10091415Topic5OrganisationalApproachesinImprovingEthicalBehaviour

7/29/2019 10091415Topic5OrganisationalApproachesinImprovingEthicalBehaviour

1/12

TTooppiicc55

OrganisationalApproaches inImproving

EthicalBehaviour

4. Identify the responsibilities of management in addressing ethicalproblems.

3. Identify the various means of solving unethical behaviour problemin organisations; and

2. Identify some of the structural causes of unethical conduct inorganisations;

By the end of this topic, you should be able to:

1. Discuss the four main ethical safeguards;

LEARNING OUTCOMES


2/12

TOPIC 5 ORGANISATIONAL APPROACHES IN IMPROVING ETHICAL BEHAVIOUR 69

INTRODUCTION

Figure 5.1: Illustration of an unethical behaviourWhat do you think after reading the comic strip in Figure 5.1? Do you feel the actof asking money or bribes is equivalent of breaching the ethical codes laid out inan organisation.

We can assume that the senior executives of most business firms want their staffmembers to act in ways that they would consider right, proper and just.We can also be reasonably certain that they want them to act in ways that will notoffend the majority of the population, and not attract adverse publicity from the

nations media.

Yet, this unethical behaviour happens ever so often. Why do they occur and whatcan be done to prevent it? In this topic, we will examine several ways ofpreventing their occurrence of unethical behaviour and discuss on the causes andsolutions of unethical behaviour.

IMPROVING THE ETHICAL CLIMATE INORGANISATIONS

5.1

In order to improve an organisations ethical climate, top management can use avariety of ethical safeguards as shown in Figure 5.2.


3/12

TOPIC 5 ORGANISATIONAL APPROACHES IN IMPROVING ETHICAL BEHAVIOUR70

Figure 5.2: Ethical safeguardsIn the following sections, we will look at each approach and see how theyimprove an organisations ethical enviroment.

5.1.1 Ethical Codes

What is the definition of ethical codes? Let us look at the definition provided forit.

Ethical codes are statements about the norms and beliefs of an organisation.These norms and beliefs are generally proposed, discussed and defined by thesenior executives in the firm before being published and distributed to all itsmembers.


4/12


Now, let us look at Table 5.1 for the explanation of norms and beliefs, in relationwith the ethical code.

Table 5.1: Ethicals Codes on Norms and BeliefsAspects Norms BeliefsDefinition Norms are standards ofbehaviour.

They are the ways in which thesenior management of anorganisation want the staffmembers to act when confrontedwith a given situation.

Beliefs are standards of thought.They are the ways of thinking inwhich the senior managementof an organisation want itsemployees to adopt.

However, it is not censorship.The intent is to encourage waysof thinking and patterns of

attitudes that will lead towardsthe desired behaviour.

Expressedform

Norms in an ethical code aregenerally expressed as a series ofnegative statements, for it is easierto list the things a person shouldnot do than to be precise about thethings a person should do.

Beliefs in an ethical code aregenerally expressed in a positiveform.

Example Employees of the companywill not accept personal gifts

with a monetary value overRM25 in total from anybusiness friend or associate.

Employees are expected topay their full share of thecosts of meals or otherentertainment that have thevalue above RM25.

Our first responsibility is to ourcustomers.

We wish to provide goodservices for the community inwhich we operate.

Do you think ethical codes work? Are they helpful in conveying to all employees

the moral standards selected by the board of directors and president? The answeris not really.

The problem is that it is not possible to state clearly and explicitly the norms andbeliefs of an organisation relative to the various constituent groups (employees,customers, suppliers, distributors, stockholders and the general public) withoutoffending at least one of these groups. For example, it is not possible for acompany to say that it considers its employees are more important to the successof the firm than its stockholders. By saying that, the company sends the message


5/12


that profits and dividends come second, which goes against the goal of manybusiness organisations.

Consequently, codes of ethics are usually written in general terms, notingobligations to each group without stating which of them takes precedence in anygiven situation.

The basic difficulty with codes of ethics is that they do not establish prioritiesbetween norms and beliefs. Priorities are the true values of a firm. For example,let us say that one division in a firm is faced with declining sales and profits.Thus, the firm would be faced with the question of whether it should reduce itsmiddle-management employment and cut its overheads costs (the classicdownsizing decision)? The code of ethics says, in one section, that we respect ouremployees; while in another section, that we expect fair profits. How then dowe decide on the best course of action? What is fair in this instance? The codeof ethics does not provide us the answer.

Ethical dilemmas are conflicts between economic and social performances. Thelatter is expressed as obligations to employees, customers, suppliers, distributorsand the general public. Ethical codes can express a general sense of obligationswhich members of senior management feel towards those groups. However, theycannot help the middle-management or lower-level management to choose

between groups, or between economic and social performances.

ACTIVITY 5.1

Give two examples of positive beliefs that an organisation shouldhave. Discuss with your coursemates.

5.1.2 Ombudsman Position

An Ombudsman is a person within an organisation; often an older andrespected manager who is close to retirement. He has been relieved ofoperating responsibilities and assigned the task of counselling youngeremployees on career problems, organisational difficulties and ethical issues.


6/12


The term Ombudsman originated from the Swedish language and it means:

A government agent in a country who has been specially appointed to

investigate complaints made by individual citizens against the public officialsfor abuses of power or uncaring acts. Often, the Ombudsman can goconsiderably beyond counselling and investigation and is able to actinformally to resolve problems.

Does the position of Ombudsman work? Actually, it does not. The problem isthat the person reporting the incident is not truly not implicated in any way.We can assume that Ombudsman are generally discrete in talking to an offender.However, the source of information for the Ombudsman (the originator of thecomplaint) is usually clear. It has to be a person within the organisation who hasinformation about the practice and the moral scruples to report it. He is generallysomeone who has spoken to the offender about the practice within the past 30days. The Ombudsman does not have to be concerned about retribution but hisinformer generally does.

ACTIVITY 5.2

In your opinion, do you think an Ombudsman can effectively play hisrole in solving cases involving ethical issues? Explain your reasons.

5.1.3 Ethics Hotlines

Sometimes, employees may face an ethical issue but are reluctant to raise it withtheir manager or colleagues. Ethics hotlines may provide an avenue foremployees, who do not want to be seen with an ethics officer, to report orenquire about ethical matters anonymously. For example, Telekom Malaysia(TM) has set up an Ethics Hotline, which operates 24 hours every day, for staff toturn to for advice on ethical issues and concerns. Ethics hotlines can be an

effective approach to protect the confidentiality of the callers, while gatheringimportant information that is needed to resolve complaints or allegations relatedto ethics.

Let us look at Figure 5.3, we can see an example of a corporate company whichprovides web based report and Ethics Hotline number for their staff should theywant to report conduct that may be unethical, illegal, in violation of professionalstandards, or otherwise inconsistent with the company code of conduct.


7/12


Figure 5.3: Screen capture of Ethics hotline

5.1.4 Ethics Training

An organisational compliance programme requires instituting an ethics training

enerally, an ethics training programme should educate the organisation

ccording to Thorne, Ferrell, & Ferrell (2008), an organisations ethics training

pany.

Source: https://secure.ethicspoint.com

programme and communication system to educate employees about the firms

ethical standards. Ethics training usually involves lectures offered by a companytrainer and is usually given to managers. To be effective, ethics training should

be related to actual situations that employees may experience in their job andpossible ethical solutions to those problems.

Gemployees about the firms policies, expectations, the relevant laws andregulations, and general social standards. An effective ethics training would alsomake employees aware of the available resources, support systems andpersonnel who can assist with ethics and legal advice.

Acan have three goals. The goal of ethics training is to ensure that an employee:

(a) Recognises when a situation requires ethical decision making;

(b) Understands the values and culture of the organisation; and

(c) Employee evaluate the impact of ethical decisions on the com


8/12


What are the four ethical approaches used in addressing theorganisations ethical enviroment? Discuss briefly on each approach.

SELF-CHECK 5.1

STRUCTURAL CAUSES OF UNETHICAL

We have seen that neither codes of conduct nor Ombudsman can ensure that the

or example, let us look at established organisations such as General Electric,

The individual managers of these large organisations cheated the government,

5.2BEHAVIOUR

moral standards selected by the president and board of directors of a firm will beadhered by all members of that firm. Consequently, we will have to look at the

causes of unethical behaviour and see if we can eliminate those causes.

FGeneral Dynamics, E. F. Hutton and the Thorp Division of ITT. we will belooking at the reason why product managers at General Electric defrauded thegovernment, and why regional managers at E. F. Hutton defrauded the banks.

banks and customers. However, they did not directly benefit from theirunethical act. These were not instances of managerial dishonesty as there wereno payments, vacations and gifts. However, the individuals did benefitindirectly. Thus, it is necessary to understand this indirect benefit for this is thestructural cause of unethical behaviour within organisations.

ost large companies today are diversified, within numerous divisions. Each

here are two major problems with divisionalised, decentralised type of

tween the divisions (in products, markets, processes or

control overthe strategies of the divisions until after an outstanding success or an

Mdivision normally consists of a given product line, market segment andproduction process. Divisionalised structures of this type are generallydecentralised: authority for product, market and process changes are allocated tothe divisional managers, who are then held responsible for economicperformance.

Torganisational structure:

(a) Interrelationships betechnologies) cannot be utilised as the basis for economies of scale oreconomies of scope due to the separate nature of the divisions.

(b) Corporate management in a decentralised structure has little


9/12


absolute failure has occurred. They are reduced to an ineffective reviewfunction. These problems brought changes in the management ofdiversification, starting around 1975.

Before moving to the next section, attempt the exercise shown below.

EXERCISE 5.1

1. ical codes?

eason.

n improving anason.

What are eth

2. Do ethical codes work? State your r3. Do you think ethics training is effective i

employees ethical behaviour? State your re

4. What are the structural causes of unethical behaviour?

SOLUTIONS TO THE STRUCTURAL CAUSES

What can nethical behaviour inorganisations? Unfortunately, not much can be done. In the previous topic, we learnt

es,ariable costs, fixed expenses and quarterly profits) and more on the numerical

addressed andesolved by the senior executives within the firm? If it is not resolved properly by the

5.3OF UNETHICAL BEHAVIOUR

you do to remove the structural causes of u

on individual choice that there are no completely satisfactory means of reaching adecision when confronted by an ethical dilemma. Multiple analysis (using economic,legal and moral forms of reasoning) appears to make the issues clearer, and theproper, right or just decision more apparent. However, the process does notguarantee unanimity as the values and the priorities arising from economic, legaland moral outcomes differ among members of every organisation. Thus, there areno complete satisfactory means of changing the planning, control and motivationalsystems to ensure that the moral standards of senior executives will be followed.

We can put less emphasis on the financial measures of performance (sales revenuv

measures (customer complaints, quality rejections, workforce absenteeism,community attitudes and delay in responding to dividend inquiries). However,these alone are not going to solve the problem in management represents a conflict

between the economic and social performances of an organisation.

What do you think will happen if the conflict is not specificallyrsenior executives within the firm, the natural tendency of the middle-level andoperating-level managers will tend to favour the economic performance of theorganisation. This is so as under the current managerial systems, their performance


10/12


is measured by economic criteria and their future is dependent upon economicresults.

If nager who has to solve the problem of unethicalconduct in your organisation, how would you go about it? Discuss

ACTIVITY 5.3

you were a ma

with your coursemates.

THE ETHICAL RESPONSIBILITIES OF

Let us s t e of a firm. How do you address and resolvethe conflict between economic and social performances? The resolution of the

corporate executive, how would you answer these difficult ethical

uestions?

e of our major clients insists upon putting inaccurate statements intheir advertisements. Should we maintain that client?

ct factory-to-store

MANAGEMENT

ay hat you are a senior executiv

5.4

conflict has to be done as part of the strategic planning process. Ethical issues have tobe made a part of that process, and no longer ignored or pushed down onto theoperating levels. Hard ethical questions have to be asked by the managers in the

business units, and specific ethical answers have to be supplied by the corporateexecutives.

If you are a

q

(a) On(b) We can reduce our costs by replacing the wholesale distributors who

helped us in building the market. Should we start direshipments?

Basically, your response should have the following components:

cts associated withalternatives.

)tfully evaluate each of these alternatives following

legal and moral forms of reasoning.

It also rsonal costs may be associatedith the choice and courage to bear those costs.

(a) CharacterThe character to face issues which have adverse social impaeach of the

(b CourageThe courage to thougheconomic,

entails having the character to recognise that pe

w


11/12


However, others may disagree with this decision because of the followingdifferences:

Differences in perspectives within the firm; or Differences in beliefs in the importance

requirements, moral principles of benevolenof economic outcomes, legal

ce and consistency, and moral

gal and ethical outcomes, requirements, principlesnd values, but no clear ordering among them. However, this is not an excuse to

values of justice and liberty.

We have numerous economic, leaavoid making ethical decisions in management. We have to make those decisions

based on our sense of responsibility to others as it is a test of our character and ameasure of our courage.

How does the management respond in addressing ethical problemsin an organisation?

SELF-CHECK 5.2

Test your understanding by doing the exercise shown below.

EXERCISE 5.2

There are mainly four approaches in addressing the ethical climate in anorganisation and they are ethical codes, Ombudsman position, ethics hotlines

nd distributed to all members of the firm.

n thetask of counselling younger employees on various ethical issues.

1. d contrast the two newly developed methods(GE and BCG) for the management of diversity.Compare an

2. What can be done to solve the structural causes of unethicalbehaviour problem existing in organisations?

and ethics training.

Ethical codes are lists of statements containing the norms and beliefs of anorganisation published a

An Ombudsman is normally an elderly and respected person within anorganisation who has been relieved of operating responsibilities and give


12/12


Divisionalisation and decentralisation are believed to be the prime structuralcauses of unethical behaviours.

The solution for unethical behaviour is by putting less emphasis on the financialecisions related to unethical conduct based upon

measures of performance and more on the numerical measures.

The management has to make dtheir sense of responsibility to others as it is a test of their character and ameasure of their courage.

Beliefs

Decentralisation

alisation

Ethics hotlines

Ethics training

Division

Ethical codes

Norms

Ombudsman

10091415Topic5OrganisationalApproachesinImprovingEthicalBehaviour

Documents

Transcript of 10091415Topic5OrganisationalApproachesinImprovingEthicalBehaviour