Ethical Culture Analysis: JP Morgan Essay
Ethical Culture Analysis: JP Morgan
JP Morgan Chase & Co. is one of the largest global banking organizations, having undergone transformational mergers, which have aided it in the improvement of its position in the sector of investment banking (JP Morgan Chase & Co., 2012). The JP Morgan brand is used for marketing certain businesses, including asset management, investment banking and commercial banking. The organization is based in the United States of America and was founded in 1871 (JP Morgan Chase & Co., 2012). Since the inception of the company more than two hundred years ago, JP Morgan Chase offers a spectrum of global financial and banking services that has transformed it into an industry leader. The organization employs over seventy thousand people globally and has a total of 2.2 trillion dollars in assets (JP Morgan Chase & Co., 2012). I am interested in working for JP Morgan because it is a leading organization in the banking sector. The organization represents business growth, which I am interested in professionally. It is therefore, important that I study the ethical and work culture of the organization, to be well informed about it. The purpose of this paper is to analyze the ethical culture of JP Morgan. The paper begins by giving a short description of the organization and how it responds to antisocial behavior. The paper then proceeds to analyze the components of ethical culture found in JP Morgan based on relevant ethical theories. Finally, the paper evaluates JP Morgan’s cultural change efforts, organizational citizenship and ethical global citizenship.
How the Organization Prevents and Responds to Problematic and Antisocial Behavior
According to Borman and Motowidlo (1997), the definition of antisocial behavior varies across context, culture and time. However, when one thinks about antisocial behavior, they think about the actions that are aggressive, destructive or intimidating (Borman & Motowidlo, 1997).
Apparently, such kinds of actions negatively impact on the quality of lives of others. Some modes of antisocial behavior that JP Morgan is aimed at preventing and responding to include misuse of the organization’s space, disregard of the safety of the workplace, intimidating acts directed toward employees and clients, disclosure of confidential information and damage to the working environment (Bose, 2012). JP Morgan boasts of a strong reputation when everyone has responsibilities, as its most fundamental asset. It, therefore, has a code of conduct that guides the behavior of every employee of the company in order to prevent the occurrence of antisocial behavior. The main concept behind the code of conduct is that no one should sacrifice their integrity whether for a perceived gain to JP Morgan’s business or personal gain (JP Morgan Chase & Co., 2012). Therefore, this code of conduct is one of the measures that JP Morgan has taken to prevent antisocial behavior and to avoid any ethical transgressions that would damage its reputation.
According to JP Morgan Chase & Co. (2012), the company is dedicated to preventing and responding to antisocial behavior effectively by creating a dynamic, open and entrepreneurial workplace, while every employee is encouraged to respect others, contribute to the company, and work to the best of their ability. Firstly, the organization strives to create a culture of cooperation across borders, languages and zones.
The organization is, therefore, dedicated to creating a working environment where people support, respect and value each other. The employees are required to analyze the company’s code of conduct, which guides their decisions in various circumstances. The company requires that the new employees provide an affirmation that they have read and understood the code of conduct prior to joining the company (JP Morgan Chase & Co., 2012). Moreover, they are required to comply with it and report on any suspicions of violations as required by the company’s policies. Whenever there are issues of antisocial behavior, the employees are required to inform about conduct of others that may have led to violation of company’s policies (Bose, 2012). Furthermore, the organization urges employees to cooperate during any inquiries, examinations, litigations and investigations related to JP Morgan’s business.
When problematic issues, including unethical behavior and violations, are reported, a manager at JP Morgan is required to act with greater levels of integrity. Talking about the senior leaders, they are required to assist the employees with questions or direct them to someone who might help (Ting-Toomey & Chung, 2012). For example, when there is a suspected case of violation in JP Morgan, the manager to whom the case is reported is not supposed to investigate or ask someone to investigate it on their behalf. On the contrary, according to the code of conduct, the manager should report the issue using the proper reporting channels such as Code Reporting Hotline (JP Morgan Chase & Co., 2012). The manager should also ask the employee who reported on the issue to go ahead and use the right reporting channels. The JP Morgan Company has various forms of punishments for the employees who show sustained antisocial behavior and continually break the code of conduct. When appropriate, the problematic employees’ employment is suspended or terminated completely (Ting-Toomey & Chung, 2012). In addition, the company may demand monetary compensation due to damages caused by the employees. Lastly, the company may seek a court order restricting the problematic employee to further violate the code of conduct.
Components of Ethical Culture
There are various temptations to engage in unethical practices on the way to success in business (Anderson, 2006). In many instances, companies consider profits ahead of other components of business, which can be devastating to both the customers and the business as a whole. According to Anderson (2006), that is not the case in JP Morgan because the clients appreciate that the company understands their needs and acts with regard to their interests. The culture of JP Morgan is focused on partnership, with more emphasis being placed on trust and the desire that the company performed better. Through the use of strict company’s policies and a code of conduct, JP Morgan has clearly defined its intention of having an ethical business culture that is based on various components.
The first component of JP Morgan’s ethical culture is people. JP Morgan’s business comprises various people, including partners, employees and customers. This component is derived from the belief that people are the most valuable assets of a company. It takes the effort of people to create a company’s vision. According to Kwok and Tadesse (2006), JP Morgan regards people as its most valuable asset rather than simple assets that exist to be exploited. Kwok and Tadesse (2006) state that the financial services industry is dynamic, complex and innovative; therefore, there is the need to hire employees with the best credentials. JP Morgan agrees and understands those facts, thereby creating a structure where people involved in its organization are offered the best experience. JP Morgan believes that no barrier should prevent employees from performing to their full potential. Finally, at JP Morgan, people have the ability to advance and be rewarded based solely on their capability and character. Employees of JP Morgan are encouraged to deliver honest and constructive feedback to their colleagues (JP Morgan Chase & Co., 2012).
Meeting a commitment is the second component of the ethical business culture of JP Morgan. This component is derived from the belief that to build a strong ethical culture. It is important to meet expectations of the society and business objectives. Meeting commitments is also based on the belief that it increases business benefits and reduces costs and risks. The company is known for keeping its promises and honoring its commitments. For example, when employees are encouraged to work and are promised to be given bonuses, the bonuses always materialize (Rupp, Ganapathi, Aguilera, & Williams, 2006). In case a commitment cannot be met, JP Morgan makes sure that the other party is notified on time and is given assurance that they will receive compensation in the future.
The code of conduct, being the third component of an ethical culture, is very important in informing the employees about the needed ethical practices in an organization. This component is based on the belief that a code of conduct sustains ethical culture by providing guidelines of elements of an organizations culture. A code of conduct contains the vision and mission statements of an organization and the behaviors restricted to an organization. The ethical culture of JP Morgan is guided by a viable code of conduct that states clearly how the employees should behave at work. Moreover, JP Morgan’s code of conduct includes enforceable punishments for those who break it. For example, JP Morgan’s code of conduct states that the employees who break the code of conduct will be punished to the extent of having their employment terminated and when appropriate, monetary compensation will be sought by the company (JP Morgan Chase & Co., 2012).
Transparency and communication is the last component of an ethical culture, and it is based on the belief that good communication is the key to successful business. Transparency and good communication is very important in communicating the company’s direction. In the case of JP Morgan, an open-door policy is maintained regarding questions on the direction the company is taking. The company also allows feedback and complaints to be reported in a manner that the people who inform about some violations are not punished.
Pertinent Ethical Theories
Various ethical theories guide the process of making ethical decisions in the workplace. Ethical decision-making is not always innate, but to some, it has to be cultivated with practice over time (Rupp, Ganapathi, Aguilera, & Williams, 2006). Ethical theories offer guidance while determining whether one’s decisions affect others and whether the other’s rights are being respected or rejected. One of the related ethical theories is egoism, which states that the desire to meet ones’ needs or wishes drives someone to do what is good or bad, right or wrong (Anderson, 2006). In fact, this theory was proposed by Adam Smith and Ayn Rand. The basic principle in this theory is that one chooses an action that realizes their self-interest. The theory is related to the JP Morgan ethical culture, as evidenced by the JP Morgan and Bruno Skil (The London Whale) case (Lesova, 2012). With regard to the case, there is a lack of honesty while JP Morgan tried to delay the revelation of losses caused by its main players (Ina Drew and Iksil) under the belief that they can cope with the losses before they are discovered (Lesova, 2012). In this case, JP Morgan destroyed its reputation as a trusted bank by being dishonest.
Utilitarianism is an ethical theory that states that the fact that an action provides the greatest pleasure possible to a large number of people makes it seem right or wrong, good or bad (Rupp, Ganapathi, Aguilera, & Williams, 2006). In fact, utilitarianism was proposed by J.S. Mill and Jeremy Bentham. The theory is based on the principle of maximizing positive outcomes for large numbers of people. Hereby, utilitarianism is related to the JP Morgan’s ethical culture of choosing actions that increase people’s happiness. For example, in 2012, JP Morgan made a donation of one hundred and ninety million dollars to non-profit organizations in thirty seven countries worldwide with the purpose of supporting education, community development and workforce development (JP Morgan Chase & Co., 2012). As a result, this action increased the pleasure and happiness of the communities that received the donations.
Deontological ethical theory, which was proposed by Immanuel Kant and W.D. Ross, states that the fact that something is conventional to one’s duty makes it right or wrong, good or bad (Rupp, Ganapathi, Aguilera, & Williams, 2006). One, therefore, should act in a way that is convectional to their recognized duties. In fact, this is related to JP Morgan’s action in 2012 to introduce Chase liquid that is a general purpose card, which is low cost and is designed to “bring undeserved customers into the traditional banking system “(JP Morgan Chase & Co., 2012).
Cultural Change Efforts
Despite its roles and responsibilities in the society, the banking industry has made various mistakes that have sparked a lot of debates. JP Morgan perceives the challenging periods as opportunities to reshape its banking culture. JP Morgan like any financial and investment organizations has served a vital role in the economy by offering organizations and individuals the necessary credit and capital they needed to grow (Davies, Chun, da Silva, & Roper, 2004). Moreover, it provides employment to thousands of people throughout the globe and creates services and products necessary for people and institutions. In his studies, Bose (2012) states that JP Morgan has realized that doing business as usual is not sufficient; therefore, it has decided to have an affirmative responsibility of playing bigger roles of solving social, economic and environmental challenges on a daily basis.
Having a global scale is one of the cultural change efforts that JP Morgan has initiated in searching for solutions. Apparently, the global scale has enabled JP Morgan to connect people, ideas and capital globally. Businesses through the help of the scale can now access and navigate global markets. Furthermore, it enables JP Morgan to raise sufficient funds, addressing significant needs of the society and developing wider perspectives and expertise for it to become a trusted financial advisor (Bose, 2012).
In addition, JP Morgan has made sure there are deep connections at the local levels in addition to having a global perspective. The organization has made an effort to have over five thousand and six hundred branches, long-standing community development programs, and philanthropic and public finance programs in thousands of localities around the world. The local level connections have enabled JP Morgan to address specific community challenges by reporting their importance (Bose, 2012).
Organizational Citizenship/Social Performance
Although businesses exist to make money for investors, it is also clear that firms have social responsibilities to other members of the society.
In pursuit of their self-interest and compliance with the law, firms have to perform voluntary functions that address the interests of others (Ting-Toomey & Chung, 2012). According to Anderson (2006), organizational citizenship behavior is the behavior that increases the effectiveness of an organization. Talking about social performance of the company, it can be measured using some distinct paths that affect the relationship between a company and employees. Hereby, the first path is the need for security and safety. Being consistent with the idea of providing employees with security and safety, JP Morgan emphasizes in its annual reports that taking care of employees is among the most important missions and core values of the organization. The organization then supports the claims with employee friendly policies (JP Morgan Chase & Co., 2012). Moreover, JP Morgan pays highly competitive wages to its employees. In fact, more than half of the employees at JP Morgan have health insurance and retirement plans. Thus, employees at JP Morgan pay only about eight percent of the costs (JP Morgan Chase & Co., 2012).
Group distinctiveness is also a good factor in social performance of a company, with people seeking satisfaction of knowing that their group compares well with others in important dimensions (Kwok & Tadesse, 2006). The social responsibility of JP Morgan has been outstanding due to performing activities that increase its positive distinctiveness. JP Morgan has, therefore, been able to provide its employees with a positive social identity. What is more, JP Morgan predicts the future needs of its employees in order to enhance their loyalty within the firm. In fact, JP Morgan is rated as one of the most generous companies in the United States of America, and it is mostly regarded as one of the best places to work (Kwok & Tadesse, 2006). The reason is that the community views it from the positive side; therefore, employees feel a sense of pride in working for JP Morgan. Consequently, they are more likely to remain loyal to the company.
Ethical Global Citizenship and Ethical Diversity
In the face of technological advancement and globalization, there is a need for shared ethics and values for the proper functioning of the economic, social and political network. According to Kwok and Tadesse (2006), the process of globalization generates imbalances, uncertainty and conflicts. The process of globalization has led to more frequent contacts between people with diverse views of the world. In fact, a large number of differences are driven by religious practices and beliefs (Rupp, Ganapathi, Aguilera, & Williams, 2006). JP Morgan understands that its strength lies in its collective diversity. The organization is, therefore, dedicated to creating a workplace culture so that everyone can be successful depending on merit. According to JP Morgan Chase & Co. (2012), the organization hires and develops people with diverse backgrounds and unique experiences. Diversity is, therefore, a core factor in developing the strength of JP Morgan with regard to its global business capabilities. Anderson (2006) adds that different people offer diverse perspectives, which in turn enhance creativity and strength in their work, providing the best solutions for their clients. Finally, Anderson (2006) claims that JP Morgan offers scholarships and internship opportunities to students of diverse backgrounds. The organization also participates in various career events that attract diverse candidates. The code of ethics and JP Morgan’s policies respects diversity and are based on three basic principles, including integrity, prudence and transparency. JP Morgan Chase & Co. (2012) states that JP Morgan’s craving for diversity is based on active involvement of people in annual forums, business resource groups, participation in community activities, appreciation of inputs based on the efforts of multicultural marketing and involvement of senior leaders in open discussions. JP Morgan offers comprehensive benefits, programs and policies that address the dynamic needs of diverse individuals.
JP Morgan is an ethically transformed organization because there are clear indications that it has learned from its previous mistakes and surpassed its ethical outcomes. Some of the possible objections and disagreements that may arise regarding the transformed ethical culture of the organization are lack of honesty and transparency as portrayed in the Bruno Iksil case. In the case of Bruno Iksil, the chief executive officer of JP Morgan agreed that the organization had not been transparent concerning the amount they had lost and had given too much trust to people who managed the problematic division, thereby taking personal responsibility for the issue (Lesova, 2012). Objections of overprotecting employees when they make mistakes may also arise as seen in the Bruno Iskil case. The company now operates with regard to a code of ethics that encourages integrity and transparency. The code of ethics emphasizes on the kind of punishments employees should expect when they violate the company policies and ethical requirements.
I also feel that JP Morgan is an ethically transformed company because although there has been a rise in the number of human rights violations, JP Morgan has continued to view human rights as an important part of its corporate responsibility. The company seeks to protect the human rights of its employees by providing them with mortgage loans, retirement and medical covers. The employees can, therefore, afford medication and health care when they are sick. Possible objections to this may arise in reference to the Alayne Fleischmann case, where loans she had been granted by the company had been securitized and sold to other investors without her knowledge (Kwok & Tadesse, 2006). This, however, can be counter argued by the fact that JP Morgan has company policies and code of ethics that have to be followed, and if there are any violations, one can use them to seek justice.
For the proper management that would improve the organization, it is recommended that JP Morgan conducts frequent human resource training on the code of ethics and the expectations of each employee. The training will help employees to understand the reward and penalty systems, thereby improving their productivity. The employees will further understand the company’s definition of fraud and violations and will be in a better position to avoid them. Furthermore it is recommended that JP Morgan should find new ways of funding projects rather through credit markets, with the purpose of lowering operational costs. JP Morgan should enhance their connectivity between other banks and clients to ease communication and enhance the payment environment. Adopting new and advanced electronic solutions, will lead to enhanced efficiency in the way the organization deals with limited resources, expanding global networks, growing transaction volume and expanded responsibilities.
Based on the analysis of JP Morgan, I would like to work for the company and would recommend it to others. The company is a global leader in the banking sector and therefore, operates on a competitive environment. JP Morgan represents business growth which I am interested in professionally, and it operates on a strict ethical culture that emphasizes on trust and integrity.