Organizational Culture and Ethical Behavior

According to Reuters

Goldman Sachs is no longer one of the top three commodities banks. That enviable place has been usurped by rivals JPMorgan, Morgan Stanley, and Citibank.

The decline of organizational culture

has over time eroded business ethics leading to scandal after scandal. From here on its downhill for the company, because we live in a word where ethical behavior and trust has become increasingly valued. Organizational culture forms the basis of business ethics and thus is responsible for ethical or unethical behavior within an organization. Therefore, to promote ethical behaviors and practices in an organization it is prudent for the organization to cultivate a culture or climate that promotes moral behavior. For this research paper, I shall examine the relationship between organizational culture and ethical or unethical behavior in Goldman Sachs & Co. By relying on Cooper\u2019s ethical decision making model, I shall also demonstrate how to solve an ethical dilemma.

Introduction

Organizational culture refers to a set of beliefs, behaviors, or shared values found within a company that is responsible for its distinct psychological and social climate. Corporate Culture changes depending on the shared values in the organization. Case in point, Goldman Sachs & Co. was a Wall Street firm whose reputation for integrity, humility, and teamwork made it one of the most reputable firms. However, the culture of the organization which was focused on customer service evolved into one of \u2018money first.\u2019 The climate in the organization grew toxic as shared values were lost as were the business ethics. Corporate culture develops organically and is thus are difficult to control. The morals held by the organization from its leadership all the way to the most junior employee determine its culture. Once these morals are no longer the basis for decision-making, unethical practices creep in and business suffers in the long run (Maloney 2010).

Despite many scandals

Goldman Sachs remains a top performer in several business areas including but not limited to investment banking, banking and investing, institutional client services, and investment management. However, its reputation as a customer focused investment company has suffered from the numerous scandals that the company has suffered. Goldman Sachs has been accused of numerous unethical practices. From helping Greece hide its mounting debt over ten years, mishandling of mortgages to its trading interests taking precedence over those of clients. The decay of morals can be directly attributed to the climate the company\u2019s leadership oversees; a climate devoid of morality or business ethics. \u00a0Previously, membership to the Goldman\u2019s elite group was considered a most coveted position. Not anymore, the firm has lost its ability to appeal to appeal to most members of society who are well aware of the firm\u2019s willingness to cross any ethical boundaries.

Cooper\u2019s Ethical Decision Making Model

provides a way of designing a series of questions to guide public administrators in a systematic examination of very difficult ethical dilemmas. Cooper’s model is a sequential and logical approach to ethical decision-making. According to Cooper, the first thing to do is to describe the problem. In a company the size of Goldman Sachs, managers and administrators should encourage employees to voice ethical concerns or dilemmas (Abbasi 2013). Once a description of the problem has been presented, the next task is to identify the problem and define its scope by analyzing the underlying issues. Case in point, in the fall of 2014 Rohit Bansal was convicted of leaking confidential federal documents for profit. The culprit forwarded information to other parties in complete gross of the confidentiality policy. Such incidences are usually an indicator of an underlying problem. For Goldman Sachs, this problem is conflict of interest. Most employees of Goldman and Sachs have worked with the Federal government before joining the organization. This obviously creates a conflict of interest where employee have access to sensitive market information either directly or indirectly.

The next step in cooper\u2019s model

is the identification of potential courses of action. What should the supervisor or administrator do now that he or she has identified the source of conflict of interest? The possible solutions and their alternatives are discussed in detail, weighing their pros and cons. There are several courses of action that were available to Goldman and Sachs including reducing the number of employee with federal history or instituting controls so employee do not have access to confidential information. Personally, I think that the best alternative for Goldman and Sachs as a company would be to sever all ties with the federal dealings that make their dealings suspect. This includes increasing the transparency and accountability of processes which increases customer trust in the organization (Jayakumar 2016). In addition, several controls need to be put in place. Administrators can use internal and external controls to maintain business ethics. Background checks should be performed for instance, to reduce chances of hiring employees that might create a conflict of interest for the organization.

Cooper\u2019s model for solving ethical dilemmas

also states that ideal solution balances these four elements. First, the decision should be based on morals, that is, no implementation of illegal or illicit subject matter. In \u2018rehearsal of defenses\u2019, the decision should also consider how the other possible solutions align with the company\u2019s overall objectives. The decision to cut ties with the federal government will create a perception of honesty and create trust with its customer base. Also, in cases where organizational values are in competition, the company should design a hierarchy of moral values. For instance, For Goldman Sachs client interests should trump the pursuit of profit. Finally, Cooper stresses that an administrator should also take into account the aftermath of the decision. This is because the satisfaction of the parties involved is key to sustaining the decision.

References

Jayakumar, Uma M.; Comeaux, Eddie. (2016|) The Cultural Cover-Up of College Athletics: How Organizational Culture Perpetuates an Unrealistic and Idealized Balancing Act.

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Abbasi, Enayat; Zamani-Miandashti, Naser. (2013) The role of transformational leadership, organizational culture and organizational learning in improving the performance of Iranian agricultural faculties. Higher Education (00181560). Vol. 66 Issue 4, p505-519. 15p. 2 Diagrams, 4 Charts. DOI: 10.1007/s10734-013-9618-8.

Maloney, Krisellen; Antelman, Kristin; Arlitsch, Kenning; Butler, John. (2010) Future Leaders’ Views on Organizational Culture. College & Research Libraries. Vol. 71 Issue 4, p322-345. 24p.