The issue of ethical behavior is one of the top challenges facing organizations today. A good definition of ethics includes the thought of doing what is morally acceptable or what is “good” and “right” as opposed to doing what is “bad” or “wrong” (Sims, 1992). But why are these issues a concern for organizations? What can they do to promote ethical behavior from their employees? Organizations should be concerned with ethical behavior for many reasons.
Even though ethical decisions are not always black and white, ethical behavior is important to the organization because ethical behavior enhances the corporate reputation, helps attract talented employees, and enhances the corporate image.
First, there is evidence that profitability is enhanced by a reputation for honesty and corporate citizenship (Kinicki, Kreitner, 2009). After all, the number one reason for business is to make a profit, thus returning value to its share holders. Consumers are more likely to buy goods or services from a reputable company then one with a reputation for unethical behavior.
The Ford Company in the 1970’s was a good example of lost sales due to an unethical decision. When the Ford Pinto was hit in the rear, the gas tank would often explode. Ford was slow to acknowledge the problem. By the time Ford admitted that they had a flawed design, many consumers had stopped buying Fords. Another reason organizations should be concerned with ethical behavior is its ability to attract talented employees. In a recent survey eighty three percent of those polled rated a company’s record as “very important” when deciding to accept a job offer (Kinicki, Kreitner, 2009).
Hiring and keeping innovative, creative and talented employees is essential for businesses as they attempt to compete in this global economy. Without talented people, organizations will be at a disadvantage when it comes to competing for future business. Being good corporate citizens is another reason that organizations should be concerned with ethical behavior. Businesses have many stakeholders that rely on them. These include shareholders, current and former employees, customers, suppliers and communities where facilities are located (Kinicki, Kreitner, 2009).
Businesses are more than just profit centers today. When making decisions, businesses must consider the social, political, and environmental effects as well as the profitability aspect. The challenge to be a good corporate citizen has put the emphasis on being an ethical company, with every decision made. Ethics is an important organizational issue, but ethics starts with the individual. We make decisions based on a combination of our personality characteristics, values and moral principles (Kinicki, Kreitner, 2009). Each of us “learns” what is right or wrong as we grow up.
Our moral compass is set by what we learn from parents, teachers, grandparents, siblings and society. We take our observations and experiences and use them to form our opinion as to what right and wrong means. We then use our moral compass to make decisions as we become employees and managers of business. Organizations should do everything necessary to address ethical issues up front. If they are unsuccessful in eliminating issues before they happen, organizations should be forthright in communicating any possible wrongdoing. Consider an example shared recently in the Wall Street Journal.
Defense contractor DynCorp International Inc. recently admitted that it may have violated Foreign Corrupt Practices when it tried to speed up the issuances of visas and licensing related to work for the U. S. government overseas” (Cole, 2009, p. B. 4). This possible violation, if legitimate, was committed by sub-contractors working for DynCorp. By proactively disclosing possible wrongful behavior, DynCorp is sending a message that it will not tolerate unethical behavior by its employees or sub-contractors. But organizations can do more than address possible issues after they occur.
They can impact ethical behavior in a positive manner through various means. By utilizing different measures organizational culture can be affected in a positive way. Ethical behavior starts at the top (Sims, 1992). The ethical tone of an organization is set with its top managers. How top management acts when faced with an ethical dilemma, strongly effects how the rest of the organization will react when they face questionable issues. By walking the walk and talking the talk, organizational leaders can show their subordinates what they expect in the area of ethics.
Actions and words by top executives will set the tone for the entire organization. Another way an organization can positively affect ethical behavior is through a corporate code of ethics. This code of ethics should be shared with all employees throughout the organization. The company that I work for emails the code of ethics to all employees annually. A high ranking executive will send the code out for all to read. Each employee then is required to electronically sign indicating that he or she understands the code. This annual process sends the message that unethical behavior will not be tolerated.
Organizations have much to do to be a productive, profitable entity in today’s global economy. Building an organizational culture that supports ethical decision making through active leadership, positive community actions, and employee involvement will go a long way toward meeting business goals. With a strong culture in place, organizations will be seen in a positive light by their customers, future and current employees, and by the communities where they do business. Being a good corporate citizenship will lead to a well liked, responsible, financially supported organization that can be competitive in the twenty first century.