Ethics and organizational culture are more than buzzwords; these are concepts that require conscious development to ensure the long-term success of an organization. Ethical companies that nurture a healthy organizational culture enjoy high customer satisfaction, high productivity, employee loyalty, and a strong reputation. Companies that act unethically may get away with it for a while, but eventually their behavior surfaces with reputation-damaging headlines about government lawsuits or investigations. With social media and internet access prevalent today, an ethical breach that insults or harms a customer or employee can bring the world’s attention to the company within hours.
Managers and executives need to understand the difference between ethics and culture and how they relate to each other. Ethics refers to a person’s or a company’s sense of what is right and what is wrong. Companies must consciously consider and articulate ethics to establish values and standards that go beyond basic legal requirements set by society. Organizational culture is a company’s way of life that not only includes written and unwritten ethics and standards, but it also encompasses the day-to-day actions that embody and convey those ethics – or sometimes lack thereof.
A business may have a mission statement, code of ethics, and written policies that emphasize the corporate values of respect, honesty, integrity, and quality. These declarations, as vital as they are, remain only words on paper; it’s the company’s organizational culture—the daily actions of the CEO through to the most recent hire—that determines how its ethical values hold up in the real world.
If the corporate culture is negative, its ethical position will eventually deteriorate. For example, a company that tolerates offensive jokes and sly gossip in the break room will act against its stated value of respect for all employees. A culture that emphasizes closing the deal by any means, even if that means presenting the customer with exaggerated product benefits, goes against the values of honesty and integrity. A culture that focuses entirely on the bottom line will sacrifice product quality as cheaper components and sloppy processes infiltrate production.
On the other hand, a company with a healthy culture will seamlessly integrate its ethics into its daily operations. These companies give employees the training, tools, and resources to do their job. When performance issues arise, corrective discussions take place in a neutral space and focus on problem solving rather than shaming the employee. Executives and managers routinely treat everyone they meet with courtesy and dignity, including customers, employees, partners, vendors and guests. Customers get complete and accurate information about products and services, and the company delivers on its promises, whether it’s paying a supplier on time or honoring a customer’s discount coupon. The company integrates quality control procedures into the production line and provides full support to the person responsible for ensuring quality. If a product needs to be recalled due to safety issues, for example, the company does so quickly and with full disclosure to the public and its customers, employees and suppliers.
A company’s culture starts at the top. People in any organization imitate the actions of their leaders, so it is essential that executives and managers monitor their own behavior to exemplify ethical behavior for all employees. Since organizational culture can make or break a company’s reputation, leaders should organize regular assessments to see how well their culture meets the company’s shared values and code of ethics.