can you answer this?

Using your own organization or one with which you are familiar, take the Corporate Culture Ethics Audit on p. 188.1) Briefly describe the organization and report the score (the number of “yes” answers).2) Choose one of the questions which received a “no” answer, and describe why that question is important.3) Discuss the changes you would recommend over the course of one year to ensure that question would receive a “yes” answer in the future. The post should be a minimum of 250 words and your recommendation(s) should be supported with evidence from a minimum of two sources, including the book. I recommend not choosing the question about happiness, job satisfaction, and turnover. Why? First, the question is really asking about three separate variables. Second, those variables can be affected by a number of factors that are not related to ethics.Whatever audit question you choose, the recommendations should address the ethical aspects of that question. For example, employee turnover and job satisfaction might be influenced by low wages. Increasing compensation might reduce turnover and increase satisfaction, but that solution is more directly related to the management and organizational behavior courses. For this discussion, it is more important to address the factors that influence the relationship between ethics and turnover and/or the relationship between ethics and satisfaction. 4) Reply to the posts of two classmates, indicating where you could improve the effectiveness of their proposed changes. It is not necessary to disagree, but it is important build on their proposals and identify areas for improvement. Make connections to the text or other sources as needed to provide evidence for your suggestions. Be specific.
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CHAPTER 7
H
O
O
K
S
,
A
L
T
H
E
A
©Stanislav Bokrach, Shutterstock
5
8
2
ORGANIZATIONAL FACTORS:
THE ROLE
0
OF ETHICAL CULTURE AND
RELATIONSHIPS
B
U
Copyright 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s).
Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
CHAPTER OBJECTIVES
CHAPTER OUTLINE
t To understand the concept of corporate
Defining Corporate Culture
culture
The Role of Corporate Culture in Ethical
Decision Making
t To examine the influence of corporate
culture on business ethics
t To determine how leadership, power, and H
motivation relate to ethical decision making
O
in organizations
t To assess organizational structure and its
relationship to business ethics
t To explore how the work group influences
ethical decisions
O
K
S
,
t To discuss the relationship between
individual and group ethical decision making
A
L
T
H
E
A
5
8
2
AN ETHICAL DILEMMA*
0
B
Dawn Prarie had been with PCA Health Care Hospitals
for three years and had been promoted to marketing
U
director in the Miami area. She had a staff of 10 and
a fairly healthy budget. Dawn’s job was to attract more
patients to the HMO while helping keep costs down.
At a meeting with Dawn, Nancy, the vice president,
had explained the ramifications of the Balanced
Ethical Frameworks and Evaluations
of Corporate Culture
Ethics as a Component of Corporate Culture
Compliance versus Valuebased Ethical Cultures
Differential Association
Whistle-Blowing
Leaders Influence Corporate Culture
Power Shapes Corporate Culture
Motivating Ethical Behavior
Organizational Structure and Business Ethics
Group Dimensions of Corporate Structure
and Culture
Types of Groups
Group Norms
Variation in Employee Conduct
Can People Control Their Own Actions within
a Corporate Culture?
Budget Act and how it was affecting all HMOs. “Being
here in Miami does not help our division,” she told
Dawn. “Because of this Balanced Budget Act, we
have been losing money on many of our elderly
patients. For example, we used to receive $600 or
more a month, per patient, from Medicare, but now
our minimum reimbursement is just $367 a month!
Copyright 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s).
Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
180
I need solutions, and that’s where you come in. By
the end of the month, I want a list of things that will
help us show a profit. Anything less than a positive
balance sheet will be unacceptable.”
It was obvious that Nancy was serious about
cutting costs and increasing revenues within the
elderly market. That’s why Dawn had been promoted
to marketing director. The first thing Dawn did after
the meeting with Nancy was to fire four key people.
She then gave their duties to six others who were at
lower salaries, and put the hospital staff on notice
that changes would be occurring at the hospital over
the next several months. Three weeks later, Dawn
presented Nancy with an extensive list of ideas.
The list included these suggestions:
1. Trimming some prescription drug benefits
2. Reducing redundant tests for terminal patients
3. Hiring physician assistants to see patients but
billing patients at the physician rate
4. Allowing physicians to buy shares in PCA, thus
providing an incentive for bringing in more
patients
5. Sterilizing and reusing cardiac catheters
6. Instituting a one-vendor policy on hospital
products to gain quantity discounts
7. Prescreening “insurance” patients for probability
of payment
Dawn’s assistants felt that some of the hospital
staff could be more aggressive in the marketing
area. They urged using more promotional materials,
offering incentives for physicians who suggested
PCA or required their patients to be hospitalized,
and prescreening potential clients into categories.
“You see,” said Ron, one of Dawn’s staff, “we feel
that there are four types of elderly patients. There
are the healthy elderly, whose life expectancies
are 10 or more years. There are the fragile elderly,
with life expectancies of two to seven years. Then
there are the demented and dying elderly, who
usually have one to three years. Finally, we have
the high-cost or uninsured elderly. Patients who
are designated healthy would get the most care,
including mammograms, prostate-cancer screening,
and cholesterol checks. Patients in the other
categories would get less.”
As she implemented some of the
recommendations on Dawn’s list, Nancy also
Part 3: The Decision-Making Process
launched an aggressive plan to destabilize the
nurses’ union. As a result, many nurses began a
work slowdown and were filing internal petitions to
upper management. Headquarters told Nancy to
give the nurses and other hospital staff as much
overtime as they wanted but not to hire anyone
new. One floor manager suggested splitting up
the staff into work teams, with built-in incentives
for those who worked smarter and/or faster.
Nancy approved the plan, and in three months
productivity had jumped 50 percent, with many
of H
the hospital workers making more money. The
downside
O for Nancy was an increase in workerrelated accidents.
OWhen Dawn toured the hospital around this
time,
K she found that some of the most productive
workers were using substandard procedures and
S
poorly made products. One nurse said, “Yes, the
, gloves are somewhat of a problem, but
surgical
we were told that the quality met the minimum
requirements and so we have to use them.” Dawn
A this to Nancy’s attention, whereupon Nancy
brought
drafted
L the following memo:
TAttention Hospital Staff
It has come to management’s attention that
Hminor injuries to staff and patients are on the
Erise. Please review the Occupational Safety and
Health Administration guidelines, as well as the
Astandard procedures handbook, to make sure
you are in compliance. I also want to thank all
those teams that have been keeping costs down.
5We have finally gone into the plus side as far
8as profitability. Hang on, and we’ll be able to
the hospital to make it a better place
2stabilize
to care for patients and to work.
0 At Nancy’s latest meeting with Dawn, she
BDawn, “We’ve decided to use your staff’s
told
segmentation strategy for the elderly market. We
U
want you to develop a questionnaire to prescreen
incoming HMO patients, as well as existing clients,
into one of the four categories so that we can tag
their charts and alert the HMO physicians to the
new protocols. Also, because the recommendations
that we’ve put into practice have worked so well,
we’ve decided to use the rest of your suggestions.
The implementation phase will start next month.
I want you, Dawn, to be the lead person in
Copyright 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s).
Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
Chapter 7: Organizational Factors: The Role of Ethical Culture and Relationships
developing a long-term strategy to break the unions
in the hospital. Do whatever it takes. We just need to
do more with less. I’m firm on this—so you’re either
on board or you’re not. Which is it going to be?”
181
QUESTIONS | EXERCISES
2. What factors influence Dawn’s options?
3. Discuss the issue of for-profit versus nonprofit
healthcare facilities.
4. If you were Dawn, what information would
you like to have to help you make your
decisions?
1. Discuss PCA Health Care Hospitals’ corporate
culture and its ethical implications.
*This case is strictly hypothetical; any resemblance to real persons,
companies, or situations is coincidental.
Hin which we work. Although they are
ompanies are much more than structures
not alive, we attribute human characteristics
O to them. When times are good,
we say the company is “well”; when times are not so good, we may try to “save”
O
the company. Understandably, people have strong feelings about the place that provides
them with income and benefits, challenges, satisfaction,
self-esteem, and often lifelong
K
friendships. In fact, excluding time spent sleeping, we spend almost 50 percent of our
S
lives in this second “home” with our second “family.” It is important, then, to exam,
ine how the culture and structure of these organizations
influence the ethical decisions
made within them.
In the ethical decision-making framework described in Chapter 5, we introduced the
A relationships influence the ethical
concept that organizational factors and interpersonal
decision-making process. In this chapter, we take
L a closer look at corporate culture and
the ways a company’s values and traditions can affect employees’ ethical behavior. We also
T behavior within a company. Next we
discuss the role of leadership in influencing ethical
describe two organizational structures and examine
H how they may influence ethical decisions. We discuss new organizational structures that have been created to address the orgaE other stakeholders. Then we consider
nization’s corporate responsibility to employees and
the impact of groups within organizations. Finally,
Awe examine the implications of organizational relationships for ethical decision making.
C
5
8
DEFINING CORPORATE
CULTURE
2
Culture is a word that people generally use in relation to genealogy, country of origin,
0
language and the way people speak, the types of food they eat, and other customs. Many
B norms, artifacts, and rituals all play
define culture as nationality or citizenship. Values,
a role in culture. Chapter 5 defined corporateUculture as a set of values, norms, and
artifacts, including ways of solving problems that members (employees) of an organization share.
Corporate culture is also “the shared beliefs top managers in a company have about
how they should manage themselves and other employees, and how they should conduct
their business(es).”1 Mutual of Omaha incorporates the concept of corporate culture into
its mission statement. Its intent is “to build a corporate culture that respects and values the
unique strengths and cultural differences of our associates, customers and community.”2
Its executives believe that the company’s corporate culture provides the foundation for its
work and objectives, so much so that the organization has adopted a set of core values
Copyright 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s).
Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
182
Part 3: The Decision-Making Process
called “Values for Success.” Mutual of Omaha feels that these values form the foundation
for a corporate culture that will help the organization realize its vision and achieve its goals.
Corporate culture is exhibited through the behavioral patterns, concepts, documents such
as codes of ethics, and rituals that emerge in an organization.3 It gives the members of the
organization a sense of meaning and purpose and familiarizes them with the organization’s
internal rules of behavior.4
Southwest Airlines has a very strong and friendly, fun-loving organizational culture that
dates all the way back to the days of its key founder Herb Kelleher. Kelleher became legendary
for appearing in a dress and feather boa and joining baggage handlers on Southwest flights.
He organized an awards ceremony for employees that many felt
rivaled the Academy Awards. He treated his employees like
family. Today,H
Southwest continues that legacy. For instance,
“All organizations, not
pilots willinglyOand enthusiastically support the “Adopt a Pijust corporations, have
lot” program, in which students in classrooms around the
O
country adopt a Southwest pilot for a four-week educational
some sort of culture.”
and mentoringKprogram. The pilots volunteer in the students’
classrooms and send e-mails and postcards to a variety of desS
tinations. Southwest’s culture allows it to attract some of the best talent in the industry.5
,
Values, beliefs, customs, rules, and ceremonies
that are accepted, shared, and circulated
throughout an organization represent its culture. All organizations, not just corporations,
have some sort of culture, and therefore we use the terms organizational culture and corA
porate culture interchangeably.
A company’s history and unwritten rules
L are a part of its culture. For many years, IBM
salespeople adhered to a series of unwritten standards for dealing with clients. The history
Tgeneration within an organization are like the
or stories passed down from generation to
traditions that are perpetuated within society
H at large. Henry Ford, the founder of Ford
Motor Co., left a legacy that emphasized the importance of the individual employee. Henry
Ford pioneered the then-unheard-of highE
wage of $5 a day in the early years of the twentieth century, and current company chairman
A William Clay Ford, Jr., continues to affirm
that positive employee relationships create a sustainable competitive advantage for the
company.6 William Ford has maintained his grandfather’s legacy by taking a leadership role
in improving vehicle fuel efficiency while5reducing emissions. Ford is trying to become
an industry leader in sustainability through initiatives such as its Go Green Dealership
8
Program. This voluntary program offers dealers the chance to receive energy assessments
from Ford’s sustainability experts with the2intent of increasing their energy efficiency. For
dealers that choose to make changes, Ford0experts provide guidance on sustainable product selections and state and federal tax incentives.7
Leaders are responsible for the actionsBof their subordinates, and corporations should
have ethical corporate cultures. For this reason,
U the definition and measurement of a corporate culture is very important. It is defined in the Sarbanes–Oxley Act, which was enacted
after the Enron, Tyco International, Adelphia, Peregrine Systems, and WorldCom scandals. The characteristics of an ethical corporate culture were codified within the Sarbanes–
Oxley 404 compliance section. This section includes a requirement that management assess
the effectiveness of the organization’s internal controls and commission an audit of these
controls by an external auditor in conjunction with the audit of its financial statements.
Section 404 forces firms to adopt a set of values that must form a portion of the company’s
culture. The evaluation of corporate culture it mandates is meant to provide insight into
the character of an organization, its ethics, and its level of openness.
Copyright 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s).
Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
Chapter 7: Organizational Factors: The Role of Ethical Culture and Relationships
183
Compliance with Sarbanes–Oxley 404 requires not merely changes in accounting but
a change in corporate culture. The intent is to expose mismanagement, fraud, theft, abuse,
and to sustain a corporate culture that does not allow these conditions and actions to exist.
Many consulting companies that have filled the need of companies wanting to comply have
not understood what “culture” means in this case. They have sought to provide direction
and criteria for improving an organization’s ability to manage risk, not its ethics. In many
firms, an ethical corporate culture is measured in the following ways:
t
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their communications and actions.
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internal control system.
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O
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corrective actions.
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S
the organization, including the CEO, other members
of management, and the board of
directors.8
,
t
t
t
The problem with these standards of measurement is that they evaluate merely risk
and compliance. They are not a complete measure of the aspects of a company that make
A afore mentioned items define an ethiup its ethical culture. Yet many assume that the four
cal corporate culture. Since values, norms, and artifacts
L are the three major components of
culture, all of these elements are important in measuring an ethical culture.
T at least 164 distinct definitions of
In the past 50 years, scholars have developed
culture. More recent reviews indicate that the
Hnumber of definitions has only been
increasing.9 While these definitions of culture vary greatly, they share three common
E belonging to a group or society,” (2)
elements: (1) “culture is shared among individuals
“culture is formed over a relatively long period
Aof time,” and (3) “culture is relatively
stable.”10
Different models of culture, and consequently different instruments for measuring it, focus on various levels (national, organizational,
individual) and aspects (val5
ues, practices, observable artifacts and rituals, underlying implicit assumptions). Geert
8
Hofstede, who researched IBM’s corporate culture, described it as an onion with many
layers, representing different levels within the 2
corporation.11 Today, IBM describes its
culture as a culture of trust. The company has 0
adopted IBM Business Conduct Guidelines, which describe ethics and compliance issues in-depth and provide direction for
B
employees on how to deal with observed misconduct.
The company also created an
online reporting system that allows employees
worldwide
to raise issues and report
U
concerns. These measures serve to advance IBM’s goal of ensuring that its relationships with stakeholders “are truly built on trust.” 12 Many in business define ethics as
what society considers right or wrong and develop measures that manage the risk of
misconduct. Managing risk is not the same as understanding what makes up a firm’s
culture, however. We know for certain that culture has a significant effect on the ethical
decision-making process of those in business. Ethical audits, ethical compliance, and
risk culture surveys may be good tools, but in and of themselves they are not useful
in helping to define organizational culture or in explaining what makes a particular
organizational culture more ethical or unethical.
Copyright 2011 Cen …
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