Ethical Issues in I/O Psychology

Organizational ethics is the ethics of an organization, and it is how an organization 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 industrial and organizational
psychology as well as business ethics on the micro and macro levels, organizational ethics is
neither OB or I/O psychology, 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.
Ethics are the principles and values used by an individual to govern his or her actions and decisions.
An organization forms when individuals with varied interests and different backgrounds unite on
a common platform and work together towards predefined goals and objectives. A code of ethics
within an organization is a set of principles that is used to guide the organization in its decisions,
programs, and policies. An ethical organizational culture consists of leaders and employees
adhering to a code of ethics.
Ethics in Industrial/Organizational Psychology:
Organizations and employees are faced with ethical dilemmas every day. Ethical dilemmas are
ambiguous situations that require a personal judgment of what is right or wrong because there are
no rules, policies, or laws guiding such decisions. Individuals often rely on their morals and
personal values, which often leads to different decisions by different people in similar situations.
Because people have different backgrounds which impact their personal values and how they
define a particular situation, the decision that one person makes may be very different than what
another one makes. For example, suppose you want to sell your car. You know that your car has
been in several accidents and has had a lot of work done on it. Do you share that information with
a prospective buyer? There is no law or policy that says you must. In fact, most people would say
that unless the buyer specifically asks you that question you shouldn’t bring it up at all. Is it morally
wrong or unfair not to share this information? Based on an individual’s value system, the answer
may be “yes”, it is morally wrong, or “no”, it’s not morally wrong. In life, we often encounter two
types of ethical dilemmas: Type A and Type B. In a Type A dilemma, there is a high level of
uncertainty as to what is right or wrong, there appears to be no best solution, and there are both
positive and negative consequences to a decision. For example, many people would say that drug
research that uses animals to test new drugs is unethical, because it is morally wrong to hurt any
living creature. Others would say that new drugs could save millions of lives and that it would be
morally wrong not to make and test drugs that could potentially save human lives. As you can see,
there seems to be no one best answer, as there are both negative and positive consequences in
making this decision. In a Type B dilemma, also called rationalizing dilemmas, the difference
between right and wrong is much clearer than in a Type A dilemma. Usually, individuals know
what is right but choose the solution that is most advantageous to themselves. For example,
choosing not to tell a prospective buyer about any past damage that occurred with a car for sale
would have the most advantages for the seller. Type B dilemmas are called rationalizing dilemmas
because individuals “rationalize” they are right because “everyone else does it.” For example,
many students will say that they have cheated at least one time on a test. Most of those students
would agree that it is morally wrong to cheat. So why have so many done it? They rationalize that
“for just this one time” it is okay and that it is not hurting anyone. And they convince themselves
that because everyone else is doing it, it must be okay. This ability to rationalize is why unethical
behavior is at an all-time high in organizations. In a survey done by Careerbuilder.com (2005) of
2,050 workers, 19% of them reported participating in the unethical act of lying in the workplace
at some point in their professional career. In a survey by the Ethics Resource Center in 2007, 56%
of workers surveyed reported witnessing unethical behavior from others, including such things as
“borrowing” work supplies and taking them home, stealing pencils and other equipment, using
sick leave when they weren’t sick, abuse of employees by management, and coming in late and
leaving early. At the end of each chapter in this textbook, you will be presented with some ethical
dilemmas for which you are asked to discuss and answer questions. Using the information from
this section, decide whether you think those situations are ethical or unethical. There is no right or
wrong answer. Compare your thoughts and ideas with other classmates to get a clear perspective
of how difficult it is to get everyone to make the same decision when faced with an ethical dilemma
as opposed to a decision that is guided by law or policy.
Ethical Issues:
Before Bob can design a research study, he needs to be aware of the ethical standards that apply
in conducting scientific research. When human beings are involved in research there must always
be intentional consideration of the potential consequences involved, and a plan on the part of the
researchers to respect those people's rights. Let's review with Bob some of the major ethical
considerations for research in industrial and organizational psychology.
Overview:
An organization's ethical philosophy can affect the organization in many ways including its
reputation, productivity, and the bottom line of the organization. Ethics within an organization can
offer many benefits. A positive ethical corporate culture improves the morale among the workers
in an organization, which could increase productivity, employee retention and loyalty. Higher
productivity improves the efficiency of the organizations and increased employee retention
reduces the cost of replacing employees. Other essential benefits of an ethical culture include better
internal communication and wider community development through corporate social
responsibility. [citation needed] The Foreign Corrupt Practices Act (FCPA) restricts the United
States business firms from engaging in bribery and other illegal practices internationally. There
are laws that have the same type of prohibition for European companies which create a
disadvantage competitively for both European and U.S. firms. Such laws are not a restricting
element to organizations that have highly elevated ethical behavior as part of their values.
Organizations that lack ethical practices as a mandatory basis of their business structure and
corporate culture, have commonly been found to fail due to the absence of business ethics.
Corporate downfalls would include, but are not limited to, the recent Enron and WorldCom
scandals, two primary examples of unethical business practices concerning questionable
accounting transactions.
Organizations focusing on encouraging ethical practices are commonly viewed with respect by
their employees, the community, and corresponding industries. Ethical business practices of
organizations have resulted in a solid financial bottom-line. This has been seen through greater
sales and increased revenue by companies retaining talented personnel and attracting new skilled
employees. 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, less training time for new employees, and greater output
regarding services (or production of goods).
Basic ethical elements:
There are at least four elements that aim to create an ethical culture and behavior of employees
within an organization.
These elements are:
1. A written code of ethics and standards (ethical code)
2. Ethics training for executives, managers, and employees
3. The availability of ethical situational advice (i.e. advice lines or offices)
4. Confidential reporting systems
Organizations are constantly striving for a better ethical atmosphere within the business climate
and culture. Businesses must create an ethical business climate in order to develop an ethical
organization. Otherwise said, companies must focus on the ethics of employees in order to create
an ethical business. Employees must know the difference between what is acceptable and
unacceptable in the workplace. These standards are found in the written code of ethics or may be
referred to as the employee handbook. These standards are a written form of employee conduct
and performance expectations.
Employee handbooks also commonly include rules concerning expectations and consequences that
follow misconduct. Handbooks normally will clearly state the rules, guidelines, and standards of
an organization as well as possible rules, regulations, and laws that they are bound by. Many
company handbooks will include laws regarding sexual harassment, alcohol abuse, and
drug/substance abuse.
Ethical system implementation:
The function of developing and implementing business ethics into an organization is difficult. Due
to each organization's culture and atmosphere being different, there is no clear or specific way to
implement a code of ethics to an existing business. Business ethics implementation can be
categorized into two groups; formal and informal measures. Formal measures include training and
courses pertaining to ethics. Informal measures are led by example from either the manager or the
social norm of the company.
There are several steps to follow when trying to implement an ethical system. Some of these steps
include obtaining a commitment from the board of directors and senior managers, developing
resources for ethics initiatives, and determining ethical risks and developing contingency plans.
Other steps include developing an ethics program that addresses risks while still maintaining
compliance with the ethical standards, providing insight for implementation and audits of the
ethical programs, and communicating with stakeholders to create shared commitment and values
for ethical conduct.
The implementation should be performed to the entirety of the business including all areas of
operations. If it is not implemented pragmatically and with caution for the needs, desires, and
personalities (consider the Big Five personality traits) of the stakeholders, the culture, and the
employees, then problems may arise. Although a great deal of time may be required, stakeholder
management should consider the Rational Decision-Making Model for implementation of various
aspects, details, and standards of an ethical system to the stakeholders. If an implementation has
been performed successfully, then all stakeholders have accepted the newly designed ethics system
for the organization. With the implementation of an ethical system comes the implementation of
new tasks and responsibilities. The responsibilities include leadership in ethics, delegating, and
communicating as well as motivating the company’s ethical position to its employees.
Theories and models in Ethical Issues:
Refer to the following theories and models for more information:
 Stakeholder Theory
 Maslow's Hierarchy of Needs
 Rational Decision-Making Model
 Big Five Personality Traits