SIBM Bangalore EMBA Semester 1

Improving Ethical Behavior

Table of ContentsAbstract.......................................................................................................................................................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 honorablebehavior. 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 sizeswimming 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 thatthe 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, LockheedScandal, 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 auditor’s or controller’s 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 organization’s 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 Smith’s 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 organization’s assets for personal benefit,accepting any valuable thing from the organization’s customers or suppliers, andhaving a financial interest in an organization’s 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 toconfidential 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 one’s career while the third leading factor is the desire to protect one’s livelihood (Schwartz, 2006, 1) and (MacDo, 2006, 1).

Job pressure, according to the study, causes employees to engage in unethical behaviorsthat 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 inunethical 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 didn’t 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, one’s duty to prevent pain to a stray cat would be equal to one’s duty to prevent pain to one’s 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 doesn’t 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. Kant’s 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 don’t 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 wasn’t 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 one’s 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 Ethical Behavior

Wisdom and Knowledge

Experience promotes wisdom that helps convert information to knowledge.

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

Self-ControlSelf-control means effectively managing reactions to challenging situations and temptations.

Putting personal motivations aside and acting with objectivity by doing what is right.

JusticeActing justly and fairly is a long-term driver of ethical behavior; remember the “Golden Rule.”

Establishing just and mutually agreed upon criteria and administering them fairly to all people.

TranscendenceThe belief in a power and source outside oneself reduces self-serving actions and increases humility.

Putting institutional and/or stakeholder interests above self-interests. Identifying a personal purpose that is aligned with organizational mission.

Love and KindnessTreating people with kindness helps increase the reservoir of positive affection and love.

Recognizing and encouraging others for their contributions.

Courage and Integrity

Ethics requires the courage to do the right things consistently without regard to personal consequences.

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 “There’s 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 transgressor’s 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 Don’t, 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 organization’s 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 NetIdeally, 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 naïve 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 don’t” 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 do–an “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 FormulaTaken 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 Enron’s, Tyco’s and World Com’s unethical behavior on their respective communities, workforces, and other stakeholders.

The Benefits & Importance of Ethics in the WorkplaceThe 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 ProtectionA 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 business’s assets. For

example, they would avoid making personal long distance calls using the business’s 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 TeamworkWorkplace 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 ImageYou 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-MakingEthical 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.”