Is Your Company’s Culture Corrupt?

Good companies are often infiltrated at all levels of the organization by crooks, and some companies are inherently crooked, but even good companies can find themselves inadvertently creating a corrupt culture that promotes unethical practices both internally and externally. Many researchers have studied the phenomenon and have identified critical elements that make an entire company go bad. What’s frightening is these characteristics are rather common, especially in organizations that tout themselves as performance driven firms.

So is your company’s culture corrupt?

Leadership is often the first to blame in any situation, but even more so when the company’s culture goes bad. In the article “Culture Corrupts! A Qualitative Study of Organizational Culture in Corrupt Organizations,” authors Campbell and Goritz analyzed corrupt organizations to identify the underlying cultural factors that create a corrupt environment. The authors found that two crucial components created an organizational culture that supports corruption. First, “[c]orrupt organizations perceived themselves to fight in a kind of war . . . [and] perceive themselves as a military force rather than as an ordinary company” (Campbell & Goritz, 2014, pg. 298).

As we all know war brings out the best and the worst in people. Starting with such an extreme approach drives the organization to win at all costs, which leads to the second key component of a corrupt culture—how they reward employees.

Corrupt organizations tie organizational survival and success to employee job security and success. Under these circumstances, the “employees’ moral and ethical concerns become less important than the concern to survive, with the consequence that employees begin to perceive corruption as a positive behavior.” In short, this creates an environment where “the end justifies the means,” and the only thing that matters is results, not how they are obtained (Campbell & Goritz, 2014, pg. 301). The leadership sets the tone by “[setting] their goals in a way that these goals are only attainable through corruption, and they distribute rewards” and apply punishment in a way that supports corruptive means (Campbell & Goritz, 2014, pg. 302).

I have heard many organizations push their sales team with the “come back on your shield mentality” or quoting the Art of War and the conference table. This is a toxic behavior, and ultimately a foolhardy and shortsighted approach to business.

The recent issues at Wells Fargo serve as a prime example. High demands were placed on employees to secure new accounts. Rewards and job preservation became closely tied to this goal. Over time employees found themselves pressured to meet these goals by any means necessary, which meant securing new accounts without the consent of the customer. Now Wells Fargo is drowning in the legal and economic repercussions of a decision that started out innocently enough, but that ultimately lead to an enterprise wide display of unethical behavior.

Many people can’t understand how Wells Fargo was able to let the situation get so bad. The answer is fear and silence. Fear and silence infect the whole organization and it is through fear and silence that immoral persons are able to falsify numbers, engage in conflicts of interests, and other unethical behaviors. The buck truly stops with leadership. The recent HBR article, “Why Ethical People Make Unethical Choices,” showed that a manager’s reaction to employees who raise concerns determines whether they will ever speak up again (Carucci, 2016). Leaders need to make it okay to speak. Still, they are not the only ones to blame.

Whether through fear or silence, all members of the organization become complicit in the moral collapse of the whole firm when they don’t speak out against the unethical few. Author C.E. Johnson notes that some “don’t want to believe the organization is in trouble” and so choose to ignore what they see (2015, pg. 325). Self-imposed ignorance and inaction represents immoral behavior just as detrimental to the firm as the immoral behavior they are ignoring.

The push to win at all costs is a dangerous and slippery slope for companies. Don’t let a drive for results and success undermine the very fabric of your organization. Don’t let economic incentives erode the moral fiber of your company. Build an organization with a worthy purpose and set standards of behavior and money and success will naturally follow. Shortcuts ultimately leave you stranded, or worse, in jail. Better to take the high road.

 

 

References

Campbell, J., & Goritz, A.S. (2014) Culture corrupts! A qualitative study of organizational culture in corrupt organizations. Journal of Business Ethics. 120, 291-311. Retrieved October 8, 2015 from the EBSCOhost database.

Carruci, R. (2016, December 16). Why ethical people make unethical choices. Harvard Business Review. Retrieved from https://hbr.org/2016/12/why-ethical-people-make-unethical-choices.

Johnson, C.E. (2015). Meeting the Ethical Challenges of Leadership: Casting Light or Shadow (5th ed.). Los Angeles, California: SAGE Publications Ltd.

 

Shennandoah Goodson

Shennandoah is the founder of 525 Principle. She regularly speaks and contributes articles on a variety of topics to outlets such as SXSW Interactive, Society for Marketing Professional Services, Commercial Real Estate Women, and numerous others.

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