Corporate Culture: Definition, Role, Enforcement, and Assessment

This essay provides a comprehensive analysis of corporate culture, defining it as the shared values, beliefs, and standards that characterize an organization and its members. It emphasizes the critical role of corporate culture in the success or failure of businesses, particularly within the banking sector, where failures in risk management have highlighted the importance of a strong ethical culture. The essay discusses strategies for enforcing a financial-misconduct-free corporate culture, including the use of both hard laws and soft laws, such as ethical codes and employee incentives. It also stresses the importance of regularly assessing corporate culture to identify and address potential issues, utilizing technology-based analytics to gauge employee perceptions and impact on performance. The conclusion highlights the benefits of a strong corporate culture, including its role in supporting business strategy, influencing employee behavior, fostering trust, and contributing to financial stability.

Running head: CORPORATE CULTURE 1
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Corporate Culture
Definition
Corporate culture is defined as the shared beliefs, attitudes, values and standards which
characterize organization’s members as well defining its nature. Corporate culture is founded on
organizational structure, strategies, objectives, and approaches to investors, customers, staff, and
the community at large. Thus, it is an important element in the ultimate success or failure of any
business. By definition corporate culture impacts operations of a particular firm. Through the
same, it flows within management both outward and inward. In various corporations, the culture
was stipulated much earlier by the charismatic leadership and activities of those that found it.
While as key tendencies become more institutionalized, the “culture” also becomes a habit of the
institution that is acquired by newcomers. Through overstepping certain bounds corporate culture
can be suicidal. For instance, an aggressive, creative, high-risk might result in fraud and
eventually collapse of a corporation.
Role of Corporate Culture
Corporate culture is responsible for coordination of approaches in case of numerous
equilibria as awareness sharing facilitator and as a method to attain staff sorting and beliefs
convergence (Levine, 2018). As times goes on, it has been evident that there are matters much
importance of corporate culture in banking. Due to the recent financial crisis, it has become a key
topic for the regulators of the bank to address. This is partly because of the increasing realization
that the failures in risk management in different leading world financial institutions were not just
isolated conditions but instated systematic breakdowns reflections in corporate culture.
Enforcing a Corporate Culture

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Any financial organization that is committed to enforce a strong culture in order to reduce
lapses in standards for financial services should be able to adopt both hard and soft laws. There is
a need for a multipronged mechanism to do away with unethical behaviors and instill
trustworthiness (Parker & Bradley, 2011). Hard laws are necessary for reforming behavior and
culture in the banking sector. Such laws include the rules and regulations which government and
various bodies of regulations make for the industry.
Nevertheless, there are complementary soft laws. These refer to the corporate business
standards of business and ethical codes which banks develop and establish using their unique
processes for disciplinary actions. They are the most efficient approach to avoid escalating
financial misconduct but are also the hardest to put into action (Kirkpatrick, 2009). The best
method to enforce them is through a corporate culture that requires honesty, competence,
proficiency, and dependability of every member of staff in all circumstances.
Enforcing a Financial-Misconduct Free Corporate Culture
Maintaining a detailed staff handbook and corporate standards of conduct are not
sufficient for a strong culture. People make a positive response to incentives. It is, therefore,
important for an organization to reward employees who emulate the behavior that a company
wants (Hoffman, 2009). A European central member, Ignazio Angeloni, suggested a number of
questions that all employees should more often ask themselves. One most the questions deemed
most important by analysts was that “is the employee acting as if their actions were in public?”
this aims to make the corporate culture to shine a light in all aspects of the business (Levine,
2018). Therefore, every member of staff should work with a feeling that they are under
oversight.

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Assessing Corporate Culture
A bank must be able to frequently assess the existing culture effectively as culture is
necessary for effective financial sector services regulation. More often assessment can identify
drift and provide an opportunity for the corporate control to rectify underlies issues lest they
result in misconduct (Kirkpatrick, 2009). Technology which is analytics-based can permit an
organization to directly find out from the staff company’s culture strength. Appropriate analytics
too can help determine they way employees think of the culture and its impact on the general
performance. Regardless of the public regulations that are implemented to control the financial
sector, the banking sector requires cultural protection to safeguard its reputation (Schneider & De
Meyer, 2011). Amid a staunch culture which rewards professional ethics, an organization can
easily be implicated in the current headline-grabbing charge for misconduct.
Conclusion
A strong and efficient culture in a bank is the one that backs up the growth of the bank’s
strategy and continuously influences the behavior of the employees. It can be a kind of the
bank’s “off-balance sheet capital.” It might act as a reassurance to the regulators that there is a
possibility for prudent risk-taking and ethical standards adherence while offering the bank a
platform for sustainable and improved value creation. This is essential both in economic growth
and for financial stability as a suitable complement to more equity capital level in banking. A
corporate culture that is strong can also be employed to foster trust around banks, with beneficial
outcomes for stability and ethical behavior.

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References
Parker, R., & Bradley, L. (2010). Organisational culture in the public sector: evidence from six
organizations. International Journal of Public Sector Management, 13(2), 125-141.
Levine, R. (2018). The legal environment, banks, and long-run economic growth. Journal of
money, credit and banking, 596-613.
Schneider, S. C., & De Meyer, A. (2011). Interpreting and responding to strategic issues: The
impact of national culture. Strategic management journal, 12(4), 307-320.
Hoffman, A. J. (2009). Institutional evolution and change: Environmentalism and the US
chemical industry. Academy of management journal, 42(4), 351-371.
Kirkpatrick, G. (2009). The corporate governance lessons from the financial crisis. OECD
Journal: Financial Market Trends, 2009(1), 61-87.
Stulz, R. M., & Williamson, R. (2013). Culture, openness, and finance. Journal of financial
Economics, 70(3), 313-349.