41 Ethical Behavior in Organizations
Dr. Radha Kanwal Sharma
1. Learning Outcome
2. Introduction
3. Approaches to ethical behaviour
4. Eight elements of an ethical organization
5. Encouraging ethical behaviour
6. Values affecting ethical behaviour
7. Putting values into practice
8. Behavioural standards and code of conduct
9. Some activities for ethical decision making in groups
10. Summary
1. Learning Outcomes:
After completing this module the students will be able to:
· Understand the concepts of ethical behaviour.
· Elements of ethical organization
· Virtuous values in business
· How values are put into practice.
2. Introduction
Ethics are the principles and values a person uses to govern his activities and decisions. Ethics is about behavior. In the face of dilemma, it is about doing the right thing.
In an organization, a code of ethics is a set of principles that guide the organization in its programs, policies and decisions for the business. The ethical philosophy of an organization can influence the reputation, productivity and bottom line of the business.
Business ethics is a fundamental term that is applicable to all workplaces. Irrespective of the nature of an organization and its function, an unethical employee promotes corruption and also could be a liability to an organization. Therefore, it becomes important for an organization to encourage its employees to adhere to ethical behavior.
Ethics can be related to leadership or the employees of the organization.
Leadership Ethics: The ethics that leaders in an organization use to manage employees have a strong effect on the morale and loyalty of workers. The code of ethics leaders use determines discipline procedures and the acceptable behavior for all workers in an organization. When leaders have high ethical standards, it sets the benchmark for employees in the organization to meet that same level. Ethical leadership also enhances the company‘s reputation in the financial market and community. A solid reputation for ethics and integrity in the community improves the company‘s business.
Employee Ethics: Ethical behavior among workforce in the organization ensures that employees do their duties with honesty and integrity. Employees who use ethics to guide their behavior adhere to employee policies and rules while striving to meet the goals of the organization. Ethical employees also meet standards for quality in their work, which enhances the company‘s reputation for quality products and service.
3. Approaches to ethical behavior
There are two approaches to ethical behavior in organization; individualistic approach and communal approach. Each approach incorporates a different view of moral responsibility and a different view of the kinds of ethical principles used to resolve ethical problems.
Individualistic approach: this approach pertains to moral responsibility. According to this approach, every person in an organization is morally responsible for his or her own behavior, and any efforts to change that behavior should focus on the individual.
Communal approach: This approach does not view individuals in isolation, but as members of communities that are partially responsible for the behavior of their members. Therefore, to understand and change the behavior of an individual, we need to understand and try to change the communities to which they belong.
To tackle the problems related to ethics, both of the approaches should be taken into account as the individuals and social communities are inseparable. Both complement each other. E.g. earlier an alcoholic was viewed as an individual with problems. Treatment used to focus on helping the individual deal this problem. Today, however, the alcoholic is seen as part of a dysfunctional family system that reinforces alcoholic behavior; and in many cases, the behavior of the alcoholic requires to change the entire family situation.
These two approaches also lead to different ways of evaluating moral behavior. Many ethical issues in the workplace take an individualistic approach. Efforts are made to promote the good of the individual and individual rights, (right to freedom of expression or the right to privacy), are held paramount. The communal approach encourages focusing on the common good, by considering ways in which actions or policies promote social justice and or prohibit ways that bring harm to the entire community.
4. Eight elements of an ethical organization
An ethical organization is characterized by these eight elements:
1. Respect
Mutual respect must exist among employees and between employer and employees. If there is mutual dislike, things will not progress. It is important to maintain cordial relationships. If something goes wrong and existing relationship start to weaken, timely Corrective action should be taken.
2. Honor
Good people are a fundamental part of good ethics. They are the ambassadors for doing things right. Special attention should be given to strong performers and employees who exemplify the spirit of the organization. Most companies recognize top achievers in terms of sales. Management should look beyond figures and show gratitude to the people who exhibit exemplary behavior. Ethical behaviors must be acknowledged and honored publicly, as well as privately.
3. Integrity
In an ethical organization, employees should not lie, steal, or cheat. An individual should always stand by his word. One should treat others the way one wants to be treated by them. Management should not hire or retain people who do not have integrity. Other employees, customers and vendors will not trust them. This lack of trust can pose serious problems for business. It should be made sure that no one sells the company’s values short to make a quick buck. Such kind of practice is not only unethical, but also unprofitable.
4. Customer focus
Customer is of utmost importance for any business. A focus on the customers reinforces the responsibility of the organization towards market. Business decisions affect all stakeholders viz. employees, investors, business partners and ultimately, customers.
Serving all of these people is part of organization‘s ethical responsibility. Selling your customers short not only risks compromising the ethics, it also risks the long-term health of company.
5. Results-orientation
The organization should not aim for results at any cost. All work to achieve results must be done within the value system of the company. Results should be attained in the context of developing products according to customers‘ needs, and these should be produced and delivered it at a fair price to all the parties involved. In an ethical company, results are more than just numbers. They are benchmarks and lessons for the future and goals for the present.
6. Risk-taking
Organizations that thrive prosper and grow; do so by taking risks. These organizations do not stick to the safe path. Great companies innovate, encourage thinking ‗out of the box, and try new things. These companies re-invent themselves and reward the risk-takers. As long as company‘s ethical philosophy is adhered to, risk-taking poses no threat to ethics. Great companies attract employees who are willing to take risks. Employees are encouraged, supported and rewarded for taking calculated risks. If the risks pay off, the risk takers share the rewards . if the risks do not pay off, After action review is done to analyze what went wrong and what should be done in future to avoid this trap..
7. Passion
Great organizations are comprised of people who have a passion for what they are doing. These are people work the thrill and challenge of the job and not merely to collect a pay-check. These employees are highly motivated, excited, and believe that their work can make a difference. People demonstrate passion in different ways, it can be extra effort on a project or working on the weekend and even enthusiastic cheerleading. Without the passion, employees put in a minimal effort in work.
8. Persistence
People in outstanding organizations have the will to persist. They keep working even when results are not as desired, or when customers refuse to buy. This persistence is result of passion for what they are doing. They work harder, they continue to take risks. They behave with honor and integrity. They keep their focus on the customer’s needs and wants. And, they are not satisfied until they achieve the goals and results that are expected.
5. Encouraging ethical behavior among employees
Some ways for organizations to encourage ethical behavior are listed below:
1 Communicating the code of ethics: The foremost step to promote ethical behavior among employees is by establishing a code of ethics. The code of ethics provides the direction and guidelines for ethical behavior. Employees need to be familiarized with the code of ethics either through a company manual or posters. This enables the employees to have a clear idea of the management‘s expectation with respect to employee code and conduct.
2 Managers as role models: Having managers as role models is another way of promoting ethical behavior. For this purpose, managers must be chosen with care and due consideration. This is beneficial in many ways. Employees tend to emulate their managers and if they are ethical in their behavior, it lends more credibility to the code of ethics. Thus, employees have a guiding force to promote ethical behavior. If managers strictly adhere to ethical standards themselves, employees feel less reluctant to oppose the guidelines laid out for ethical behavior
3 Disciplinary actions for unethical behavior: Curbing any malpractice regarding unethical behavior in the initial stages itself is better than allowing it to proliferate to other areas of the organization. Imposing sanctions on unethical behavior helps the employees to understand the implications of inappropriate behavior. For this purpose, management needs to lay down disciplinary actions that are to be taken against employees found guilty. E.g. if organization promotes sales ‗at all costs‘, then employees might resort to any (right or wrong) methods to achieve their targets. On the other hand, if the ethical code is serious about the means as much as the results, the employees will refrain from using wrong methods to achieve end targets.
4 Rewards for ethical behavior: employee adhering to ethical practices should be duly recognized and rewarded. This reinforces ethical behavior. This also becomes an inspiration to co workers. Therefore, it is important that employers identify and reward employees who stick to ethical practices despite tempting situations.
It is basically the responsibility of the management to promote ethical behavior among their employees. The organizational culture together with its mission and vision statement influences the ethical behavior.
6. Values affecting ethical behavior
Martin Seligman in his book, Authentic Happiness reviewed following core virtuous values that influence ethical behavior and appear to have universal appeal. These values appear to align with ethical behavior:
1 Wisdom and Knowledge: This refers to the capacity to take information and convert it to something useful. Wisdom comes from capitalizing on one‘s experience to interpret information in a knowledgeable manner to produce wise decisions. A prerequisite to doing the right thing when faced with an ethical dilemma is to know what to do and knowing the difference between right and wrong.
2 Self Control: This refers to the ability to avoid unethical temptations. The capacity to take the ethical path requires a commitment to the value of acting with temperance.
Ethical people say ―no‖ to individual gain if it is inconsistent with institutional benefit and goodwill.
3 Justice and fair guidance: This value is regarding fair treatment of people. Justice is served when individuals perceive that they receive a fair return for the energy and effort made for a particular purpose. For example, a leader‘s commitment to justice is tested continually with the allocation of organizational resources. Ethical leaders value and embrace fair advice and guidance; no special treatment is given to certain individuals and groups.
4 Transcendence: A spiritual value that recognizes that there is something beyond oneself more permanent and powerful than the individual. Without this value, one may tend toward self-absorption. Leaders who are motivated predominately by self-interest and the exercise of personal power have restricted effectiveness and authenticity.
5 Love and Kindness: This refers to the expression through words and deeds of love and kindness. In an organizational context, love refers to an intense positive reaction to another co-worker, group and/or situation. An organization ―with heart‖ allows for the expression of love, compassion and kindness among people, the goodwill which can be drawn upon when one faces ethical challenges.
6 Courage and Integrity: This is the courage to act ethically and with integrity. These values involve discerning right from wrong and acting accordingly. They impel one to consistently do what is right without concern for personal consequences, even when it is not easy.
In practice, these six categories of virtuous values are intertwined. For example, the capacity to administer resources fairly and offer fair guidance to stakeholders along the way is supported by courage and integrity. Difficult decisions surrounding the allocation of limited resources leave some individuals and groups with less than they would prefer. The redeeming grace is the perception that such decisions are made with fairness and integrity. Unpopular decisions are easier to accept when they are perceived to be derived fairly and with integrity.
Driving ethical behavior with values and attitudes requires that there be alignment among values, attitudes, and behavior. Examples of this alignment between each of the righteous values, associated attitudes, and behavior are offered in Table 40.1.
| Values | Attitude | Ethical Behavior |
| Wisdom and Knowledge | Experience promotes wisdom that helps convert information to knowledge. | Using knowledge to solve problems ethically and to do what is right. |
| Self-Control | Self-control means effectively managing reactions to challenging situations and temptations. | Putting personal motivations aside and acting with objectivity by doing what is right. |
| Justice | Acting justly and fairly is a long-term driver of ethical behavior; remember the ―Golden Rule.‖ | Establishing just and mutually agreed upon criteria and administering them fairly to all people. |
| Transcendence | The belief in a power and source outside oneself reduces self-serving actions and increases humility. | Putting institutional and/or stakeholder interests above self interests. Identifying a personal purpose that is aligned with organizational mission. |
| Love and Kindness | Treating people with kindness helps increase the reservoir of positive affection and love. | Recognizing and encouraging others for their contributions. |
| Courage and Integrity | Ethics requires the courage to do the right things consistently without regard to personal consequences. | Making unpopular decisions based on fair consideration of the facts. |
7. Putting Virtuous Values into Practice
―What can managerial leaders do on a proactive basis to encourage ethical behavior? At least five practices help leaders steer their organizations toward ethical conduct.
First, any gap between knowledge about what to do and actual actions needs to be closed. Unfortunately, too often people fail to do it. John Maxwell explains various reasons for ethical lapse, including that people just rationalize their choices with relativism. While the reasons for these actions are varied and complex; People fail ―do the right thing‖ in spite of their knowledge because they do not act wisely.
Second, managerial leaders must be very deliberate about who joins their organization. Many organizational leaders believe that selecting people for their values is as important as selecting for skill sets. Jim Collins, in his compelling book ‗Good to Great‘ emphasize how long-term success depends on putting the right people in place. Selecting people who share organization‘s virtuous values is critical to building an ethical culture and long-term business success.
Third, new personnel need to be socialized into the organization so as to advance virtuous values. New employee orientations make a good platform to promote the organization‘s values. As a way of promoting and influencing ethical behavior, it is very powerful for new employees to hear managerial leaders espouse core virtuous values and to see those values affirmed through the actions of others in the organization.
Fourth, accountability and follow-up are critical in putting virtuous values into practice. Systems and procedures can remind people of commitments and help connect words or promises with deeds. In organizations with behavioral integrity, words and deeds count. When virtuous values are driving behavior, the alignment of words and deeds serves to advance the creation of an ethical work culture.
Finally, managerial leaders can positively impact the practice of ethical behavior by fairly allocating organizational resources and linking them appropriately. All managerial leaders have five key resources to manage: people, money, capital assets, information, and time. Allocation of these resources and the process managers use to accomplish such distribution can create perceptions of equity and fairness, or inequity and unfairness. Managerial leaders who value justice and fairness are more likely to deal the cards fairly — thereby modeling ethical behavior— than are those who do not.
8. Behavioral Standards and Codes of Conduct: The Safety Net
Ideally, managerial leaders and their people act ethically as a result of their internalized virtuous core values. Established behavioral standards and written codes of ethical conduct help to reinforce virtuous values and promote ethical organizational behavior. Behavioral standards usually incorporate specific guidelines for acting within specific functional workplace areas. For example, a sales department may clearly outline criteria for expense reimbursements.
Codes of ethical conduct have received varying degrees of attention over the past three decades.
They can be categorized into three types:
Type 1: Inspirational-Idealistic codes of conduct specify global themes such as ―Be honest,‖ ―Show integrity in all matters,‖ ―Practice wise decision making,‖ etc. Such themes are not anchored to specific behavior or situations.
Type 2: Regulatory codes of conduct clearly define acceptable behavior. This type of code is designed to help as a jurisprudential tool when disputes occur. It is more of a ―do and don‘t‖ approach.
Type 3: Educational/Learning-Oriented codes of conduct offer principles to guide decision making and behavioral reactions into likely situations. This approach is compatible with building a learning organizational culture. For example, the principle and value of fairness might be applied to allocating a bonus pool. Managerial leaders responsible for this process could be engaged in scenarios in which they would be asked to take ―fair action‖ in making these allocations. Such learning experiences can serve to enlighten and inform so as to foster ethical decision making.
Behavioral standards and codes of ethical conduct help guide ethical behavior by offering a written rule to remind employees of the right thing to do. These standards and codes trigger peoples‘ internalized values, thus gaining strength through firm yet fairly administered consequences.
9. Activities for Ethical Decision Making in Groups
In a business, the decisions made by groups and individuals have the ability to affect the overall image of the company. Training employees to make ethical decisions keeps the organization‘s image positive. Leading employees through activities related to the ethical issues, keeps the issues at the front of their minds and develop decision-making processes that result in ethical decisions all of the time.
Role Play
Groups are led through scenarios where they may be tempted to make an unethical decision. Scenarios may include cases of theft within the company, making decisions that result in personal gain instead of working for the good of the company, or sharing company secrets. As these scenarios are presented, group members will share what they would do and discuss the positives and negatives of each decision. Groups will put together a short skit outlining their consensus on the proper way to respond to the scenario.
Ethics and Values
Ask groups to define the meaning of ethics so that all employees have a clear understanding of the issue. Then, employees should create lists of values and things that they value. For example, honesty and trustworthiness would be values, while money and family would be things that they value. With each item on the list, employees should note which values and things that they value may lead to unethical behavior. For example, valuing money or free time may lead to employees cutting corners or making unethical decisions to get more money and free time.
Importance of Ethical Behavior
Encourage groups to make lists outlining the importance of ethical behavior. Group should also write down the negative impact that unethical decision-making could have on the business, e.g. lost clients, unhappy employees, or tension in the workplace. Making groups aware of the consequences of unethical decision-making helps to understand the importance of engaging in ethical decision-making and ethical behavior in general.
Decision Making Strategies
Groups should develop a process for making decisions. Instead of a specific process for decision making, group members may want to come up with a list of questions to ask when making a decision in order to ensure that the decision is ethical. A sample list may include the options such as what values are most important in making the decision, and what the potential consequences of the decision could be.
10. Summary
Ethics are the principles and values a person uses to govern his activities and decisions. Ethics is about behavior. In the face of dilemma, it is about doing the right thing. Ethics can be related to leadership or the employees of the organization. The code of ethics leaders use determines discipline procedures and the acceptable behavior for all workers in an organization. Ethical behavior among workforce in the organization ensures that employees do their duties with honesty and integrity. Employees who use ethics to guide their behavior adhere to employee policies and rules while striving to meet the goals of the organization.
Learn More:
- Aswathappa,K. (2008). Organizational Behaviour. Himalaya Publishing House, New Delhi
- Gupta, S.K., Joshi, Rosy. (2013). Organizational Behaviour. Kalyani Publishers, New Delhi
- Prasad, L.M. (2009). Organizational Behaviour. Sultan Chand & Sons, New Delhi
- http://blog.commlabindia.com/elearning-design/ethical-behaviour-organizations
- http://smallbusiness.chron.com/ethical-decisions-impact-organization-26159.html
- http://www.entrepreneurship.org/resource-center/eight-elements-of-an-ethical-organization.aspx
- http://www.scu.edu/ethics/publications/iie/v2n1/
- http://smallbusiness.chron.com/activities-ethical-decision-making-groups-35365.html
- Martin Seligman. (2002), Authentic Happiness .New York: Free Press
- https://gbr.pepperdine.edu/2010/08/creating-and-sustaining-an-ethical-workplace-culture/