Business Ethics: The role of Culture and Values for an Ethical Workplace
Dr. Chadaram Satyanarayana,
Director,
Yadavrao Tasgaonkar School Of Business Management,
Bhiwpuri Road, Karjat,
Maharastra, India.
19th January,2011.
According to Concise Oxford Dictionary, ‘ethic’ is relating to morals; treating of moral questions; morally correct; honorable.
It is the study of morals and morals choices. It focuses on standards, rules and codes of conduct that govern the behavior of individuals and groups. In the simplest terms, business ethics are moral principles that define right and wrong behavior in the world of business. What constitutes right and wrong behavior in business is determined by the public interest groups, and business organizations as well as an individual’s personal morals and values. The other dictionary meaning of ‘ethics’ is that it is the ‘ science of morals’ ; it is that branch of philosophy, which is concerned with human character and conduct It is a treatise on morals ( capable of knowing right and wrong).’Ethics refer to the code of conduct the guide an individual while dealing in a situation. It relates to the social rule that influence people to be honest in dealing with the other people. Ethics are the principles of behavior that distinguish between the right from the wrong business ethics is the evaluation of business activities and behavior as right or wrong . Ethical conduct conforms with what a group or society, as a whole considers right behavior.
Abstract:
An ethical workplace is established through an organization’s culture, values and leadership. To promote ethical behavior, human resource professionals, people mangers and senior management need to be knowledgeable about business ethics – from leadership, codes of conduct and related legislation to compliance training, ethical decision-making, and cultural and generational differences around ethics, Transparency, fairness and communication are keys to establishing and maintaining an ethical workplace,
Introduction:
In the business world today, issues of trust, respect , fairness, equity and transparency are gaining more attention, Business ethics includes organizational values, guidelines and codes, legal compliance, risk management, and individual and group behavior within the workplace.
Effective leadership, with open dialogue and thoughtful deliberation, develops the foundation of an ethical workplace, is woven into the fabric of the organizational culture and is mirrored in ethical decision-making. Toward this end, all organizational leaders have role in establishing corporate values and modeling ethical behavior for their workforce, organization and community.
The importance of ethical leadership has grown exponentially. A 2009 special report from the Business Roundtable Institute of Corporate ethics and the Arthur W. Page Society focuses on the issue of leadership and trust. The Dynamics of Public Trust in business – Emerging Opportunities for Leaders emphasizes that trust is a critical factor in business . The report points out that ” even in the best of times. The dynamism of trust requires continual monitoring and rebalancing as economic and social situations change.” Companies can create positive business ethics by generating goodwill, communicating openly and taking advantage of opportunities for leaders to create value based on a foundation of accountability and integrity. Ultimately, trust- through good business ethics- “Business success in a number of critical area such as employee performance, customer retention and innovation.
While not inclusive of all aspect of business ethics, this research article focuses on organizational culture and values and integral in the foundation of and ethical workplace. The primary audience – human resource professional, people managers and senior management – will find this article useful to thoughtfully consider the state of business ethics in their respective companies, identify related challenges and opportunities , and rethink how better to communicate , restructure and / or reframe policy and practice that influence the organization’s ethical stance .
Business Imperative:
Organizational culture and ethical leadership are at the core of business ethics. Each shapes and reinforces corporate values, and influences employee attitudes and behaviors broadly define, business ethics includes ethical conduct, legal compliance and, in some cases, corporate social responsibility.
Ethics – related outcomes can be seen in nearly every aspect of a company, from employee perception of fairness, to employee engagement and retention, and ultimately, as US. And global executives note, to reputation and sustainability (see SHRM’s 2008 Executive Roundtable Symposium on sustainability and human resource management ).
The establishment of business ethics as policy is not new A no. of business code were establish and in use in the 1920s in fact the retailer J. C. Penny company introducer company code of conduct in 1913.3 The focus on business ethics, particularly ethics policies and programs rapidly grew in the United States in the 1980s and 1990s in response to govt. and legal pressure. The defense industry initiative (DII), created in the 1980s in response to government regulations was developed for defense contractors to comply with a high standards. (DII) Was the first organized attempt at creating standard ethic and compliance programs in 1999, a survey of sample of fortune 1000 companies by researchers Weaver, Trevino and Cochran found that only 20% had adopted ethics policies prior to 1976 and 60% since the mid-1980s. A series of high-visibility corporate scandals (such as Enron, Arthur Anderson, WorldCom) resulted in the Sarbanes- Oxley Act ( SOX) of 2002, the goal of which is to foster truthful communication between company officers and shareholders in publicly traded companies.
In today’s global marketplace, HR ethics and compliance officers, and organizational leadership must also be cognizant of cultural norms, legislation, communication styles, etc, In Europe, for example, there is a history of socially mandated employee involvement in businesses, where the U.S. style of codes of conduct may not be applicable. Other cultural differenced, such as indirect communication styles and the need to save face, require sensitivity for ethics – related communications. U.S. corporate ethics programs tend to reflect American culture norms, such as individualism. In contrast, collectivist societies use different communication style to address interpersonal and ethical problems. Whether in domestic or global companies, ultimately, the commitment to business ethics and the foundation is build through organizational culture, with ethical values reflected in workplace.
“Because sound ethical behavior continues to erode within society, it is vital that an organization’s leaders model the ethical behavior they require from staff member”, notes Norman Howard, Director of Human Resources W.K. Kellogg Foundations . “Thus, the culture of an organization plays a critical and essential role in defining the importance of ethics both in how it respects employees and how it conducts business,”
An ethical culture is developed through communication, rules, leadership, reward, rituals and stories. The realm of business ethics and organizational culture include the views of employees and management, individual and organizational values. And constant compliance and principle – driven ethics. Attitudes and behaviors are reinforced overtime through code of conduct, behavioral modeling by senior staff, ethical decision processes and ethics trainee. Three key question to ask within an organization are: 1) How does company’s cult
ure Portray organizational values; 2) Do company policies reflect corporate values that firm the platform for ethical leadership and corporate governance; and 3) are employees treated fairly and consistently? Leadership determines how effectively this accomplished. As pointed out in an article titled “The Ethical Commitment: Building Value Based Cultures,” employees want to trust management and know that their needs and well-being are considered. Managers demonstrate trustworthiness when they listen to employees, account for their actions, and explain reasons for decision. Data from the 2009 National Business Ethics Survey, conducted by the ethics Resources center, reveal employees’ views about whether leadership sets a good example of ethical behavior, with 80% approval for top management and 86 % for direct supervisors. This may include policies and programs, the code of conduct, ethics communications, ethics training and employees’ opinion surveys. Key questions to consider are: 1) is the company sending the message that it promotes ethical behavior; 2) is it concerned with the welfare of employees or is the goal to protect the company; 3) is the formal ethics program outsourced for cost savings (on the Internet), thoughtfully focused on the nuances of the organizational culture, and to what degree is senior management involved?
