decisions. These ratings must be measured against the organization’s code of ethics. People who act ethically should be rewarded for their behavior, and unethical acts should be punished.

Provide Discussion Mechanisms

A formal mechanism should be created by organizations where employees can discuss ethical dilemmas and report unethical behavior. Ethical officers and counselors should be there for resolving unethical behavior.

Ethical Culture in India

Ethics in India are based on a number of thoughts, ideas, and Vedas. In India, the organizational culture is divided into two broad categories, namely, professional culture and community culture. The professional culture helps employees to maintain a certain acceptable level of discipline in an organization.

The community culture of an organization emerges from the varied cultural backgrounds of employees. Every organization has a wide variety of people, and different individuals bring different ethical values with them. These ethical values gradually become a part of the organizational culture.

Some of the important ethical values required in Indian organizations are given as follows:

  • Respect: It implies that every individual must respect the beliefs and values of others. In India where multi-ethnicity exists, people should respect each other’s views, beliefs, and ideas to maintain good mutual relationships.

  • Trust: It implies that employees in an organization must have trust and faith in each other. Doubts often result in misunderstandings, problems, and chaos among individuals and must be evaded. Therefore, trust should be built among employees to facilitate better working.

  • Spirituality: It emphasizes the positive inner transformation of an individual’s life. An individual experiences satisfaction at his/her workplace only when he/she is in a peaceful and contented frame of mind. Spirituality motivates employees to commit themselves to work and perform efficiently.

  • Tolerance: It refers to an increase in the level of adaptability of an employee to various organizational changes. Tolerance towards changes helps in sustaining harmony among employees.

  • Flexibility: It is a degree of adaptability that a person displays with the surroundings in the organizational environment.

  • Sincerity: It is the truthfulness and transparency in the nature and behavior of employees in an enterprise. It necessitates an honest code of conduct in an enterprise.

  • Perseverance: It is the determination of an individual to keep on trying and strive to achieve goals.

Positive Organisational Culture

Organizations always aim to develop a positive culture to grow and flourish. Positive organizational culture is nurturing, democratic and progressive in nature. The such culture encourages and rewards the contribution of its employees and quickly adapts to the constantly changing world.

A positive organizational culture mainly emphasizes the following three areas:

Building Up Employee Strengths

A positive organizational culture focuses on developing employees’ skills and abilities. This increases their contribution towards the achievement of an organization’s goals and objectives. In addition, employees must be aware of their strengths so that they can improve their productivity.

Rewarding More Than Reprimanding

To promote a positive organizational culture, organizations must reward employees even for small ethical acts instead of only instilling the fear of punishment for any ethical misconduct. This will make employees feel valued and strengthen their faith in the organizational culture.

Focusing on Employee’s Vitality and Growth

A positive organizational culture should focus on hiring people with the best talents and improving their capabilities and skills. In addition, it includes conducting training programs and recreational activities and encouraging employees to opt for advanced educational programs.

These activities help employees to improve their personal and professional skills.

Positive Organisational Culture at McDonald’s

McDonald’s, a fast food retail chain was started by two brothers, Dick, and Maurice McDonald in 1 938. Today, McDonald’s is ranked number one in the fast food retail industry. In 1948, the founders of the organization brought in the model, wherein the whole family could dine in a restaurant at affordable prices.

They incorporated the concept of speedy service to serve their customers. At present, the company operates in around 120 countries across the globe, with more than 32,000 franchisees, and serves around 68 million people every day.

The rich organizational culture of McDonald’s strengthened its position as a leading fast food chain in the global market. McDonald’s commitment to its employees and society paved way for its ongoing success.

According to Len Jillard, senior vice president of people resources and chief people officer of McDonald’s Canada, “The culture of collaboration and respect has certainly served us well in terms of our ongoing success. We continue to evolve and reinvent ourselves as we move along within that spirit of collaboration and we continue to improve and excel so we can take everything to that next level.”

McDonald’s has a strong culture of trust and collaboration. It employs the ‘three-legged stool’ approach, where each leg presents the three basic parts of the organization as a whole.

The following are the McDonald’s three-legged stool:

  • Corporate staff
  • Franchisees
  • Supplier Base

According to Jillard, “If one of the legs is broken the stool is not going to be functional. All three [roles] are integral and we realize we’re very interdependent. As a result, we have a very high level and a high degree of collaboration.

It’s more than just making jobs available, it’s participating. We certainly encourage and celebrate this with all of our people. We believe in the culture of collaboration … and giving back to the communities in which we do business. It just makes sense. You need to behave as a member of that community, and that means you give back.”

The main factor that helps in building strong organizational culture in McDonald’s is the organization’s capability to retain its employees by respecting their needs. Mcdonald’s organizational culture shows ample flexibility while treating its employees.

As per Jillard “If it’s someone just coming out of university and starting a career, you have to put a career path together that shows them where opportunities are: whether it be a profession in human resources, operations, training or finance, wherever it is they want to go we can create that path to help them get there.

We have the flexibility to make it happen. It is not unusual for employees to be exposed to multi-disciplines.”

McDonald’s provides its employee’s training and development opportunities. This enables its staff to meet the needs of the customers in the most efficient manner. According to Jillard, “McDonald’s provides the tools, training, and the opportunities to do all these different things.

I think that’s one of the cool things about McDonald’s in terms of our culture. It provides these kinds of opportunities and challenges and is a way of keeping employees engaged — it’s very much focused on growth and the success of our people.”

The corporate culture at McDonald’s is characterized by the role that it plays in achieving employee goals. It offers employees the necessary resources to help them in doing well within the company.

The human resource policy at McDonald’s focuses on:

  • Appointing local candidates for their staff, who have a better understanding of customers

  • Providing a secure and safe working environment

  • Providing training and development opportunities to the staff

  • Developing high standards for recruitment

  • Providing career opportunities

  • Ensuring proper communication among employees and management

  • Promoting skills based upon non-discrimination of gender, marital status, color, nationality, ethnic origin, or race. However, the education, talent, and performance of employees matter.

Jillard says, “Whether you’re with us for one year or if you’re here for more, we will help you meet your future. We will invest in you and your growth. You can take many of the competencies we will help you develop in whatever it is you choose to do — whether it’s with McDonald’s or whether it’s outside of McDonald’s.”

Article Source
  • Kummerow E., Kirby N. (2013). Organisational culture. Singapore: World Scientific Publishing Company.

  • Robbins S., Judge T. (2013). Organisational behaviour. Boston: Pearson.

  • Treviño L., Nelson K. (2004). Managing business ethics. Hoboken, NJ: Wiley

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