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SIBM Bangalore

EMBA Semester 1

Improving Ethical Behavior

Table of Contents
Abstract...................................................................................................................... 2
Introduction to Ethics................................................................................................. 2
Ethical Behavior................................................................................................... 2
Unethical Behaviors............................................................................................. 3
What is an Unethical Behavior?.................................................................................. 3
2.1 False Communications................................................................................... 3
2.2 Collusion......................................................................................................... 4
2.3 Gifts and Kickbacks........................................................................................ 4
2.4 Conflict of Interest.......................................................................................... 4
2.5 Unethical practices in the Health Care Sector................................................4
2.6 Insider Trading................................................................................................ 5
2.7 Discrimination and Harassment.....................................................................5
2.8 Wrong Doing.................................................................................................. 5
Why People Behave Unethically...........................................................................6
Causes of Unethical Behaviors.............................................................................6
TERMS IN AND TYPES OF ETHICAL THEORY................................................................7
TELEOLOGICAL..................................................................................................... 7
CONSEQUENTIALIST............................................................................................. 7
DEONTOLOGICAL.................................................................................................. 8
RELATIVISM/SUBJECTIVISM................................................................................... 9
VIRTUE BASED THEORIES................................................................................... 10
Managing Ethics at Workplace:.................................................................................11
Values Drive Behavior........................................................................................ 11
Putting Virtuous Values into Practice..................................................................12
Behavioral Standards and Codes of Conduct: The Safety Net............................13
The Ethical Behavior Formula.............................................................................13
The Benefits & Importance of Ethics in the Workplace.............................................15
Asset Protection................................................................................................. 15
Productivity and Teamwork................................................................................ 15
Public Image....................................................................................................... 15
Decision-Making................................................................................................. 15

Abstract
The media bombards us with accounts of unethical behaviors in organizations which
reveal social issues that demand our attention. These behaviors are from individuals
with no moral character and have raised a lot of concerns about business ethics.
This paper examines the unethical behaviors, their causes, and the strategies for
reducing their occurrence.

Introduction to Ethics
Ethics is the study of morality. It is the value that is worth pursuing in life. It is
honorable
behavior. Ethics is relative. What is honorable in one society may not be honorable
in another. It depends on several factors: world views, descriptive values and moral
values. It is a function of the environment. What one salesperson may consider
being an unethical marketing behavior, another salesperson may perceive it as an
aggressive marketing strategy.

Ethical Behavior
Ethics can be illustrated with the popular story of a millionaire who built an Olympic
size
swimming pool for his evening enjoyment. He filled the pool with many crocodiles of
different types and sizes. His own idea of enjoyment is to watch these crocodiles
swim every evening. At the completion of the construction of the swimming pool, he
invited all the elites of the city to its dedication. As people were eating and drinking,
an announcement was made by the host, over the public address system, that if
any young man was bold enough to swim across the swimming pool, he would be
given one of two things: a real estate that worths $1 million or his only beautiful
daughter in marriage. Before he finished his announcement, a young man jumped
into the swimming pool, to the surprise of everyone, swam across the pool and got
out without a single bruise on his body. The millionaire ran to him, gave him a big
hug and asked him what he would like to receive out of the two. The young man
said he did not want any of them and that
the only thing he wanted was, he wanted to know the bastard who pushed him into
the swimming pool. That is ethics. The young man told the truth. He did not want
any of the two rewards promised by the millionaire because he did not, on his own,
jump into the pool. He was pushed by an unknown person. The millionaire too
behaved honorably. He did not believe anyone could jump into the swimming pool
to swim across. Since somebody did, he was still willing to stand by his words. He
did not say he was not willing to give his only daughter in marriage to a stranger.

Unethical Behavior
The media feeds us with information of unethical behaviors in our environment
revealing the unethical social issues that demand our attention. The newspaper
accounts of unethical behaviors in business have raised concerns about business
ethics which have led to studies on their causes in organizations (Carroll, 1978, 4).
These unethical behaviors are from unsavory individuals that have no moral
character. In 1961, the survey conducted by Reverend Raymond C. Baumhard S. J.,
showed that there was a very high concern about ethical behaviors. That concern is
higher today.

What is an Unethical Behavior?


The Civil Service Commission of Philippines defined an unethical behavior as any
behavior prohibited by law. In a dynamic business environment, a large gray area
exists that makes it difficult and unclear to distinguish what is ethical. An unethical
behavior would therefore be defined as one that is not morally honorable or one
that is prohibited by the law. Many behaviors will fall in the classification including
corruption, mail and wire fraud, discrimination and harassment, insider trading,
conflicts of interest, improper use of company assets, bribery and kickbacks,
compliance procedures, ethical relations with others, disciplinary action, fraud,
illegal business donations, patent infringement and product liability.
Unethical behaviors that stimulated interest in ethics include Watergate events,
Lockheed
Scandal, the 1972 United States presidential election, illegal business donations and
bribery of foreign officials in order to induce business abroad(Carroll, 1978, 5).
Today, the most common ones are false communication, collusion, conflicts of
interest, gifts and kickbacks, health services providers unfair practices, insider
trading, discrimination and harassment, and embezzlement.

False Communications
False communications fall into various categories. They include falsification of
auditors or controllers report or any form of manipulation that does not tell the
whole truth. These include cheating on tax returns or inappropriate depreciation
schedule and wrong expenses (Brennan Jr., Valtz, Shallenberger & Stanton, 1961,
164). Feeding the public with wrong report of the organizations business
performance to make the organization look good is another common practice. In
2001, Enron gave wrong information about their loss because Ken Lay, the CEO of
Enron, was advised by some trusted Enron executives to report only $1.2 billion of
the $7 billion in losses because it was felt that the amount could be explained
reasonably without doing more damage to the falling stock price of the company
(Collins, 2007, 3). Similar to this was the case of Manville Corporation. The top

management of the Corporation suppressed, for decades, evidence which proved


that asbestos inhalation was killing their employees.

Collusion
Collusion, especially with competitors, to fix prices, is an unfair business practice
today. This could be considered stealing from customers. However, there are
differences of opinion on whether or not price fixing is stealing from customers
(Brennan Jr., Valtz, Shallenberger & Stanton, 1961, 174).

Gifts and Kickbacks


Some organizations do not allow their employees to receive gifts from clients during
normal course of business. Those who do, generally provide guide lines on
limitations as to the amount an employee can receive as gift. Sometimes a buyer
may request for kickbacks or entertainment which, if not provided, may lead to the
loss of the customer. An employee frequently receives pressure from the
management to behave unethically or to obtain profitable business at any cost,
which may include the use of any possible dirty tricks. The employees who desire to
be retained or promoted have no choice but to dance to the tune of the
management. This is because there were cases of those who refused to behave
unethically the way management instructed and were fired or nearly fired (Brennan
Jr., Valtz, Shallenberger & Stanton, 1961, 165).

Conflict of Interest
Conflict of interest occurs when ones private interest interferes or appears to
interfere in any way with the interest of the organization. According to Sliglitz, it can
be argued that there is no conflict of interest because, based on Adam Smiths view,
the individuals, when pursuing their own self-interest are actually pursuing the
general interest of society (Sliglitz, 2003, 2). Some examples of conflicts of interest
are:
diverting from the organization for personal benefit, a business opportunity,
using the organizations assets for personal benefit,
accepting any valuable thing from the organizations customers or suppliers, and
having a financial interest in an organizations competitor.

Unethical practices in the Health Care Sector


There are three common unethical practices in the Health Care Sector. The first is
refusing to provide health care services to the patients who have no medical
insurance. Some Health Centers do not admit patients who have no insurance
unless they can provide evidence that they have the ability to pay for the health
service. The second unethical practice in the health care sector is over treating

patients to boost income. The third is doing surgery at surgical centers instead of
the hospital so that the doctors do not have to pull call at any hospital (Weber,
2003,6).

Insider Trading
Insider trading is an unethical behavior which occurs when a person who has access
to
confidential information uses or shares the information for securities trading
purposes or any other purpose except the conduct of regular company business.
The confidential information of the company are not to be used for achieving
personal gain neither are they to be disseminated directly or indirectly, to friends,
family members and other outsiders who may in turn trade on or misuse the
information.

Discrimination and Harassment


Discrimination involves not providing equal opportunity in employment on merit but
on other basis such as race, sex, national origin, age, religion, or any other basis not
related to the job. Harassment is a derogatory comment or unwelcome sexual
advances (FS Networks, Inc., 2004, 3).

Wrong Doing
A large number of people, including top management, are involved in wrong doing
both in the public and in the private sectors. The managers of E.E. Hutton, for
example, were found guilty of 2000 mail and wire fraud. Similarly, the supervisors of
a defense contractor were accused of falsifying time cards (Gellerman, 1986, 85).

Why People Behave Unethically


Dedicated employees, who are usually honest, sometimes behave unethically
because of four rationalizations: that no one will ever find out, that the behavior is
not really illegal, that it is in the best interest of the organization, and that the
organization will protect them. Although the costs of unethical behavior are hard to
measure, they can add, according to research, more than 20% to the cost of doing
business. The costs will include low wages, unemployment, and poverty. If top
management wants to improve organizational performance, they must stand firm
that ethical methods are the only ways business should be done.

Causes of Unethical Behaviors


The study that was commissioned by American Management Association (AMA) and
which was conducted by the Human Resource Institute (HRI) using 1121 managers
and Human Resource experts as participants, revealed that the leading cause of
unethical corporate behavior is pressure to meet unrealistic business objectives
and deadlines. The study also showed that the second leading factor that causes
unethical behavior is the desire to further ones career while the third leading factor
is the desire to protect ones livelihood (Schwartz, 2006, 1) and (MacDo, 2006, 1).
Job pressure, according to the study, causes employees to engage in unethical
behaviors
that includes cutting corners on quality control, covering up incidents and lying to
customers. Ignorance is another major cause of unethical behaviors. The study of

(AMA) and (HRI), (MacDo, 2006, 1), revealed that the ignorance that the acts are
unethical and not knowing the seriousness of the consequences when caught, are
causes of unethical behaviors.
Competition for scarce resources, power or position can cause individuals to engage
in
unethical behaviors. Hosmer emphasized that an attempt to improve their
corporate competitive positions made managers to take immoral actions (Hosmer,
1987, 439). Bazerman and Banaji felt that the cause of the unethical behaviors in
organizations is the presence of a few bad apples among organizational actors
(Bazerman & Banaji, 2004, 111). The primary cause of unethical behaviors can be
traced to lack of maintaining the type of consistent leadership that is necessary for
running an ethical organization. This exposes the employees to opportunities that
make them engage in unethical behaviors.

TERMS IN AND TYPES OF ETHICAL THEORY


TELEOLOGICAL - This describes an ethical theory which judges the rightness of

an action in terms of an external goal or purpose. So, according to a teleological


theory, consequences always play some part, be it small or large, in the
determination of what one should or should not do. Not all teleological theories are

consequentialist. John Rawls' theory of justice is teleological, but not


consequentialist because it claims that consequences are only part of what must be
considered when determining what policy is morally just.
Benefits
1. There is room in some theories for good intentions, even if the action didnt
active the desired end.
2. Active attempt to connect morality with the real world.
3. By allowing for the consideration of consequences, teleological theories can
adapt to different circumstances and situations. (Also see utilitarianism)
Problems - Depends on the theory. See utilitarianism for an example.

CONSEQUENTIALIST - Under a consequentialist theory, the consequences of


an action determine its moral value. A key question in consequentialist theory is
how to measure the moral worth of the consequences. Consequences can be good,
neutral, or evil. Another relevant question is which consequences count (intended or
actual). If only actual consequences count, then do all consequences count?
Consequences can be distinguished by direct/indirect, individuals/objects affected,
influence of complicating factors, etc.
All of these considerations go into shaping the ethical theory. For example, Jeremy
Bentham and John Stuart Mill were both act utilitarians. So they judged an individual
action to be good or bad depending on the actual consequences of that action.
Bentham defined good as pleasure and evil as pain. (Bentham) Thus when choosing an
action, according to Bentham, one should choose the action which produces the
greatest amount of pleasure compared to pain for all affected. Since pleasure and
pain were the foundation for good and evil, all affected would include all sentient
things. J. S. Mill differed from Bentham in that he believed that happiness and
unhappiness were the basis for good and evil. (Mill) Under his evaluation then, while
pleasure and pain were important considerations, they were only the basic
minimum. This sets up an ability for Mill to claim that consequences to more
sentient beings may be more important than those to less sentient beings and to
characterize some pleasures as higher than others.
Benefits
1. Consequentialism is grounded in actual effect. So, moral action always improves
life on earth (in some manner). Acting morally can improve your lot in life. So, there
is an incentive to act morally even if you do not believe in an afterlife.
2. Consequentialist theories are often attentive to the particulars of the situation.
3. These theories will allow for exceptions to the rule when warranted by the
outcome.
4. Utilitarianism follows the cause and effect reasoning in science. It can be proven
wrong or right by referring to empirical evidence, instead of a theoretical ideal.
5. All sentient beings understand pain and pleasure. Thus many have claimed that
utilitarianism is transcultural.
6. On a related note, utilitarianism avoids the charge of speciesism in ethical theory
by using a moral foundation that is shared by other species, thus requiring their
consideration.
Problems

1. Consequences are difficult to predict. Your actions may have good intentions and
a high probability of causing good results. But, if something happens and the
consequences are actually bad, then your action was morally wrong. Also, as the
situation involves more people and alternatives, it becomes more difficult to
determine which action would produce the best consequences. How can we ever
know that we actually chose the best alternative. There is no opportunity for
comparison of actual cases, just similar ones.
2. "Does the end always justify the means?" A consequentialist theory would justify
many actions that we normally would consider wrong, if it turned out that the
consequences were good.
3. This theory undermines trust in others and intimate relationships since we can
never be sure that the consequences might not justify a betrayal of trust and in
many of these theories, each individual is treated the same regardless of one's
relationship. So, for example, ones duty to prevent pain to a stray cat would be
equal to ones duty to prevent pain to ones own cat.

DEONTOLOGICAL - This type of theory claims that there are features within the
actions themselves which determine whether or not they are right. These features
define the extent to which the actions conform with recognized moral duties. For
example, driving while drunk violates the duty to above all do no harm. The duties
derive from various sources, such as religion, biology, psychology, metaphysics,
culture, language, etc. Depending on the deontological theory, these duties may be
absolute (no exceptions), prima facie (can only be overridden by a more important
duty), or conditional (only hold under specified circumstances).
Deontological theories do not consider consequences to be important when
determining whether or not an action is ethical. It doesnt matter if the drunk driver
made it home safely. Driving drunk was still wrong because the intention to drive
drunk was wrong (or to drink alcohol when one knows one needs to drive).
Immanuel Kant's ethical theory is deontological. He claims that actions are only
morally right when they are done out of duty. He sees moral duties as unchanging
laws for human conduct. He believes that morality is derived from the ability to
think rationally, which enables beings to be free. If one is not free, then one cannot
be held responsible. Thus only free individuals are moral agents and all free
individuals are capable of acting out of reason. Kants moral theory is largely
focused on protecting and promoting the free action of rational beings. Three
formulations of his categorical imperative are derived from this moral foundation:
(Kant)

Always act out of duty, in accordance with a good will (I.e. One does the right thing
because one recognizes that it is the right thing to do, not because it pleases you to
do it or will promote good consequences.)
Always act as if the maxim of thy action were to become by thy will a Universal Law
of Nature (i.e. Are you willing to allow any other rational being to act on the same
reasoning you used to justify your action?)
Act as to treat the capacity for rationality, whether in thine own person or in that of
any other, in every case as an end withal, never as a means only. (i.e. Never treat a
rational being as a mere means to an end.)
Benefits

1. Right and wrong actions are easily determined by considering one's duties. In
some cases, these are explicitly spelled out (i.e. religion). However, the use of
judgement is usually necessary to determine which duties apply and how.
2. Unlike utilitarianism, the end does not justify the means. Deontological theories
provide a sound basis for inalienable rights and inherent value.
3. Since duties do not change, there is a greater sense of security/predictability in
the accepted behavior of others. Right and wrong dont vary with the
consequences, although there may be a various according to circumstances (i.e. in
the case of conflicting duties).
4. Good motives are valued, even if the outcome wasnt what you expected..
Problems
1. There is no agreement on a single standard for morality.
2. Ignoring consequences can cause pain and suffering.
3. The imposition of a specific moral belief system on others has been a cause of
significant harm throughout history. Some deontological theories are not equipped
to respect diverse beliefs. However there are some deontological theories that
incorporate respect for the beliefs of others. There are even some religious-based
theories which, while espousing one true way also respect diverse beliefs amongst
individuals (i.e. Buddhist ethics).

RELATIVISM/SUBJECTIVISM - This type of theory denies that there is any


uniquely right moral theory, standard, or value. Everything is subjective. For
example, Jean Paul Sartre claimed that each individual creates his or her own
morality based solely on one's own decisions about what is valuable. There are no
moral standards to turn to that have any more authority than those that you create.
Things (including other people) only have value because you gave them value. (Sartre)
Benefits
1. Adjusts for changing factors in society and allows for true multiculturalism.
2. Each individual is fully responsible for his/her own moral beliefs since he/she
chose to create and value them.
Problems
1. This leads to social anarchy. Moral theories are tools that are supposed to help
people live together with some degree of harmony and security. But, if you accept
that morality is truly relative, you have to accept that there is no standard by which
you can judge the moral beliefs of others.(ex. The Nazis, KKK, etc.)
2. What is the meaning of morality if it lacks any standard to judge such claims
other than individual choice?

VIRTUE BASED THEORIES - Teleological theories consider the goals of

actions. Deontological theories focus on acting in accordance with moral duties and
obligations. Virtue based theories focus on the character of the person. According to
virtue based theories, ethics is about what sort of person one should strive to
become. The qualities that one should develop in oneself are called virtues (ex.
honesty, fairness, kindness, faithfulness, generosity, prudence, integrity, bravery,
etc.).

One should act in ways that develop these virtuous qualities within oneself. For
example, Aristotle claimed that in order to become an honest person, one should
tell the truth. (Aristotle) Eventually it becomes a habit. Along, the way one learns how to
tell the truth appropriately, without being brutally honest all of the time or lying
whenever it is easier to do so. There are many virtues that one ought to develop
through practice over ones lifetime. Becoming virtuous is excelling at all of the
virtues that make a good human being, health care professional, etc. It is a learning
process that continues throughout your life.
Benefits
1. This type of theory recognizes that individuals and circumstances are unique. For
example, the virtue of compassion may be expressed by two people in two different
ways. Similarly, running into a burning building may be courageous action for a fire
professional but foolhardy for an untrained individual with no protective equipment.
2. Virtue ethics allows each individual to use his/her own judgement when making
difficult moral decisions, yet recognizes certain common goals.
3. Mistakes are expected and recognized as learning opportunities.
Problems
1. Some argue that too much is left to individual judgement, thus opening the door
to bias and prejudice.
2. Similarly, virtues can be interpreted very differently. For example, consider the
many ways that fairness may be interpreted.
3. Virtue ethics depends on modeling for some of the education. However, one may
choose a poor role-model and therefore develop a false sense of virtue.

Managing Ethics at Workplace:


Values drive behavior and therefore need to be consciously stated, but they also
need to be affirmed by actions.
Ethics is about behavior. In the face of dilemma, it is about doing the right thing.
Ethical managerial leaders and their people take the right and good path when
they come to the ethical choice points.
Managerial leaders and their people are invited to explore how values, actions, and
behavioral standards can help steer organizational behavior.

Values Drive Behavior


A well-used axiom in organizational behavior thought asserts that values ultimately
drive our behavior. In a nutshell, values exert influence over our attitudes, and
attitudes influence our behavior. Values are integral to attitude formation and to
how we respond to people and situations. Extensive literature exists dealing with

how values relate to effective managerial leadership. A review of this body of work
leaves us with the clear picture that values are a key component of effective
managerial leadership.

Value

Attitude
Experience promotes wisdom that
Wisdom
and
helps convert information
to
Knowledge
knowledge.
Self-Control

Ethical Behavior
Using knowledge to solve problems
ethically and to do what is right.

Self-control
means
effectively Putting personal motivations aside and
managing reactions to challenging acting with objectivity by doing what is
situations and temptations.
right.

Acting justly and fairly is a longJustice


term driver of ethical behavior;
remember the Golden Rule.
The belief in a power and source
outside oneself reduces selfTranscendence
serving actions and increases
humility.
Treating people with kindness
Love
and
helps increase the reservoir of
Kindness
positive affection and love.
Ethics requires the courage to do
Courage
and the
right
things
consistently
Integrity
without
regard
to
personal
consequences.

Establishing just and mutually agreed


upon criteria and administering them
fairly to all people.
Putting institutional and/or stakeholder
interests
above
self-interests.
Identifying a personal purpose that is
aligned with organizational mission.
Recognizing and encouraging others
for their contributions.
Making unpopular decisions based on
fair consideration of the facts.

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. If you know what is the right thing to do, just do it. Unfortunately, too often
white collar criminals will tell us that they knew what was right, yet they failed to
do it. John Maxwell, in his recent book Theres No Such Thing as Business Ethics,
explains various reasons for ethical transgressions, including that people just
rationalize their choices with relativism. While the reasons for the transgressors
actions are varied and complex, the simple truth is that they failed to do the right
thing in spite of their knowledge. They did not act with wisdom.
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: Why Some Companies Make the Leap . . . and Others Dont,
underscores how long-term success depends on putting the right people in place.
Larry Bossidy, as CEO of Allied Signal, made people selection a top priority and

considered it a key task of top management. Selecting people who share your
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. As an executive, I regularly attended new employee orientations to
espouse the organizations 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.

Behavioral Standards and Codes of Conduct: The Safety Net


Ideally, managerial leaders and their people will act ethically as a result of their
internalized virtuous core values. I like to think of this as ethics from the inside
out. Relying solely on this inside out approach, however, is simply nave in many
circumstances.
Established behavioral standards and written codes of ethical conduct can help
bolster 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 proscribe clearly delineated conduct. This type
of code is designed to help as a jurisprudential tool when disputes occur. It is more
of a do and dont 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
wherein 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 can help steer ethical behavior
by offering a cue or written rule to remind personnel of the right thing to doan
outside in process for ethical behavior management. These standards and codes
trigger peoples internalized values, thus gaining strength through firm yet fairly
administered consequences.

The Ethical Behavior Formula


Taken together, virtuous values, actions, and behavioral standards/codes can
produce a formula, such as that illustrated below, that may increase the likelihood
of ethical organizational behavior:
Virtuous Values + Aligned Action + Behavioral Standards/Codes >
Increased Ethical Behavior
Consider adapting the six virtuous values and aligning them with key managerial
leadership actions such as selection, employee orientation/socialization, and
allocation of resources. Behavioral standards and/or codes of ethical conduct can be
added as appropriate. Acting on these three formula components may serve to
increase the display of ethical organizational behavior.
Three Good Reasons to Apply the Formula
There are at least three good reasons to practice ethical behavior in your
organization. These reasons may motivate you to adapt the formula into your
managerial leadership practice repertoire.

First, it is the right thing to do. Employees and external stakeholders alike
want and deserve to be treated ethically. Taken to the extreme, a culture allowing
unethical behavior can breed all manner of damaging and even criminal activity.

Second, it makes economic sense. A mounting body of evidence shows that


an emphasis on the softer sides of business, including ethics, positively influences
the harder traditional bottom line. By listening to employees, effectively recognizing
their work, and practicing good ethical behavior, managers have given a boost to
such hard measures as operating earnings, ROI, and stock price.[4]

Third, in line with a growing trend to look beyond shareholder value to a


broader stakeholder perspective, organizational ethical behavior becomes the
socially responsible thing to do. Just think for a moment about the impact of
Enrons, Tycos and World Coms unethical behavior on their respective
communities, workforces, and other stakeholders.

The Benefits & Importance of Ethics in the


Workplace
The Ethics Resource Center reports that non-unionized employees perceive stronger
ethical cultures within their organizations than their unionized counterparts. The
non-profit organization also reports that young workers are more likely to perceive
weak ethical cultures within their companies than older ones. Managers also tend to
value stronger ethical cultures than employees in non-management positions. It is
your duty as a manager to incorporate and manage a strong ethical culture within
your business. Workplace ethics are significant to your business and provide
numerous benefits.

Asset Protection
A strong ethical culture within your business is important in safeguarding your
assets. Employees who abide by your workplace ethics would be able to protect and

respect your businesss assets. For example, they would avoid making personal long
distance calls using the businesss lines. Workers can only respect company
property when you treat them with respect and dignity, which makes them feel
proud to be working for your business. Ensure that your workers perform in an
environment with integrity and strong ethics. It increases employee pride and
discourages them from stealing supplies or equipment.

Productivity and Teamwork


Workplace ethics is integral in fostering increased productivity and teamwork
among your employees. It helps in aligning the values of your business with those of
your workers. Achieving this alignment requires that you encourage consistent
dialogue regarding the values of your business, which enhances community,
integrity and openness among employees. Ethics enable your workers to feel a
strong alignment between their values and those of your business. They show such
feelings through increased productivity and motivation.

Public Image
You earn a lot of respect and cultivate a strong image in the public domain when
you make ethical choices. For instance, you can fulfill your corporate social
responsibility by reducing waste discharge from your business. The public would
consider your business to be operating with honor and integrity while valuing
people over profits. Building a strong public image through ethical conduct also
earns you more clients. Customers would develop trust in you and do business with
your organization.

Decision-Making
Ethical conduct in the workplace encourages a culture of making decisions based on
ethics. It also enhances accountability and transparency when undertaking any
business decisions. During turbulent times, a strong ethical culture guides you in
managing such conflicts by making the right moves. It can help you to introduce
change successfully in your organization, which can be a challenge. Ethical conduct
within the business sensitizes you and your staff on how to act consistently even in
difficult times.

Conclusion
Today, there is a tremendous loss of confidence in corporate conduct and there is an
urgent need to work towards restoring it. Although ethics education seem to
produce limited evidence of changing behaviors, the commitment of management
to monitor annual ethics education for all employees will produce the desired
favorable results. There should be clear communication to the employees of what
are honorable and expected behaviors in the organization. They must maintain and
stand firm on a clear cut policy that ethical methods are the only way of doing
business.

References:

Aristotle. The Nicomachean Ethics, Welldon, J. trans. Prometheus Books (Buffalo, NY:
1987).
Hosmer, LaRue J. (1987), The Institutionalization of Unethical Behavior. The
Journal of Business Ethics, 439 447.
Weber, David O. (2005). Unethical Business Practices in U.S. Health Care Alarm
Physician Leaders. Special Report: Ethical Debates/Ethical Breaches
McShulskis, Elaine (July, 1997). Job stress can prompt unethical behavior, HR
Magazine. 22-24.
National Defense University. (1986). Strategic Leadership and Decision Making.
//www.au.af.mil/au/awc/awcgate/ndu/strat-ldr-dm/comt.html. 1-10.
Stiglitz, J.E. (2003) Ethics, market and Government Failure, and Globalization.