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STRATEGIC MANAGEMENT
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7/17/2019 Chapter 4-Class Ppt
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The Corporate Culture
Impact and Implications
Chapter4
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Chapter Objectives
After exploring this chapter !ou "ill be able to#1$ %efine corporate culture
2$ &xplain ho" corporate culture impacts ethical decision-ma'ing
($ %iscuss the differences bet"een a compliance culture and a values-
based culture
)$ %iscuss the role of corporate leadership in establishing the culture
*$ &xplain the difference bet"een effective leaders and ethical leaders
+$ %iscuss the role of mission statements and codes in creating an ethicalcorporate culture
,$ &xplain ho" various reporting mechanisms such as ethics hotlines andombudsman can help integrate ethics "ithin a firm
$ %iscuss the role of assessment monitoring and auditing of the cultureand ethics program
.$
&xplain ho" culture can be enforced via governmental regulation
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/hat is Corporate Culture0
A shared pattern of beliefs expectations and meanings that
influence and guide the thin'ing and behaviors of the
members of that organiation$
This culture shapes the people "ho are members of the
organiation$
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Compliance vs$
alues-3ased Cultures
In the 1..45s there "as a distinction in t!pes of corporate
cultures#
Compliance-based cultures6the traditional approach78 A compliance-based culture emphasies obedience to the rules as the
primar! responsibilit! of ethics$ A compliance-based culture "ill
empo"er legal and audits offices to mandate and monitor
compliance "ith the la" and "ith internal codes$
Values-based or integrity-based cultures
8 A values-based culture is one that reinforces a particular set of values
rather than a particular set of rules$
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%ifferences in 9oals
The goals of a traditional compliance-oriented program ma!include meeting legal and regulator! re:uirements; minimiingris's of litigation and indictment; and improving accountabilit!
mechanisms$ The goals of a more evolved and inclusive ethics program ma!
entail a broader and more expansive application to the firmincluding# maintaining brand and reputation;
recruiting and retaining desirable emplo!ees;
helping to unif! a firm5s global operations;
creating a better "or'ing environment for emplo!ees; and
doing the right thing in addition to doing things right$
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The tone at the top$?
3e!ond personal behavior leadership sets the tone through othermechanisms such as the dedication of resources$ &thical business leaders not onl! tal' about ethics and act ethicall! on a personal
level but the! also allocate corporate resources to support and promote ethicalbehavior$
There is a long-standing credo of management# >budgeting is all about values$?
@ore common versions are# >put !our mone! "here !our mouth is? and >"al'the tal'$?
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Effective=eaders vs$
Ethical =eaders
3eing perceived as a leader pla!s an important role in a
leader5s abilit! to create and transform an ethical corporate
culture$
e! executives have the capabilit! of transforming a business
culture for better or "orse$
/hat do "e mean b! an >ethical? leader0 A good leader is
simpl! an!one "ho does "ell "hat leaders do$ 9ood leadersare effective at getting follo"ers to their common destination$
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Effective=eaders vs$
Ethical =eaders
Certainl! ethicall! appropriate methods of leadership are central to
becoming an ethical leader$
Creating a corporate culture in "hich emplo!ees are empo"ered and
expected to ma'e ethicall! responsible decisions is a necessar! part ofbeing an ethical business leader$
3ut "hile some means ma! be ethicall! better than others 6e$g$
persuasion rather than coercion7 it is not the method alone that
establishes a leader as ethical$ /hile perhaps necessar! an ethical means of leading others is not
sufficient for establishing ethical leadership$
The other element of ethical leadership involves the end or goal
to"ards "hich the leader leads$
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3uilding a alues-3ased
Corporate Culture
One of the 'e! manifestations of ethical leadership is the
articulation of values for the organiation$
It is the leader5s responsibilit! to ensure that the firm isguided b! some set of organiing principles that can guide
emplo!ees in their decision-ma'ing processes$
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The
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%eveloping The Culture through
a Code
The second step in the development of guiding principles for the firm is
the articulation of a clear visionregarding the firm5s direction$
The third step in this process is to identif! clear steps as to ho" this
cultural shift "ill occur$ ou need to have processes and procedures inplace that support and then sustain that vision$
Dinall! to have an effective code that "ill successfull! impact culture
there must be a belief throughout the organiation that this culture is
actuall! possible achievable$ If conflicts remain that "ill prevent certain components from being
realied or if 'e! leadership is not on board no one "ill have faith in
the changes articulated$
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Whistleblowing? involves the disclosure of unethical or illegal
activities to someone "ho is in the position to ta'e action to prevent or
punish the "rongdoing$
/histleblo"ing can expose and end unethical activities but it can alsoseem dislo!al it can harm the business and it can extract significant
costs on the "histleblo"er$
/histleblo"ing can occur internall! as "hen Bherron /at'ins reported
her concerns to en =a!$
It can occur externall! as "hen Eeffer! /eigand 6as portra!ed in the
movie The Insider7 reported to +4 @inutes about 3ro"n and /illams5
activities in not onl! concealing and 'no"ingl! mislead the public about
the harmful effects of cigarettes but also using additives that increased
the potential for harm$
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Chapter Dour ocabular! Terms
After examining this Chapter !ou should have a clear understanding of the
follo"ing e! Terms and !ou "ill find them defined in the 9lossar!#
Code of Conduct
Compliance &nvironment Culture
&thics Officers
Dederal Bentencing 9uidelines
@ission Btatement
Fnited Btates Bentencing Commission
alues-based Organiation
/histleblo"ing