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The Role of Management in Establishing an Ethical Culture

October 4, 2016

 

Why Ethical Issues Arise in the Workplace and How to Deal with Them  

 

The 2013 National Business Ethics Survey reported by the Ethics & Compliance Initiative found that 47% of employees observed misconduct at their organizations while 63% reported it. A weak ethical culture was blamed for 34% of the violations and 21% of employees experienced retaliation after reporting misconduct.

 

I am concerned that while misconduct is down overall from previous studies, a relatively high percentage of misconduct is committed by managers – the very people who should be establishing an ethical culture and providing ethical leadership. Workers reported that 60% of the misconduct involved someone with managerial authority from the supervisory level up to top management. Nearly a quarter (24%) of observed misdeeds involved senior managers. Also, workers said that 26% of misconduct is ongoing within their organizations and about 12% of wrongdoing was reported to take place company-wide.

 

These results are disturbing on many levels. First, if 50% of employees admit observing misconduct, then in all likelihood the real number is higher. The result is it becomes more difficult to instill an ethical culture in an organization. Second, with 60% reporting managerial involvement in misconduct it is challenging at best to establish an ethical tone at the top. These high levels of observed and reported misconduct raise questions about how an organization can improve its commitment to ethical behavior.

 

The key is to focus on managerial behavior. Top management must make it clear that violations of ethical policies will not be tolerated. Just as a parent models behavior for his/her kids to learn from, top management must demonstrate by their actions that they don’t just pay lip service to a code of ethics. Managers must be committed to making decisions in accordance with core values such as honesty, integrity, respect for others, taking responsibility for their actions and being accountable for them.

 

To be an effective, ethical leader, managers must learn how to spot ethical issues in their organization. Moreover, managers must learn how to raise ethical issues especially in gray areas. A key area is to look for rationalizations for unethical actions. Probing employee behavior entails looking out for signs that values have been compromised and corners have been cut by deviating from ethical norms. The rationalizations come in many forms.

 

A common rationalization that I have observed is to claim it’s someone else’s responsibility. This is true when an employee feels he/she is just following orders of a superior. Another is to pass it off as no big deal, a kind of materiality test for ethical conduct. Here, managers must make it clear that even a “minor” deviation from policies is cause for alarm because it could portend greater problems and lead to more serious misconduct down the road.

 

Some managers rationalize unethical actions by claiming it is standard practice in the organization. Dennis Kozlowski, the infamous former CEO of Tyco who rationalized his theft of $150 million from the company,” stated in an interview with Morley Safer of 60 Minutes that he wasn’t doing anything different than was done by his predecessor.

 

Culture is often seen as abstract and difficult to measure. Documents such as a statement of values, a credo, and ethics code means nothing unless top management models ethical behavior in every action taken and decision made. Moreover, there must be consequences for unethical behavior and rewards for employees who have acted in accordance with prescribed ethical standards much like employees should be rewarded for meeting or exceeding production goals.

 

A report by the SHRM Foundation titled “Shaping an Ethical Workplace Culture” describes an ethical workplace culture as one that gives priority to employee rights, fair procedures, and equity in pay and promotion, and that promotes tolerance, compassion, loyalty and honesty in the treatment of customers and employees. The reason is 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.

 

In my blog tomorrow posted on workplaceethicsadvice.com I will address some of the common ethical issues in the workplace and how managers can best deal with them in order to effectively defuse tensions that can build up and eventually explode if untreated.

 

Blog posted by Steven Mintz, aka Ethics Sage, on October 4, 2016. Dr. Mintz is Professor Emeritus from Cal Poly San Luis Obispo. He also blogs at: www.workplaceethicsadvice.com.

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© 2016 by Steven Mintz and  Do Good PR Group