Organizational Ethics
Encyclopedia
Organizational Ethics is the ethics
of an organization
, and it is how an organization ethically responds to an internal or external stimulus. Organizational ethics is interdependent with the organizational culture
. Although, it is akin to both organizational behavior (OB) and business ethics
on the micro and macro levels, organizational ethics is neither OB, nor is it solely business ethics (which includes corporate governance and corporate ethics). Organizational ethics express the values of an organization to its employees and/or other entities irrespective of governmental and/or regulatory laws.
(FCPA) restricts U.S. firms from engaging in bribery and other illegal practices internationally. There are laws that have the same type of prohibition for European companies. These laws create a disadvantage competitively for both European and U.S. firms. Such laws are not a restricting element to organizations that have highly elevated ethical behavior as part of their values. Organizations that do not have an outlook for positive ethical practices as part of their cultures, usually lead to their own demise, such as, Enron
and WorldCom by their questionable accounting practices. The converse is generally true, organizations that have integrity and encouraging ethical practices as part of their culture are viewed with respect by their employees, community
, and corresponding industries. Thereby, the positive ethical outlook of an organization results in a solid financial bottom-line, because of greater sales along with their ability to retain and attract new and talented personnel. More importantly, an ethical organization will have the ability to retain employees that are experienced and knowledgeable (generally referred to as human capital
). This human capital results in less employee turnover and less time to train new employees, which in turn allows for greater output of services (or production of goods).
to executives, managers, and employees; 3) availability for advice on ethical situations (i.e, advice lines or offices); and 4) systems for confidential reporting.
Good leaders strive to create a better and more ethical organization. Restoring an ethical climate in organization is critical, as it is a key component in solving the many other organizational development and ethical behavior issues facing the organization.
. Other perks may include, “on-site” childcare
, flextime for work hours, employee education reimbursement, and even telecommuting
for various days during a week. All the above are just a few examples of employee benefits that quality organizations offer to their employees. These benefits are not mandates by law, and they represent only a few of benefits that best known corporations and firms offer to their employees throughout the world.
that are coarsely related to “organizational ethics”, but "organizations" and "ethics" are wide and varied in application and scope. These theories and studies can range from individual
(s), team
(s), stakeholder, management
, leadership
, human resources
, group
(s) interaction(s), as well as, the psychological framework behind each area to include the distribution of job
tasks within various types of organizations. As among these areas, it is the influence of leadership in any organization that cannot go unexamined, because they must have a clear understanding of the direction of the organization’s vision, goals (to include immediate and long term strategic plans), and values. It is the leadership that sets the tone for organizational impression management (strategic actions taken by an organization to create a positive image to both internal and external publics). In turn, leadership directly influences the organizational symbolism (which reflects the culture, the language of the members, any meaningful objects, representations, and/or how someone may act or think within an organization). The values and ideals within an organization are generally center upon “values for business” as the theoretical approach that most leaders select to present to their "co-members" (which in truth maybe subordinates). In fact, an examination of business methodology reveals that most leaders approach the ethical theory from the perspective of values for business. Importantly, as transverse alongside of presenting the vision, values, and goals of the organization, the leadership should infuse a spirit of empowerment
to its members. In particular, leadership using this management style of empowerment for their subordinates is based upon view of: “Achieving organizational ownership of company values is a continuous process of communication, discussion, and debate throughout all areas of the organization” as.
that implies that all stakeholders (or individuals) must be treated equally regardless of the fact that some people will obviously contribute more than others to an organization. Leadership has to not only place aside each of their individual (or personal) ambitions (along with any prejudice) in order to present the goals of the organization, but they have to also have the stakeholders engaged for the benefit of the organization. Further, it is leadership that has to be able to influence the stakeholders by presenting the strong minority voice in order to move the organization’s members towards ethical behavior. Importantly, the leadership (or stakeholder management) has to have the desire, will, and the skills to ensure that the other stakeholders’ voices are respected within the organization, and leadership has to ensure that those other voices are not expressing views (or needs as in respects to Maslow's Hierarchy of Needs
) that are not shared by the larger majority of the members (or stakeholders). Therefore, stakeholder management, as well as, any other leadership of organizations have to take upon themselves the arduous task of ensuring an “ethics system” for their own management styles, personalities, systems, performances, plans, policies, strategies, productivity, openness
, and even risk(s) within their cultures or industries.
) of the stakeholders, or the culture, then unethical views may be taken by the stakeholders, or even unethical behavior throughout the organization. Therefore, although, it may require a great deal of time, stakeholder management should consider the Rational Decision-Making Model for implementation of various aspects of an ethical system to the stakeholders. If implantation is done successfully, then all stakeholders (not just the leadership) have accepted the task of benchmarking
not only the implantation of an “ethics system”, but each stakeholder feels empowered for the moment to moment daily decisions that are ethically positive for the organization. When executed timely and with care, then all stakeholders (including leadership) will have at the very less a positive and functional success as the basis for continuous improvement (or kaizen
) to present as the norm for its organizational ethics.
Ethics
Ethics, also known as moral philosophy, is a branch of philosophy that addresses questions about morality—that is, concepts such as good and evil, right and wrong, virtue and vice, justice and crime, etc.Major branches of ethics include:...
of an organization
Organization
An organization is a social group which distributes tasks for a collective goal. The word itself is derived from the Greek word organon, itself derived from the better-known word ergon - as we know `organ` - and it means a compartment for a particular job.There are a variety of legal types of...
, and it is how an organization ethically responds to an internal or external stimulus. Organizational ethics is interdependent with the organizational culture
Organizational culture
Organizational culture is defined as “A pattern of shared basic assumptions invented, discovered, or developed by a given group as it learns to cope with its problems of external adaptation and internal integration" that have worked well enough to be considered valid and therefore, to be taught to...
. Although, it is akin to both organizational behavior (OB) and business ethics
Business ethics
Business ethics is a form of applied ethics or professional ethics that examines ethical principles and moral or ethical problems that arise in a business environment. It applies to all aspects of business conduct and is relevant to the conduct of individuals and entire organizations.Business...
on the micro and macro levels, organizational ethics is neither OB, nor is it solely business ethics (which includes corporate governance and corporate ethics). Organizational ethics express the values of an organization to its employees and/or other entities irrespective of governmental and/or regulatory laws.
Overview of the field
The Foreign Corrupt Practices ActForeign Corrupt Practices Act
The Foreign Corrupt Practices Act of 1977 is a United States federal law known primarily for two of its main provisions, one that addresses accounting transparency requirements under the Securities Exchange Act of 1934 and another concerning bribery of foreign officials.- Provisions and scope...
(FCPA) restricts U.S. firms from engaging in bribery and other illegal practices internationally. There are laws that have the same type of prohibition for European companies. These laws create a disadvantage competitively for both European and U.S. firms. Such laws are not a restricting element to organizations that have highly elevated ethical behavior as part of their values. Organizations that do not have an outlook for positive ethical practices as part of their cultures, usually lead to their own demise, such as, Enron
Enron
Enron Corporation was an American energy, commodities, and services company based in Houston, Texas. Before its bankruptcy on December 2, 2001, Enron employed approximately 22,000 staff and was one of the world's leading electricity, natural gas, communications, and pulp and paper companies, with...
and WorldCom by their questionable accounting practices. The converse is generally true, organizations that have integrity and encouraging ethical practices as part of their culture are viewed with respect by their employees, community
Community
The term community has two distinct meanings:*a group of interacting people, possibly living in close proximity, and often refers to a group that shares some common values, and is attributed with social cohesion within a shared geographical location, generally in social units larger than a household...
, and corresponding industries. Thereby, the positive ethical outlook of an organization results in a solid financial bottom-line, because of greater sales along with their ability to retain and attract new and talented personnel. More importantly, an ethical organization will have the ability to retain employees that are experienced and knowledgeable (generally referred to as human capital
Human capital
Human capitalis the stock of competencies, knowledge and personality attributes embodied in the ability to perform labor so as to produce economic value. It is the attributes gained by a worker through education and experience...
). This human capital results in less employee turnover and less time to train new employees, which in turn allows for greater output of services (or production of goods).
Basic elements of an ethical organization
There are at least four elements which exist in organizations that make ethical behavior conducive within an organization. The four elements necessary to quantify an organization's ethics are: 1) written code of ethics and standards; 2) ethics trainingTraining
The term training refers to the acquisition of knowledge, skills, and competencies as a result of the teaching of vocational or practical skills and knowledge that relate to specific useful competencies. It forms the core of apprenticeships and provides the backbone of content at institutes of...
to executives, managers, and employees; 3) availability for advice on ethical situations (i.e, advice lines or offices); and 4) systems for confidential reporting.
Good leaders strive to create a better and more ethical organization. Restoring an ethical climate in organization is critical, as it is a key component in solving the many other organizational development and ethical behavior issues facing the organization.
Intrinsic and extrinsic
The intrinsic and extrinsic rewards of an ethical organization are tethered to the organizational culture and business ethics of an organization. Based upon the reliability and support structure of each of the four areas needed for ethical behavior, then the organizational ethics will be evident throughout the organization. The organization, the employees, and other entities will receive intrinsic and extrinsic rewards. Actions of employees can range from whistle blowing (intrinsic) to the extraordinary actions of an hourly employee buying all the peanut butter (as produced by his employer), because the labels were not centered, and he knew that his employer (extrinsic) would reimburse him in full.Above and beyond
Above and beyond is a standard part of the operational and strategic plans for organizations that have positive organizational ethics. Above and beyond the quarterly or yearly income statements, an entity will plan for its employees by offering “wellness programs” along with general health coverage, and/or a viable stable retirement plan. Further, an organization will allow for paid maternity leave, or even paid time off for new parents after an adoptionAdoption
Adoption is a process whereby a person assumes the parenting for another and, in so doing, permanently transfers all rights and responsibilities from the original parent or parents...
. Other perks may include, “on-site” childcare
Childcare
Child care means caring for and supervising child/children usually from 0–13 years of age. In the United States child care is increasingly referred to as early childhood education due to the understanding of the impact of early experiences of the developing child...
, flextime for work hours, employee education reimbursement, and even telecommuting
Telecommuting
Telecommuting or telework is a work arrangement in which employees enjoy flexibility in working location and hours. In other words, the daily commute to a central place of work is replaced by telecommunication links...
for various days during a week. All the above are just a few examples of employee benefits that quality organizations offer to their employees. These benefits are not mandates by law, and they represent only a few of benefits that best known corporations and firms offer to their employees throughout the world.
Leadership and theory for ethics in an organization
There are many theories and organizational studiesOrganizational studies
Organizational studies, sometimes known as organizational science, encompass the systematic study and careful application of knowledge about how people act within organizations...
that are coarsely related to “organizational ethics”, but "organizations" and "ethics" are wide and varied in application and scope. These theories and studies can range from individual
Individual
An individual is a person or any specific object or thing in a collection. Individuality is the state or quality of being an individual; a person separate from other persons and possessing his or her own needs, goals, and desires. Being self expressive...
(s), team
Team
A team comprises a group of people or animals linked in a common purpose. Teams are especially appropriate for conducting tasks that are high in complexity and have many interdependent subtasks.A group in itself does not necessarily constitute a team...
(s), stakeholder, management
Management
Management in all business and organizational activities is the act of getting people together to accomplish desired goals and objectives using available resources efficiently and effectively...
, leadership
Leadership
Leadership has been described as the “process of social influence in which one person can enlist the aid and support of others in the accomplishment of a common task". Other in-depth definitions of leadership have also emerged.-Theories:...
, human resources
Human resources
Human resources is a term used to describe the individuals who make up the workforce of an organization, although it is also applied in labor economics to, for example, business sectors or even whole nations...
, group
Group (sociology)
In the social sciences a social group can be defined as two or more humans who interact with one another, share similar characteristics and collectively have a sense of unity...
(s) interaction(s), as well as, the psychological framework behind each area to include the distribution of job
Job (role)
A job is a regular activity performed in exchange for payment. A person usually begins a job by becoming an employee, volunteering, or starting a business. The duration of a job may range from an hour to a lifetime . If a person is trained for a certain type of job, they may have a profession...
tasks within various types of organizations. As among these areas, it is the influence of leadership in any organization that cannot go unexamined, because they must have a clear understanding of the direction of the organization’s vision, goals (to include immediate and long term strategic plans), and values. It is the leadership that sets the tone for organizational impression management (strategic actions taken by an organization to create a positive image to both internal and external publics). In turn, leadership directly influences the organizational symbolism (which reflects the culture, the language of the members, any meaningful objects, representations, and/or how someone may act or think within an organization). The values and ideals within an organization are generally center upon “values for business” as the theoretical approach that most leaders select to present to their "co-members" (which in truth maybe subordinates). In fact, an examination of business methodology reveals that most leaders approach the ethical theory from the perspective of values for business. Importantly, as transverse alongside of presenting the vision, values, and goals of the organization, the leadership should infuse a spirit of empowerment
Empowerment
Empowerment refers to increasing the spiritual, political, social, racial, educational, gender or economic strength of individuals and communities...
to its members. In particular, leadership using this management style of empowerment for their subordinates is based upon view of: “Achieving organizational ownership of company values is a continuous process of communication, discussion, and debate throughout all areas of the organization” as.
Stakeholder and other theories
Whether it is a team, small group, or a large international entity, the ability for any organization to reason, act rationally, and respond ethically is paramount. Leadership must have the ability to recognize the needs of its members (or called “stakeholders” in some theories or models), especially, the very basics of a person’s desire to belong and fit into the organization. It is the stakeholder theoryStakeholder theory
The stakeholder theory is a theory of organizational management and business ethics that addresses morals and values in managing an organization. It was originally detailed by R...
that implies that all stakeholders (or individuals) must be treated equally regardless of the fact that some people will obviously contribute more than others to an organization. Leadership has to not only place aside each of their individual (or personal) ambitions (along with any prejudice) in order to present the goals of the organization, but they have to also have the stakeholders engaged for the benefit of the organization. Further, it is leadership that has to be able to influence the stakeholders by presenting the strong minority voice in order to move the organization’s members towards ethical behavior. Importantly, the leadership (or stakeholder management) has to have the desire, will, and the skills to ensure that the other stakeholders’ voices are respected within the organization, and leadership has to ensure that those other voices are not expressing views (or needs as in respects to Maslow's Hierarchy of Needs
Maslow's hierarchy of needs
Maslow's hierarchy of needs is a theory in psychology, proposed by Abraham Maslow in his 1943 paper A Theory of Human Motivation. Maslow subsequently extended the idea to include his observations of humans' innate curiosity...
) that are not shared by the larger majority of the members (or stakeholders). Therefore, stakeholder management, as well as, any other leadership of organizations have to take upon themselves the arduous task of ensuring an “ethics system” for their own management styles, personalities, systems, performances, plans, policies, strategies, productivity, openness
Openness
Openness is the quality of being open. It sometimes refers to a very general philosophical position from which some individuals and organizations operate, often highlighted by a decision-making process recognizing communal management by distributed stakeholders rather than a centralized authority...
, and even risk(s) within their cultures or industries.
Ethical system implementation and consideration
The function of developing and the implantation of an “ethics system” is difficult, because there is no clear, nor any singular decisive way that is able to be presented as a standard across the board for any organization – as due to each organization’s own culture. Also, the implementation should be done accordingly to the entire areas of operations within the organization. If it is not implemented pragmatically and with empathic caution for the needs, desires, and personalities (consider the Big Five personality traitsBig Five personality traits
In contemporary psychology, the "Big Five" factors of personality are five broad domains or dimensions of personality which are used to describe human personality....
) of the stakeholders, or the culture, then unethical views may be taken by the stakeholders, or even unethical behavior throughout the organization. Therefore, although, it may require a great deal of time, stakeholder management should consider the Rational Decision-Making Model for implementation of various aspects of an ethical system to the stakeholders. If implantation is done successfully, then all stakeholders (not just the leadership) have accepted the task of benchmarking
Benchmarking
Benchmarking is the process of comparing one's business processes and performance metrics to industry bests and/or best practices from other industries. Dimensions typically measured are quality, time and cost...
not only the implantation of an “ethics system”, but each stakeholder feels empowered for the moment to moment daily decisions that are ethically positive for the organization. When executed timely and with care, then all stakeholders (including leadership) will have at the very less a positive and functional success as the basis for continuous improvement (or kaizen
Kaizen
, Japanese for "improvement", or "change for the better" refers to philosophy or practices that focus upon continuous improvement of processes in manufacturing, engineering, game development, and business management. It has been applied in healthcare, psychotherapy, life-coaching, government,...
) to present as the norm for its organizational ethics.
Theories and models
- Stakeholder theoryStakeholder theoryThe stakeholder theory is a theory of organizational management and business ethics that addresses morals and values in managing an organization. It was originally detailed by R...
- Maslow's Hierarchy of NeedsMaslow's hierarchy of needsMaslow's hierarchy of needs is a theory in psychology, proposed by Abraham Maslow in his 1943 paper A Theory of Human Motivation. Maslow subsequently extended the idea to include his observations of humans' innate curiosity...
- Rational Decision-Making Model
- Big Five personality traitsBig Five personality traitsIn contemporary psychology, the "Big Five" factors of personality are five broad domains or dimensions of personality which are used to describe human personality....
See also
- EconomicsEconomicsEconomics is the social science that analyzes the production, distribution, and consumption of goods and services. The term economics comes from the Ancient Greek from + , hence "rules of the house"...
- EthicsEthicsEthics, also known as moral philosophy, is a branch of philosophy that addresses questions about morality—that is, concepts such as good and evil, right and wrong, virtue and vice, justice and crime, etc.Major branches of ethics include:...
- Group EmotionGroup EmotionA group of people share a range of qualities and characteristics which signifies it from other groups. One facet of the group's entity is its emotional characteristics. Just as individuals have moods, emotions and dispositional affects, Groups possess similar attributes which influence aspects such...
- The Golden Rule
- Ethic of reciprocityEthic of reciprocityThe Golden Rule or ethic of reciprocity is a maxim, ethical code, or moralitythat essentially states either of the following:* : One should treat others as one would like others to treat oneself....
- Human FactorsHuman factorsHuman factors science or human factors technologies is a multidisciplinary field incorporating contributions from psychology, engineering, industrial design, statistics, operations research and anthropometry...
- Human Resources Development
- Human Resource ManagementHuman resource managementHuman Resource Management is the management of an organization's employees. While human resource management is sometimes referred to as a "soft" management skill, effective practice within an organization requires a strategic focus to ensure that people resources can facilitate the achievement of...
- Industrial and Organizational PsychologyIndustrial and organizational psychologyIndustrial and organizational psychology is the scientific study of employees, workplaces, and organizations. Industrial and organizational psychologists contribute to an organization's success by improving the performance and well-being of its people...
- Industrial EngineeringIndustrial engineeringIndustrial engineering is a branch of engineering dealing with the optimization of complex processes or systems. It is concerned with the development, improvement, implementation and evaluation of integrated systems of people, money, knowledge, information, equipment, energy, materials, analysis...
- Industrial SociologyIndustrial sociologyIndustrial sociology, until recently a crucial research area within the field of sociology of work, examines "the direction and implications of trends in technological change, globalization, labour markets, work organization, managerial practices and employment relations to the extent to which...
- List of human resource management topics
- Leadership Character Model
- Functional leadership modelFunctional leadership modelIn the functional leadership model, one conceives of leadership not as a person but rather as a set of behaviors that help a group perform their task or reach their goal...
- Organizational behavior
- Organizational development
- Organizational empowermentEmpowermentEmpowerment refers to increasing the spiritual, political, social, racial, educational, gender or economic strength of individuals and communities...
- Organization designOrganization designOrganization design can be defined narrowly, as the process of reshaping organization structure and roles, or it can more effectively be defined as the alignment of structure, process, rewards, metrics and talent with the strategy of the business...
- Organizational theory