Management of Ethics in Organizations

Management of Ethics in Organizations
Name
Institution
Author’s Note
Abstract
Statistics have revealed an alarming state of affairs regarding the frequencies of unethical behavior or misconduct in companies. In a recent survey conducted among 1000 companies based in the US, it was discovered that at least 59.8% of company employees have engaged or observed at least two unethical acts in the workplace. This paper analyzes the historical development of ethics in business from the ages of religious paternalism to the modern age of ethical, legal regulations. As many scholars have pointed out, there is a close relationship between ethical leadership and ethical misconduct. Therefore, as will be discussed in this essay, an organization’s management plays a critical role in overseeing the adherence of their workforce to the organization’s code of ethics and code of conduct. Also, a review on the 2007-2008 financial melt-down will bring to light the interplay between ethics and capital market processes. Further, I present a review of the efficiency and importance of company-sponsored volunteer programs in ensuring corporate social responsibility.
Keywords: Ethical behavior, Code of Ethics, Code of Conduct, social responsibility.
Introduction
Throughout history, many scholars have advanced theories to explain how to strike a balance between the common economic goal of business and the ever-dynamic expectations of the society; ethics have proved to serve this balance. Simply put, ethicality is about making the most sensible choices concerning resources, people risks, and the environment.

The management utilizes the principles outlined in an organization’s code of ethics and code of conduct to ensure that its workforce engages in ethical behavior. Recent Statistics have revealed that in most US companies’ employees engage or witness at least two acts of misconduct on any given day in business (Eisenbeib & Giessner, 2012). As will be discussed below, punishment, motivation, and awareness serve the management an upper hand in ensuring ethical behavior in an organization.
Common Forms of Unethical Behavior
In any organization the following forms of misconduct are evident; embezzlement of funds, abusive use of the internet, use of obscene or abusive words/language. Also, in some other organizations, there are cases of presenting untruthful information to internal and external constituents, false report on hours of work, discrimination by gender, race, or religion, and sexual harassment. The list could be longer since some forms of misconduct may go unnoticed or not be reported due to fear of rank or retaliation.
As many scholars have conceptualized, ethical leadership is key to management of ethics in an organization. Ethical leadership expects leaders to demonstrate normatively appropriate conduct in their carrying out their personal duties as well as in their interpersonal relations. To promote normatively appropriate conduct in the workforce, leaders should incorporate ethics in reinforcement and decision-making and also ensure healthy two-way communication (Eisenbeib & Giessner, 2012). As Mayer puts it, ethics in an organization revolve around two key aspects; moral person and moral manager. An ethical leader incorporates ethics in his actions; for instance, one should consider if his decision represents what any moral person could have done, that is, ‘what is right to do.’ The management reinforces the code of ethics and code of conduct to achieve ethical behavior and minimize the likelihood of misconduct. For instance, a violation of the code of ethics should attract the exact penalty such as dismissal or pay cut, and it should be exercised without favoritism. Also, the Management is expected to set the example and adhere to all rules and regulations set forth. It will send a message that all personnel is expected to follow policy (Eisenbeib & Giessner, 2012). It is important to discipline staff who are not following protocol to reward those who are; hence, this will bring in a self-driven motif to engage in ethical conduct.
Ethics in Modern Day Businesses
The twentieth century saw the advent of the use of the code of ethics in the industrial economy. In this age, ethics were a result of the justice-based theory, rights-based theory; which relied on religious paternalism. For example, in his Detroit Automobile factory, John Ford utilized religion to impose ethics on his employees. Ford presented an additional 5 dollar pay to any employee who satisfied his investigative agents in keeping his code of conduct that involved regular church attendance, abstinence from alcoholic drinks, and absolute record on reporting to work late. In much of the 20th century, this served the purpose of maintaining ethics in many organizations. However, with an increase in corporate size, the use of morality diminished hence the role of the leader was redefined to focus on the use of the code of ethics (Mayer et al., 2010). Codes of ethics have proved inefficient in fostering ethical behavior in modern businesses. Critics argue that the code of ethics only imitates criminal law; therefore, some employee will engage in unethical practices not defined in the code of conduct and remain unpunished since they’ve not broken any law anyway.
Financial Meltdown
Therefore, the aspect of social responsibility has ensured the re-emergence of morals and values in the modern industry. Although modern businesses have not equaled the moral standards and ethical responsibility exhibited in the past years, the attachment of social responsibility index to companies’ share market values and customer loyalty has helped to keep many companies’ ethical responsibility at toes (Mayer et al., 2010).
For example, scholars elude that people had a role in the 2007-2008 financial melt-down. The 2007 crisis presented a real-time example of the effects of the breakdown of trust in a financial market. The financial meltdown was a result of a subprime mortgage crisis; the price of a single-family mortgage home which was at an average price of $228,300 declined to $204,200 by December the same year (a 10% decrease). By the end of 2008, the median prices in the mortgage industry had fallen by 24%; an equivalent of the financial crisis in the Great depression of 1929. The crisis was due to irresponsibility and lack adherence to ethics of competition and business.
The years before the crisis were marked by irresponsible mortgage activities whereby financiers engaged in ‘folly lending’. Mortgages were advanced to credit-unworthy individuals who in many cases failed to pay back. The risk in the subprime mortgages was transferred to the banking industry hence affected many other sectors of the economy in America. These acts were a violation of the Utilitarian ethical theory; which advocates for decision-making that serves the interest of the maximum number of stakeholders (Mayer et al., 2010). Clearly, the mortgage selling activity was motivated by self-interest and lack of consideration of its spill-over effect to other sectors of the economy; hence, this ended up in a worldwide financial crisis.
Other Emerging Factors in Ethics
In the modern-day organizations, the aspects of diversity and discrimination are critical to ethical leadership. In a workforce containing people of different religion, sex, race, and socio-economic backgrounds it is vital to come up with non-discrimination standards and corresponding non-compliance policies. Human resource managers should incorporate the aspect of diversity in hiring to ensure the workforce is rich in diversity. Many researchers point out that a diverse workforce is more productive than a lesser diverse one. To promote diversity and shun discrimination, the management should conduct orientation programs to new employees and regular awareness programs to update employees of the anti-discrimination policies and the penalties they attract.
For example, in 1999, the Coca-Cola Company faced a tough lawsuit regarding racial discrimination as described in the US Civil Rights Act. In the lawsuit, four African-American individuals (who were also standing on behalf of 2000 other African-American co-workers) sued Coca-Cola with allegations of discrimination in promotion, salary, and performance at work. Coca-Cola was declared liable for a $192 million compensation; the largest ever in a corporate racial discrimination lawsuit.
Secondly, the aspects of corporate programs and company-sponsored volunteer programs have raised a mixed opinion. In the US, an average of $160 billion is allocated to training corporate employees and volunteer programs. For example, the Mars Volunteer Program has had far-reaching benefits for its associates such as M&M’s and Wrigley. Volunteer programs improve employee collaboration and increase their self-awareness. As an ethical leader, I advocate for volunteer programs since they promote social responsibility, integrity, justice, and trustworthiness.
Conclusion
As discussed above, ethical leadership plays a critical role in managing ethics in an organization. Leaders set an example in their personal life and interpersonal relationships for their followers to follow concerning ethics. As postulated in the utilitarian theory, the management should incorporate ethics in decision-making and ensure equality in administering punishment or rewards concerning an organization’s code of ethics and code of conduct. As exemplified in Coca-Cola’s racial discrimination lawsuit, it is vital for managers to look into diversity and discrimination in managing corporate ethics.
References
Eisenbeib, S. A., & Giessner, S. R. (2012). The emergence and maintenance of ethical leadership in organizations. Journal of Personnel Psychology.
Mayer, D. M., Kuenzi, M., & Greenbaum, R. L. (2010). Examining the link between ethical leadership and employee misconduct: The mediating role of ethical climate. Journal of Business Ethics, 95, 7-16.