A Study on Importance of Ethics in Organizations

Nakka Uday Kumar1 Dr.L.Srinivas Reddy2

1 Research Scholar ,Department of Business
Management,Osmania University,Hyderabad,Telangana State.
2 Principal , Aristotle PG College, Moinabad, RR Dist,
Telangana state.
ABSTRACT :
In today’s competitive world, ethics are being neglected by several organizations in
almost all businesses. Several unethical practices have increased in the organizations
.Several remedial measures are to be adopted in order to adopt ethical values .Nowadays it
seems difficult for the organizations to have a balance between profitability and belief
system. Mostly people are adopting shortest unethical routes in order to achieve success
within less time. Success achieved without ethics does last long only for shorter duration.
Leaders in the top most management must adopt ethical principles and must encourage
employees to follow the organizational ethics in order to achieve success in the work.

Keywords : Ethics, Organizational ethics, Ethical practices, Transparency.

INTRODUCTION :
Ethical behavior in organizations means to act in certain ways which are in
accordance with the ethical values held by that organization.
The organizations that stress ethics have better images and reputation and
yield higher long-term interests. Reputation is of immense importance to
all organizations, whether they are commercial, governmental, or NGO’s.
REVIEW OF LITERATURE :
Research suggests that ethical or unethical behavior in business
organizations is both combination of individual characteristics and
contextual factors and among these factors, organizational culture is one of
the key influences.( Meyers, 2004; Frederick, 1995; Trevino & Nelson,
2004).
Research by Trevino et al. (1999) showed that in the United States (US)
ethical business organizations have, as a rule, clearly communicated ethics
guidelines or codes of ethics.
They have incentive systems that are clearly tied to ethical behaviour, and
promote the achievement of both economic outcomes and non- economic
goals (Trevino & Weaver, 2001).
According to Gabler (2006), employees of an ethical business have “a
sense of responsibility and accountability for their actions and for the
actions of others and freely raise issues and concerns without fear of
retaliation” (p. 339).

Inorder to remain competitive, to attain prosperity and to achieve desired

goals, organization’s reputation paves the way towards stakeholder’s
approval and acceptance (Tom Watson 2007)

For organizations reputation is seen as a major element alongside and

included in financial performance and innovation. The organizational
reputation is very much keenly observed in a crisis because of the loosing
of valuable human resources and also the associated legal costs
(Fombrun, Van Riel 2004).

Unethical behavior of the management and the employees usually causes

dissatisfaction of the parties involved, scandals, and may even lead to the
organization’s bankruptcy (Robertson 2008).

The economic crisis has brought the subject to the forefront about
importance of ethical behavior . Several discussions and researches support
the importance of the ethical behavior in organizational functioning. Some
of the authors even argue the linkage between ethics and world economic
crisis (Mulej et al. 2009).
NEED OF THE STUDY : The need of the study arises from the ethical
principles being adopted by organizations in it’s services, products and for it’s
employees.

SCOPE OF THE STUDY : The scope of the study is wide and is related
to the top level management, managers, business processes, finished
product and also the services offered to employees by the organisation.

OBJECTIVES OF THE STUDY :

1. To study the business ethics being framed in organizational policies

2. To find out that managers of various departments have thoroughly

understood the policies.

3. To know about the proper implementation of business ethics in the

organization.

4. To find out the gaps between preparation and implementation of the

ethical principles.

STATEMENT OF THE PROBLEM :

To find out the gap between the formulation of business ethics and
the actual implementation of ethical principles and to understand about the
balance between economic reality and ethical demands in reality.

RESEARCH METHODOLOGY :

Secondary data : The data is collected from various secondary sources

namely Textbooks, Journals and Magazines ,Journal articles and various
websites.
ANALYSIS AND INTERPRETATION :

In today’s competitive world, organizations are able to witness large no of

unethical practices in almost all businesses.

Several remedial measures are to be adopted in order to adopt ethical

values .Nowadays it seems difficult for the organizations to have a balance
between profitability and belief system. Mostly people are adopting
shortest unethical routes in order to achieve success within less time.

Success achieved without ethics does last long only for shorter duration.
Leaders in the top most management must adopt ethical principles and
must encourage employees to follow the organizational ethics in order to
achieve success in the work.

Good organizational culture, open communication and top

management commitment have become important to bring required
change in term of ethics in the organization.

Employees look towards their superiors when they are in dilemma

with regards to decision making . Senior managers can be considered
as role models .

A strong ethical culture is very essential for high ethical conduct in the
organization. Rewarding good conduct, leads to a strong ethical
culture.

Ethical conduct of employees depends to a large extent on how they

perceive the organizational policies. If they perceive them as fair they
are motivated to work ethically. On the other hand if they perceive
them as unfair they tend to adopt unethical behavior which they feel is
right thing to do.
Fairness should always be the central theme of all organisational
policies. Therefore, to set the right precedent unethical conduct
whether it occurs at the higher or lower levels of the organisation
should be condemned and strict action initiated against the wrong
doers.

Organizations needs to develop transparency in communication

process. The important aspect should always be on presenting the
accurate picture about the organization before the employees.

Creating awareness about the disciplinary mechanisms that deal with

impropriety and lack of integrity at all levels of organisational
hierarchy.

Organizations needs to adopt one of the key measure called whistle-

blowing process to facilitate anonymous disclosure of malpractices by
employees without any fear which might be a one of the important step
to be undertaken by the organization inorder to know about any
employee’s unethical practices .

CONCLUSION :

Ethical behavior is determined by the values of the society and legal

principles act to support activity along these lines. At the government
level the major role of the executive, legislative and judicial
organisations is to insure the health and safety of its people and
provide that all will be protected from the negative outcomes which
do occur in the society.

Legal aspects are often supplemented by codes of conduct. These are

most often met in groups, such as lawyers, accountants, doctors,
pharmacists and other professional organizations, such as the chambers
of commerce.
Every organizational practice, process and system should be so designed
in such a way as to propagate core values of the organization . It is only
when ethics are incorporated into the everyday conduct of the employees, a
true ethical culture that is long lasting becomes a reality.

BIBLIOGRAPHY :

Meyers, C. (2004). Institutional culture and individual behavior: Creating an

ethical environment. Science and Engineering Ethics, 10(2), 269-276.

Trevino, L., & Nelson, K. (2004). Managing business ethics: Straight talk about
how to do it right. New Your: Wiley.

Trevino, L., & Weaver, G. R. (2001). The role of human resources in

ethics/compliance management: A fairness perspective. HRM Review, 11(1),
113-134.

Trevino, L., Weaver, G. R, Gibson, D., & Toffler, B. (1999). Managing ethics and
legal compliance: What works and what hurts. California Management Review,
41(2), 131-150.

Tom Watson (2007) Evaluating Public Relations: A Best Practice Guide to

Public Relations Planning, Research and Evaluation, kogan page
publishers.

Mulej, M., Bozˇicˇnik, S., Potocˇan, V., Zˇ enko, Z. and Sˇtrukelj, T.

(2009b), “Social responsibility as a way of systemic behaviour and
innovation leading out of the current socio-economic crisis”, paper
presented at 53rd ISSS Conference Making Liveable, Sustainable Systems
Unremarkable, 12-17, July, Brisbane, Australia.
Fombrun , C . J .and van Riel , C . B . M .( 2004 ) Fame and Fortune: How
Successful Companies Build Winning Reputation, Pearson Education,
New Jersey.

Frederick, W. C. (1995). Values, nature, and culture in the American corporation.

New York: Oxford University Press.

https://www.researchgate.net/publication/271139279_ROLE_OF_ETHICS_IN_
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