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Ethical Challenges in the Workplace

The Role of Management in Establishing an Ethical Culture

Ethical Issues in the Workplace 

The ethical culture of an organization says a lot about what a company values. Ethics codes are one way to express the prevailing values and outlines guideposts to get to that goal. Unfortunately, many companies pay lip-service to such documents. They do not guide actions or spell out how violators will be penalized. Perhaps this explains why time and again we witness unethical behavior at the corporate level, whether it as at Wells Fargo’s opening fictitious customer accounts, or Volkswagen instilling defeat device to cheat on emission output or Takata, the maker of air bags for Toyota that just filed for bankruptcy protection in the U.S. These companies like many others seem to have lost their moral compass. Integrity is no longer valued as the prime ethical value from which others are derived.Moral compass

I recently read an interesting book by Stephen Robbins and Timothy Judge (Organizational Behavior). They offer a useful list of what management can do to create a more ethical organizational culture. They suggest a combination of the following practices:

  1. Be a role model and be visible.Your employees look to the behavior of top management as a model of what’s acceptable behavior in the workplace. When senior management is observed (by subordinates) to take the ethical high road, it sends a positive message for all employees.
  2. Communicate ethical expectations.Ethical ambiguities can be reduced by creating and disseminating an organizational code of ethics. It should state the organization’s primary values and the ethical rules that employees are expected to follow. Remember, however, that a code of ethics is worthless if top management fails to model ethical behaviors.
  3. Offer ethics training.Set up seminars, workshops, and similar ethical training programs. Use these training sessions to reinforce the organization’s standards of conduct, to clarify what practices are and are not permissible, and to address possible ethical dilemmas.
  4. Visibly reward ethical acts and punish unethical ones.Performance appraisals of managers should include a point-by-point evaluation of how his or her decisions measure up against the organization’s code of ethics. Appraisals must include the means taken to achieve goals as well as the ends themselves. People who act ethically should be visibly rewarded for their behavior. Just as importantly, unethical acts should be punished.
  5. Provide protective mechanisms.The organization needs to provide formal mechanisms so that employees can discuss ethical dilemmas and report unethical behavior without fear of reprimand. This might include creation of ethical counselors, ombudsmen, or ethical officers.

An ethical workplace culture is one that gives priority to employee rights, fair procedures, equity in pay and promotion, promotion of tolerance, compassion, loyalty and honesty in the treatment of customers and employees, and the ethical pursuit of profit. When employees respect the rules of conduct and feel fairly treated by management, the employees begin to trust managers and internalize the company’s values as their own. Once that happens, ethics becomes embedded in the workplace culture. If stockholders and potential investors trust management and believe they are committed to ethics, they are more likely to invest. This is why we have mutual funds comprising socially responsible corporations.

It is true that good ethics is good business. Perhaps not in the short-term but definitely in the ling-term when one’s ethical transgressions tend to catch up with a person or organization.

Blog posted on June 27, 2017 by Steve Mintz, Professor Emeritus, Cal Poly San Luis Obispo. Steve blogs under the pseudonym, Ethics Sage. Check out my website at: