Introduction
Ethics are the principles and values a person uses to govern his activities and decisions. Ethics is
about behavior. In the face of dilemma, it is about doing the right thing.
In an organization, a code of ethics is a set of principles that guide the organization in its
programs, policies and decisions for the business. The ethical philosophy of an organization can
influence the reputation, productivity and bottom line of the business.
Business ethics is a fundamental term that is applicable to all workplaces. Irrespective of the
nature of an organization and its function, an unethical employee promotes corruption and also
could be a liability to an organization. Therefore, it becomes important for an organization to
encourage its employees to adhere to ethical behavior. Ethics can be related to leadership or the
employees of the organization.
Leadership Ethics: The ethics that leaders in an organization use to manage employees have a
strong effect on the morale and loyalty of workers. The code of ethics leaders use determines
discipline procedures and the acceptable behavior for all workers in an organization. When
leaders have high ethical standards, it sets the benchmark for employees in the organization to
meet that same level. Ethical leadership also enhances the company‘s reputation in the financial
market and community. A solid reputation for ethics and integrity in the community improves
the company‘s business.
Employee Ethics: Ethical behavior among workforce in the organization ensures that
employees do their duties with honesty and integrity. Employees who use ethics to guide their
behavior adhere to employee policies and rules while striving to meet the goals of the
organization. Ethical employees also meet standards for quality in their work, which enhances
the company‘s reputation for quality products and service.
Approaches to ethical behavior
There are two approaches to ethical behavior in organization; individualistic approach and
communal approach. Each approach incorporates a different view of moral responsibility and a
different view of the kinds of ethical principles used to resolve ethical problems.
Individualistic approach: this approach pertains to moral responsibility. According to this
approach, every person in an organization is morally responsible for his or her own behavior, and
any efforts to change that behavior should focus on the individual.
Communal approach: This approach does not view individuals in isolation, but as members of
communities that are partially responsible for the behavior of their members. Therefore, to
understand and change the behavior of an individual, we need to understand and try to change
the communities to which they belong.
Eight elements of an ethical organization
An ethical organization is characterized by these eight elements:
1. Respect
Mutual respect must exist among employees and between employer and employees. If there is
mutual dislike, things will not progress. It is important to maintain cordial relationships. If
something goes wrong and existing relationship start to weaken, timely Corrective action should
be taken.
2. Honor
Good people are a fundamental part of good ethics. They are the ambassadors for doing things
right. Special attention should be given to strong performers and employees who exemplify the
spirit of the organization. Most companies recognize top achievers in terms of sales.
Management should look beyond figures and show gratitude to the people who exhibit
exemplary behavior. Ethical behaviors must be acknowledged and honored publicly, as well as
privately.
3. Integrity
In an ethical organization, employees should not lie, steal, or cheat. An individual should always
stand by his word. One should treat others the way one wants to be treated by them. Management
should not hire or retain people who do not have integrity. Other employees, customers and
vendors will not trust them. This lack of trust can pose serious problems for business. It should
be made sure that no one sells the company’s values short to make a quick buck. Such kind of
practice is not only unethical, but also unprofitable.
4. Customer focus
Customer is of utmost importance for any business. A focus on the customers reinforces the
responsibility of the organization towards market. Business decisions affect all stakeholders viz.
employees, investors, business partners and ultimately, customers.
Serving all of these people is part of organization‘s ethical responsibility. Selling your
customers short not only risks compromising the ethics, it also risks the long-term health of
company.
5. Results-orientation
The organization should not aim for results at any cost. All work to achieve results must be done
within the value system of the company. Results should be attained in the context of developing
products according to customers‘ needs, and these should be produced and delivered it at a fair
price to all the parties involved. In an ethical company, results are more than just numbers. They
are benchmarks and lessons for the future and goals for the present.
6. Risk-taking
Organizations that thrive prosper and grow; do so by taking risks. These organizations do not
stick to the safe path. Great companies innovate, encourage thinking ‗out of the box, and try new
things. These companies re-invent themselves and reward the risk-takers. As long as company‘s
ethical philosophy is adhered to, risk-taking poses no threat to ethics. Great companies attract
employees who are willing to take risks. Employees are encouraged, supported and rewarded for
taking calculated risks. If the risks pay off, the risk takers share the rewards . if the risks do not
pay off, After action review is done to analyze what went wrong and what should be done in
future to avoid this trap..
7. Passion
Great organizations are comprised of people who have a passion for what they are doing. These
are people work the thrill and challenge of the job and not merely to collect a pay-check. These
employees are highly motivated, excited, and believe that their work can make a difference.
People demonstrate passion in different ways, it can be extra effort on a project or working on
the weekend and even enthusiastic cheer-leading. Without the passion, employees put in a
minimal effort in work.
8. Persistence
People in outstanding organizations have the will to persist. They keep working even when
results are not as desired, or when customers refuse to buy. This persistence is result of passion
for what they are doing. They work harder, they continue to take risks. They behave with honor
and integrity. They keep their focus on the customer’s needs and wants. And, they are not
satisfied until they achieve the goals and results that are expected.
Encouraging ethical behavior among employees
Some ways for organizations to encourage ethical behavior are listed below:
1 Communicating the code of ethics: The foremost step to promote ethical behavior among
employees is by establishing a code of ethics. The code of ethics provides the direction and
guidelines for ethical behavior. Employees need to be familiarized with the code of ethics either
through a company manual or posters. This enables the employees to have a clear idea of the
management‘s expectation with respect to employee code and conduct.
2 Managers as role models: Having managers as role models is another way of promoting
ethical behavior. For this purpose, managers must be chosen with care and due consideration.
This is beneficial in many ways. Employees tend to emulate their managers and if they are
ethical in their behavior, it lends more credibility to the code of ethics. Thus, employees have a
guiding force to promote ethical behavior. If managers strictly adhere to ethical standards
themselves, employees feel less reluctant to oppose the guidelines laid out for ethical behavior
3 Disciplinary actions for unethical behavior: Curbing any malpractice regarding unethical
behavior in the initial stages itself is better than allowing it to proliferate to other areas of the
organization. Imposing sanctions on unethical behavior helps the employees to understand the
implications of inappropriate behavior. For this purpose, management needs to lay down
disciplinary actions that are to be taken against employees found guilty. E.g. if organization
promotes sales ‗at all costs‘, then employees might resort to any (right or wrong) methods to
achieve their targets. On the other hand, if the ethical code is serious about the means as much as
the results, the employees will refrain from using wrong methods to achieve end targets.
4 Rewards for ethical behavior: employee adhering to ethical practices should be duly
recognized and rewarded. This reinforces ethical behavior. This also becomes an inspiration to
co workers. Therefore, it is important that employers identify and reward employees who stick to
ethical practices despite tempting situations.
It is basically the responsibility of the management to promote ethical behavior among their
employees. The organizational culture together with its mission and vision statement influences
the ethical behavior.
Values affecting ethical behavior
Martin Seligman in his book, Authentic Happiness reviewed following core virtuous values that
influence ethical behavior and appear to have universal appeal. These values appear to align with
ethical behavior:
1 Wisdom and Knowledge: This refers to the capacity to take information and convert it to
something useful. Wisdom comes from capitalizing on one‘s experience to interpret information
in a knowledgeable manner to produce wise decisions. A prerequisite to doing the right thing
when faced with an ethical dilemma is to know what to do and knowing the difference between
right and wrong.
2 Self Control: This refers to the ability to avoid unethical temptations. The capacity to take the
ethical path requires a commitment to the value of acting with temperance.
Ethical people say ―no‖ to individual gain if it is inconsistent with institutional benefit and
goodwill.
3 Justice and fair guidance: This value is regarding fair treatment of people. Justice is served
when individuals perceive that they receive a fair return for the energy and effort made for a
particular purpose. For example, a leader‘s commitment to justice is tested continually with the
allocation of organizational resources. Ethical leaders value and embrace fair advice and
guidance; no special treatment is given to certain individuals and groups.
4 Transcendence: A spiritual value that recognizes that there is something beyond oneself more
permanent and powerful than the individual. Without this value, one may tend toward self-
absorption. Leaders who are motivated predominately by self-interest and the exercise of
personal power have restricted effectiveness and authenticity.
5 Love and Kindness: This refers to the expression through words and deeds of love and
kindness. In an organizational context, love refers to an intense positive reaction to another co-
worker, group and/or situation. An organization ―with heart‖ allows for the expression of love,
compassion and kindness among people, the goodwill which can be drawn upon when one faces
ethical challenges.
6 Courage and Integrity: This is the courage to act ethically and with integrity. These values
involve discerning right from wrong and acting accordingly. They impel one to consistently do
what is right without concern for personal consequences, even when it is not easy.
In practice, these six categories of virtuous values are intertwined. For example, the capacity to
administer resources fairly and offer fair guidance to stakeholders along the way is supported by
courage and integrity. Difficult decisions surrounding the allocation of limited resources leave
some individuals and groups with less than they would prefer. The redeeming grace is the
perception that such decisions are made with fairness and integrity. Unpopular decisions are
easier to accept when they are perceived to be derived fairly and with integrity.
Driving ethical behavior with values and attitudes requires that there be alignment among values,
attitudes, and behavior. Examples of this alignment between each of the righteous values,
associated attitudes, and behavior are offered in Table 40.1.
Values Attitude Ethical Behavior
Experience promotes Using knowledge to
Wisdom and wisdom that helps solve problems
Knowledge convert information ethically and to do
to knowledge. what is right.
Self-control means Putting personal
effectively managing motivations aside and
Self-Control reactions to acting with
challenging situations objectivity by doing
and temptations. what is right.
Acting justly and Establishing just and
fairly is a long-term mutually agreed upon
Justice driver of ethical criteria and
behavior; remember administering them
the ―Golden Rule.‖ fairly to all people.
Transcendence The belief in a power Putting institutional
and source outside and/or stakeholder
oneself reduces self- interests above self
serving actions and interests. Identifying
increases humility. a personal purpose
that is aligned with
organizational
mission.
Treating people with
Recognizing and
kindness helps
encouraging others
Love and Kindness increase the reservoir
for their
of positive affection
contributions.
and love.
Ethics requires the
courage to do the Making unpopular
right things decisions based on
Courage and Integrity
consistently without fair consideration of
regard to personal the facts.
consequences.
Activities for Ethical Decision Making in Groups
In a business, the decisions made by groups and individuals have the ability to affect the overall
image of the company. Training employees to make ethical decisions keeps the organization‘s
image positive. Leading employees through activities related to the ethical issues, keeps the
issues at the front of their minds and develop decision-making processes that result in ethical
decisions all of the time.
Role Play
Groups are led through scenarios where they may be tempted to make an unethical decision.
Scenarios may include cases of theft within the company, making decisions that result in
personal gain instead of working for the good of the company, or sharing company secrets. As
these scenarios are presented, group members will share what they would do and discuss the
positives and negatives of each decision. Groups will put together a short skit outlining their
consensus on the proper way to respond to the scenario.
Ethics and Values
Ask groups to define the meaning of ethics so that all employees have a clear understanding of
the issue. Then, employees should create lists of values and things that they value. For example,
honesty and trustworthiness would be values, while money and family would be things that they
value. With each item on the list, employees should note which values and things that they value
may lead to unethical behavior. For example, valuing money or free time may lead to employees
cutting corners or making unethical decisions to get more money and free time.
Importance of Ethical Behavior
Encourage groups to make lists outlining the importance of ethical behavior. Group should also
write down the negative impact that unethical decision-making could have on the business, e.g.
lost clients, unhappy employees, or tension in the workplace. Making groups aware of the
consequences of unethical decision-making helps to understand the importance of engaging in
ethical decision-making and ethical behavior in general.
Decision Making Strategies
Groups should develop a process for making decisions. Instead of a specific process for decision
making, group members may want to come up with a list of questions to ask when making a
decision in order to ensure that the decision is ethical. A sample list may include the options such
as what values are most important in making the decision, and what the potential consequences
of the decision could be.
