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Organizational ethics

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Organizational Ethics is the ethics of an organization, and it is how an organization ethically responds to an internal or external stimulus. Organizational ethics is interdependent with the organizational culture. Although, it is akin to both organizational behavior (OB) and business ethics on the micro and macro levels, organizational ethics is neither OB, nor is it solely business ethics (which includes corporate governance and corporate ethics). Organizational ethics express the values of an organization to its employees and/or other entities irrespective of governmental and/or regulatory laws.

Overview of the Field

The Foreign Corrupt Practices Act (FCPA) restricts U.S. firms from engaging in bribery and other illegal practices internationally. There are laws that have the same type of prohibition for European companies. These laws create a disadvantage competitively for both European and U.S. firms.[1] Such laws are not a restricting element to organizations that have highly elevated ethical behavior as part of their values. Organizations that do not have an outlook for positive ethical practices as part of their cultures, usually lead to their own demise, such as, Enron and WorldCom by their questionable accounting practices. The converse is generally true, organizations that have integrity and encouraging ethical practices as part of their culture are viewed with respect by their employees, community, and corresponding industries [2] Thereby, the positive ethical outlook of an organization results in a solid financial bottom-line, because of greater sales along with their ability to retain and attract new and talented personnel. More importantly, an ethical organization will have the ability to retain employees that are experienced and knowledgeable (generally referred to as human capital). This human capital results in less employee turnover and less time to train new employees, which in turn allows for greater output of services (or production of goods).

Basic Elements of An Ethical Organization

There are four elements that exist in organizations that make ethical behavior conducive within an organization. The four elements necessary to quantify an organization's ethics are: 1) written code of ethics and standards; 2) ethics training to executives, managers, and employees; 3) availability for advice on ethical situations (i.e, advice lines or offices); and 4) systems for confidential reporting.[3]

Intrinsic and Extrinsic

The intrinsic and extrinsic rewards of an ethical organization are tethered to the organizational culture and business ethics of an organization. Based upon the reliability and support structure of each of the four areas needed for ethical behavior, then the organizational ethics will be evident throughout the organization. The organization, the employees, and other entities will receive intrinsic and extrinsic rewards. Actions of employees can range from whistle blowing (intrinic) to the extraordinary actions of an hourly employee buying all the peanut butter (as produced by his employer), because the labels were not centered, and he knew that his employer (extrinsic) would reimburse him in full.[4]

Above and Beyond

Above and beyond is a standard part of the operational and strategic plans for organizations that have positive organizational ethics. Above and beyond the quarterly or yearly income statements, an entity will plan for its employees by offering “wellness programs” along with general health coverage, and/or a viable stable retirement plan. Further, an organization will allow for paid maturity leave, or even paid time off for new parents after an adoption. Other perks may include, “on-site” childcare, flex-time for work hours, employee education reimbursement, and even telecommuting for various days during a week. All the above are just a few examples of employee benefits that quality organizations offer to their employees. These benefits are not mandates by law, and they represent only a few of benefits that best known corporations and firms offer to their employees throughout the world.

Leadership and Theory for Ethics in an Organization

There are many theories and studies that are coarsely related to “organizational ethics”, but organizations and ethics are wide and varied in application and scope. These theories and studies can range from individual(s), team(s), management, leadership, human resources, group(s) interaction(s), as well as, the psychological framework behind each area to include the distribution of job tasks within various types of organizations. As among these areas, it is the influence of leadership in any organization that cannot go unexamined, because they must have a clear understanding of the direction of the organization’s vision, goals (to include immediate and long term strategic plans), and values. It is the leadership that sets the tone for organizational impression management (strategic actions taken by an organization to create a positive image to both internal and external publics). In turn, leadership directly influences the organizational symbolism (which reflects the culture, the language of the members, any meaningful objects, representations, and/or how someone may act or think within an organization). The values and ideals within an organization are generally center upon “values for business” as the theoretical approach that most leaders select to present to their "co-members" (which in truth maybe subordinates). In fact, an examination of business methodology reveals that most leaders approach the ethical theory from the perspective of values for business [5][6]. Importantly, as transverse along side of presenting the vision, values, and goals of the organization, the leadership should infuse a spirit of empowerment to its members. In particular, leadership using this management style of empowerment for their subordinates is based upon view of: “Achieving organizational ownership of company values is a continuous process of communication, discussion, and debate throughout all areas of the organization” [7].


Theories and models

See also

References

  1. ^ Svensson, Jakob, “Who Must Pay Bribes and How Much? Evidence from a Cross-Section of Firms,” Quarterly Journal of Economics, 118(2003), page 207
  2. ^ Managing with Soul: Combining Corporate Integrity with the Bottom Line,” November 14, 2003, www.hreonline.com/HRE.
  3. ^ Clark, Margaret M.,JD.,SPHR, "Corporate Ethics Programs Make a Difference, but not the only difference", HR Magazine, July 1, 2003, page 36.
  4. ^ Peters, T.J., and Austin, N. 1985, Passion for Excellence: The Leadership difference. New York: Ballantine.
  5. ^ Dricscoll, Dawn-Marie and Hoffman, W. Michael (2002). Ethics Matters: How to Implement Values-Driven Management
  6. ^ McDaniel, Charlotte, (2004), Organizational Ethics: Research And Ethical Environments, page 39
  7. ^ Dricscoll, Dawn-Marie and Hoffman, W. Michael (2002). Ethics Matters: How to Implement Values-Driven Management, page 172
  • Halbert, Terry, and Ingulli, Elaine, Law & Ethics in the Business Environment, 5th edition (2006). Mason, OH: Thomson Learning.
  • Driscoll, Dawn-Marie and Hoffman, W. Michael, Ethics Matters: How to Implement Values-Driven Management (2000). Waltham, MA: Bently College Center for Business Ethics.
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