Creating an Ethical Corporate Culture

Ethical dilemmas in business are common and can create challenges to workplace harmony that can disrupt the exchange of ideas and block actions critical to establishing an ethical organizational culture. Even when organizations have great policies and procedures and follow the laws and regulations, there’s still a high risk of unethical behavior.

Why do some organizations stumble when it comes to ethics? In many cases there are mixed messages, such as inconsistent application of policies or a tendency to overlook borderline or even directly unethical behavior. This is the “it’s not my job” mentality.

Here are some other common missteps.

• Senior leaders fail to “walk the talk” – they are guilty of modeling inappropriate behavior.
• Individuals may begin cutting corners due to misplaced incentives. When an organization begins rewarding the wrong things, this can lead to cutting corners on safety, quality, etc.
• Individuals may also feel the need to follow orders even when they are being asked to do something they feel is wrong.
• Individuals also have the need for closure, which can lead to conflict avoidance. For example, an employee may not be sure how to approach a possibly unethical situation, so he or she may simply opt to close it out without having the difficult conversation about ethics.
• Defensive “logic” is prevalent. This manifests as “everyone is doing it, so why not me?” or “why should I stick my neck out?”

The ethical dilemmas an organization faces are difficult because there is not a “wrong” answer. The toughest ethical dilemmas in the workplace occur when two or more competing alternatives are present, each having its own set of ethical values, the choice of which always offers a less-than-ideal solution. This happens because we often are pitting two favorable outcomes against each other—often fairness versus compassion. “Right” versus “right” is the toughest ethical challenge to navigate.

Knowing what the right thing to do is and doing it are two different things. It takes ethical leadership for one’s actions to match one’s words. Integrity is the bedrock principle that underlies ethical decision-making and is built on moral values.

In the book Moral Courage, Rushworth Kidder (the founder of the Institute for Global Ethics) lists five characteristics that morally courageous leaders have in common. Flipped in reverse, these attributes also illustrate what tempts them to behave immorally in the first place. Immoral leaders:

• Are influenced more by personalities than by principles.
• Are intolerant of ambiguity and personal loss.
• Seek immediate gratification and simple rewards.
• Do not think independently.
• Lack persistence and determination.

When one or more of those underlying factors is present, leaders are more inclined to do whatever it takes in the pursuit of a short-term goal – even if that means sacrificing their ethics and personal values. 

So, what is the best way to resolve an ethical dilemma? I like to follow a three-step approach for solving an ethical problem.

1. Examine the facts, identify the stakeholders, consider the consequences

• Who will be helped and who will be harmed by what you do?
• What kind of benefits and harms are we talking about and how important are they?
• How does all this look over the long run as well as the short run?

2. Analyze the alternative actions by reasoning through the effects on others

• How do actions measure up to moral values such as honesty, fairness, equality, respect for the dignity of others, and responsible action?
• How do the actions measure up against moral principles such as the rights of others and the decision-maker’s duties to the stakeholders?
• Is there a need to balance competing rights? If so, how will each be weighed?
• Which option offers actions that are least problematic?

3. Make a decision

The final decision should embrace Kidders Legal Test: Is law breaking involved? If yes, the issue is one of obedience to the enforceable laws, as opposed to the unenforceable canons of moral code. If the answer is “yes it is legal” there are three other tests for right vs. wrong.

• The Smell Test:

Does this course of action have about it an indefinable odor of corruption that makes you recoil? This is a “gut test” and a “gut level” determination. Always listen to your gut because it tests your internal code of morality at the psychological level.

• The Front Page Test:

How would you feel if what you are about to do showed up tomorrow morning on the front pages of the nation’s newspaper? What would your response be if a decision made in private suddenly became public? This is a test of your social mores.

• The Mom Test

If I were my Mother, what would I do?” or “If Mom knew about this what would she think?” This is about the moral exemplar who cares deeply about you and means a great deal to you. Put yourself in another person's shoes and think about what you are on the verge of doing. It might well be wrong.

Making an ethical decision is often easier said than done. Pressures from others; a sense of wanting to be a team player; and the importance of advancing in an organization can get in the way of doing what is right. Even more complicated decisions are based on balancing right vs. right. It is important to have an ethical framework to avoid sliding down the ethical slippery slope where one’s actions are dictated by expediency rather than a long-term approach that advances the ethical culture of the organization.

Kidder sums up the need for ethical decision-making this way: "As we practice resolving dilemmas we find ethics to be less of a goal than a pathway, less a destination than a trip, less an inoculation than a process".

Blog posted by Dr. Steven Mintz, aka Ethics Sage, on March 3, 2016. Professor Mintz is on the faculty of the Orfalea College of Business at Cal Poly San Luis Obispo. He also blogs at: www.ethicssage.com.