Culture and Climate

Organizational Culture  

Unethical behavior in business can severely affect stakeholders, such as competitors, consumers, employees, investors, the environment, and society. Whether individually or collectively, employees may engage in unethical actions, and organizational cultures may condone such behavior. Therefore, it is crucial to take proactive measures to prevent the development of a culture that promotes toxic and unethical conduct.

The primary challenge lies in acquiring a comprehensive understanding of what exactly makes up an ethical corporate culture. To achieve this, it is essential to start by explaining the broader concept of corporate culture itself.

Swiss born Edgar Schein, a leading expert on organizational culture defines the culture of a group “… as the accumulated shared learning of that group as it solves its problems of external adaptation and internal integration; which has worked well enough to be considered valid and, therefore, to be taught to new members as the correct way to perceive, think, feel, and behave in relation to those problems. This accumulated learning is a pattern or system of beliefs, values, and behavioral norms that come to be taken for granted as basic assumptions and eventually drop out of awareness” (2017, p. 6).

Schein presents a three-level model of organizational culture, emphasizing the importance of distinguishing between an organization’s artifacts, espoused values, and basic underlying assumptions to understand what influences behavior within the organization.

Levels of Organizational Culture

Consider culture as the collective learning of a group in its efforts to survive, grow, navigate its external environment, and organize itself. Organizational culture can be understood as comprising three interconnected levels: artifacts, values, and assumptions. Assumptions represent the deepest aspect of culture, followed by values, and, subsequently, artifacts comprise the most observable level.

Assumptions

Assumptions are deeply embedded within the fabric of organizational culture, running at an unconscious level. Assumptions frequently touch on fundamental aspects of life, including;

• the nature of time and space,
• human nature and activities,
• the essence of truth and our methods of discovering it,
• the appropriate relationships between individuals and groups,
• the relative importance of work, family, and personal development,
• gender roles, and
• the structure of the family.

If we assume that others will exploit us and are fundamentally lazy, we’ll interpret their actions through that lens. For example, we might see someone sitting idly at their desk as “loafing” instead of “thinking through an important problem.” Similarly, we could interpret being absent from work as “shirking” rather than “working remotely.” Conversely, if we assume that everyone is highly motivated and capable, we’ll encourage them to work at their own pace and style. We’ll interpret quiet desk time as thinking or planning. If someone isn’t productive, we’ll attribute it to a job mismatch rather than laziness, and we’ll view working from home as a sign of productivity.

Assumptions play a critical role in shaping a business’s trajectory. They form the foundation for strategy development, planning, and decision-making, and they influence all other aspects of business organizations. Unfortunately, due to their fundamental nature, assumptions can be challenging to change if necessary.

Espoused Values

Espoused values are the formalized values that a company publicly claims to uphold. Values prescribe desirable end-states and are typically communicated through official statements, such as vision and mission statements. By serving as a guide, these values influence the decision-making processes within the business organization, ensuring that choices align with the stated values and desired goals. Bourne, Jenkins, and Parry (2019) found that organizational values can be outward or inward-facing, as well as task or ethics-focused. Subordinate to this categorization are values that focus on competence (being global, financial strength), character (ambition, passion), interpersonal (supporting others, empowerment), and community (social responsibility, care for the environment).

Figure 3.1. This illustration from Bourne, Jenkins & Parry (2019) suggest a number of areas of emphasis in their map of espoused values. [Image Description]

Artifacts

Artifacts are the visible and tangible components that represent a business organization’s culture. They are clear and obvious and manifest in several ways, such as the physical layout of workspaces, communication style, codes of conduct, reward systems, rituals, and ceremonies. While easy to observe, they can be challenging to make sense of without knowing the values and assumptions behind them.

Organizational Climate

There is often confusion about the distinction between organizational culture and organizational climate. As a result, it is essential for businesses to carefully discriminate between the two to thrive in today’s changing business environment.

Some experts see climate as equivalent to culture, but it is better viewed as a product of underlying assumptions and, therefore, a manifestation of the culture (Schein, 2017.) An organization’s climate encompasses both the strategic and process climates. It is a collective of employees’ day-to-day sentiments, attitudes, and perceptions toward their work environment. As such, it serves as a valuable tool for helping employees understand the behaviors expected (be they good or bad). Climate is influenced by leadership’s values that are implemented through policies and practices. It’s essential to note that, because business leadership has historically been predominantly white and male, this significantly influences leadership values, which in turn influence what is considered worthwhile in businesses. As one might expect, Western values also dominate organizational culture. Unlike culture, climate is more tangible and can change quickly based on the organization’s practices, policies, and procedures.

In contrast, culture focuses on the business organization’s unique and particular aspects. It encompasses enduring values, beliefs, and traditions that have evolved and adapted over time. While climate may indicate how employees currently perceive their work environment, culture embodies the fundamental values and beliefs, and past behaviors that have shaped those perceptions. Therefore, if unacceptable behavior in the form of toxicity or unethical behaviors emerges in an organization, it would be prudent to go straight to climate to work on immediate fixes. However, eventually, an overhaul of culture is needed.

An organization’s culture can positively impact its success, but it can also hinder success if it is unhealthy and unproductive. Ethical cultures only emerge when careful attention is paid to the fundamentals. Setting a vision and mission that allows for ethical conduct, infusing ethical values throughout the organization, developing a comprehensive ethics program, and establishing an ethical tone at the top are all crucial in preventing a toxic culture from taking root in place of an ethical and effective culture.  According to Schein (2017), “leadership is integral to shaping the culture and remains a crucial influence at every stage of the organization’s growth and development” (p. 15).

References

Bourne, H., Jenkins, M. & Parry, E. (2019). Mapping espoused organizational values. Journal of Business Ethics, 159, 133–148. https://doi.org/10.1007/s10551-017-3734-9

Schein, Edgar. (2017). Organizational culture and leadership (5th ed.). Wiley.

Image Descriptions

Figure 3.1.This image is a circular map of espoused organizational values developed by Bourne, Jenkins & Parry (2019). The circle is divided into four quadrants by two intersecting axes: one running horizontally from “Inward facing” to “Outward facing” and the other running vertically from “Ethical focus” to “Task focus.” Along the outer perimeter, each quadrant is labeled to reflect a particular emphasis: “Emphasising community” (top left), “Emphasising competence” (top right), “Emphasising character” (bottom right), and “Emphasising the interpersonal” (bottom left). Within the circle, numerous individual values are plotted as blue dots and labeled. For example, values like Sustainability, Safety, and Social Responsibility appear in the upper left quadrant; Excellence, Efficiency, and Growth appear in the upper right; Courage, Pride, and Ambition in the lower right; and Compassion, Respect, and Teamwork in the lower left. Central values like Integrity, Accountability, Honesty, Leadership, and Commitment are placed near the center of the circle, suggesting cross-cutting importance. The diagram visualizes how different organizations may emphasize different sets of values, either outward-facing and performance-based or inward-facing and ethically or interpersonally focused. [Return to Figure 3.1]