Frequently Asked Question: What is corporate culture?

Corporate culture is the basis of any company’s code of ethics and is described as being ‘the way we do things around here’ (The Corporate Ethics Monitor, Volume 1, Issue 1, page 14). The idea of an organization’s culture can be applied to any group or corporation, small, medium or large. Is the employee encouraged to behave responsibly? Does the employee know what is expected of him or her? Is there any value or norm that should not get eroded or sacrificed in pursuit of the bottom line? Is there a well-understood ethical decision-making framework – one that applies to the most senior as well as most junior employee? Are you supposed to raise a dilemma if you see on and, if so, with whom? Will the company ‘kill the messenger’ if you raise such a dilemma.

The idea of an organization’s culture can be applied to any group or corporation, small, medium or large. Corporate culture encompasses such practices as fair hiring procedures, how a deal is worked out, how vacation time is decided, how the company is structured (i.e. number of vice-presidents and managers), the goals of the company, and pension programs. Essentially, corporate culture is how a company runs on a day to day basis, following unwritten rules that are simply understood by all employees and employers. It is important to note that corporate culture may contradict a written code of ethics. “Strong corporate cultures tend to inhibit adaptability” (The Corporate Ethics Monitor, Volume 1, Issue 2, page 31). In other words, often older, or authoritarian, or more established companies and organizations find it difficult to align their corporate culture with the changing views of society. Therefore, for an integrity-aspiring corporation, it is important to understand that while the views and ethics of the board of directors may not change, the needs, views, makeup and ethical practices of the employee base may dramatically change overtime. This requires ethics testing, policy and training recalibration, social performance auditing, accountability and transparency analysis, and continuous improvement. In order to meet the needs of this new employee demographic as well as changing societal expectations, a corporation must be willing to examine its corporate culture, identify the outdated aspects, and change it for the better.

There are five important factors to keep in mind if you as a corporation want to examine and change your corporate culture.

1. “Recruit the best people you can,” those “who are prepared to make time for the effort because they care about being involved in an examination of the organization’s values, ethics and future” (The Corporate Ethics Monitor, Volume 1, Issue 3, page 45).
2. “Spend as much time as possible quietly building a strong internal constituency that can be counted upon when the project goes public” (The Corporate Ethics Monitor, Volume 1, Issue 3, page 45). This is an important step if the new policies are going to be successfully integrated into the company’s corporate culture because if the policies do not seem well thought out or well supported then they will not be popular and people will not be willing to adopt them.
3. Remember that “any effort to change an institution short of a revolution must be incremental” (The Corporate Ethics Monitor, Volume 1, Issue 3, page 45). If an organization is serious about changing its corporate culture, it cannot give up at the first sign of resistance from some employees but instead it must try to explain why the changes are taking place and how they will effect the average employee so that people will be better prepared for the eventual changes.
4. “Ignore traditional organizational roles,” which tend to pigeonhole people and ideas into roles that may not best serve the employee, the employer or the corporation. Changing a company or organization’s culture may mean that certain roles are redefined or replaced by new ones.
5. Use appropriate tools to identify and reduce the gap between espoused values and actual practices. This means social and ethics audits, independent performance appraisals, committing to international best practice standards, seeking unfettered and regular opinions or dialogue from diverse stakeholders, and independent verification.

Keeping these five factors in mind when beginning the process of changing a company’s culture will make the process much easier for the employees and the employers.