Organizational business ethics

Editor's Notes

• #2: Ethics! We hear about it every day. There is a public consciousness related to ethics that is much more prominent than it was only a few years ago. And why not? Just in the last few years, we’ve seen unethical behavior in all aspects of life, i.e. among our politicians, our court system, the government, and certainly among organizations and business leaders. The media puts everything (small, large, and in between) before the public, and immediately we form an opinion about it, and it shapes our image of the person or institution. And often, it’s not a good one. In our modern society, images, reputations, and success in business can be ruined in an instant by some unethical act, or even the appearance of it. Let’s face it, we all have an image about some thing, somebody, and some organization.
• #3: When we speak of images and reputations, take a look at some of these issues, people, institutions, and business organizations. We have heard of and/or heard something negative about all of these just in the last few years. What are your thoughts on these occurrences? What is your viewpoint of these people? What is your image of some of these institutions?
• #4: Life is about choices. We deal with choices in our personal lives everyday. Most of us are guided by such questions as, “Is this the correct thing to do? Is this the right decision to make?” We are guided by our own sense of morality, i.e. the difference between right and wrong. Organizational business ethics work much the same way. Here, we are dealing with choices, also, about anything and everything related to organizational activities and business situations. We apply our own personal set of values, standards, rules, principles, strategies, and even knowledge of what is lawful to every decision, and these are the things that guide us. But that’s not to say we aren’t tempted. That’s not to say we don’t always go against our sense of morality (right vs wrong) at various times. That’s not to say we always make the right choices. Sometimes, we make the wrong one.
• #5: Organizational business ethics occupy a prominent role in the modern spectrum of American business. Society’s greater consciousness of ethics gives rise to how it permeates and influences every aspect or organization activity. For example, employees have a role in ethical behavior and their commitment to the organization. They share a role in shaping the ethical image and reputation of an organization just by their actions and the way they represent the organization. Leadership and management would prefer that the actions and activities of their employees be driven by loyalty to the organization. We can only hope that management behaves ethically, because oftentimes employee behavior reflects the behavior of the leadership in the organization. How about investors? Organizational leaders hope that investors will see the company as an upstanding organization committed to responsible behavior so that they (the investors) will be more prone to invest in the company. If they invest in the organization, they are putting their trust in the organization and its leadership. In short, investors want to be confident that their financial commitment will be used responsibly and appropriately cared for. Likewise, we as customers need to be have a degree of confidence in the organization, too. What does the company brand represent? Are we getting fair value for our money? Do we have an adequate level of trust in the company to stand behind its products and services? If our image, as customers, is not positive from an ethical perspective (nor any other perspective, for that matter), then we are not likely to patronize that company nor their products and services. Where does a negative ethical image of a company come from? In reality, it could from any number of sources or occur for any number of reasons. It may come from some legal problem the company had. It may come from some bad publicity. It may simply come from one customer who has had a bad experience with the company. If someone tells you that a company gouges prices or does not stand behind their products, wouldn’t you be prone to do business somewhere else? All of this affects performance, productivity, efficiency, and profitability may all be tied to organizational ethics, as well as its reputation and image among customers, competitors, and even its standing in the industry. One of the organization’s most prized assets is it reputation.
• #6: This brings us to what is known as the “ethical dilemma.” The ethical dilemma is far-reaching. It may relate to the most simple of ethical issues. But it can involve some that are quite complex, as well. We can say that it involves every associate in an organization, and the choices they make, daily, as influenced and driven by their character, values, judgment, social influences, and, yes, the models of behavior they observe from leadership down throughout the organization. It can involve even the smallest of acts, such as the unauthorized removal of a pen or pad of paper. It may relate to a decision about some business practice in the competitive environment. It may involve the mishandling of a customer complaint or an inappropriate relationship with a client. It may even be associated with the way in which an individual interacts with peers and other associates in the organization. Many organizations attempt to control or mandate ethical behavior through some sort of code of ethics or ethics training. There is nothing wrong with that, but such training seldom covers every specific thing? In fact, it is impossible to cover every little act of unethical behavior by means of a code of conduct and/or ethics training. Moreover, even if management attempts to do that, oftentimes people come away with different interpretations of things. In our organizational work lives, ethical choices are made that are influenced by everything from a code of conduct to our character, personal values, and judgment. Thus, the “ethical dilemma.”
• #7: Laws certainly don’t cover everything either. Sure, there are certain things that are unlawful in a business organization: such as polluting the environment; sexual harassment; unfair labor practices; inequality in hiring, firing, and promoting; misrepresentation of earnings to internal and external stakeholders, etc. And oftentimes, people are definitely influenced by the consequences of such acts. But there are many other things that are not so obvious. In fact, there are myriads of things that laws don’t cover, but they nevertheless are unfair, unjust, and improper. Perhaps, now, you begin to get the idea of just how far reaching the ethical dilemma is.
• #8: Ethics, ethical behavior, and the culture of ethics starts with the leadership of an organization. Associates in an organization emulate the behavior of the leaders of the organization. So, if the leaders behave unethically, then, it stands to reason that subordinates will, also. Let’s say for example that a manager or leader in an organization goes on a trip paid for by a supplier, or a contractor, or even a customer. Those that see that then begin to believe it’s acceptable behavior, and other associates down through the organization begin to accept gratuities from their clients and external associates, as well. Why wouldn’t they? They see this as acceptable behavior, because the leadership in the organization is doing it. Such gratuities may not always be big ticket items such as trips and large gifts, but it could be something as simple as tickets to a ballgame or dinners. What would be the impression of competing suppliers, contractors, or customers? They would naturally feel as though they are at a disadvantage, especially if they don’t possess the where with all in terms of resources to offer similar gifts, which we may, in actuality refer to as “bribes.” Misuse of power and authority can be classified under the heading of unethical behavior, also. Abusive treatment of employees and unfair, unequal hiring and promotion practices are unethical. We hear of and see this kind of thing, frequently. Yes, there are laws against it, but it can be so far reaching and subtle, that laws may not cover every form of abuse and discrimination. Moreover, many employees just live with it, even though they are negatively impacted by it, out of concern for their jobs and personal welfare. This kind of thing filters down throughout the organization, also, and it can easily become an accepted part of the cultural behavior. But that does not make it right.
• #9: Once leaders realize the importance of ethics in their organizations, and they see the need to create an improved ethical culture and identity, it may be wise for leaders to start by doing a personal inventory of themselves, i.e. their own ethics, ethical standards, and behavior. This is tantamount to a personal evaluation, i.e. a look in the mirror, if you will. Sadly, this often occurs after it’s too late. For example, there may have already been some problem that has occurred, such as a law suit or some negative publicity about a client relationship. But regardless of when they do it, it needs to be done, and it is advisable to start with themselves since it is they that will initiate the changes. The most difficult part of this self-evaluation is “honesty.” Leaders need to be honest with themselves as they answer the hard questions about their own core values and beliefs. “Would I (or have I ever accepted) a bribe or gift, especially if it was in return for something, such as more business or a renewal of a contract?” Then, if they have, the real key question is “is there anything wrong with that, or is that just the way (I see) business is done?” Beyond that, the leader should look at the organization with the similar questions, and then determine how these core values and beliefs of him or herself and the organization impact the organization. Who has it harmed, or helped? Who might it harm or help? How does this behavior impact and affect my organization? Good leaders in any organization have a consistent set of values. This is a part of being an effective and skillful leader. Consistency in ethics is a vital part of this. This means that leaders should treat every organizational associate, every client, every contractor and supplier, and certainly every customer equally, fairly, and consistently.
• #10: Perhaps, now you can see how ethics is much more than, and goes beyond, a code of conduct. There is so much more to it than could ever be included in a code of conduct briefing or document. Simply put, organizational/business ethics starts at the top of the organization….with leadership! Leaders have the responsibility to create a culture of ethics in their organizations, where ethics becomes a part of behavior that is desired rather than something mandated, complete with penalty provisions. And that brings us to the question, “how do leaders create the ethical organization?” The role of leaders starts with simply setting the example for all internal and external stakeholders. In short, it starts with the behavior of leaders, themselves, as a basis for enacting and creating purposeful and ethical values.
• #11: Before we look at the steps associated with creating the ethical culture, we need to understand the difference between objective and subjective ethical behavioral influences. A code of conduct or code of ethics is something that is merely mandated and will likely cover the more obvious violations of ethics and policy guidelines. They present standards for ethical performance, many are delivered in an annual training session for all associates, and they are complete with penalty provisions. Many organizations have these, and they are important. But as we have said, they are not enough. In fact, oftentimes, this type of training results in confusion, misinterpretation, and even resentment. The ethical culture goes beyond the traditional objective code of ethics we find in many organizations. It taps into the moral development of the employee and creates an ethical consciousness that is prevalent throughout the organization. This is what we mean when we say that ethics can become a part of the culture where people incorporate an emotional intelligence related to ethics associated with their actions. So to speak, the organization is typified by an ethical climate.