The Effect of Culture on Business Ethics in an Organization
by
Cryshtal Avera
Abstract
This paper compares two companies with similar, purposeful cultures that are based on core values and a noble cause with a company who purposefully created an environment of many cultures within their organization and hired a CEO who was bold and ego based and ultimately was fired by the Board of Directors after many of their top executives could no longer take it and planned to leave. The question I ask is, “Does a specific culture, purposefully designed and based on shared core values and noble cause directly relate to the ethical environment within an organization?” Are culture and ethics in an organization directly linked or mutually exclusive?
The Effect of Culture on Business Ethics in an Organization
Is it possible or even probable that the culture of an organization directly affects the ethics? My intention is to review companies who have a purposeful and strong culture, as well as one company who reportedly hires leaders who lack ethics, with a choice to create a very different, separated culture style to compare whether culture affects ethics in an organization.
Organizations with Purposeful Cultures Based on Shared Values
Zappos and Google fall into the category of those considered to have purposeful, strong cultures. The book, Tribal Leadership states that, “Tribes are the basic building block of any large human effort, including earning a living”. The authors present the perspective that any organization falls into at least one of the five following tribal stages:
- Life Sucks
- My Life Sucks
- I’m great (and you’re not)
- We’re great
- Life is great
The research behind the book involved a ten year study, over 24,000 people, and specifically highlights that reported results are based on the people rather than simply statistical analytics.
Zappos definitely falls into stage four or stage five of the tribal leadership descriptions.
“In less than 10 years, Zappos has grown into a company with over a billion dollars in annual gross merchandise sales, while simultaneously making Fortune magazine’s “100 Best Companies to Work For” list, success that is driven primarily by repeat customers and word of mouth. While our brand has come to be known for delivering the very best customer service, the number-one priority of the company is actually not customer service.
Our priority is company culture, and our belief is that if we get the culture right, most of the other stuff—such as delivering great customer service or building an enduring brand or business—will happen as a natural by-product of our culture. It all goes back to our belief that, in the long term, a company’s brand and its culture are really just two sides of the same coin.” -Tony Hsieh, Zappos CEO.
Regarding their culture Google states on their website, “It’s really the people that make Google the kind of company it is. We hire people who are smart and determined, and we favor ability over experience.”. They later state in the same section that, “We strive to maintain the open culture often associated with startups, in which everyone is a hands-on contributor and feels comfortable sharing ideas and opinions. In our weekly all-hands (“TGIF”) meetings—not to mention over email or in the cafe—Googlers ask questions directly to Larry, Sergey and other execs about any number of company issues. Our offices and cafes are designed to encourage interactions between Googlers within and across teams, and to spark conversation about work as well as play.”. These descriptions of their culture is in alignment with the Zappos culture regarding the Tribal Leadership descriptions of stages four and five of an organization.
Ethics in Organizations with Purposeful Culture
Regarding their ethics, the first section of Zappos’ ethical code of conduct is titled LIVING OUR CORE VALUES. Here’s a quote from that introductory section,
“While this Code of Conduct addresses a wide variety of topics, you need to use your good judgment and common sense as it cannot, and does not, address every possible situation. When in doubt, imagine that your conduct or the words you are using will be fully disclosed in the media with all details, including your name and picture. If you are uncomfortable with the idea that your conduct or words will be available for all to see, you should think again about your course of action or words.”
The clear message is given that Zappos trusts it’s employees and is letting them know they should feel morally and ethically good about any decision they make regarding actions they will take.
A common mindset of the business industry regarding ethics is a mindset that has leadership talking “at” people more than communicating “with” them. The mindset tends to have leadership consider employees like small children or not to be trusted. This view has leadership in many organizations feeling like they have to be constantly checking up on employees and setting up an environment of a whistleblower program that feels like it’s lacking the expectation of a team that trusts one another. Zappos has a clear chain of command. If a person behaves in a way that is lacking in ethics Zappos leadership will address that behavior…AFTER encouraging the peers who report it to work it out with their coworkers.
Zappos hires people that are clearly qualified to fill the role of their job with excellence. They also ensure through what some view as a rigorous interview process with questions that many think are silly that each new team member is in alignment with their core values. They don’t attempt to convince their employees to be ethical or find a way to embrace core values of the organization. Zappos finds people that are a fit in core values, noble cause, and can do their job well. Then they get out of their way; encouraging them, praising them, helping them shine and setting up an environment where team members hold each other accountable and all feel they are on a team of support. The leadership often don’t take a title. Their website has a tab titled “meet our monkeys” where you learn about the CEO and other top leaders. This is a purposeful culture that turns what is considered to be the norm by many on it’s head. It is one of many outlined in the book, Trible Leadership that has true success. Financially, the business is sound and continues to grow and improve and the employees are happy.
Tony Hsieh’s book title Delivering Happiness is referring to every stake holder from employees, to customers, to suppliers, to families of employees, and so on.
Treating people like people is a key feature of the Culture Sync teachings based on Tribal Leadership findings and Zappos is a clear leader of that way of doing business.
A company with a similar culture to Zappos, the Google code of conduct has subject headers such as No Retaliation, Respect Each Other, and Serve Our Users. The document does include topics that are clearly required by law, but there is no terminology such as “whistleblower” or similar which can create an environment full of stress and a me first mentality. Google also has a Dog Policy section in their code of conduct highlighting that they bring their dogs to work and they call themselves a “dog company”. The language throughout the document, even in the legally necessary items, continues to be of a trusting nature when the reader is addressed rather than an isolating nature.
Individual Leadership Lacking Ethics in an Organization
Is This a Reflection of the Company’s Ethics?
In comparison to Zappos and Google, let’s review a company that has operated with a different approach, Pfizer. We’ll consider the effect a leader’s ethics has on organization ethics. Jeff Kindler, CEO of Pfizer, was ousted by the Board in 2010 after a 2 week investigation inspired by some of the top executives leaving or turning in notices.
Jeff Kindler had a reputation for being aggressive. One of his executives called him a micro micro manager. Another said she felt like a battered housewife because he had a habit of passionately pointing out disappointments with an employee in public displays. He had favorites; one executive was given complete use of a company helicopter so she didn’t have to move to NY among other extravagant perks while the other executives felt they couldn’t speak honestly due to believing Kindler would retaliate.
Areas of importance in business ethics such as bullying are highlighted here. In this case, it was the CEO who was the bully. There was no whistleblower program because he made it clear he was to be feared unless his executives agreed with him at all times. He portrayed himself as a bully in exaggerated ways; threatening a competitor’s representative at a social function, pulling opportunities away from those in his organization he felt had disagreed with him, and giving extreme perks to only one or two who were blindly loyal regardless of his actions. In this case, Jeff Kindler seemed to completely lack ethics. However, he was hired at Pfizer because he got things done in his previous job. The question I take away from this situation is, “can a lack of ethics in a leader eventually to cause the downfall of the organization where short term successes may create a sense of false admiration for that leader?” This scenario reminds me of the saying, “fake it til you make it”. In this case, being so bold while lacking ethics became detrimental to Kindler as he was removed from his position unexpectedly. The Board came to the conclusion they had to make a quick decision to save the company.
Culture(s) of a Company where Leadership Lacks Ethics
In a Forbes Magazine article dated May, 2010, Pfizer’s culture was highlighted and David Simmons, the president and general manager of the Established Products (EP) Business Unit discussed how they had purposefully encouraged multiple cultures rather than a monotheistic culture embraced by the company as one such as companies like Zappos and Google. To quote Simmons,
“We started to take what was new and needed and distilled that into a unique and different cultural identity. This was a very powerful way to create new results. If I had known at the beginning of this journey how productive this could be, I would have done it faster, with less hesitation. But getting such a culture to work within EP was just the beginning, because of course the point was to add value to the overall business of Pfizer, not to optimize just our unit.”
Keep in mind, this article was published only a few short months before the CEO was ousted by the Board based on his lack of ethics and damage to the company because of his bold, ego based actions. As the author of the article states,
“Inevitably tensions arise when different cultures are allowed to develop. Many global businesses are now encouraging business units to adopt cultures linked to what they do. The challenge for top leadership is then to manage it all well, getting increased value at the unit level while at the same time getting more than the sum of the parts from the enterprise as a whole.”
Did Pfizer miss the big picture? Did encouraging multiple cultures within different areas of their company reflect their true ethics, or lack thereof? Was the hiring of CEO Jeff Kindler another sign that Pfizer’s culture and ethics program were not founded on a culture of we, but a culture of me?
While many more companies could be studied regarding how culture is related to the ethics in an organization, the Tribal Leadership research and these examples of Zappos and Google in direct contrast to Pfizer indicate that culture does directly effect the ethics of an organization. Though it appears companies who create a purposeful culture based on common values, noble cause, and ethics make for happy employees and success, I did find indications that employees at Pfizer have said they are happy throughout the years which makes me question how much of an impact money has on culture. If a company operates with a leader lacking ethics and a scattered culture but pays employees well above average, how long can employees find happiness there? That’s another question for another paper.
References
Logan, D & King, J. & Fischer Wright, H. 2009. Tribal Leadership. HarperCollins
Hsieh, T. 2010. Delivering Happiness. Grand Central Publishing
Article, Inside Pfizer’s Palace Coup. January 28, 2011. Fortune Magazine
Article, Getting Beyond the Corporate Culture at Pfizer. May 18, 2010. Forbes Magazine
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