Academic journal article The Journal of Business Communication

Cultural Change in Ethical Redemption: A Corporate Case Study

Academic journal article The Journal of Business Communication

Cultural Change in Ethical Redemption: A Corporate Case Study

Article excerpt

"The whole affair made me feel like my favorite aunt had been arrested for prostitution. This unusual analogy characterized the sorrow of Robert Carlson for a company he had served with pride for almost fifty years. As public relations director and spokesperson for the Sundstrand Corporation, a Fortune 500 company based in Rockford, Illinois, Carlson found himself in the middle of a federal fraud investigation that would result in the largest financial judgment ever sought against a Defense contractor ("Sundstrand Admits," 1988). At the time of the investigation, Sundstrand was the nation's 100th largest defense contractor (Orr, 1988, September 18), and its unethical conduct produced a crisis in public confidence that jeopardized its financial position with commercial and governmental markets. Further, public humiliation brought to light the existence of a corporate culture of fear and hostility, and management efforts to cover up the crisis only deepened the hostility and shame.

When an organization finds itself embroiled in a crisis situation of this magnitude, effective damage control requires that it develop effective external communication strategies to restore its public image, as well as effect necessary cultural change within the organization to preclude the reoccurrence of the problem.

As our analysis of the case study of Sundstrand illustrates, the organization initially opted to control the crisis damage by use of external communication. For various reasons, which will be illustrated and analyzed later, this approach failed.

Insight into various types of effective external communication strategies, for use in attempts to restore one's image, is being refined by an ever-expanding body of relevant research (Allen & Caillouet, 1994; Benoit & Brinson, 1994; Benoit & Hanczor, 1994; Benson, 1988; Marcus & Goodman, 1991; Nelson, 1984). Excellent summaries of research of external communication during a crisis appear in Hobbs (1995) and Sturges (1994). Since Sundstrand's problems were so deeply rooted in ethical violations, effective damage control required more than cosmetic public relations efforts.

Ethical standards are a normal part of conducting business, because "organizational communication is addressed to an audience, whose beliefs, biases, goals, and perceptions of the communicators impose constraints on their actions" (Conrad, 1985, p. 201) and employees are expected to submit to these constraints. Organizations make value judgments about what constitutes appropriate behavior to meet their goals. In the case of government contracting, the ethical standards for reporting and billing are imposed on the contractor's existing standards. For key Sundstrand employees, what was "acceptable" behavior ultimately differed from the government's standard and was labeled fraudulent activity. There were several reasons for misconduct. First, competitive pressures to make a profit can cause steps to be taken to avoid "giving away the store," even though ethical boundaries may be crossed (Harris, 1993). Second, government standards were sufficiently ambiguous to allow contractors latitude in completing a project. Third, a cozy relationship between government regulators and contractor representatives allowed Sundstrand employees to violate the spirit if not the letter of several ethical standards.

Thus, governmental ethics guidelines must be integrated into the corporate culture to ensure compliance. Culture may be defined as "written and unwritten expectations of behavior (rules and norms) that influence the members of the organization" (Pace & Faules, 1994, p. 62). But more important than simple rules promulgated by leaders, "Meanings evolve through social interaction and sense-making activities of people . . . creating and recreating the social structure that makes an organization" (Smircich & Calas, 1987, p. 231). An organization's ethical orientation within its corporate culture seeks to determine what decisions will be made, and yet member decisions have a powerful effect on the reshaping of those same standards. …

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