- Defining corporate culture
- Types of organizational cultures
- Types of organizational cultures continued
- Compliance vs values-based ethical cultures
- Differential association and whistle-blowing


[SLIDE 1]

A company's corporate culture is the shared beliefs of its top managers in how the organization should be managed. A company's organizational culture includes shared norms, values, customs, and rules that influence employees and their behavior as well as how they resolve ethical issues.

Sarbanes-Oxley 404 is a section of the Sarbanes-Oxley Act that outlines the characteristics of an ethical corporation. Section 404 requires organizations to formally adopt a set of values that make up the corporate culture. It also requires managers to assess how well the organization's internal controls are working. Additionally, managers are required to have external auditors evaluate the organization's internal controls when the company's financial statements are audited. 

The purpose of Sarbanes-Oxley 404 is not just to change a company's accounting practices. Rather, it is designed to change a company's corporate culture as well. Sarbanes-Oxley 404 was designed to expose fraud, theft, mismanagement, and abuse, and to foster a corporate culture that does not allow these things. 


[SLIDE 2]

There are six general types of organizational cultures including an (1) apathetic culture, (2) caring culture, (3) exacting culture, (4) integrative culture, (5) compliance culture, and (6) values-based ethics culture. 

In a company with an apathetic culture, minimal concern is shown for performance or people. Individuals tend to focus on their own self-interests. An example of a company with an apathetic culture is one that eliminates its pension program as a cost-saving measure.


[SLIDE 3]

In a company with a caring culture, people are shown a great deal of concern, but there is minimal concern for performance. From an ethical standpoint, companies with this type of culture sound very appealing, but few companies succeed long-term when they are not concerned with performance. There are few companies that have caring cultures. 

An exacting culture is the opposite of a caring culture. In an exacting culture, there is a great concern for performance, but there is minimal concern for people. The primary focus is on the interests of the organization.

In a company with an integrative culture, there is a high concern for both people and performance. Management recognizes that employees are an important component of the company's success. Such companies often mentor their employees to help them grow in their positions and rise up the corporate ranks. Many companies have integrative corporate cultures.


[SLIDE 4]

A compliance culture uses a legalistic approach to ethics. In such a culture, laws and regulatory rules form the basis of ethical codes of conduct. Companies with compliance cultures are primarily concerned with risk management instead of fostering an ethical culture. 

Many companies are embracing a values-based ethics culture. This is a type of culture where an explicit mission statement defines an organization's core values and how people should be treated. In a values-based ethics culture, the focus is on trust, transparency, and respect so that ethical issues can be identified and dealt with. 

A cultural audit is an assessment of an organization's values that is used to identify its corporate culture. Cultural audits can be done by either external or internal auditors.


[SLIDE 5]

In differential association, ethical or unethical behavior is learned from those who are part of intimate personal groups. For example, young people tend to form friendships with certain groups. The behavior of the group influences the ethical behavior of the individual. An example in business is when a new pharmaceutical sales representative is pressured into padding her expense account because that's what the company's other sales representatives do. If she doesn't do it, she is told, it will make everyone else's expense accounts look too high.  

A whistle-blower is someone who reports a company for wrongdoing in order to influence the company to change its behavior. Whistle-blowers are often compensated for their actions if the information they provide leads to a conviction. Whistle-blowers are protected by law against retaliation.  

A qui tam relator is a company insider who provides information about a company's wrongdoing to the federal government under the Federal False Claims Act.