term ethics and ethical behavior

What does ethical behavior mean for a business manager?

Introduction

This essay broadly discusses the term Ethics and Ethical behavior in a business organization. Ethics is a very complex term to define. The roots of the term ethics is originate from the ancient Greek word "ethicos" meaning "the authority of custom and tradition". The term ethics is different according to different author. The ethics is defined as the critical analysis of human actions to decide their rightness or falseness in terms of two major criteria: truth and justice. This essay also emphasis on the factors that greatly influenced to shape the ethical behavior. Further this essay also discussed about the unethical issues occur in the organization. What are the control systems to reduce the unethical behavior in an organization.

According to author Svensson and Wood the culture and lifestyle of people affect business ethics. In today's world, emphasis is on customers who decide if business activities are ethical or not. It point out importance of business ethics in determining corporate strategy and culture. (Svensson,G. & Wood, G., 2003).

According to author Zekos, he investigates the five values in relation with ethics. Firstly, value maximization to search out values of ethics for people. Secondly, a firm examines the ethical behavior of individual. Thirdly, the key factor that is law, important factor in shaping ethics. Forth value is the ethics against corruption. Finally, investigate the effect of globalization on corruption and ethics. (Zekos, G. I., 2004).

The ethical domain of behavior is typically guided by a value system. For value based approaches that serve as criteria for ethical decision making are utilitarian approaches, individualism approach, moral rights approach and justice approach. For an individual manager, the ability to make correct ethical choices will depend on both individual and organizational characteristic that influences ethical behavior.

Relating to what is good or bad, having to do with moral duty and obligation. There are three ethical models: the utilitarian model, moral rights model and the justice model. These can be used to determine weather a decision or a behavior is ethical. Business ethics is a system of moral principles applied in the commercial world. Business ethics provides guideline for acceptable behavior by organizations in both their strategy formulation and day to day operations.

Organizational culture and ethical behavior:

The ethical climate of an organization is the shared set of understandings about what right behavior is and how ethical issues will be handled. This climate sets the tone for decision making at all levels and in all circumstances. Some of the factors that may be emphasized in different ethical climate of organization are as follows:

Personal self interest, company profit, operating efficiency, individual friendships, team interest, social responsibility, social morality, rules and standard procedure, laws and professional codes.

There was a very famous case of the company Johnson & Johnson is that the famous drug Tylenol poisoning took place. The executives of that company immediately pulled their product from the market place. So at that time company not think about its profit but it think about the doing right according to ethical standards. From this example it is very well understood that when company follow the ethical codes and conducts the company achieves its highest peak of the profit.

Dilemmas involving discrimination, harassment, fraud, contractual breaches, favoritism and inconsistent policies regarding pay, rewards and discipline are common issues in many organizations.

However, despite the moral perception and expectation that business should operate ethically, not all organizations do, as is evident by the recent Enron scandal as stated in article.

Recently, "a federal court judge found Allegheny Bottling, Pepsi-cola bottling franchise, guilty of price fixing. The firm had ended years of cola wars by setting prices with its major competitor, Mid-Atlantic Coca- cola bottling. Since evidence showed most executives in the firm knew of the illegal price-fixing scheme, the unusual penalty allowed the judge to place the firm on probation and significantly restrict its operations."

Ethical climate in an organization

Leaders teach organizational values to every new member of the organization. These values establish the foundation of the leader's character. Once members learn these values, their leaders enforce adherence. Adhering t the principles that the organizational values embody is essential, for the organization cannot tolerate unethical behavior. Unethical behavior destroys morale and the cohesion and undermines the trust and confidence essential to teamwork and goal accomplishment.

As we discussed earlier, the ethical climate of different organization can emphasize different things. In the Johnson & Johnson example just cited, the ethical climate supported doing right thing due to social responsibility regardless of cost.

When the ethical climate is not clear and positive, ethical dilemmas will often result in unethical behavior. In such instances, an organization's culture also predisposes its members to behave unethically.

Pressure, opportunity and predisposition can all lead to unethical activities; however, organizations must still take a proactive stance to promote an ethical climate.

Organizational social responsibility:

Closely related to ethics of workplace behavior is social responsibility the obligation of organizations to behave in ethical and moral ways as institutions of the broader society. This concept suggests that members must ensure that their ethical frameworks extend to the organization as a whole. Managers and leaders should commit organizations to actions that are consistent with both the quest for high productivity and the objective of corporate social responsibility. ( Hunt, 2004).

As for example, some years ago the two beech-nut senior executives were sentenced to jail for their roles in notorious case of organizational wrongdoing. This scandal involved the sale of apple juice for small kids and infants. The bottles were finely labeled 100% of quality written pure fruit juice on that label. They were mixing lots of chemical ingredients in it and it was contaminated. This case exposed to public because someone blow the whistle within the organization. The whistle is blown by someone to maintain the ethical standards of the company as well as the save many children lives.

There was another one case of Enron discussed in one of the article is that employees kept buying shares in the firm for their retirement accounts, unaware that a complex series of limited partnerships was creating financial instability. Those who lost most of their retirement savings when Enron went bankrupt are now probably wishing that someone had right to expect, furthermore, that Enron's auditor Arthur Andersen would have disclosed these practice at the same time. By failing to do so and thereby violating its credibility and its own business viability when major customers canceled contracts with them.

Building an environment of ethical in an organization:

Create and follow a formal written company code of ethics for business and allocate copies to all employees. Create and implement a formal system foe reviewing. Updating and enforcing the company code of ethics. Company must educate employees about the code of ethics for that company should arrange training programs. The company should make the reward strategy for the employees. Lastly, encourage and motivate all employees to take responsibility for their behavior and maintain the strong code of ethics.

There are four ways of thinking about ethical behavior in organization are as follows:

  1. The utilitarian view: "This view considers ethical behavior to be that which delivers greatest good to the greatest number of people. Utilitarianism believes that the need of the many outweigh the need of the few."
  2. The individualism view: this view considers ethical behavior to be that which is best for an individual's long-term self interest. In principle, at least, someone who acts unethically in the short run such as by denying a qualified minority employee a promotion, should not succeed in the long run because short run actions will not be tolerant. Thus, if everyone operated with long term self interest in mind, their shot run actions would be ethical.
  3. The moral rights view: This view considers ethical behavior to be that which respects fundamental rights shared by all human being. This view is tied very closely to the principle of basic human rights, such as those of life, liberty, and fair treatment by law. In an organization, this principle is reflected in such issues as rights to privacy, due process, freedom of speech. Ethical behavior does not violate any of these fundamental human rights.
  4. The justice view: "This view considers ethical behavior to be that which is fair and impartial in its treatment of people.

In the business firm, two issues address this view of ethical behavior."

Procedural justice is the degree to which rules and procedures specified by policies are properly followed in all cases under which they are applied. In a sexual harassment case, for example, this may mean that required formal hearings are held for every case submitted for administrative view.

Distributive justice the degree to which all people are treated the same under policies, regardless of race, ethnicity, gender, age, or any other demographic characteristic. In a sexual harassment case, this might mean that a complaint filed by a man against a woman would receive the same consideration as one filed by a woman against man. (Hunt, 2004).

Corporate consequences towards unethical behavior

The potential for individuals and organizations to behave unethically is limitless.

Consider for example, companies that dump dangerous medical waste materials into our rivers and oceans also appear to favor their own interests over public safety and welfare.

In fact, story tells may be far more typical than we would like, as one expert estimates that about two-thirds of largest American corporations have been involved in one form of illegal behavior or another.

Individual consequences towards unethical behavior

Sometime people knowingly commit unethical actions because organization often rewards behaviors that violate ethical standards. There are many reasons behind violation.

There are many environmental and situational factors that affect the ethical standards of people. Sometimes the reward strategy that used in the organization force people to commit unethical behavior.

In one article according to Steven and Soltero, they design one technique that is outcome based control system can be a major factor for the unethical employee behavior because employee only wants to achieve reward by any risk and by any illegal and unethical ways. (Steven and Soltero, 2005).

Reduction of unethical behavior

Organization must focus on the proper recruitment and selection of employees. However, by altering their reward system, an organization could escape the necessity of proper selection and the need to alter undesirable employees.

Organization should provide more ethics training to strengthen their employees' personal ethical framework. That is, organization must devote more resources to ethics training programs to help its members clarify their framework and practice self discipline when make ethical decisions in difficult situations.

In conclusion, even though ethical problems in organizations continue to greatly concern society, organizations, and individuals, the potential impact that organizational culture can have on ethical behavior must be met by organizations if they are truly concerned about survival and competitiveness. Author also feels that company must focus on proper recruitment and training program of employees. Management must keep on eye at both the dark side and positive aspects before choosing a control system.

There is no doubt that ethics play an important role in business today. It can summaries from the whole research that the concept of ethics is very broad to understand. The concept changes from one person to another. Author also found the term ethics is a complex when it links with business. Sometime it is very difficult to follow ethics in each and every circumstance come to the company. The challenge must be met by firms if they are rightly concerned about survival and competitiveness. In today's difficult times is for more firms to step ahead and operate with strong, positive, and ethical cultures. Finally, the study of the codes of ethics and credos are very important factors for the ethical decision making.

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Ethical behavior in Management and Business

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