Corporate Culturedefinition: A blend of the values, beliefs, taboos, symbols, rituals and myths all companies develop over time.

Whether written as a mission statement, spoken or merely understood, corporate culture describes

and governs the ways a company's owners and employees think, feel and act. Your own business's

culture may be based on beliefs spelled out in your mission statement. It could consist in part of a

corporate symbol, like the rainbow-colored apple that symbolizes Apple Computer. Whatever shape

it takes, your corporate culture plays a big role in determining how well your business will do.

If you're not happy with your current culture, there are things you can do to start changing it

now. Look for a symbol, story, ritual or other tool you could use to bring out the values and

practices you want for your company. Your cultural tool might be a new corporate logo

symbolizing your company's personality. Or you could choose a story to embody your

approach and make it part of your culture. If you can't find a tool, make one. For example,

you can turn an admired former employee into a symbol by giving an award named after

that individual, complete with ritual ceremony.

The beliefs and behaviors that determine how a company's employees and management interact and handle outside business transactions. Often, corporate culture is implied, not expressly defined, and develops organically over time from the cumulative traits of the people the company hires. A company's culture will be reflected in its dress code, business hours, office setup, employee benefits, turnover, hiring decisions, treatment of clients, client satisfaction and every other aspect of operations.

Related Corporate culture refers to the shared values, attitudes,

standards, and beliefs that characterize members of an organization and

define its nature. Corporate culture is rooted in an organization's goals,

strategies, structure, and approaches to labor, customers, investors, and

the greater community. As such, it is an essential component in any

business's ultimate success or failure. Closely related concepts,

discussed elsewhere in this volume, are corporate ethics (which formally

state the company's values) and corporate image (which is the public

perception of the corporate culture). The concept is somewhat complex,

abstract, and difficult to grasp. A good way to define it is by indirection.

The Hagberg Consulting Group does just that on its Web page on the

subject. HCG suggests five questions that, if answered, get at the

essence:

What 10 words would you use to describe your company?

Around here what's really important?

Around here who gets promoted?

Around here what behaviors get rewarded?

Around here who fits in and who doesn't?

As these questions suggest, every company has a culture—but not all

cultures (or aspects of them) help a company reach its goals. The

questions also suggest that that companies may have a "real culture,"

discernible by answering these questions, and another one which may

sound better but may not be the true one

EMERGENCE AND CHARACTERISTICS

The concept of corporate culture emerged as a consciously cultivated

reality in the 1960s along-side related developments like the social

responsibility movement—itself the consequence of environmentalism,

consumerism, and public hostility to multinationals. Awareness of

corporate culture was undoubtedly also a consequence of growth, not

least expansion overseas—where corporations found themselves

competing in other national cultures. The U.S. competition with Japan,

with its unique corporate culture, was yet another influence. So was the

rise to prominence of management gurus the dean of whom was Peter

Drucker. As corporations became aware of themselves as actors on the

social scene, corporate culture became yet another aspect of the

business to watch and to evaluate—alongside the "hard" measures of

assets, revenues, profits, and shareholder return.

Corporate culture by definition affects a firm's operations. It is also, by

definition, something that flows from management downward and

outward. In many corporations, the "culture" was set very early on by the

charismatic activity and leadership of a founder. But as major tendencies

become deeply institutionalized, corporate culture also becomes an

institutional habit that newcomers acquire. In actual practice

"reinventing" the corporation from the top down, therefore, is difficult to

achieve, takes time, and happens only under strong leadership.

Observers and analysts of the phenomenon tend to subdivide culture into

its various expressions related either to major constituencies (employees

and workers, customers, vendors, government, the community) or to

methods or styles of operation (cautious, conservative, risk-taking,

aggressive, innovative). A corporate culture may also, by overstepping

certain bounds, become suicidal—as the case of Enron Corporation, the

energy trader, illustrates. In the Enron culture an aggressive, creative,

high-risk style led to fraud and ultimate collapse. Analysis is helpful in

understanding how a corporate culture expresses itself in specific areas.

However, the concept is social and culture, as the phrase itself implies. It

does not lend itself to reorganization by a rearrangement of standard

building blocks.

CULTURE IN SMALL BUSINESSES

Culture can be a particularly important consideration for small

businesses. A healthy company culture may increase employees'

commitment and productivity, while an unhealthy culture may inhibit a

company's growth or even contribute to business failure. Many

entrepreneurs, when they first start a new business, quite naturally tend

to take on a great deal of responsibility themselves. As the company

grows and adds employees, however, the authoritarian management

style that the business owner used successfully in a very small company

can become detrimental. Instead of attempting to retain control over all

aspects of the business, the small business owner should, as consultant

Morty Lefcoe told Nation's Business, strive to "get everybody else in the

organization to do your job, while you create an environment so that they

can do it."

In a healthy culture, employees view themselves as part of a team and

gain satisfaction from helping the overall company succeed. When

employees sense that they are contributing to a successful group effort,

their level of commitment and productivity, and thus the quality of the

company's products or services, are likely to improve. In contrast,

employees in an unhealthy culture tend to view themselves as

individuals, distinct from the company, and focus upon their own needs.

They only perform the most basic requirements of their jobs, and their

main—and perhaps only—motivation is their paycheck.

Since every company is different, there are many ways to develop a

culture that works. Following are several main principles that small

business owners should consider in order to create a healthy corporate

culture:

Prevailing corporate

Prevailing corporate culture begins at the top. Entrepreneurs need to explain and share their vision of the company's future with their workers. "Let your vision for the company become their vision for the company," stated John O'Malley in his article "How to Create a Winning Corporate Culture." He goes on to say that "a company without a vision is reactive in nature, and its management is seldom confident addressing competitive threats and stepping into the future." In addition, small business owners should be aware that their own behavior and attitudes set the standard for the entire workforce.

Small business owners who set poor examples in areas such as lifestyle, dedication to quality, business or personal ethics, and dealings with others (customers, vendors, and employees) will almost certainly find their companiTreat all employees equally. Entrepreneurs should treat all employees equally. This does not mean that business owners can not bestow extra rewards on workers who excel, but it does mean that interactions with all employees should be based on a foundation of respect for them. One particular pitfall in this area for many small business owners is nepotism. Many small businesses are family-owned and operated. But bloodlines should be irrelevant in daily operations. "Successful '� businesses constantly place 'you are no different'

expectations on family members they employ," noted O'Malley. "Doing otherwise quickly undermines employees' morale'�. Showing favoritism in the workplace is like swimming with sharks—you are destined to get bitten.es defined by such characteristics

Treat all employees equally. Entrepreneurs should treat all employees

equally. This does not mean that business owners can not bestow extra

rewards on workers who excel, but it does mean that interactions with

all employees should be based on a foundation of respect for them. One

particular pitfall in this area for many small business owners is nepotism.

Many small businesses are family-owned and operated. But bloodlines be

irrelevant in daily operations. "Successful '� businesses constantly place

'you are no different' expectations on family members they employ,"

noted O'Malley. "Doing otherwise quickly undermines employees'

morale'�. Showing favoritism in the workplace is like swimming with

sharks—you are destined to get bitten."

Hiring decisions should reflect desired corporate culture. The wise small

business owner will hire workers who will treat clients and fellow

employees well and dedicate themselves to mastering the tasks for which

they are responsible. After all, "good attitude" is an essential component

of any healthy corporate culture. But entrepreneurs and their managers

also need to make sure that hiring decisions are not based upon ethnic,

racial, or gender issues. Besides, businesses typically benefit from

having a diverse workforce rather than one that is overly homogeneous.

Two-way communication is essential. Small business owners who discuss

problems realistically with their workforce and enlist employees' help in

solving them will likely be rewarded with a healthy internal environment.

This can be an important asset, for once a participatory and engaging

culture has been established, it can help propel a small business ahead

of its competition.

On the other hand, problems with the corporate culture can play a major

role in small business failures. When employees only perform the tasks

necessary to their own jobs, rather than putting out extra effort on behalf

of the overall business, productivity declines and growth comes to a halt.

Unfortunately, many entrepreneurs tend to ignore the developing

cultures within their businesses until it is too late to make needed

changes.

In an article for Entrepreneur, Robert McGarvey outlined some warning

signs of trouble with the company culture, including: increased turnover;

difficulty in hiring talented people; employees arriving at work and

leaving for home right on time; low attendance at company events; a lack

of honest communication and understanding of the company mission; an

"us-versus-them" mentality between employees and management; and

declining quality and customer satisfaction. A small business exhibiting

one or more of these warning signs should consider whether the

problems stem from the company culture. If so, the small business owner

should take steps to improve the culture, including reaffirming the

company's mission and goals and establishing a more open relationship

with employees.

Ethics are considered the moral standards by which people judge behavior. Ethics are often summed up in what is considered the “golden rule”—do unto others as you would have them do unto you. While this makes sense as a general rule of thumb, it is not entirely useful when looking to define business ethics.In business, there are many different people you have to answer to: customers, shareholders and clients. Determining what to do when an ethical dilemma arises among these different interests can be extremely tricky, and as such business ethics are complex and multi-faceted.

Business ethics are ethics that refer to the moral rules and regulations governing the business world. In other words, they are the moral values that guide the way corporations or other business make decisions.

Some business ethics are imposed by law. For example:

The Securities and Exchange Commission governs the way investment bankers and stock brokers do business

Court rules dealing with attorney client privilege dictate some ethical decisions for attorneys.

Factors That Affect Business Ethics

Ethical codes that govern businesses often address certain main areas. These areas, as compiled by the NIEHS branch of the U.S. National Institutes of Health include:

Honesty Objectivity Integrity Carefulness Openness Respect for intellectual property Confidentiality Responsible publication Responsible mentoring Respect for colleagues Social responsibility Non-discrimination Competence Legality Human subjects protection

These principles are important in all fields of business; however, they may apply in different ways in different fields. For example:

Accounting  ethics - especially for accountants of publicly-held corporations - depend upon complete

honesty and transparency. When accountants do not behave ethically, or violate these principles of ethics, shareholders can be harmed. The accountants at Arthur Anderson did not behave with honesty, openness and responsible publication when auditing Enron. As a result, shareholders were harmed, the company collapsed, and some Arthur Anderson accountants were held legally liable for their breach of business ethics.

Attorney  ethics call for complete confidentiality. The law recognizes that attorneys have such a high moral obligation to keep their clients secrets confidential, that if an attorney violates this ethical duty, he can lose his license to practice law.

Medical or medical research ethics call for protection of their human subjects when it comes to treating patients or conducting experiments on patients. Peer review boards and other such institutions govern experiments designed to be conducted on human subjects to ensure that business ethics are followed and that experimenters make the best moral and ethical decisions.

Setting Codes of Business Ethics

While the law imposes some ethical rules, legislation cannot possibly define business ethics as a whole and cannot address every situation in which ethical dilemmas may arise.

A code of ethics is a set of principles and rules used by companies, professional organizations and individuals to govern their decision making in choosing between right and wrong. Depending on the context of a given code of ethics, penalties and/or sanctions may result from a violation.

Codes of ethics are generally used in the business and professional context to assure the public that corporations

and members of regulated professions are acting in a socially and professionally acceptable manner. Organizations with an established and published code of ethics have in place review processes and appeals procedures to guard against malicious or self-serving use of the code for individual benefit.

These ethical rules are often referred to as a code of conduct or rules of conduct, by which those in the group abide.

Each group determines their ethical stance based upon different guidelines, whether it is established principals, religious book, or group agreement.

While members of the group may follow the ethical guidelines as a principle by which they believe everyone should act, they might also have a set of personal ethics which also governs their own behaviors.

Conflicts in Business and Personal Ethics

Sometimes business ethics and personal ethics may conflict. This dilemma occurs commonly in attorney ethics. For example:

An attorney may represent a client who commits murder, and that client may tell the attorney where the body is buried.

In every other situation, a person would likely have a strong ethical and moral obligation to go to the police.

Attorney ethics dictates that the lawyer keep the client's secret. In fact, it would be unethical to not keep the secret.

In this case, the attorney must put business ethics first in order and keep the secret to protect the structure of the American justice system.If the attorney did not act under these special rules of business ethics, people would be deprived of their

constitutional right to a fair trial and competent defense in the court systems. Therefore, business ethics can change the rules of normal ethics in order to serve a higher purpose

ETHICAL PRINCIPLES FOR BUSINESSWhether you work for a small business or a major corporation, following ethical principles

matters.

The most recent lesson on the importance of business ethics came with the Wall Street

collapse, as once highly esteemed financial institutions made headlines for their bad

choices and questionable behavior.

While businesses have to meet economic expectations, they also have ethical

responsibilities. Everyone, from the bottom to the top of the organizational chart, must take

care to meet these responsibilities.

People with integrity value other principles, including honesty, respect, personal

responsibility, compassion, and dependability. These qualities are integrated into the Six

Pillars of Character offered by the Josephson Institute, a nonprofit organization that

develops and delivers services and materials to increase ethical commitment. The pillars

are:

Trustworthiness

Respect

Responsibility

Fairness

Caring

Citizenship

The Importance of Ethics in OrganizationsEthics are the principles and values an individual uses to govern his activities and decisions. In

an organization, a code of ethics is a set of principles that guide the organization in its

programs, policies and decisions for the business. The ethical philosophy an organization uses

to conduct business can affect the reputation, productivity and bottom line of the business.

Leadership EthicsThe ethics that leaders in an organization use to manage employees may have an effect on the

morale and loyalty of workers. The code of ethics leaders use determines discipline procedures

and the acceptable behavior for all workers in an organization. When leaders have high ethical

standards, it encourages workers in the organization to meet that same level. Ethical leadership

also enhances the company’s reputation in the financial market and community. A solid

reputation for ethics and integrity in the community may improve the company’s business.

Employee EthicsEthical behavior among workers in an organization ensures that employees complete work with

honesty and integrity. Employees who use ethics to guide their behavior adhere to employee

policies and rules while striving to meet the goals of the organization. Ethical employees also

meet standards for quality in their work, which can enhance the company’s reputation for quality

products and service.

Ethical Organizational CultureLeaders and employees adhering to a code of ethics create an ethical organizational culture.

The leaders of a business may create an ethical culture by exhibiting the type of behavior they'd

like to see in employees. The organization can reinforce ethical behavior by rewarding

employees who exhibit the values and integrity that coincides with the company code of ethics

and disciplining those who make the wrong choices.

Benefits to the OrganizationA positive and healthy corporate culture improves the morale among workers in the

organization, which may increase productivity and employee retention; this, in turn, has financial

benefits for the organization. Higher levels of productivity improve the efficiency in the company,

while increasing employee retention reduces the cost of replacing employees.Sponsored Lin

Using Values and Ethics for Competitive AdvantageA White Paper by David Lapin

Financial excellence results when a corporation's values and its ethics support its strategy. Many companies, unbeknownst to their leadership, operate with at least three separate, and usually non-aligned, value systems: the Values that management communicates, both orally and in writing; the Values that employees believe drive management's conduct; and the Values that actually underpin the interpersonal dynamics of the organization. To gain strategic advantage, these three systems must first be identified, then integrated into one system of values.

The Role of Ethics in StrategyFinancial excellence results when a corporation's values and its ethics support its strategy.

Ethics is a component of strategy because every business secures its future by making a contribution. The act of making a contribution is fundamentally an ethical activity. Identifying that contribution and maximizing its value is the field of strategy. Profit is the value the market attaches to an organization's contribution and the efficiency with which it makes that contribution.

Employees who see their company making a valued contribution (with profits as the outcome), rather than merely generating shareholder wealth, commit to their work with greater passion. This leads to a partnership between employees and corporate leadership that boosts innovation and uplifts performance. Ethics play a vital role in the preservation of this priceless partnership, which can thrive only in an atmosphere of trust and integrity. Trust and integrity result from integrating an organization's disparate value systems and aligning them with the organization's strategic objectives

What are Ethics, and How do they Differ from Values?Values are beliefs about what is good and what is bad, what is right and what is wrong. Even people of different cultures differ very little about these beliefs.1 Nearly all people would like their children to be honest, fair, courteous, charitable, and so on. People do, however, differ substantially when it comes to the "price" they are willing to pay for what is right.2 Ethics is the "cost" that a person will pay to uphold his values. It is the way a person translates his or her beliefs into actions (or abstentions) that entail a cost. Most people differ in their ethics, rather than in their values.

Thus, adopting a change in values alone will not impact on any aspect of organizational performance. Rather, the way an organization translates its values into an ethic will impact on its strategic objectives.

Integrating Disparate Corporate ValuesMany companies, unbeknownst to their leadership, operate with at least three separate and usually non-aligned value systems. Measuring the degree of alignment between these value systems and determining what drives each of them highlights the opportunities for change.

The three value systems are:

1. The Espoused Value System - The Values that management communicates both orally and in writing.

2. The Perceived Value System - The Values that employees believe drive management's conduct.

3. The Actual Value System - The values that actually underpin the interpersonal dynamics of the organization. Management may have never previously articulated these values and employees may never have identified them.

To gain strategic advantage, these three systems must be integrated into one system of values. Furthermore, in order for these values to impact on financial performance, senior management must translate them into an ethic that supports the organization's objectives, that is aligned with its strategy and is understood at all levels of the organization.

Identifying Espoused, Perceived, & Actual ValuesAn organization's espoused values are either implied or articulated in its published materials.3 But the way employees' honestly perceive management's values are often very different from the values that management espouses. Qualitative research methodology can probe employee perceptions. However, exposing the actual values and ethics that drive the organization requires that one analyze the reasons for those perceptions, in light of various management decisions and behaviors.

Espoused, Perceived, & Actual Values in One SystemIt is, at times, difficult for an organization's leadership to acknowledge the existence of divergent value systems and to understand the implications of the divergence. It is even more difficult for leaders to confront the truth of what the values are that really drive their organization. Yet this confrontation with the truth is a vital step in crafting an integrated value system that can transform an organization and impact its performance.

An integrated value system takes into account the strategic objectives of the organization, the personal values of leadership, and the diversity of its employees. It aligns employee perceptions with management's espoused values. A system such as this can translate into the actual ethic that drives management decisions and conduct. This ethic differentiates

Translating a Value System into a Corporate EthicChoosing values is easy. However, leaders often rethink their organizations' values when they confront the behavioral and organizational changes that those values would compel when translated into a living ethic. They need to examine how congruent the chosen values are and how they promote or undermine corporate intent and strategic objectives. Only then can leadership comfortably commit to a new system with all of its defined implications.

How Values and Ethics can Undermine StrategyWe shall describe three cases of organizational values actually or potentially undermining organizational strategy and describe Strategic Business Ethic's approach to resolving the situations. The first case is in the Health Care Industry, the second in the Banking Industry, and the third is a case of Mergers and Acquisitions.

About the Eight CausesAccording to psychologists Art Bell and Brett Hart, there are eight common causes of conflict in the workplace. Bell and Hart identified these common causes in separate articles on workplace conflict in 2000 and 2002.The eight causes are:

1. Conflicting resources.

2. Conflicting styles.

3. Conflicting perceptions.

4. Conflicting goals.

5. Conflicting pressures.

6. Conflicting roles.

7. Different personal values.

8. Unpredictable policies.

You can use this classification to identify possible causes of conflict. Once you've identified these, you can take steps to prevent conflict happening in the first place, or you can tailor your conflict resolution strategy to fit the situation.

In many cases, conflict in the workplace just seems to be a fact of life. We've all seen situations where different people with different goals and needs have come into conflict. And we've all seen the often-intense personal animosity that can result.In many cases, effective conflict resolution can make the difference between positive and negative outcomes.The good news is that by resolving conflict successfully, you can solve many of the problems that it has brought to the surface, as well as getting benefits that you might not at first expect:

Increased understanding: The discussion needed to resolve conflict expands people's awareness of the situation, giving them an insight into how they can achieve their own goals without undermining those of other people.

Increased group cohesion: When conflict is resolved effectively, team members can develop stronger mutual respect, and a renewed faith in their ability to work together.

Improved self-knowledge: Conflict pushes individuals to examine their goals in close detail , helping them understand the things that are most important to them, sharpening their focus, and enhancing their effectiveness.

However, if conflict is not handled effectively, the results can be damaging. Conflicting goals can quickly turn into personal dislike. Teamwork breaks down. Talent is wasted as people disengage from their work. And it's easy to end up in a vicious downward spiral of negativity and recrimination.

If you're to keep your team or organization working effectively, you need to stop this downward spiral as soon as you can. To do this, it helps to understand two of the theories that lie behind effective conflict resolution:

Social responsibility

Businesses can use ethical decision making to secure their businesses by making decisions

that allow for government agencies to minimize their involvement with the corporation. (Kaliski,

2001) For instance if a company is and follows the United States Environmental Protection

Agency (EPA) guidelines for emissions on dangerous pollutants and even goes an extra step to

get involved in the community and address those concerns that the public might have; they

would be less likely to have the EPA investigate them for environmental concerns.[2] “A

significant element of current thinking about privacy, however, stresses "self-regulation" rather

than market or government mechanisms for protecting personal information” (Swire, 1997)

According to some experts, most rules and regulations are formed due to public outcry, which

threatens profit maximization and therefore the well-being of the shareholder, and that if there is

not outcry there often will be limited regulation.[3]

Critics argue that Corporate social responsibility (CSR) distracts from the fundamental economic

role of businesses; others argue that it is nothing more than superficial window-dressing; others

argue that it is an attempt to pre-empt the role of governments as a watchdog over powerful

Tricorp corporations though there is no systematic evidence to support these criticisms. A

significant number of studies have shown no negative influence on shareholder results from

CSR but rather a slightly negative correlation with improved shareholder returns.[clarification needed][4]

Corporate Social Responsibility

Corporate Social Responsibility or CSR has been defined by Lord Holme and Richard Watts in

The World Business Council for Sustainable Development’s publication ‘Making Good Business

Sense’ as “…the continuing commitment by business to behave ethically and contribute to

economic development while improving the quality of life of the workforce and their families as

well as the local community and society at large". CSR is one of the newest management

strategies where companies try to create a positive impact on society while doing business. There

is no clear-cut definition of what CSR comprises. Every company has different CSR objectives

though the main motive is the same. All companies have a two point agenda- to improve

qualitatively (the management of people and processes) and quantitatively (the impact on

society). The second is as important as the first and stake holders of every company are

increasingly taking an interest in “the outer circle”-the activities of the company and how these

are impacting the environment and society.[5] Social responsibility is an ethical ideology or

theory that an entity, be it an organization or individual, has an obligation to act to benefit

society at large. Social responsibility is a duty every individual or organization has to perform so

as to maintain a balance between the economy and the ecosystem. A trade-off always[citation

needed] exists between economic development, in the material sense, and the welfare of the

society and environment. Social responsibility means sustaining the equilibrium between the

two. It pertains not only to business organizations but also to everyone whose any action impacts

the environment.[1] This responsibility can be passive, by avoiding engaging in socially harmful

acts, or active, by performing activities that directly advance social goals.

[edit]

BIBLIOGRAPHY

Barrier, Michael. "Building a Healthy Company Culture." Nation's

Business. September 1997.

"Corporate Culture: Telling the CEO the Baby is Ugly." Hagenberg

Consulting Group. Available from http://www.hcgnet.com/research.asp?

id=6. Retrieved on 2 February 2006.

Grensing-Pophal, Lin. "Hiring to Fit Your Corporate

Culture." HRMagazine. August 1999.

Hindle, Tim. Field Guide to Strategy. Boston: Harvard Business/The

Economist Reference Series, 1994.

McGarvey, Robert. "Culture Clash." Entrepreneur. November 1997.

O'Malley, John. "How to Create a Winning Corporate Culture