Empowerment, and Ethics
Humane, Empowering Work
Building a Constructive
• Organizational culture consists of the values, symbols, stories, heroes,
and rites that have special meaning for a company‟s employees.
• Culture represents the emotional, intangible part of the organization.
If structure is the organization‟s skeleton, culture is its soul.
• Many firms are now attempting to develop cultures that are helpful in
motivating their employees and keeping them committed to the firm.
• 47% of 400 CEOs in North America and Europe said that reshaping
culture and related employee behavior took up a great deal of their
time and was as important as monitoring financial information.
• A recent study of 200 mergers found incompatible cultures to be the
primary cause of failures.
Functions of Organizational Culture
Elements of Organizational Culture
Focus on Management:
Organizational Culture at Quad/Graphics
• Selected as one of the “100 Best Companies to Work for
in America,”Quad/Graphics is a remarkable success
• The company‟s philosophy is “Have fun, make money, HARRY
and don‟t do business with anyone you don‟t like.” QUADRACCI
• Harry Quadracci, who has been called the P. T. Barnum
of Printing, describes the company as a circus, a
continuous performance of highly creative and
• Employees at Quad/Graphics are empowered, don‟t sign
time cards, are continually learning, and receive a
variety of unique benefits.
Organizational values are beliefs held by an
individual or group that speak to the actions
and ends that organizations “ought to” or
The Importance of Values
“Every excellent company we studied is
clear on what it stands for, and takes the
process of value shaping seriously. In fact,
we wonder whether it is possible to be an
excellent company without clarity on values
and without having the right sorts of
values.” Peters & Waterman, In Search of Excellence
Focus on Management: Values at
The HP Way:
• We have trust and respect for individuals
• We focus on a high level of achievement
• We conduct our business with
• We achieve our common objectives
• We encourage flexibility and innovation
• Symbols are things that stand for or suggest
• As examples:
– office assignments signal status
– dress codes suggest the level of formality
– logos can influence customer and employee
– an action can be symbolic, as in the case of the
Some Forms of Symbols
A PHYSICAL OBJECT
Web Wise: The Land O’Lakes Logo
• The importance of company symbols to those outside
the firm is seen in a study of customers‟ ratings of 47
firms on things such as quality and reputation.
• 600 customers were asked to rate the firms on the
basis of their names, and another 600 were also
provided with the company logo.
• The logo had a strong influence on ratings. For
example, Motorola‟s score rose by 55%.
• Land O‟Lakes‟ kneeling native American woman
logo dropped the company‟s rating by 12%.
Forms of Narratives
• Stories dramatize relatively ordinary, everyday
events within organizations in order to convey
important cultural meanings.
• Legends are more uplifting than stories and
portray events that defy explanation by ordinary
• Myths are dramatic, unquestioned narratives about
• Sagas describe heroic exploits performed in the
face of adversity.
Recurring Story Themes
• Equality. These recognize that members
must deal with status inequalities in
• Security. These recognize that members
desire security, but that organizations can
threaten their security.
• Control. These recognize tensions between
members‟ desire to control events and their
realization that they can‟t always do so.
Focus on Management:
Stories at 3M
• The importance of innovation as a 3M value is supported by a story
often repeated throughout the firm concerning transparent tape.
• According to the story, an employee accidentally developed
cellophane tape but was unable to get superiors to accept the idea.
• The employee was able to sneak into the corporate boardroom and
tape down the board members‟ copies of the minutes with the
• The board was impressed enough with the novelty to give it a try,
and the product was incredibly successful.
• The story reinforces the importance of innovation and encourages
3M employees who believe in their ideas to never take no as a final
• Heroes are company role models. In their
performance of deeds, embodiment of character,
and support of the existing organizational culture,
they highlight the values a company wishes to
• Heroes are the main characters in the stories
relayed throughout an organization.
• Rites combine cultural forms into a public
• Some forms of rites include:
– Rites of Passage (completion of Army basic
– Rites of Enhancement (awards ceremony)
– Rites of Integration (company Christmas party)
• Rituals are relatively simple combinations of repetitive
behaviors, often carried out without much thought, and
often brief in duration.
• For example:
– how members greet one another
– how visitors are met at airports
– who eats where and with whom
– how a phone conversation should proceed
• Rituals are often more important for their expressive,
emotional consequences than for more practical reasons
Focus on Management: Herb Kelleher
of Southwest Airlines
• Herb Kelleher is cofounder, chairman of the board, and
CEO of Southwest Airlines.
• Under Kelleher‟s guidance, Southwest has been
remarkably successful. It has been profitable every year
since 1973 yet maintains the lowest fares. It is the safest
airline in the world and ranks number one in the industry
for service, on-time performance, and lowest employee
• Fortune magazine named it the most admired airline and
best place to work in the United States.
• Kelleher has created a unique culture at Southwest
Airlines through a mix of humor, altruism, concern for
others, and straight talk.
Focus on Management:
Culture at Walt Disney Company
• Employees -- primarily high school and college
students -- are critical to Disney‟s success.
• Employees must convey the Disney fantasy and
create happiness while carrying out repetitive
work at low pay.
• Disney is heavily unionized, with 24 unions at
• To deal with this, Disney pays close attention to
Focus on Management:Culture at
Walt Disney Company (Continued)
• Selection. Disney‟s clean-cut and conservative image attracts the
kind of employees it wants. A film shows prospective employees
the sort of discipline, grooming, and dress code the company
• Socialization. Cast members participate in an ongoing program that
continually reinforces Disney‟s values, philosophies, and guest
• Language. Employees are “cast members” and they are “cast” in
“roles.” Cast members work “onstage” or “backstage” and they
• Ceremonies. Service recognition awards, peer recognition awards,
banquets, and informal recognition parties help boost morale.
Web Wise: Harley Owners Group
A good example of rites of integration is
the “meetings” of Harley-Davidson‟s
HOG (Harley-Owners Group) chapters,
where “the bond is metal” as hundreds of
Harley riders hit the road together to help
out worthy causes of just “share the
Some Guidelines for Assessing
• Look around -- what do the headquarters and other
buildings look like? How are people dressed? How much
interaction is there? Who is talking with whom? How does
the place “feel”?
• Ask to see newsletters and other internal documents. What
values are emphasized? Who are the “heroes” held up for
praise? Are parties, celebrations, or other ceremonies
mentioned? What sorts of things are discussed?
• Look at annual reports or other communications to those
outside the firm. What “face” is being presented to the
Guidelines for Assessing Organizational
• Ask, “Can you tell me anything about what the culture is
like here? Are there stories that people here tell about X?”
• Ask, “What values are stressed in X? How are they
communicated? How are they reinforced?”
• Ask, “Who is looked up to in X?”
• See what you can learn about rites and ceremonies in the
organization. What happens when people accomplish
something? Are there “rites of passage” such as promotion
ceremonies and retirement parties? Are there regular “get-
togethers” such as holiday parties, social events, and
company softball games?
Guidelines for Assessing Organizational
• Ask, “What sorts of behaviors are expected and
rewarded here? What sorts of behaviors are
• Ask people outside the firm what they think of it.
• Check magazines, newspapers, and other sources to
get clues about the culture of the organization.
• As appropriate, use quantitative measures of
Some Guidelines for Assessing Organizational
Culture (Continued) --
Making Sense of the Information
• Overall, how salient is culture?
– Do leaders mention culture, values, and heroes in their
– Do organizational members talk much about culture and its
• What primary themes emerge?
• Are responses consistent across people, levels, and
• How does everything fit together?
– Are valued behaviors rewarded?
– Are symbols, stories, heroes, and ceremonies consistent?
• Subcultures are distinctive clusters of ideologies, cultural
forms, and other practices within the larger culture.
• Subcultures may develop among members of the
organization who have common training or duties, similar
personal characteristics, frequent interaction, or shared
• Subcultures may lead to conflict and misunderstanding.
• Potential benefits of subcultures include:
– accomplish certain tasks while permitting the primary culture to
present a certain “face” to the world
– provide diversity of views, assumptions, and values
– serve as seeds for desired change
• Countercultures are subcultures that contradict the
• Countercultures help clarify the bounds between
acceptable and unacceptable behavior.
• Countercultures may arise:
– to provide a safe haven for the development of innovative ideas.
– to encourage the questioning of old, and perhaps outmoded,
– to handle severe, shared employee discontents.
– because of mergers or acquisitions of firms with differing
Four Views of How Organizational
Culture Affects Performance
• In his book, Theory Z, William Ouchi presented
comparative studies of Japanese and American
• He identified three types of organizations:
– Typical Japanese (Type J)
– Typical American (Type A)
– Ideal Hybrid (Type Z)
• The Type Z organization:
– Emphasis on group decision making and consensus
– Long-term employment
– Individual achievement and advancement
Type A. Type J, and Type Z
Organizations (Figure 8-3)
CULTURAL VALUE U.S. (TYPE A) JAPAN (TYPE J) U.S. (TYPE Z)
Employees Short-term employment Lifetime employment Long-term employment
Decision Making Individual Group and consensus Group and consensus
Responsibility Individual Collective Individual
Evaluation Rapid and quantitative Slow and qualitative Slow and qualitative
Control Explicit and formal Implicit and informal Implicit and informal
Career paths Narrow Broad Moderately broad
Concern for people Narrow Holistic Holistic
In Search of Excellence
• The most popular writing on the relationship
between organizational culture and
effectiveness was presented by Tom Peters and
Robert Waterman in In Search of Excellence.
• Based on their observation of 62 successful
firms, including Hewlett-Packard, McDonald‟s,
Disney Productions, Levi Strauss, and Johnson
& Johnson, Peters and Waterman concluded
that eight key attributes of the organizational
culture contributed to their success.
Attributes of Effective Organizational
Culture (Peters & Waterman)
CUSTOMER AUTONOMY AND
LOOSE-TIGHT EXCELLENCE THROUGH
SIMPLE FORM, HANDS-ON,
LEAN STAFF VALUE-DRIVEN
STICK TO THE
Reactions to In Search of Excellence
• There have been several challenges to the conclusions of In Search
• Excellence was based on financial performance. Were the firms
also successful in terms of social responsibility and social
• In the years following publication of In Search of Excellence,
several of the “excellent” companies suffered financially.
• One study found no significant performance differences between a
subset of the Peters and Waterman “excellent” companies and a set
of firms representative of the Fortune 1,000 industrials.
• There were also no differences between the two groups of firms in
the extent to which they adhered to the Peters and Waterman
attributes of “excellent” companies.
• Strong culture is variously defined in terms of:
– degree to which values and ideologies are widely shared and
clearly ordered in terms of their relative importance
– degree of extremity of values; strength of commitment to values
• It seems simplistic to assume that having a strong culture
would necessarily lead to success. There are certainly
some strong cultures that are inconsistent with demands of
the environment, and a strong culture may discourage
• Having a strong culture may not be enough; it also has to
Strategically Appropriate Culture
• For culture to be effective, it must:
– be distinctive
– be valuable
– be hard to imitate
• Court ruling: “that there may be instances in
which the law might recognize a perceived
threat to a „corporate culture‟ that is shown to
be palpable (for lack of a better word),
distinctive, and advantageous.”
Neurotic Leaders and Their Firms
Dramatic Needs attention, Dependency needs of
excitement, feels a subordinates complement
sense of entitlement “strong leader” tendencies
of chief executive
Suspicious Vigilantly prepared “Fight or flight” culture,
to counter attacks including dependency,
and personal threats fear of attack, lack of trust
Detached Withdrawn and not Lack of warmth or emotions;
involved; lacks conflicts; jockeying for power;
interest in present insecurity
Neurotic Leaders and Their Firms
(Figure 8-4) (Continued)
Depressed Lacks self-esteem, Lack of initiative; passivity;
self-confidence, or negativity; lack of motivation;
initiative; fears ignorance of markets;
success and tolerates leadership vacuum
mediocrity or failure
Compulsive Tends to dominate Rigid, inward directed, insular;
organization from subordinates are submissive,
top to bottom; uncreative, insecure
dogmatic or obstinate;
The Bottom Line: Developing an
Effective Organizational Culture
Identify the Core
Develop a Formulate Strategic Values and
Mission Objectives to Operating Principles
Statement for Support the That Support the
the Firm Mission Mission and Strategic
Socialize New Mechanisms for
Employees into the Communicating
Are Compatible with
Culture of the Firm the Elements of the
the Firm’s Culture
Culture to Employees
Guidelines for Culture Change
• Understand the current culture.
• Change at the right time.
• Value diversity.
• Understand resistance to culture change.
• Recognize the importance of implementation.
• Use appropriate cultural forms.
• Give it some time.
The Bottom Line: Changing the Culture
of an Organization
Define the Communicate the Organizational
Elements of the New Culture to Policies and
New Culture Employees Practices to
Replace Managers Use Formal
Evaluate the Culture
and Employees Mechanisms to
of the Firm in
Who Do Not Reinforce and
Relation to the
Embrace the Transmit the
New Culture New Culture
• To foster a creative and productive environment where
employees are motivated to achieve exceptional
performance, the organization‟s culture needs to
empower its employees.
• Empowerment seeks to break the cycle of
powerlessness in organizations by giving employees a
real sense of control.
• Empowerment gives people in organizations the ability
to get things done, often at levels of the hierarchy where
the power can be most directly and effectively applied.
“I am the people -- the mob -- the crowd -- the
Do you know that all the great work of the
world is done through me?”
• Learned helplessness is a condition that
results from the belief that one‟s
behaviors simply don‟t make a difference.
Learned helplessness results in feelings of
• Causes of powerlessness in organizations
– rules won‟t change
– bosses are set in their ways
– things have always been done a certain way
– the assembly line is relentless
Some Consequences of Powerlessness
Stages of the Empowerment Process
(From Figure 8-5)
STAGE 1 STAGE 2 STAGE 3 STAGE 4 STAGE 5
Self- Empowering Behavioral
Efficacy Experience Outcomes
Some Conditions Leading to
• Organizational factors such as bureaucratic
• Autocratic supervision
• Rewards that aren‟t tied to performance
• Routine, simplified jobs
Some Empowering Managerial Practices
• Let the people who work for you participate in decision
making. They will gain a sense of control over their
work lives and will be more enthusiastic about
• Offer control over work processes, such as the ability to
stop the assembly line.
• Tie rewards to performance. Employees naturally feel
powerless when they see that their actions don‟t directly
influence things they care about.
• Express confidence, encouragement, and support.
Celebrate “small wins” and provide assurance that
obstacles can be overcome.
Sources of Self-Efficacy Information
• Enactive attainment. People may gain self-efficacy
through actual mastery of a task.
• Vicarious experience. People may gain self-efficacy by
seeing that others who are similar can master a task.
• Verbal persuasion. Employees may simply be
convinced through words of encouragement and
feedback that they can master tasks.
• Emotional arousal. Techniques that create emotional
support or foster a supportive environment may reduce
the emotional arousal that lowers self-efficacy.
Focus on Management: An Empowering
Culture at Saturn Corp.
• Saturn employees at plants in Spring Hill, Tennessee and
Wilmington, Delaware don‟t punch time clocks.
• Labor and management (all called team members) share
the same cafeteria.
• The union gave up rigid work rules, and GM (Saturn‟s
parent corporation) abandoned most of its rigid hierarchy.
• Saturn employees were grouped into small teams and
given responsibility for everything from covering absent
members to major production decisions.
• A special team, called Saturn Consulting Services, is
available to provide consulting and training expertise to
organizations wanting to learn from the Saturn experience.
Focus on Management:
Empowerment at Federal Express
• The goal of Fred Smith, chairman and president of Federal Express,
was to create a “power environment.” He calls empowerment “the
most important element in managing an organization.”
• To create a power environment, Fed Ex has a philosophy that fosters
respect for human dignity, ingenuity, and potential.
• Fed Ex has a job-secure environment in which people aren‟t afraid to
take risks, jobs have been redesigned to increase employee power,
and there are many opportunities for promotion from within.
• The company also has many programs and processes designed to
empower employees. These include an annual employee attitude
survey followed by an action phase to deal with concerns, as well as
a process for resolving grievances, an awards program, and others.
The Bottom Line: Empowering
Assess the Employees and
in Identifying Ways
Current Job Educate Them About
to Enhance Their
Responsibilities the Meaning and
Levels of Authority
of Employees Objectives of
Create an Provide
Guidelines to Formalize the
Culture That Guidance and
Help Employees Boundaries
Supports Support to
Use Their of Employees’
Empowerment Employees to
as a Core Value Be Successful
Encouraging Ethical Behavior
• Ethics are principles of morality or conduct.
• Business ethics are rules about how businesses
and their employees ought to behave.
• Business ethics help to guide an organization‟s
efforts and offer a foundation for its culture.
• The need for ethical behavior in organizations has
been dramatized by some very visible ethical
violations, including kickbacks, bribes, and
myriad other forms of corruption.
Global Perspectives: Bribes,
Quanxi, and Sokaiya
• Bribery in overseas dealings has increased sharply in the
last two decades; it has been estimated that bribes paid to
acquire large contracts in developing countries now
exceed 15% of the contracts‟ value.
• Outright bribes and payments for quanxi, or
“connections,” total $3 billion to $5 billion in China.
• Japan has been rocked by evidence that corporate leaders
have made large payments to yakuza, or gangsters, to
secure favors and prevent retribution, including to
sokaiya, gangsters who obtain information about illicit
corporate activities and threaten to disclose it.
Ethics and Firm Performance
• One recent study found that companies that had an
“ethical commitment” -- as evidenced by inclusion of
ethics codes in the management reports within annual
reports -- had much higher levels of performance
than did those without such codes.
• Also, some companies with an “ethical” commitment
had higher scores on Fortune reputation ratings.
• Committing specific unethical acts may have
disastrous consequences for organizations and their
• Whistle blowers are individuals who report to the press,
government, or other parties outside the firm illegal or
unethical activity within the firm.
• Whistle blowers may find their jobs and careers threatened.
• About 35 states now have laws protecting whistle blowers.
• The federal False Claims Act allows whistle blowers to sue
government wrongdoers in the name of the United States.
• Opponents of whistle blower protection argue that it may be
misused by marginal employees, may result in sidestepping
of internal resolution mechanisms, and may lead to “dialing-
for-dollars” whistle blowing.
Legal Remedies for Unethical Behavior
• One of the earliest legal codes for dealing with unethical
behavior was the Code of Hammurabi, consisting of 282 rules
outlining all aspects of public involvement.
• Governments are increasingly applying criminal laws to
companies and company executives.
• The Foreign Corrupt Practices Act of 1977 was enacted in
response to disclosures that American companies were paying
bribes to high government officials in foreign countries in an
attempt to win contracts and sell products and services.
• The 1991 Sentencing Guidelines for Organizations provide
tough sanctions, including jail sentences and fines in the
millions of dollars, for those convicted of corporate
Guidelines for Ethical Behavior
• Be honest, direct, and open in your dealings with
• Take ethical stands on difficult issues.
• Ask whether your actions respect the rights of others.
• Ask whether your actions are just.
• Ask how you would feel if the act was done to you.
• Use your power in ethical ways.
• Apply the sunlight test.
“Always do right. This
will gratify some people,
and astonish the rest.”
Encouraging Ethical Behavior in Others
• Promote, communicate, and reward ethical behavior
as a key value.
• Model ethical behavior in public and private.
• Speak out against unethical behavior when you see it.
• Communicate expectations regarding ethical behavior,
including through a code of ethics.
• Make sure that goals don‟t push employees into
unethical behavior; unreasonable goals are often the
motivation for lying, cheating, and stealing.
Encouraging Ethical Behavior in Others
• Encourage ethics training.
• Give employees ways to voice their ethical
questions and concerns, such as through use of
ethics hot lines and ombudsmen.
• Set up internal programs to resolve ethical
A Short Code of Ethics
The Bottom Line: Encouraging Ethical
Develop a Standards for Appropriate
Code of Ethical Ethical
Ethics Behavior to Behavior for
Establish and Enforce a Design and Design and
Maintain an Zero-Tolerance Implement Implement
Organizational Policy for Policies That Policies That
Culture That Unethical Identify Reward Ethical
Values Ethical Employee Unethical Employee
Behavior Behavior Behavior Behavior