Ethical Corporate Behaviour
Organizational ethics is used to consider the issues of morality and rationality in organizations. Organizational ethics is completely different from management ethics. Management ethics focuses on the ethical quality of the decisions and actions taken by managers of an organization. Thus, management ethics deals with the individuals in the organization and organizational ethics deals with all the activities of an organization. Therefore, organizational ethics is collective in scope.
Table of Contents
Organizational ethical issues can be handled at three levels. These levels are:
- Corporate mission
- Constituency relations
- Policies and practices
Corporate mission refers to the objectives of an organization that are used to define its ethical responsibilities. Corporate mission also reflects the ambitions and expectations of the employees. Employees should be integrated in a good manner to achieve the corporate mission.
Constituency relations define the responsibilities of the elements of an organization. The elements of an organization may be employees, customers, suppliers, shareholders and the general public. These responsibilities must be handled properly to manage the ethical conduct of business.
Organizational ethics can also be used to evaluate the policies and practices of the organizations. Public commitment to ethical principles can give way to business and administrative practices.
Organizational ethics also depends on the type of the organization. Organizations can be classified by considering their economic and ethical concerns.
Organizations can be classified into four types. These are:
- Exploitative: Organizations with low economic and ethical concerns are called exploitative organizations. These organizations utilize child labour and use rivers for dumping wastes to maximize their profits.
- Manipulative: Organizations with high economic performance concerns and low ethical concerns are called manipulative organizations. These organizations use tax laws, labour laws and union leaders to maximize profit.
- Holistic: Organizations with high ethical concerns and low economic concerns are called holistic organizations. These organizations spend their money in social and environmental purposes.
- Balanced: Balanced organizations have high ethical and economic concerns. These types of organizations gain profit as well as work for social and environmental purposes.
Corporate Code of Ethics
Corporate ethical codes can be defined as the standards and beliefs of an organization. These standards and beliefs are made by the managers of the organization. These ethical codes can be used to adjust the thinking and attitude of the individuals in the organization. Ethics codes of organizations are different from the rules of ethics. Ethical rules are the requirements according to which an individual acts.
Snoeyenbos and Jewell define three elements to implement ethical behaviour in the organization. These elements are:
- Implementing the corporate ethical code
- Introducing an ethics committee
- Introducing a management training programme that includes ethics training
Organizations can handle the issue of ethics by incorporating the code of business conduct in the corporate structure. These business codes can be used to advise, guide and regulate the behaviour of the individuals in organizations. Organizations can translate the human core values into business codes by using some specific guidelines. Many organizations have formulated codes of ethics for their employees. Most of these codes are very different and some are similar. These formulated codes of ethics can be used as a tool for developing ethical conduct.
Some of the ethical codes formulated by organizations are:
- Ethical codes for discipline
- Proper code of dressing
- Avoiding abusive language or actions
- Punctuality
- Legalistic ethical codes
- Always following instructions from superiors
- Performance of fair performance appraisals
- Personal and cultural ethical codes
- Not using official property for personal use
- Performance of good quality of work
- Having initiative
- Conservation of resources and protection of quality of environment
Advantages of a Code of Ethics
- Code of ethics can be used to handle outside pressure.
- They can also be used in making overall strategic decisions.
- These codes can be used to define and implement the policies of the organization and distribute work between the employees.
- Code of ethics can be used to optimize the public image and confidence of the organization.
- They can be used to increase the skills and knowledge of the individuals.
- Code of ethics can also be used to respond to the different issues of stakeholders.
- These codes of ethics can be used to discourage improper requests from employees.
- They can also strengthen the enterprise system.
Development of Ethical Corporate Behaviour
The approaches to business ethics can be classified into the following areas:
Identifying Practical Issues and Assigning Responsibilities
This approach explores various kinds of ethical issues that can arise in business and society. Business activities should be conducted in such a way that they do not cause any harm to the society. The various ethical issues that can arise in business and society are:
- Employee rights
- Ethical business conducts
- Environmental protection
- Child labour in business
- Discrepancies in the wages of women employees
- Bonded labour
- Exploitation of unorganized labour
- Minimum wages
- Obligations of large and multinational corporations
Analysing Existing Practices and Framing a Code of Conduct
This approach deals with the subject of public policy and with the identification of unethical practices. There are various areas of conduct that require some amount of government regulation. Such areas include product liability, worker rights, environmental problems, white-collar crimes and child labour. This approach also deals with the ethical guidelines that provide benchmarking for the decision-making process.
Benchmarking
Benchmarking is one of the trends or perspectives that can be used by the management for the purpose of organizational development. Benchmarking can be defined as a process of comparing the works and service methods against the best practices and best outcomes. Benchmarking acts as a powerful agent for change and motivation that helps in organizational development.
Benchmarking basically focuses on identifying changes that can result in higher-quality output by incorporating different organizational behaviour techniques. The process of benchmarking involves looking both inside and outside the organization for identifying the methods that can be used for organizational development.
Benchmarking facilitates organizational development by identifying improvement strategies. It enables the organization to learn from other organizations. It also helps in the relocation of resources that speed up organizational development. Benchmarking is also used to train and develop human resources to ensure efficient performance that is comparable to the performance of competitors.
The following is the sequence of steps involved in an effective benchmarking process:
- Determine the key performance areas that need to be benchmarked. These include products and services, customers, business processes in all departments and organizations, business culture and calibre and training of employees.
- Identify the most relevant competitors and best organization in the relevant industry.
- Set the key standards and variables that need to be measured.
- Measure the standard variables regularly and objectively.
- Develop an action plan to gain or maintain superiority over competitors.
- Specify programmes and actions to implement the action plan and monitor the ongoing performance of the organization.
Fundamental Philosophical Problems
Under this approach, business ethics can be defined as an attempt to keep ethical obligations. This approach deals with the relationship of the individual and the society and it is used to identify the area of development of the society and its culture.
It also focuses on the differences between personal morality and social morality. The main aim of this approach is to identify and define business values.
Business values
A business value refers to a set of beliefs pursued by an organization. Business values like ‘customer satisfaction’, ‘enthusiatic teamwork’ and ‘state-of-the-art provision for production’ are some of the commonly pursued values by several organizations.
When such values are pursued effectively and with zeal by executing them in the daily activities of the management and the employees of the organization, they are believed to pay back in manifold returns and success. Pursuing business values plays a vital role in the growth and survival tactics of an organization.
In general, the most common values that facilitate in improving profits and the image of the organization are as follows:
- Persistent progress: It refers to an eagerness and enthusiasm on the part of the organization to keep its functioning as an ever efficient and up-to- date working endeavour towards progress.
- Customer satisfaction: It refers to making the customers feel important and responding to their needs, interests and, if need be, providing solutions to their problems in case of any documentation processes regarding the purchase of the organization’s product.
- Personnel development: When it comes to development, organizations can benefit more by developing the skills of their employees. Besides considering the satisfaction of its customers and management, it should also take into account the satisfaction of its employees, which in turn can yield sincere work performance from the employees.
- Innovation: It refers to the enthusiasm to take on new challenges and responsibilities on the part of the employees and a desire to diversify and try out new ventures on the part of the organization.
Optimal use of resources: It refers to making sincere efforts to enhance overall business performance by maximum utilization of the organization’s current resources.
Ethical Issues in Organizations
There exist many different ethical issues in the organization or at the workplace. Some of them are:
- Identifying the conflict issues in the organization and trying to avoid them
- Deciding different methods to motivate employees
- Managing fairness in employee performance appraisals
- Protecting secret information of the organization
- Identifying the areas of interest of customers, employees, suppliers, owners and the staff
- Taking action against the reports of complaints in the organization
- Handling different problems of employees
- Taking corrective action against employees
Ethics management programmes are used by the organizations to manage ethics in their workplace. According to Brain Schrag, ‘Ethics programmes convey corporate values using codes and policies to guide decisions and behaviour, and can include extensive training and evaluating, depending on the organization.’ Ethics management programmes are made up of values, policies and activities that can affect the behaviour of the organization.
Managing ethics as a programme is advantageous to organizations in many ways. Some of the advantages are that:
- These programmes can assign an independent role to each individual in the organization to manage ethics.
- Ethics management can provide the necessary operating values and behaviour to the organizations.
- These programmes are used to align the operating values and behaviour.
- Ethics management programmes are used to schedule different ethical requirements.
- These programmes are used to make the organizations aware of ethical issues.
- These programmes provide structural mechanisms to handle ethical problems.
- They also provide some guidelines to decision-making.
Guidelines for Managing Ethics in Organizations
Some guidelines for managing the ethics in organizations are:
- Identify ethics management as a process: Ethics management is used to provide operating values and associated behaviour. Ethics programmes are process-oriented because the operating values are determined by ongoing reflection. The deliverables of the ethics programmes, such as codes, policies and procedures, budget times and meeting minutes, are not produced directly. However, these deliverables are produced by the process of reflection and dialogue.
- Use ethics programmes to manage behaviour in organizations: The ethical values provided by the ethical programmes can be used to direct behaviour in the workplace. Therefore, ethical management practices, in addition to ethical values, should also generate deliverables. These deliverables can be used to transform ethical values into behaviour.
- Avoid ethical dilemma: The codes of ethics and the codes of conduct can be used to minimize the occurrences of ethical dilemma.
- Combine ethics management with other management practices: Ethical management should be integrated with other management practices. While developing strategic planning, ethical values of the organization should be considered. While developing personnel policies, determine the ethical values that are most effective for the environment of the organization and then implement policies to produce these kinds of behaviour.
- Develop ethics management programmes using cross-functional teams: The employees of the organization should be included in the development and implementation of the ethics management programmes.
- Value maintenance: Ethics management programmes may increase the ethics of people in the beginning because of the sensitivity of people on their occurrence. However, people should remain ethical on the implementation of these ethics management programmes.
Roles and Responsibilities in Ethics Management
Each individual in the organization should be provided a specific role in managing ethics in the organization. However, the role assigned to each individual depends on the size and nature of the organization. The roles can also be full-time or part-time. The following responsibilities can be assigned in ethics management:
- The chief executive officer of the organization must support the ethics management programme.
- A committee or group should be developed in the organization to control the development and operation of the ethics management programme.
- A committee or group should be developed which should be responsible for training the employees on the policies and procedures of the ethics management programme and should resolve any ethical dilemmas that may arise. This committee can contain senior officers.
- A person in the organization should be designated as ombudsperson who has the responsibility of investigating or resolving complaints from the employees of the organization against the ethics management programme.
- Each person of the organization is responsible for the implementation of the ethics management programme.
