Institutional Culture and Individual Behavior: Creating an Ethical Environment

Institutional Culture and Individual Behavior: Creating an Ethical Environment

Christopher Meyers, PhD

Abstract: Much of the work in professional ethics sees ethical problems as resulting from ethical ignorance, ethical failure or evil intent. While this approach gets at real and valid concerns, it does not capture the whole story because it does not take into account the underlying professional or institutional culture in which moral decision making is imbedded. My argument in this paper is that this culture plays a powerful and sometimes determinant role in establishing the nature of the ethical debate; i.e., it helps to define what are viable action options, what is the organization's genuine mission, and what behaviors will be rewarded or criticized. Given these conclusions, I also argue that consulting ethicists need more than an understanding of ethics theory, concepts and principles; they also need a sufficiently rich understanding of organizational culture and a willingness and an ability to critique that culture.

Key Words: organizational culture, Patricia Werhane, character, consulting ethicist, ethnography

Whether business organizations should commit to creating an ethical environment is, one would hope, no longer under question. That is, arguments by the likes of Albert Carr (1) and Milton Friedman (2) notwithstanding, one no longer needs to justify the importance of creating ethical organizations. Rather, the interesting question now is how to achieve this.

My argument in this paper is, first, in order to achieve an ethical organization, one must focus as much on organizational culture as on individual behavior. And, second, when one does so focus, one sees that culture is created and maintained by two processes: the top-down establishment of institutional values by owners and managers and the carrying out of those values by in-the-trenches employees. Importantly, these conclusions carry across a wide spectrum of organizational settings, including those in technical fields. The key is not so much the mission of the organization, but its structure - how it is governed and what values are promoted and sustained. If anything, these arguments apply all the more to technical organizations: they typically have clear hierarchical structures and their core employees, engineers, have already been inculcated into professional norms.

Scientists and engineers are also inclined to compartmentalize their work, to focus on their individual project without questioning, let alone regularly challenging, the organization’s overall mission and activities. Because, I argue, such criticism is vital to an organization’s ethical health, I also conclude that it is one of the important tasks of organizational ethicists. This role, however, necessitates that ethicists have both empirical skills adequate to understanding and analyzing organizational culture and sufficient distance from that culture to make effective ethics recommendations.

The Importance of Culture. The subtitle of this paper might be "Why Do Good People Do Bad Things?" The question has to be asked in this way because much of ethics, both popular and professional, too often presumes that morally bad actions result from three sources: good people making mistakes (out of confusion or ignorance), good people having weakness of will, or bad people choosing to do evil. With this presupposition as a backdrop, the goal of professional ethics becomes finding ways to help good people avoid mistakes and have their will strengthened, and to determine appropriate punishment for wrongdoers. Theory and method, then, become tools for achieving this goal; i.e., they provide principled guidance and explain when to exact retribution when such guidance fails.

Such a goal is a worthwhile start, as many ethical problems do result from error, weakness and vice. But many also result from an organizational culture that promotes internal or prudential values at the expense of ethical ones, e.g., the culture often values productivity over moral principles (3). Within such a culture, good people will thus sometimes make 'correct' choices that are nonetheless ethically problematic. That is, they will make knowledgeable choices, they will do so with strength of character and virtuously, and yet these choices will be unethical.

This claim is admittedly counter-intuitive. How can it be that good people make correct choices that are nonetheless unethical? The question has to be answered in two parts--first, why are the choices "unethical" and, second, if they are, how can they nonetheless be "correct"? The first part is relatively easy: they are unethical because they violate accepted moral principles or produce ethically undesirable outcomes, at least as the choices are seen from outside the organization.

The "outside the organization" caveat also points to the answer to the second part: persons within the organization make choices consistent with its cultural values--with its norms, its goals, its beliefs--and because of this consistency the choices are organizationally "correct," even when they do not align with broader moral principles. In its stronger form such consistency becomes a mindset, a filter through which participants view their world. And it does more than simply motivate certain attitudes; it also works to create a conceptual scheme. Patricia Werhane explains it as follows:

We all perceive, frame, and interact with the world through a conceptual scheme modified by a set of perspectives or mental models. Putting the point metaphorically, we each run our "camera" of the world through certain selective mechanism: intentions, interests, desires, points of view, or biases, all of which work as selective and restrictive filters. We each have what I call our own metaphysical movies of the world, because they entail projections of one's perspective on the given data of experience (4).

These schemes, especially when they are rooted in a powerful group culture, significantly contribute to how agents perceive problems, how they categorize them, how they understand and ascribe value, and when and how they act. Dennis Gioia, the Ford manager responsible for making the recommendation not to recall the Pinto despite the car's history of devastating fires following minor accidents, describes Ford's corporate scheme in his memoir of those events:

My own schematized ... knowledge influenced me to perceive recall issues in terms of the prevailing decision environment and to unconsciously overlook key features of the Pinto case, mainly because they did not fit an existing script. Although the outcomes of the case carry retrospectively obvious ethical overtones, the schemas driving my perceptions and actions precluded consideration of the issues in ethical terms because the scripts did not include ethical dimensions (Werhane, 1999: 56, italics added).

This description reveals why traditional accountability ascription, i.e., why appeal to evil intent, weakness of will or error, is inadequate. By all accounts Gioia was hardly a vicious person, his account does not fit weakness of will--which assumes the agent knows better but gives in to temptation--and his choices were anything but ignorant--he had all the relevant facts at his disposal. In short, he was a good person who did bad things. The key to seeing why this follows is present in Gioia's statement that he "unconsciously overlook[ed] key features" of the case. It is not that he chose to set those aside, or that he fearfully refused to broach them with his superior; rather, he literally did not see them. He was caught up in the organizational script.

How can this be? A complete answer would require a fuller account of the metaphysics involved than is appropriate for this paper, but let me point to a couple of central elements. First, as Aristotle stressed, humans are social animals. For Aristotle, and particularly for those from the Continental (a) and crossover (b) traditions who have made intersubjectivity core to their theories, this means much more than just that we enjoy being in other humans' company: our values, our interests, maybe even the very way we perceive the world is the product of our social relations. Isolated individuals cannot, a lá Descartes or Jefferson, simply use reason to discern truth, moral or otherwise. Or at least persons do not do so and especially do not do so when they acquire and act upon their values.

Second, even if much of moral decision making is individualized, it is far more likely persons will rely upon socially determined moral frameworks when placed in a new cultural environment, for example, when starting a new job. In such an environment we spend much of our time just getting settled, determining our role and place, learning the institution's goals, interests and methods. When all this occurs within a well-established and defined organizational culture, those goals, interests and methods, soon get internalized by employees. And as internalized, they become the filter through which employees see their world, understand its norms, and make "correct" choices.

None of this is meant to preclude the possibility of independent moral evaluation and decision making (a point to which I will return later). But it does reveal the power of the corporate scheme and its impact on agents' choices and behavior.

Creating the Culture. Given the complex nature of corporate culture, attention must be paid to how it is established and maintained. The most powerful influence comes from just where one would expect--executives, directors, managers, and, in smaller companies, owners; i.e., it comes from those who create and sustain the organizational agenda. They do this in both explicit and implicit ways.

Explicitly, they develop the policies, organizational rules and codes of ethics that proclaim company values. Implicitly, they do so through promotions and subtle social approval, ranging from invites to lunch or for drinks, to the "nudge-nudge, wink-wink" forms of body language. Key here is the relationship between what managers say is of value and what they actually reinforce, combined with the recognition that, according to most accounts of organizational theory, it is the implicit and subtle processes that most effectively establish organizational culture. Humans respond more to behavioral reinforcement than to verbal rules and policies.

Take, for example, the recent debacle involving Jason Blair and the New York Times, in which it was discovered that Blair, at hot young star at the nation’s leading newspaper, had plagiarized (or simply made up) many of his news stories. You can be sure editors at the Times verbally extol the value of honest and accurate reporting. Yet, despite mounting evidence of problems, they also regularly, and preferentially, treated Blair to lunch and drinks and gave him plum assignments. As was widely discussed among journalists and social critics, racial factors no doubt contributed to this unusual treatment (Blair is African-American); but the important point here is that editors reinforced his unethical practices through their approval-behavior, even though, again, they verbally condemned such practices. A similar, if more general, example is the reaction--social, professional, and sometimes academic--to hackers: the negative consequences of their actions are criticized, while their technical skills are often held in high esteem.

Often, maybe most often, the subtle reinforcement is negative, and again ranges from simple body language (e.g., physically turning away from someone) to communication style (e.g., interrupting speakers, not answering questions) to chastising. A clear example of this occurred during the debate over space shuttle Challenger’s O-Rings. Morton-Thiokol’s Jerry Mason responded to told his vice president of engineering, Robert Lund's cold-weather fears by saying, "[T]ake off [your] engineering hat and put on [your] management hat" (Werhane, 1999: 49). With that simple statement, Mason effectively established the organization’s fundamental cultural norm, recreated Lund's corporate script, and set the stage for disaster.

Addressing the Culture. Just as the culture is set by executives, directors, managers, and owners, so must it be reset by them, to make it more consistent with broader moral norms. Again, consider how the culture is established--those in positions of authority use their power to create the de facto rules and values and to motivate behavior consistent with them. And since the more subtle forms of reinforcement are the most effective, there must be a direct correlation between them and explicit statements and policies. Without that correlation, the latter come across at best as window dressing, or at worst as organizational (and managerial) hypocrisy. Indeed, the explicit statements and policies have effective value only when they serve to express what is already present in behavior.

Done well, establishing an organizational culture that prioritizes moral norms also creates or reinforces employees' character. One of the dangers with the model being defended here is that it seems to relieve individuals of moral accountability: individuals do not act unethically, organizations do. But culture does not exist independent of people; any tone--positive or negative--set by managers must be lived-out in the actions of employees. Thus in-the-trenches workers must have characters consistent with the desired norms. Others have effectively shown the relationship between organizational culture and individual character (8,9,10,11). Hence I would like instead to focus on the crucial qualities in such characters.

Of the multiple virtues present in a moral character, three are most important for organizational ethics. Employees must, first, have practical wisdom, what Aristotle called phronesis, to be able to analyze problems, to distinguish among more and less relevant facts, to know the best means for achieving desired ends, and, maybe most important, to know where to seek advice. Second, they must have honesty, with themselves--so as to avoid self-deception--, with co-workers, and with clients. And, third, they must have courage to do the right thing, even in the face of peer or managerial pressure.

Organizational culture plays a powerful role in creating and maintaining these virtues, through role modeling and through implicit and explicit reinforcement of desirable habits. But while culture is a powerful force, it is not a determining one; individual decision-making, and thus individual accountability, is still fundamental to organizational ethics. Hence individuals need a means for breaking outside the script and acting instead on moral principles. Werhane describes the process of such breaking out as using "moral imagination," by which one engages "in a critical perspective on oneself, one's activities, one's behavior, … one's situation," and one's organizational script (1999: 67). Being caught up in the script is an excuse, but only a partial one; with an ethical commitment, and with help, one can employ moral imagination. Hence, again, one sees the importance of virtuous character. Honesty is needed to truthfully appraise the degree to which one has become embedded in the script; phronesis is needed to know what good ethics demands instead; and courage is needed to act accordingly.

Role of the Ethicist. It is at this point that the value of the outside ethicist becomes most clear. In organizations with powerful cultures it is often unreasonable to expect individuals to engage in the necessary degree of moral imagination, at least without help. The culture becomes too integral a part of the employee's identity; to a great degree she defines herself via that culture. Thus to ask her to be able, wholly on her own, to break outside--first, to see the alternatives and then to act accordingly--is in too many cases simply not realistic.

Enter the ethicist, who, with her different scheme (c), can help employees to break out, to see alternative ways of considering problems, and to explore alternative actions. These skills are all part of standard ethics training in problem evaluation, values clarification, conceptual analysis, and complex reasoning. To be most successful at this kind of assistance, ethicists must have two additional qualifications.

First, they must have a sufficiently rich understanding of the specific corporate scheme with which they are working. They must be able to discern how it performs, how it defines values, reinforces behavior, privileges some beliefs and actions while condemning others, etc. They must be able to speak the organizational language and to appreciate employees' trials and tribulations. They must, in short, be able to "find [their] way about" the organization (12). These are, however, empirical skills, ones not part of the typical training in ethics, at least not philosophical ethics. While such training undoubtedly accepts that good facts are necessary to good ethics, it too often has a narrow take on which ones are relevant. On the model promoted here, the facts have to be broadly enough construed as to include the subtle processes of culture and its impact on agents' behaviors.

Thus one of the goals of this paper is to recommend ethicists receive training in an empirical method adequate to this task. Of the many available, ethnography is probably best suited,as it has as its defining thesis that the investigator strives to acquire an insider's perspective, one that sufficiently grasps the normative forces present in an organization's culture (d). By becoming sufficiently immersed in the culture’s conceptual scheme as to be conversant in it, one can get at the meaning behind the words, at the norms present in the activity of organizational agents, at the unstated rules, values and codes of behavior that underlie the apparent facts.