Topic 03 - Building An Organizational Ethics Culture (For Sharing)

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Building an

Organizational
Ethics Culture

TOPIC 5
NATIONAL UNIVERSITY
College of Business and Accountancy
PROF. ARLENE A. SAN PABLO
How to create an ethical
organization

– The challenge for this the country:


Unethical Culture is perceived to be endemic? Found in all
organizations (Public or Private).
 Can we really change an "endemic" unethical culture?
 If yes, HOW?
How do we change a
culture

Transforming
individuals?

Structural/
administrative
changes?
– But isn't formation of individuals the
work of a community?
“It takes a village to raise a child.”
And isn't ethical formation done in a
lifetime?
– To transform individuals thus always
requires an enabling culture.
Without doubt, an ethical
individual is partly formed
by an ethical culture
(e.g. BOC, DPWH, PNP)
►In other words, an ethical
disposition is developed over
time

deliberately
Culture

– Colere: to cultivate
– Shared aspirations, world view, attitudes,
values, usually manifested and cultivated
through practices and activities in the
business world.
– Distinct way by which a community lives
– Cultivated over time by PEOPLE
Ethical Character

►Ethics is from the Greek character “ethos”


which means habit, custom or character.

►Character is from the Greek word


“kharassein” which means to engrave,
inscribe.
Normative Ethics or Virtue
Ethics?

– Normative ethics studies standards on what


makes actions right or wrong

– Virtue ethics studies on developing good habits


of character
> What is the good, virtuous life?
What is virtue ethics?
– Virtue Ethics explains differently why an action is right
or wrong;

E.g. cheating is wrong not because:


a) of its consequences; or
b) its violation of rules;

but because it is not what a virtuous and honest


person would do
What is virtue ethics?
– The focus of virtue ethics is what sort of people we
should strive to be, not so much individual things we
should do for each occasion
– Virtue ethicists attest that If we focus on character
building, a person will be honest consistently

– Virtue ethicists don’t ignore actions, but regard them as


outgrowths of a person’s character. The notion of
character is the more morally important concept.
Culture and Virtue Ethics

– An enabling culture is about deliberate, though not


clearly direct interventions, in the creation of ethical
individuals

– Whereas a normative ethics approach would focus


on punitive action.
6-14 Compliance vs.
Values-Based Cultures

– In the 1990’s, there was a distinction in types of


corporate cultures:
– Compliance-based cultures (the traditional
approach)
– Values-based or integrity-based cultures
– These latter cultures are perceived as more flexible
and far-sighted corporate environments.
6-15 Compliance Cultures

– A compliance-based culture emphasizes


obedience to the rules as the primary
responsibility of ethics.
– A compliance-based culture will empower legal
and audits offices to mandate and monitor
compliance with the law and with internal codes.
Values-Based
6-16
Cultures

– A values-based culture is one that reinforces a particular


set of values rather than a particular set of rules.
– Certainly, these firms may have codes of conduct; but
those codes are predicated on a statement of values and
it is presumed that the code includes mere examples of
the values’ application.
THE PROCESS OF CULTURAL
CONDITIONING

In childhood conditioning, infants learn basic


activities of life. Children learn patterns of thinking,
feeling and acting.

Behavioural conditioning is learning and internalizing


the values and beliefs behind these behaviours
In adult conditioning, people learn
new ways to perform overriding
already conditioned behaviour.

Unlearning is more difficult than


learning for the first time

Adult conditioning adaptive;


selective; a product of reflection
Leadership and Culture-
Building
1. Leaders should not be merely influenced and shaped by this
culture
2. Its cultivation is their responsibility
– create a culture according to an organization's vision of
what it wants to be;
– Vision: we are not yet there. How do we get there?
3. Making available "actualizing forces"
e.g. teachers gives regular quizzes to develop study habits,
discipline; supervisor gives clear detailed feedback to improve
performance
How Leaders Build a
Culture

1. Leaders set the Tone


- They make certain kinds of decisions for
the organizations
- Courageous leaders make hard, unpopular
decisions
- “Political" leaders make popular decisions
Leaders Build a Culture

2. By putting structures in place that will create a way of


doing things
modeling is never enough; policies, administrative
structures change behavior systematically and in the
long term
e.g. "environmental consciousness" through waste
segregation and collection, less plastic policy "pocket
gardens" and how people smoke less divorce law and its
relation to incidents of divorce.
Leaders Build a Culture

As a teacher… building a culture is about


Modeling: coming to class on time, preparedness, etc.
Structural interventions:
Policies: No mobiles? Yes to mobiles? No
computers? Yes to late papers?
Kinds of tests
Ways of Teaching: Lecture? Discussion?
10 Steps to Building an
Ethics Culture
1. Understand Vision
2. Ethics Audit
3. Enlist key leaders
4. Create a code of ethics
5. Initial and Continuing ethics training
6. Regular communications
7. Enforcement and Action
8. Make and activate punitive measures
9. Anonymous reporting
10. Rewards for Ethical Behavior
UNIVERSITY
VISION
We are National University, a dynamic
private institution committed to nation
building, recognized internationally
in teaching and research.

Project of: CBA Student Council '17


COLLEGE VISION
To be one of the top ten (10) business
schools in the country, producing graduates
that will excel in their chosen careers in
professional practice, industry and government,
and who will be responsible citizens and
members of the community.

Project of: CBA Student Council '17


The Steps

2. Ethics Audit
3. Enlist key leaders
4. Create an enforceable code
5. Initial and continuing Ethics Training
6. Regular Communications
7-8. Enforcement and punitive action
9. Anonymous Reporting
10. Rewards for ethical behavior
Checklist for Creating an Ethical Culture

– What is the company's vision? Is ethics expressly an ideal?


– Have you done an ethics audit?
– Is your Mancom sold to the idea? Is there deliberate leadership
modeling?
– Do you currently have an enforceable and widely known code of
conduct?
– Do you offer an ongoing and calibrated training program?
– Do you enforce your guidelines? Do you have enforceable and fair
punitive measures for infractions?
– Do you currently have an external reporting mechanism for whistle-
blowing and does it include case management tools?
– Are you’re employees aware of the items noted above?
Why should an
organization be ethical

– Recent studies show that an


overwhelming majority of people want to
work for an ethical company, going as far
as suggesting they would be willing to
accept lower salaries as long as the
company is ethical.
Why should companies be ethical
According to a DePaul University study, “Companies
explicitly committed to an ethics code return shareholder
value at twice the rate of other companies.”
Benefits of having an
Organizational Ethics Culture

Employee commitment

• Development of an ethical culture leads to


employee retention and loyalty, which increases
employee performance

Investor loyalty

• Investors are aware of the contributions of ethical


conduct in providing a foundation for efficiency,
productivity, and profits in a firm
Benefits of having an
Organizational Ethics Culture
(continued)

Customer satisfaction

• Companies viewed as socially responsible gain a high


amount of customer trust and satisfaction

Profits

• Ethical culture helps a company stay ahead of its


competitors, thereby gaining more profits
Corporate Stages of
Development

Stage 1: THE AMORAL ORGANIZATION


Stage 2: THE LEGALISTIC CORPORATION
Stage 3: THE RESPONSIVE CORPORATION
Stage 4: THE EMERGENT ETHICAL ORGANIZATION
Stage 5: THE ETHICAL ORGANIZATION

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