Revelation of Unethical Decisions in Business and Company Culture

Tue, 14. June 2016

The Panama Papers are a very illustrative example of where the world is moving towards to. The leak is the greatest revelation in history affecting several heads of state and numerous political, cultural and sports personalities. It now seems that these companies and wealthy individuals have been showing an ethical image towards the public while using the rest of their time to engage in unethical business activities using offshore tax havens.

 

All of the data that resulted in the Panama Papers scandal was released “just to make these crimes public” in words of the informant. Therefore, it has to be noted that living in the digital age means that the failure of a company’s ethics and culture will come to light all over the world.  

 

 

The corporate culture topic: important, often-repeated or old?

 

Corporate culture has been a recurring theme of the analysis and the HR areas. For some it is a topic of great importance and for others, one that is overrated and in which not to invest more than necessary.

 

It is indeed this last group the one that is most likely making employees feel less engaged with their work and could benefit the most from shaping its culture. So, why is company culture important? Many studies determine that organizational culture is the best strategy to have a great impact on a company’s employee morale, productivity and satisfaction. In order to improve their performance and employee retention, companies should engage their workforce.

 

According to a Sage Software study, “increased employee engagement results in a higher level of customer service, which leads to increased customer loyalty. All these factor into increased revenue and greater profitability. Investing in employee engagement increases workforce retention and thus decreases employee turnover costs. But the advantages of engaged employees goes far beyond the reduction of the turnover rate. Increasing employee engagement correlates directly with a positive impact on key business metrics.” In fact, Gallup Consulting revealed that companies with high engagement owned a faster EPS growth rate of 28%, while the EPS growth rate of companies with low engagement decreased by 9.4%.

 

Why company culture can fail

 

Corporate culture is not a luxury and not a trend. As it is part of the identity of the organization, it must be strategically managed. The culture code must be linked with the corporate behavior to generate both tangible and intangible profits. For some companies their culture has become their success factor. Therefore, each and every single one of the workers of the company should be steeped in its corporate culture to not disturb the normal performance and image of the company. Organizations show at every moment the level of corporate culture they have (or not) and strengthen or weaken the image that the general public has of them. It is beyond doubt no longer just about selling products, but also about selling an image.

 

To stay relevant today some companies, such as those involved in the Panama Papers, FIFA and other scandals we constantly witness in the news, create a deceiving image of their corporate culture to mask an unpleasant reality. The example of this is the inside story of the journalist Dan Lyons about what working at US startup HubSpot really is like. HubSpot has a culture code that is a model for many other startups, but what happens when it is a more aspirational code and it is not describing exactly how the company really is?

 

The positive case is the startup Optimizely. Dan Siroker, CEO of Optimizely, supports the culture of transparency and meritocracy of ideas backed by data. This culture of ownership will help make better decisions as the person who is closest to the decision and has the data should come to a conclusion. Due to this transparency and a needed 10% reduction in their workforce, Dan Siroker not only chose to send a very clear e­mail to employees but also made it public on the company’s blog.

 

Regardless of the product or services companies sell, aligning organizational culture and strategy is a necessary step towards maintaining an agile workplace that enhances the company’s image. However, shortcuts should not be made in order to gain a better perception of the public. It should be learned that in the digital world we live in it takes nothing to appear all over the media if the reality of a company is not as it wants people to believe it is.

 

 

Author: Teresa Casero 

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