Culture, Ethics, and Diversity - Research Paper Example

 Abstract In this paper, the researcher will shed light on three pertinent factors such as ethics, culture and diversity in context to leadership dimension of organization. Each of the concepts will be discussed in the light of research work of various research scholars. In the next stage, the researcher will define the intra level relationship between diversified organizational culture and ethical leadership culture and how conjoint impact of these two variables can help an organization to achieve leadership position. In the last stage, the study will cite a case study of a real life organization in order to enhance practical value of the paper. Table of Contents Table of Contents 3 Introduction 4 Literature Review 5 Case Study- HSBC 10 Conclusion 11 References 12 Introduction Crane and Matten (2007) humorously stated that an organization without ethics is like a ship in the middle of the sea without sailor. It has been argued by the researchers that ethical leadership is needed for organization in order to achieve sustainable growth. Crane and Matten (2007) also argued that global organizations face plenty of conflicts and trust deficit while operating business in competitive global environment and in such cases, these organizations need to follow some rigid ethical guidelines in order to address these challenges successfully. Sims and Brinkmann (2003) pointed out that lack of ethical culture in companies like Enron, Nortel, and World.Com etc created scope for committing financial fraud which collapsed their business. Careful analysis of the research work of Sims and Brinkmann (2009) reveals the fact that ethics is not an external force rather organizations should develop ethical culture in self driven manner in order to guide ethical behavior of organizational individuals. On the other hand, Janssens and Zanoni (2005) argued that diversity with organizational culture is becoming an essential element for organizations to achieve innovation. It is evident from the argument of Janssens and Zanoni (2005) that there cannot be standardized format of diversity in the workplace due to its multifarious nature. For example, one organization can employ diversified workforce in terms nationality, gender etc while some organizations can go for deploying lattice management structure achieve diversity. Zhang, Lowry, Zhou & Fu (2007) criticized the assumptions of previous research scholars that organizations only use the concept of diversity for achieving innovation because sometimes, organizations create culture of diversity due to strategic reasons. However, it is evident from the above discussion that there is significant amount of doubt; confusion and argument exist regarding integration of culture of ethics and culture of diversity within organizational context. Another important thing is that, very few research scholars have tried to understand the intra level relationship between ethical culture and diversity driven culture and how the conjoint relationship between these two variables can impact organizational leadership. In the next section, the researcher will address these issues in the light of existing literature. Literature Review Organizational Leadership & Ethical Culture Cameron and Quinn (2006) raised a pertinent question that can organizations achieve leadership position by deploying culture of ethics and moral principles? Well the answer of the question is not very simple due to the fact ethics is an intangible element which has the capability to impact the tangible outcomes. Another problem is that there is still no standardized definition of organizational culture. In such context, Trevin˜o and Weaver (2003) defined ethical organizational culture as the organizational setting which allows members to follow legal principles and do not involve in those activities which can hurt the interest of not only organization but also hurt the interest of social members. Consideration of the research work of Kaptein (2008) reveals the fact that corporate ethics virtues (CEV) model can be used to understand ethical culture in organization. According to CEV model, ethical culture in the organization is comprised of elements is comprised of elements like expectation of from the society that organization members would follow the legal principles and social norms, experiences of management in handling ethical conflicts, transparent communication between employee and top level management, support from top management and shareholders, not appreciating any kind of discrimination within workplace environment and creation of an open environment where internal stakeholders can freely discuss about their ethical concern. Ethical organizational culture is somewhat closely related to self-regulating capacity and self-cleansing capacity of the organization. Huhtala, Feldt, Lamsa, Mauno & Kinnunen (2011) pointed out that many organizations use corporate governance codes of a particular country but in most of the cases they face problems to control the behavior of agents (managers) which can hurt the interest of principals (shareholders). Huhtala, Feldt, Lamsa, Mauno & Kinnunen (2011) pointed out that deploying corporate governance principals can only increase the top management to follow the legislative norms of business but there is no guaranty for infusing ethical culture. Top management should take initiatives to ensure incorporation of ethical norms backed by moral principles among employees which can collectively enforce the integration of ethical culture. M. Baucus, Norton, D. Baucus & Human (2008) pointed out that an organization backed by ethical principals can create niche position in the marketplace and can also attract shareholders to invest. Following ethical principles would prevent the managers from involving in malpractices such as misrepresentation of financial statement, committing financial fraud etc which can hurt the interest of shareholders. Ethical culture in the organization can also help an organization to improve their brand image among investors and investors also become prefer to invest money on a fair and transparent organization rather than taking risk by investing money in fraudulent organization. Hence, it can be surmised from the research work of Trevin˜o and Weaver (2003) that it is easier for an organization backed by ethical culture to achieve sustainable market capitalization rather than an unethical organization. Organizational Leadership & Diversified Culture Ashkanasy, Hartel & Daus (2002) pointed out that a diversified workforce is an asset for organization and organization can use this asset in order achieves innovation and sustainable competitive advantage. Organizations can develop a culture of diversity by bringing people from different cultural context and functional domain and ask them to work in a group and the process will definitely create scope for knowledge sharing. Knowledge sharing and team building are two important drivers for innovation and these two factors can be aligned if organizations can create culturally, demographically, geographically, racially and functionally diversified workforce. Hubbard (2004) surmised that culture of diversity on organization can help an organization to improve its performance. In a globalized economy, companies are using human resources in cross cultural and transnational manner in to create a global talent pool and harness strategic initiative. For example, consumer goods giant Procter & Gamble use Russian personnel along with expatriates while operating in Russia due to the fact that it is expected that local workers can help a company to understand cultural requirements and social context of that particular country. Hubbard (2004) argued that it is not easy to manage a diversified team due to the fact leader of the team needs to consider cultural and social orientation of each member and in most of the cases, managers lack the level of emotional intelligence (EI) and sensitivity to manage a diversity. However, it is evident from the research work of Hubbard (2004) that efficient integration of diversity can help a organization to achieve leadership position due to two reasons such as, 1- A diversified team consists of people from varied background, experience, knowledge and skill set and these people can conjointly use their skill level to address a particular problem and 2- diversified talent pool can gel up with each other in order to form lattice knowledge structure which can be used for tacit knowledge sharing and achievement of innovation in terms of process design or product centric manner. Polzer (2008, p. 20) argued that there is no guaranty that managing diversity can help an organization to achieve leadership position due to the fact that diversified cultures “are prone to dysfunction because the very differences that feed creativity and high performance can also create communication barriers”. In such context, Mello and Ruckes (2006) raised one interesting point that members of heterogeneous teams are more likely to show distrust on common procedure due to their personal preferences. In such cases, a diversified culture cannot function in sustainable manner and neither can the organization achieve leadership position. It is evident from the argument of Polzer (2008) and Mello and Ruckes (2006) that creation of shared value aspect for a diversified team is major challenge for organizations and organizations need to deploy significant amount of resources in order to create common understanding about the mission and vision statement among members of a diversified team. Wee and Morse (2007) suggested that organizations should appoint leaders who can create mutual understanding and bonding between team members and resolve conflict among team members. Leaders can encourage team members in a diversified team to share tacit knowledge and communicate with each other in regular manner which can help them to understand each other’s perspectives. A well engaged but diversified team has the ability to coordinate help an organization to gather knowledge from external sources and transfer the knowledge through all the department in the organization. Wee and Morse (2007) pointed out that leaders within the organization should confuse the members of a diversified team regarding the business objectives because that will create conflict of interest which can hurt the process flow within the organization. It is evident from the above discussion that cultural diversity within the organization can work as strategic pillar for tacit knowledge sharing and innovation achievement which can alternatively help an organization to achieve leadership position. Ethical Culture and Diversified Culture It is evident from the research works of Zhang, Lowry, Zhou & Fu (2007) that ethical organizational culture can significantly impact the diversity within organization but very research scholars ever tried to understand the pattern of the interaction between ethical culture and diversified culture. Due to lack of evidences and literature on the topic, it is very difficult to predict the nature of interaction between cultural diversity and ethical principles within organization. However, research work of Mello and Ruckes (2006) can be used to identify the relationship. For example, top management in an organization can maintain ethical principals by avoiding any kind of discrimination within the organization and giving equal opportunities to every member in the organizations. Creating a diversified team without discriminating in terms of social class, gender, culture, nationality, geo-demographic orientation can be classified as work practice driven by moral and ethical principles. Organizations can exercise such kind of practices in order to create not only diversified team but also create sense of belongingness among team members. It is evident from such kind of assumption that organizations can use ethical culture to create diversified environment which can not only help them to achieve innovation but also help them to achieve leadership position. Case Study- HSBC Organizational culture of HSBC (which is a renowned multinational global financial organization) can be used understand how organizations can integrate diversity and ethics to achieve leadership principles. Integration of these two factors can be depicted in the following manner Ethical Culture Culture of Diversity Organizational Leadership HSBC use external auditors in order to validate its financial credibility and also follow all the legal norms of corporate governance in order to maintain operation in particular country. The company strictly prohibits any kind of discrimination regarding ethical practice or recruitment in order to address interest of stakeholders. HSBC also publishes its financial results in periodic manner in order to help investors to know about the stock valuation of the company in transparent manner. The company recruits candidates from all parts of the world and discrimination regarding nationality, geographic, culture is strictly prohibited in HSBC. The company diversifies its product portfolio in periodic manner in order to cater requirement of market in efficient manner and pool of diversified team members help the company to offer services in responsive manner. HSBC is one of the top 6 publicly traded organizations in the world with market capitalization over $120 billion. The company has achieved leadership position in terms of product innovation, customer loyalty and brand value. (Source: HSBC, 2011) Conclusion It is evident from the above theoretical arguments of various research scholars and practical case study of HSBC that organizational culture can be influenced by norms of ethics and diversity. But, external leadership is needed in order to integrate ethics and diversity with culture and using both the variables as staircase to achieve sustainable competitive advantage and leadership position. In order to reach any conclusive decision, further research is needed in order to understand actual nature of interaction between cultural and ethical variables within cultural context of the organization. References Ashkanasy, N., Hartel, C., & Daus, C. (2002). Diversity and emotion: The new frontiers in organizational behaviour research. Journal of Management, 28(3), 307-38. Baucus, M. S., Norton, W. I., Baucus, D. A., & Human, S. H. (2008). Fostering creativity and innovation without encouraging unethical behaviour. Journal of Business Ethics, 81(1), 97-115. Cameron, K. S., & Quinn, R. E. (2006). Diagnosing and changing organizational culture: Based on the competing values framework. San Francisco, CA: Jossey-Bass. Crane, A., & Matten, D. (2007). Business ethics. Oxford: Oxford University Press. HSBC. (2011). Connecting Customers to Opportunities. Retrieved from http://www.hsbc.com/1/PA_esf-ca-app content/content/assets/investor_relations/120420_hsbc_corporate_brochure.pdf. Hubbard, E. E. (2004). The diversity scorecard. Oxford: Elsevier: Butterworth-Heinemann. Huhtala, M., Feldt, T., Lamsa, A. M., Mauno, S., & Kinnunen, U. (2011). Does the ethical culture of organisations promote managers’ occupational well-being? Investigating indirect links via ethical strain. Journal of Business Ethics, 101(2), 231-47. Janssens, M., & Zanoni, P. (2005). Many diversities for many services: Theorizing diversity (management) in service companies. Human Relations, 58(3), 311-34. Kaptein, M. (2008). Developing and testing a measure for the ethical culture of organizations: the corporate ethics virtue model. Journal of Organisational Behaviour, 29(7), 923-47. Mello, A., & Ruckes, M. (2006). Team composition. Journal of Business, 79(3), 1019-39. Polzer, J. (2008). Making diverse teams click. Harvard Business Review, 86(7/8), 20-1. Sims, R. R., & Brinkmann, J. (2003). Enron ethics (or: Culture matters more than codes). Journal of Business Ethics, 45(3), 243-56. Trevin˜ o, L. K., & Weaver, G. R. (2003). Managing ethics in business organizations: Social scientific perspectives. Stanford, CA: Stanford University Press. Wee, J., & Morse, O. (2007). Juggling people – secrets for successful teams. Cost Engineering, 49(8), 38-9. Zhang, D., Lowry, P. B., Zhou, L., & Fu, X. (2007). The impact of individualism-collectivism, social presence, and group diversity on group decision making under majority influence. Journal of Management Information Systems, 23(4), 53-80. Read More