Corporate Culture:One way to curb unethical

behavior

Corporate culture

A blend of ideas, customs, traditional practices,

organizational values and shared meanings that help define normal

behavior for everyone who works in a company

“The accepted way of thinking, feeling, and acting in an organization”

“Shared beliefs about what is important and how things are done”

“Social glue that binds members of the organization together through shared values, symbolic devices, and shared ideals”

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Artifacts: What can you see & hear?

Symbols Slogans/mottos/credos Rituals Stories Dress code Layout of space Technology used

Observable

Espoused values: How the organization wants to operate

Rules/regulations Policies Code of conduct Strategies Goals Philosophies Ethical climate: The unspoken understanding

among employees of what is and is not acceptable behavior.

Somewhat observable

Assumptions and beliefs: Taken for granted

Beliefs Perceptions Thoughts Feelings

Not observable

Functions of Organizational Culture

Behaviorial control

Establishes Organizational Identity

Fosters Commitment

Promotes Stability •Expectations (norms and rules) and what to

anticipate and how to behave

Types of culture

Strong Weak

Foundation of a strong culture?

Ethical leaders!

“In thought, word and deed, a company’s leaders must clearly and unambiguously both advocate and model ethical behavior.” -CEO, Merck

What are the traits of an ethical leader?

Difference between good and ethical

We can’t assume everyone will be ethical all of the the time so… sometimes you have to

regulate.

Sarbanes-Oxley Act 2002

A Public Company Accounting Oversight Board is established.

The firms are not permitted to offer loans to its executive officers or board of directors.

SEC rules will create guidelines for internal controls and financial reporting procedures.

ERISA penalties are increased from $5,000 to $100,000 and one year in prison to $100,000 to $500,000 and up to 10 years in prison.

Sarbanes-Oxley Act 2002

The firm’s audit committee is entrusted with auditor oversight and with all independent directors on the committee

Certain nonaudit services by auditors to clients are banned, nonaudit services must be preapproved by the audit committee, the lead auditor must be rotated every five years, and auditors report to the audit committee.

The CEO and CFO must sign off on financial statements as accurate and fair and must repay bonuses if a restatement of financials is undertaken.

U.S Corporate Sentencing Guidelines: Directives

Establish standards and procedures to reduce criminal conduct

Assign high-level officer(s) responsibility for compliance

Not assign discretionary authority to “risky” individuals

Enforce standards and procedures through disciplinary mechanisms

Following direction of offense, respond appropriately and prevent reoccurrence

U.S Corporate Sentencing Guidelines

Effectively communicate standards and procedures through training

Take reasonable steps to ensure compliance-monitor and audit systems, maintain and publicize reporting systems

Ethics Codes/Policies in Organizations: How to

1. The code is about corporate culture -What lines can’t be crossed?

2. Get input -From ALL levels3. Don’t be too specific or too vague4. Watch out for pitfalls

-Nepotism, harassment, discrimination5. Ask experts (HR, ethicist, lawyer)6. Put someone in charge

-Who applies and updates?

In order to comply…

Codes of ethics exist in each of your chosen fields:

-Accounting (AICPA, IFAC, Code of Ethics for Professional Accountants)

-Finance (FPA, NAPFA)-Marketing (AMA, BMA)-Information Technology (Association of IT

Professionals)

Creating a culture of ethical leaders

Ethics committees Ethics officers/ombudspersons Hot lines Ethics audits Corporate ethics awards

Ethics Training

Ethics training videos The Office

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Stakeholder Theory