BUSINESS ETHICS

BY
MAHADIH K
(LLB, BSLG, MSLG, PgDPP, MPP)
 WHAT IS BUSINESS ETHICS
Business ethics consists of a set of moral principles and values
that govern the behavior of the organization with respect to
what is right and what is wrong (Jones - Parker - Bos,
2005:17).
OR
Business ethics means recognizing that there is right and
wrong in business.
NOTE;
Running a business is not just about making money, it is about
doing the right thing and making money through that
process.
 PRACTICAL BUSINESS ETHICS
John Hooker of Carnegie Mellon University suggests business ethics
revolves around the question "How can one do good by doing well?"
Conceptualizing business ethics starts with the idea that
owners/managers desire to do something good on both the
personal and community level and determine how to accomplish
good through a business. Simply obeying the law but trying to
squeeze every possible penny out of every transaction is not
practicing good business ethics. Doubling the prices of your bottled
water and generators when there is hurricane warning is not good
business ethics, but sending out a mailer with a 10 percent off
coupon for generators at the start of the hurricane season is good
business ethics. Good business ethics almost always creates a win-
win situation for everyone involved.
 COMPONENTS OF ETHICS
ETHOS
Ethos is an appeal to ethics, and it is a means of
convincing someone of the character or
credibility of the persuader.
It is a means of convincing others of the
character or credibility of the persuader. It is
natural for us to accept the credibility of
people whom we hold in reverence.
 Examples of Ethos

"As a doctor, I am qualified to tell you that this course of

treatment will likely generate the best results."
"You know me – I’ve taught Sunday School at your church for
years, babysat your children, and served as a playground
director for many summers."
"Our expertise in roofing contracting is evidenced not only by our
100 years in the business and our staff of qualified technicians,
but in the decades of satisfied customers who have come to
expect nothing but the best."
"If my age doesn’t convince you that my opinion matters, at least
consider that I am your grandfather and I love you dearly."
 values
Values are those things that really matter to each of us ... the
ideas and beliefs we hold as special. Caring for others, for
example, is a value; so is the freedom to express our
opinions.
or
Important and lasting beliefs or ideals shared by the
members of a culture about what is good or bad and
desirable or undesirable. Values have major influence on a
person's behavior and attitude and serve as broad
guidelines in all situations. Some common business values
are fairness, innovation and community involvement.
 Examples of values
The following list of values will help you develop
a clearer sense of what's most important to
you in life.
Anticipation Appreciation, Approachability,
Approval, Art, etc
 Morals
Morals are the principles on which one’s judgments of right and
wrong are based.
OR
Morals are more like a code of conduct that has been established
and agreed upon by the majority of a society. Morality is like a
guide for rational beings and morals often play an important role
in the formation of ethics. A person may be considered immoral
when he or she is old enough to understand and follow this code
of conduct and yet rejects it. Though morality is often used to
refer to the code of conduct accepted by an entire society,
different morals may be accepted and practiced by individual
groups within a society.
 virtues
Virtue is the moral excellence of a person. A morally excellent
person has a character made-up of virtues valued as good.
He or she is honest, respectful, courageous, forgiving, and
kind.
Note:
Virtues are universal and recognized by all cultures as basic
qualities necessary for our well-being and happiness.
Necessary because when we practice virtues and build the
“character muscle,” we will attract what may have been
missing in our life such as fulfilling relationships,
achievement of meaningful goals, and happiness.
 Examples of virtues
Because of these virtues or positive character
traits, he or she is committed to doing the
right thing no matter what the personal cost,
and does not bend to impulses, urges or
desires, but acts according to values and
principles.
 BEHAVIORS
Behavior or behavior is the range of actions and mannerisms
made by individuals, organisms, systems, or artificial entities
in conjunction with themselves or their environment
or
The way in which an animal or person behaves in response to
a particular situation or stimulus.
OR
A response of an individual or group to an action,
environment, person, or stimulus.
 Examples of behaviors
Insulting a person or group of people, especially for any reason
outside his or her immediate control, such as having a medical
condition, following a particular religion, or being poor.
Discouraging a person's participation in a conversation with rude
phrases, such as "shut up" or excluding someone from a
conversation
Using a tone of voice that indicates disrespect for the listener. An
impolite tone may amplify obviously rude remarks or to
contradict nominally polite words.
 Ethical Cultures
First culture refers to the outlook, attitudes,
values, goals, and practices shared by a group,
organization
Ethical culture comprises all those aspects and
elements of an organization which influence
the ethical conduct of its members
 JUSTIFICATION FOR STUDYING BUSINESS
ETHICS
Improve the Reputation of Your Business
These things take time, but word of mouth is a powerful force in society, and having
friends and neighbors talking about how you treated them right is the best advertising a
business can have.
Become a Better Businessman and Human Being
Studying business ethics changes outlooks and influences behavior. Ethics
provides a set of terminology and a conceptual framework with which you can think
and talk about ethical issues. Studying business ethics will help you weigh the potential
consequences of your business decisions, and it will teach you to make moral
distinctions and avoid common fallacies that people often fall into when making
decisions.
Having defined ethics helps you make tough decisions.
Studying ethics within business, both in theory and practice, enables students to learn
about real-world challenges business professionals face. Knowing which elements
require consideration early on can help you make decisions that preserve honesty and
integrity throughout the rest of your professional life.
 RELATIONSHIP BETWEEN ETHICS,
ECONOMICS AND LAW
Ethical issues connect closely with economic issues. E.g, during
economic practice of doing a cost-benefit analysis, could you
spend a million shillings on treating your dog/donating it for a
political campaign, or you could donate a million shillings to
save those suffering from Hepatitis B. Which option is better?
We regularly make such decisions, weighing our options by
measuring their likely costs and likely benefits against each
other.
This connects economics directly to a major issue in ethics: By
what standard do we determine what counts as a benefit or a
cost? A list of competing variables for the status of vital value
standard includes happiness, satisfying the will of God, long-
term survival, liberty, duty, and equality.
 Relationship between ethics and law
Ethics is a set of standards, or a code, or value system, worked out from
human reason and experience, by which free human actions are
determined as ultimately right or wrong, good or evil. If acting agrees with
these standards, it is ethical, otherwise unethical.

Law is a code of conduct which the authority in power prescribes for society.
It basically differs from ethics in its option to use force if and when
necessary and by the fact that It is backed by power.

In the 1960s, American legal philosopher Lon Fuller asserts that ethics tells
people what they should do and embodies the ideals they should strive to
attain. Law, on the other hand, provides boundaries of actions, set by
society, beyond which a person may go only by risking external sanctions,
such as imprisonment.
 EXAMPLE
There are many situations in life, where just following the law does not
make one ethical. For example, if a wealthy man decides to spend a
million shillings in a day having fun with is family while his neighbor has
no money to buy food and is being driven out from his home. It is not
against the law for the wealthy man to do so, but its according to his
dictate conscience that tells him to do so. His ethical value principles
forbid him to rejoice when someone else nearby is in sorrow.

Again, all moral and ethical actions do not involve the law. For example,
it is ethical to love and respect your parents, but there is no law for it,
except when they are deliberately mistreated by their children. Law
represents the minimum standards of behavior expected from people.
Merely following the law, does not make one ethical.
 BUSINESS ETHICS THEORIES
Business owners and managers use ethical theories that most
appropriately serve their operations. Different business ethics
theories exist; utilitarian, rights and justice, Kantian, virtue
approach etc. one can use these theories on their own or in
combination with each other. Each theory includes specific
traits or characteristics that focus on specific ethical principles
that can help companies correct business issues.

These theories are classified into:

Consquentialists
Non-consquentilists
 THEORIES
TELEOLOGY.
Teleological theories of ethics focus on the
consequences caused by an action and are
often referred to as "consequentalist"
theories. By far the most common teleological
theories are egoism and utilitarianism.
 EGOISM.

Egoism defines right and wrong in terms of the consequences to one's

self. Egoism is defined by self-interest. An egoist would weigh an ethical
dilemma or issue in terms of how different courses of action would
affect his or her physical, mental, or emotional well being. Thus, an
egoist, when faced with a business decision, would tend to choose the
course of action that he or she believes would best serve self-interest.
Although it seems likely that egoism would potentially lead to unethical
and/or illegal behavior, this philosophy of ethics is, to some degree, at
the heart of a free-market economy.

Note;
Adam smith advocates for a free market system where individuals pursue
their self interest.
 Cont’
Adman’s views are supported by the famous economist
Milton Friedman, who recommended that the only
moral obligation of business is to make a profit and
obey the law. However, it should be noted that
Smith, Friedman, and others who advocate free-for-
all, acknowledge that some restraints on individuals'
selfish impulses are required in business.
Question
with examples, explain the relevancies and likely
criticisms of egoism theory in business.
 UTILITARIANISM.

In the utilitarian approach to ethical reasoning, one

emphasizes the utility, or the overall amount of good, that
might be produced by an action or a decision.

This approach encompasses what is referred to as cost-

benefit analysis. In this, the costs and benefits of a
decision, or an action are compared. These costs can be
measured in economic, social, human, or even emotional
terms. When all the costs are added and compared with
the results, if the benefits outweigh the costs, then the
action may be considered ethical.
 Cont’
Utilitarianism is like egoism because it looks at the actions by their
consequences, but unlike egoism
Utilitarianism focuses on determining the course of action that will
produce the greatest good for the greatest number of people.
Utilitarianism is probably the dominant moral philosophy in
business ethics. Utilitarianism is attractive to many business
people, since it acknowledges that many actions result in good
consequences for many and bad for the few.
Question
With examples, explain the likely relevancies in relation to
their applicability of utilitarian theory in business
 Criticisms to utilitarianism
The criticisms of this approach are;
It is difficult to accurately measure costs and
benefits.
Another criticism is that the rights of those in
the minority may be overlooked.
 DEONTOLOGY.

Deontological theories differ largely from teleological views

on ethics and can not allow, e.g. the harming of some
individuals in order to help others. To deontologist, each
person must be treated with the same level of respect
and no one should be treated as a means to an end.

The term deontology comes from the Greek word deon,

meaning duty. The theory of deontology states that we
are morally obligated to act in accordance with a certain
set of principles and rules regardless of outcome.
 CONT’D
Deontology; proposes that the principles of ethics are permanent and
unchanging—and that adherence to these principles is at the heart of
ethical behavior. Many deontologists believe that the rights of individuals
are grounded in "natural law." Deontology is most closely associated
with the German philosopher Immanuel Kant.

Deontological moral systems typically stress the reasons why certain

actions are performed. Simply following the correct moral rules is often
not sufficient; instead, we have to have the correct motivations. This
might allow a person to not be considered immoral even though they
have broken a moral rule, but only so long as they were motivated to
adhere to some correct moral duty.
 Types of Deontology Ethics
1. Duty ethics Theory: an action is morally right if it is in accord with some list
of duties and obligations.
For Kant, the morally important thing is not consequences but the way
choosers think when they make choices. Kant says that only one [kind of]
thing is naturally good, and that is the good will.
Kant subsequently developed a theoretical framework through which this
principle could be derived, called the 'categorical imperative'. Kant’s
categorical imperative is the only pure (he had a thing about purity) moral
law he could come up with, and it boils down to this: “Act only on that
maxim by which you can at the same time will that it should become a
universal law.”
The categorical imperative consists of three parts, which Kant puts forward as
follows
 Example of Duty Ethics
Employees who exhibit a duty-based ethic
usually justify their behaviors in terms of
honoring company policy or satisfying their
customers. Although there are more than a
dozen major ethical paradigms, the duty-
based approaches emphasize the satisfaction
of expectations as the major contributor to
their behavior: It's just what they have to do.
 Kantian Maxims
A maxim is a ground rule or subjective principle of
action; in that sense, a maxim is a thought that can
motivate individuals.
A maxim is a personal “ought” statement, like “I ought
to save that puppy from that oncoming truck”.
A universal law is generated from a maxim by applying
it to the entire rational population. E.g., “Every
rational person ought to save puppies from
oncoming trucks.”
 Cont’d
1. The universal law - All moral statements should be general laws, which
apply to everyone under and circumstances. There should be no occasion
under which an exception is made. So, for example, murder is an immoral
action because if we allowed everybody to murder there would be no
possibility of human life on earth.
2. Treat humans as ends in themselves - Kant argues that you should never
treat people as a means to some end. People should always be treated as
ends in themselves. This promotes equality. We all use people as means,
as soon as we employ them or pay them to provide us with goods or
services. However, this does not mean we should only treat them as
means to achieve what we want and just forget about their own needs
and goals in life, and their expectations to make their own choices.
 Cont’d
3. Act as if you live in a kingdom of ends - Kant
assumed that all rational agents were able to
deduce whether an argument was moral or
not through reason alone and so, all rational
humans should be able to conclude the same
moral laws. For example we all deserve to live
healthy.
 Cont’d
2.Ethics of Rights and justice: an action is morally right if it adequately
respects the rights of all humans (or at least all members of society).
This is also sometimes referred to as Libertarianism, the political
philosophy that people should be legally free to do whatever they
wish so long as their actions do not interfer upon the rights of others.
John Locke (1632-1714). He conceptualized the notion of 'natural rights',
or moral claims, that humans were entitled to, and which should be
respected and protected (at that time, primarily by the state).
Justice-based theories of ethics concern the perceived fairness of
actions. A just (ethical) action is one that treats all fairly and
consistently in accord with ethical or legal standards. Justice theories
of ethics are closely associated with the philosopher John Rawls.
 Note;
The concept of rights based ethics is that there
are some rights, both positive and negative,
that all humans have based only on the fact
that they are human. These rights can be
natural or conventional. That is, natural rights
are those that are moral while conventional
are those created by humans and reflect
society's values.
 Virtue/Virtuous Ethics

Virtuous ethics as a line of thought looks at the

character of the decision maker to ascertain
whether the action engaged in is right or
wrong.
According to virtue ethics, “good actions come
from good people” and the reverse is true for
bad actions.
 Cont’d
Note:
Virtues are a set of acquired traits of character that enable a person to lead a good life.
They are learned over time as we relate with people in business and society that
habitually practice them. They are either intellectual virtues (wisdom) or moral virtues
(honesty, courage, friendship, mercy, loyalty, modesty, patience among others).
Aristotle was one of original proponents of virtue ethics and he singled out happiness as
a function of a good life. This means that a happy businessperson would not only be
one who finally makes the most money, but one who does so and at the same time
savoring the pleasures of a virtuous manner of achieving their success. In a business
context, the 'good life', means far more than being a profitable company. Virtue ethics
takes a much more holistic view by also looking at the way this profit is achieved, and
most notably, by claiming, that economic success is just one part of the good business
life - with satisfaction of employees, good relations among all members of the
company, and harmonious relations with all stakeholders being equally important.
 Kohlberg's Theory of Moral Development

How exactly do we develop morality? This

question has fascinated many people. Do
parental or societal influences play a greater
role in moral development? Do all people
develop morality in similar ways? One of the
best known theories exploring some of these
basic questions was developed by a
psychologist named Lawrence Kohlberg.
 Cont’d
Kohlberg's theory of moral development
outlined six stages within three different
levels. Kohlberg extended that moral
development is a continual process that
occurs throughout the lifespan.
A series of moral dilemmas have been presented
also interviewed to determine the reasoning
behind judgments of different scenarios.
Example of the dilemmas Kohlberg presented

"In Europe, a woman was near death from a special

kind of cancer. There was one drug that the doctors
thought might save her. It was a form of radium
that a druggist in the same town had recently
discovered. The drug was expensive to make, but
the druggist was charging ten times what the drug
cost him to make. He paid $200 for the radium and
charged $2,000 for a small dose of the drug.
 Cont’d
The sick woman's husband, Heinz, went to everyone he knew to
borrow the money, but he could only get together about $ 1,000
which is half of what it cost. He told the druggist that his wife was
dying and asked him to sell it cheaper or let him pay later. But the
druggist said: "No, I discovered the drug and I'm going to make
money from it." So Heinz got desperate and broke into the man's
store to steal the drug-for his wife. Should the husband have done
that?" (Kohlberg, 1963).
Kohlberg was not interested so much in the answer to the question
of whether Heinz was wrong or right, but in the reasoning for each
participant's decision. The responses were then classified into
various stages of reasoning in his theory of moral development.
 Level 1. Pre-conventional Morality

Stage 1 - Obedience and Punishment

The earliest stage of moral development is
especially common in young children, but
adults are also capable of expressing this type
of reasoning. At this stage, children see rules
as fixed and absolute. Obeying the rules is
important because it is a means to avoid
punishment.
 Cont’d
Stage 2 - Individualism and Exchange
At this stage of moral development, children
account for individual points of view and judge
actions based on how they serve individual
needs. In the Heinz dilemma, people argued
that the best course of action was the choice
that best-served Heinz’s needs. Reciprocity is
possible at this point in moral development,
but only if it serves one's own interests.
 Level 2. Conventional Morality

Stage 3 - Interpersonal Relationships

Often referred to as the "good boy-good girl"
orientation, this stage of moral development
is focused on living up to social expectations
and roles. There is an emphasis on conformity,
being "nice," and consideration of how
choices influence relationships.
 Cont’d
Stage 4 - Maintaining Social Order
At this stage of moral development, people
begin to consider society as a whole when
making judgments. The focus is on
maintaining law and order by following the
rules, doing one’s duty and respecting
authority.
 Level 3. Post-conventional Morality

Stage 5 - Social Contract and Individual

Rights
At this stage, people begin to account for
the differing values, opinions, and beliefs
of other people. Rules of law are
important for maintaining a society, but
members of the society should agree
upon these standards.
 Cont’d
Stage 6 - Universal Principles
Kohlberg’s final level of moral reasoning
is based upon universal ethical principles
and abstract reasoning. At this stage,
people follow these internalized
principles of justice, even if they conflict
with laws and rules.
 Individual factors influencing ethical
decision making
Individual difference factors are personal factors
about an individual that may influence their
sensitivity to ethical issues, their judgment
about such issues, and their related behavior.
Research has identified many personal
characteristics that impact ethical decision-
making. The individual difference factor that
has received the most research support is
"cognitive moral development."
 Factors
According to the kohlberg theory, individuals' level of
moral development passes through stages as they
mature. Theoretically, there are three major levels of
development. The lowest level of moral
development is termed the "pre-conventional" level.
At the two stages of this level, the individual typically
will evaluate ethical issues in light of a desire to avoid
punishment and/or seek personal reward. The pre-
conventional level of moral development is usually
associated with small children or adolescents.
 Cont’d
• The middle level of development is called the "conventional" level. At
the stages of the conventional level, the individual assesses ethical
issues on the basis of the fairness to others and a desire to conform to
societal rules and expectations. Thus, the individual looks outside him
or herself to determine right and wrong. According to Kohlberg, most
adults operate at the conventional level of moral reasoning.

• The highest stage of moral development is the "principled" level. The

principled level, the individual is likely to apply principles (which may
be utilitarian, deontological, or justice) to ethical issues in an attempt
to resolve them. According to Kohlberg, a principled person looks
inside him or herself and is less likely to be influenced by situational
(organizational) expectations.
 Cont’d
The cognitive moral development framework is
relevant to business ethics because it offers a
powerful explanation of individual differences
in ethical reasoning. Individuals at different
levels of moral development are likely to think
differently about ethical issues and resolve
them differently.
Situational (organizational) factors
In the business ethics context, the organizational factors
that affect ethical decision-making include the work
group, the supervisor, organizational policies and
procedures, organizational codes of conduct, and the
overall organizational culture. Each of these factors,
individually and collectively, can cause individuals to
reach different conclusions about ethical issues than
they would have on their own. This section looks at
one of these organizational factors, codes of conduct,
in more detail.
 Factors
Codes of conduct are formal policies, procedures, and
enforcement mechanisms that spell out the moral and
ethical expectations of the organization. A key part of
organizational codes of conduct are written ethics codes.
Ethics codes are statements of the norms and beliefs of
an organization.
These norms and beliefs are generally proposed, discussed,
and defined by the senior executives in the firm.
Whatever process is used for their determination, the
norms and beliefs are then disseminated throughout the
firm.
 An example of a code item would be
"Employees of this company will not accept personal gifts
with a monetary value over $25 in total from any
business friend or associate, and they are expected to
pay their full share of the costs for meals or other
entertainment (concerts, the theater, sporting events,
etc.) that have a value above $25 per person." Hosmer
points out that the norms in an ethical code are
generally expressed as a series of negative statements,
for it is easier to list the things a person should not do
than to be precise about the things a person should.
 Cont’d
Almost all large companies and many small companies
have ethics codes. However, in and of themselves
ethics codes are unlikely to influence individuals to
be more ethical in the conduct of business. To be
effective, ethics codes must be part of a value
system that favors the culture of the organization.
Executives must display genuine commitment to the
ideals expressed in the written code—if their
behavior is inconsistent with the formal code, the
code's effectiveness will be reduced considerably.
 Cont’d
At a minimum, the code of conduct must be specific to the ethical
issues confronted in the particular industry or company. It should be
the subject of ethics training that focuses on actual dilemmas likely
to be faced by employees in the organization. The conduct code
must contain communication mechanisms for the dissemination of
the organizational ethical standards and for the reporting of
perceived wrongdoing within the organization by employees.
Organizations must also ensure that perceived ethical violations are
adequately investigated and that wrongdoing is punished. Research
suggests that unless ethical behavior is rewarded and unethical
behavior punished, that written codes of conduct are unlikely to be
effective.
 ETHICAL ISSUES RELATING TO FUNCTIONAL
AREAS
CORPORATE CULTURE AND ETHICAL DECISION MAKING
Organizational culture has been seen as the pattern or way a given
group has invented, discovered or developed in carrying out a
particular task or solving a particular problem or useful and
effective in organizational learning. Organization culture is a set
of values that help organizational members know that which is
acceptable and that which is unacceptable within the
organization. It involves the development of shared meanings,
beliefs, norms, values and assumptions that guide and are
enforced by organizational behavior. Organizational culture
affects organizational outcomes, decisions, job satisfaction, job
tenure…..
THE ROLE OF CORPORATE CULTURE IN ETHICAL DECISION MAKING

Corporate culture as a set of values, beliefs,

goals, norms, and ways of solving problems
shared by the members (employees) of an
organization of any size (for profit or
nonprofit).
 
 Cont’d
Corporate culture includes the behavioral patterns, concepts, values, ceremonies, and
rituals that take place in the organization.
It gives the members of the organization meaning as well as the internal rules of
behavior.
When these values, beliefs, customs, rules, and ceremonies are accepted, shared, and
circulated throughout the organization, they represent its culture. All organizations,
not just corporations, have some sort of culture, and thus we use the terms
organizational culture and corporate culture interchangeably.
For example, complaints of uncultured issues in a restaurant business; rude employees
slow service
missing product/wrong order,
unclean restaurants.
An example of a cultured organization praises include; support of and reputation for
quality, service, cleanliness, and value etc.
 Cont’d
The ethical culture of an organization comprises all those aspects and
elements of an organization which influence the ethical conduct of its
members . Following Ferrell, Fredrich & Ferrell (2011) the ethical culture
of an organization is seen as consisting of several layers. At the heart of an
ethical culture are the shared values and assumptions of the organization.
These provide the overall direction for the behavior of the organization
and its members.
Those core values can also be implicit, especially in smaller organizations. In
order to make those core values open, and to demonstrate how they
translate into behavior in the daily business, organizations establish formal
norms, including codes of conduct, policies, and guidelines.
 Cont’d
When the members of the organization apply those norms, practices and
routines form. Practices and routines are the result of repeated
application of the norms in specific situations or contexts. While norms
are defined top-down in the organizations, practices and routines emerge
bottom-up, through the organization members’ interpretation and
application of the norms.

The final layer of culture comprises the artifacts and symbols. These are
the visible symbols and actions which reflect the organization’s inner
values, such as the organization’s value statement or slogan printed on its
marketing material, reports about the organization’s philanthropic actions,
“volunteer days”, or speeches by the organization’s executives about the
(ethical) culture of the organization.
Dimension of Organizational Culture

Jones and Ryan (2006) noted seven dimensions of culture that exist
across organizations;
• Innovation and risk taking – willing to experiment, take risks,
encourage innovation
• Attention to detail – paying attention to being precise
• Outcome orientation – oriented to results vs. oriented to process
• People orientation – degree of value and respect for people. Are
people considered unique talents, or is an engineer an engineer
an engineer.
• Individual vs. Team orientation – are individuals most highly
noted, or are collective efforts
 Note:
Corporate culture affects all aspects of the
organization e.g productivity level because it
influences employee behavior, performance,
commitment, self confidence, ethical
behavior. So, organsational culture is one of
the core determinants of organizational
success through changing work behavior.
 How does Organizational Culture Develop?

The values and norms which are the basis of culture are formed through
the following four ways
By Leaders in the organization, especially those who have shaped them in
the past. People identify with visionary leaders – how they behave and
what they expect. They note what such leaders pay attention to and
treat them as role models.
Through Critical Incidents or Important events from which lessons are
learned about desirable or undesirable behaviour.
Through effective working relationship among organisations members. This
establishes values and expectations.
Through the Organization's Environment. Culture is learned over a period
of time. Where a culture has developed over long periods of time and
has become firmly embedded, it may be difficult to change quickly.
 Organizational culture and productivity –
enforcement
Every individual has different culture and beliefs that
he works with and when he comes to an organization
that has a completely different culture and beliefs
from his own, he must be allow to internalize himself
first with the organization's culture and beliefs to
know whether he can cope with them or not.
Adequate motivational factors must be put in place in
the organization for workers because it improves
employee living standard and thus gingers employee
towards achieving higher productivity.
 Cont’d
When an organizational culture is unstable and changes from
time to time, it makes the employee discouraged and tired
of learning different culture all the time.
In cases where an organizational culture must be changed,
employees must first of all be notified and made to learn
the modification of the old culture or otherwise the new
culture will fail.
Organizational culture must be binding on all members and
staff of the organization as this will encourage uniformity
among members of the organization and thus enhance
commitment and group efficiency.
 ETHICAL LEADERSHIP.
• What is ethical leadership?
Ethical leadership involves both acting and leading ethically over time all the time.
Why practice ethical leadership?
Ethical leadership models ethical behavior to the organization and the community.
Ethical leadership builds trust.
Ethical leadership brings credibility and respect, both for you and for the
organization.
Ethical leadership can lead to collaboration.
Ethical leadership creates a good climate within the organization.
If you have opposition, or are strongly supporting a position, ethical leadership
allows you to occupy the moral high ground.
Ethical leadership affords self-respect.
 How does one practice ethical leadership?

Ethical leadership requires a clear and coherent ethical

framework on which the leader can draw in making decisions
and taking action.
Your ethical framework should agree with the ethical framework,
vision, and mission of the organization or initiative.
Ethics should be a topic of discussion.
Ethics should be out in the open.
Ethical thought must be connected to action.
Ethical leadership is a shared process.
 
 Specific components of ethical leadership:

• Treat everyone with fairness, honesty, and respect all the time.
• Treat other organizations in the same way you treat other people –
with fairness, honesty, and respect.
• Collaborate inside and outside the organization.
• Communicate.
• Work to become increasingly culturally and interpersonally
competent.
• Take cultural sensitivity and cultural competence seriously.
• Work to be inclusive.
• Take your leadership responsibility seriously, and be accountable for
fulfilling it.
• Constantly strive to increase your competence.
Expected results from a successful ethics and compliance program:

• Reduced observation of any type of misconduct

• Increased reporting among those who observe misconduct
• Increased satisfaction with management’s response to
reports of misconduct
• Increased satisfaction with the organization
• Reduced exposure to situations that could result in
misconduct
• Increased preparation to respond appropriately to situations
that could result in misconduct
• Reduced pressure to compromise ethics standards or the law
 Hippocratic Oath for Managers’’ that calls on managers to
commit to the following

Service to the Public and Society. Recognize the

manager’s responsibility to serve the public
interest by creating sustainable value for
society in the long term.
Balance Multiple Stakeholders’ Interests.
Recognize that managers must balance the
often- conflicting needs of many stakeholders
to enhance enterprise value in a way that is
consistent with societal well-being.
 Cont’d
Acting with Integrity in the Enterprise’s Interest.
Put the interests of the enterprise ahead of
personal interests while behaving as a person
of integrity, consistent with personal values,
and leading others to do the same.
Adherence to the Law. Make a commitment to
adhere to the spirit and the letter of the law
and contracts in personal and enterprise
action.
 Cont’d
Respectful and Unbiased Decision Making. Make
decisions in an unbiasedand respectful manner
without considering race, gender, sexual
orientation,religion, nationality, politics, or social
status.
Professional Development. Commit to continuous
professional development for the self and others
with the goal of always using the best and most
current available knowledge to make informed
decisions.