How to Create and Maintain an Ethical Organizational Culture

This 15-minute module will demonstrate how to create and maintain an ethical culture in your organization by:

1. Showing the ethical decisions in everyday life

2. Defining key terms and concepts

3. Explaining management initiatives

4. Assessing your knowledge with a 10-question quiz

1. Ethics in Everyday Life


By the end of this module, 

Participants will be able to pass a 10-question Multiple Choice quiz by identifying the ethically correct choice in a given situation.

Let's take a survey to see how you respond to some everyday ethical situations!

Today you see your boss by the coffeemaker, and he congratulates you on a project that was completed well - but it was your colleague who did most of it. Do you correct your him and let him know you don't deserve the praise?

  • I have to make sure my colleague hears the praise directly from the boss!
  • Well.. I'll accept the praise, but I'll let my coworker know when I get back to my desk

A frequent customer drops by with movie tickets for you to share - in exchange for expediting his delivery for today instead of the standard 1-3 business days. The phone has been ringing constantly with customers with the same request. What do you do?

  • I'm making plans for a movie date!
  • I'll decline - it's not fair to those other customers

Yesterday, you forgot to clock out for your lunch break and your manager didn't seem to notice. Today, she seems just as busy. If you keep "forgetting", you might get to leave early on Friday or have a nice extra amount on your paycheque. What do you do?

  • I'll email her so she can correct my payroll when she's not busy
  • I'll simply "forget" until my manager asks me about it

Everyday Ethics

Many of us take ethics for granted, because we assume other people will always make the "right" choice. 

However, this choice is not always an easy decision for employees of corporations, who often strive for financial success above all else.

What's the Worst that Could Happen?

When companies disregard ethics when making decisions, their customers can lose faith in them.

TD Bank

In early 2017, a report was released stating TD Bank employees were manipulating customer's bank accounts in order to reach their ever-increasing sales targets.

TD Bank - The National


In 2015, it was revealed Volkswagen had created a "cheat mode" for emissions tests, and that their cars were much worse for the environment than originally advertised. 

Volkswagen - The National

2. Key Terms and Concepts

Let's Learn Some Definitions

  • Ethics
    The study of moral values or principles that guide our behaviour and inform us whether our actions are right or wrong
  • Ethical Work Climate
    The shared concept of right and wrong behaviour in the workplace that reflects the true values of the organization and shapes the ethical decision-making of its members
  • Organizational Culture
    A system of shared meaning held by members that distinguishes the organization from other organizations

You might be thinking, "How can anyone expect a whole company and all their employees to have a change in perspective?"

Well, there are 4 main catalysts that facilitate a change in culture:

•Dramatic Crisis 

•Turnover in leadership 

•Young and/or small organization

•Weak culture

Read the statements below and see if you can fill in the correct term!

A may result in a new CEO or senior management team. They will bring with them best practices from previous organizations along with a fresh perspective of how to respond to challenges.

With only a few years or a few staff members, a  is less likely to have developed a negative culture, and any changes can be much more easily communicated.

A culture may change due to , a shock that challenges the status quo, such as the loss of a major client or a breakthrough success by a competitor.

The more widely held a culture is, the more difficult it will be to change. If the organization already has a , the more likely the members are open to change.

Creating and Sustaining Organizational Culture

How Organizational Culture Form

Culture is largely based on what has worked well in the past.

The 3 Stages of Socialization

Socialization impacts productivity, organizational commitment, and the eventual decision to stay with the organization.

Characteristics of Ethical Cultures

Now what?

We now understand what causes organizations to change, and we also know how to create and maintain a culture.

The next question is...

What characteristics do ethical organizations possess?

•High in risk tolerance 

•Low/moderate in aggressiveness 

•Focusses on both means and outcomes

Employees are encouraged to try new things, discouraged from aggressive competition, and attention is paid to both why and how things are done

3. What Can We Do?

The Role of Management

Things managers must be aware of

  1. First, recognize that employees will be influenced by the signals, such as money and profit may be everywhere, but reminders about ethical standards seem not as important
  2. Second, managers should encourage conversations about moral issues, which serve as a reminder to make decisions with ethics in mind
  3. Next, we should all be aware of our own moral "blind spots" - the tendency to see ourselves as more moral than others
  4. An environment that encourages open discussions and does not penalize people for coming forward is key to increasing the prevalence of ethics in employees's decision making 

Habits managers can form

  • Managers must be a visible role model
  • Communicate ethical expectations
  • Provide protective mechanisms 
  • Provide ethics training
  • Visibly reward ethical acts and punish unethical acts

Understand the Reasons Behind Unethical Behaviour

Cheating is not always rational

It's important to understand why people may behave unethically.

  • It's not always for cash - In one study, researchers put Coke bottles and dollar bills in a dormitory. Within 72 hours, all the Coke was gone - but none of the cash
  • It's contagious - Among high school students, 93% admitted to cheating, and the top reason was having seen their peers cheat
  • Moods affect cheating - People cheat more when they're angry
  • Incentives matter - When the stakes are high, people are more willing to resort to cheating to reach their goals

Ethical Decision Making

Ethical Decision Criteria

  • Utilitarianism: decisions are made solely on the basis of their outcomes, ideally to provide the greatest good for the greatest number.
    Promotes productivity but may sideline minority representation
  • Make decisions consistent with fundamental liberties such as the Canadian Charter of Rights and Freedoms i.e. rights to privacy, free speech, and due process. This protects whistle-blowers

  • Ensure justice by imposing and enforcing fair and equitable rules fairly and impartially. Union members favour this approach, although it may encourage a sense of entitlement that reduces risk-taking and innovation
  • Care for others by being aware of their needs, desires, and well-being, and protects the special relationships individuals have with each other

Ethical Decision Making Process

Follow this flowchart to ensure your decisions are ethical in nature:

Corporate Culture & CSR

Joel Balkin, UBC law professor

According to Joel Balkin, author of The Corporation and law professor at UBC, the only legal duty of a corporation is to maximize profits for stockholders.

Corporate Social Responsibility

There is a growing trend towards companies engaging in charitable partnerships. This improves their brand image, corporate culture, and their communities.

Tim Horton Children's Foundation is an example of Corporate Social Responsibility.

Wrap Up

Thank you for participating!

Let's review the main points

  • Ethics might not always be an organization's top priority
  • All employees can contribute to an ethical culture
  • Managers must be a role model for ethical behaviour

Take a moment to review the material before moving on to the quiz.

Question 1

The catalyst causing a change in culture for Volkswagen and TD Bank is a 

Question 2)  Which company would be most at-risk for an unethical culture?

  • A small organization of a few employees
  • A commission-only sales office
  • A large retail chain

Question 3

A company that makes its decisions based on taking a popular vote would be using a   approach by aiming to provide the greatest good to the greatest number of people.

Question 4) Managers must:

  • Regularly test employee's ethics by debating hot-button issues in the office
  • Engage employees in thoughtful discussions regarding their business
  • Ignore the concept of ethics and teach only job-related duties

Question 5) When an employee makes an unethical decision, the manager should deal with it as quietly as possible so that the other employees don't hear too much about it, or what came of it.

  • True
  • False

Question 6) When making sure your decision is ethical, which of the following questions should you NOT ask yourself?

  • Does the decision respect the rights of the individuals involved?
  • What's in it for me?
  • Is the decision fair and equitable?
  • Is the decision motivated by self-serving interests?

Question 7) The stages of new employees socializing to their new workplaces are as follows:

  • Prearrival
  • Encounter
  • Metamorphosis

Question 8)

Tim Horton Children's Foundation is an example of 

Question 9) A "moral blind-spot" is:

  • Something you should have better morals about
  • The tendency to think you are more moral than others
  • A morally controversial topic

Question 10) People cheat more when they are feeling:

  • Angry
  • Happy


Great work!

Thank you for participating in this module. 

Please remember to always keep ethical decision making in mind during your professional career!



Bakan, J. (2004). The corporation: The pathological pursuit of profit and power. Toronto: Penguin Publishing.

Breward, K., Judge, T., Langton, N., Robbins, S. P. (2016). Organizational behaviour: Concepts, controversies, applications (7th ed.). Toronto: Pearson.

CBC News The National. (2015, September 21). Volkswagen Canada halts some sales as emissions rigging scandal deepens. Retrieved from

CBC New The National. (2017, March 17). TD Bank employees may have broken law. Retrieved from

[Digital image]. (n.d.). Retrieved March 23, 2017, from

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