ETHICAL

PERSPECTIVE IN ORGANIZATION

WHAT IS ETHICS?

• A branch of philosophy concerned with the study of moral principles and moral actions.

• Purely theoretical treatment of moral virtues in terms of speculative and practical collective cultural value systems.

WHAT IS MORALITY?

• Morality is concerned with those practices that are considered right or wrong.

• It also concerns of values that reflects those practices and with the rules with which they are carried out.

COMPONENTS OF ETHICAL BEHAVIOR

1. Justnesswhat is right

2. Fairnessimpartiality

3. Righteousnessrational judgment of what is supposed to

be

4. Truthfulnessconformity with facts or reality

ORGANIZATIONAL ETHICS

• It is how an organization ethically responds to an internal or external stimulus. 

• It includes, but is not limited to business ethics which contains corporate governance and corporate ethics.

ORGANIZATIONAL ETHICS

There are at least four elements which exist in organizations that make ethical behavior

conducive within an organization.

FOUR ELEMENTS: #1

1. Written code of ethics and standards

Companies have written rules that guides employees about the basic guidelines that needs to be followed in order to maintain an ethical organization.

FOUR ELEMENTS: #2

2. Ethics Training

Ethics training is conducted to the members of the organization starting from the employees, managers, and even to executives.

FOUR ELEMENTS: #3

3. Availability for advice on ethical situations

Organizations may have advice lines, offices or certain individuals in the organization that help employees in troublesome situations to help them choose the best alternative.

FOUR ELEMENTS: #4

4. Systems for confidential reporting

Having these systems would help avoid unethical activities like leaking top-secret files and information that would be harmful to the organization.

ORGANIZATIONAL ETHICS

Good leaders strive to create a better and more ethical organization. Restoring an ethical climate in

organization is critical, as it is a key component in solving the many other

organizational development and ethical behavior issues facing the organization.

MODEL OF ETHICAL BEHAVIOR IN THE WORKPLACE

Internal Org’l Influences

Individual

External Org’l Influences

Neutralizing / Enhancing

Factors

Ethical Behavior

INTERNAL ORG’L INFLUENCES

• Ethical Codes

• Organizational Culture

• Organizational Size

• Organizational Structure

• Corporate Strategy

INTERNAL ORG’L INFLUENCES

Studies revealed that:

• Larger firms are more likely to behave illegally

• Managers are more likely to behave

unethically in decentralized organizations

• Mid-managers have the tendency to act

unethically in order to “look good” for higher

level managers

EXTERNAL ORG’L INFLUENCES

• Political-Legal

• Industry Culture

• National Culture

• Environment

EXTERNAL ORG’L INFLUENCES

• Increase in the monitoring of unethical and

potentially illegal actions

• World Customs Org. estimates that $512B

lost in counterfeiting activities

• China is the largest contributor to

counterfeiting in the world with 2/3 of all

the fake goods worldwide

INDIVIDUAL

• Personality

• Values

• Moral Principles

• Environment

NEUTRALIZING/ENHANCING FACTORS

• Age• Length of Service• Position• Heterogeneity /

Homogeneity of Org.

ETHICAL BEHAVIOR

MODEL OF ETHICAL BEHAVIOR IN THE WORKPLACE

Internal Org’l Influences

Individual

External Org’l Influences

Neutralizing / Enhancing

Factors

Ethical Behavior

WHY DO PEOPLE BEHAVE UNETHICALLY?

No one will find out

Behavior is not really illegal

It is in the best interest of the organization

The organization will protect them

OBSERVED UNETHICAL BEHAVIOR IN THE WORKPLACE

• Using office equipment for personal use

• Doing personal business on work time

• Calling in as “sick” to take the day off

• Divulging confidential information

• Claiming credit for someone else’s work

• Concealing own errors

MOREUNETHICAL BEHAVIOR

• Faking financial statements / accounting

records

• Engaging in illegal activities / business

• Bribery

• Badmouthing about competition

• Fooling customers

• Escaping the law

EXAMPLE

Corporate executives of WorldCom, a giant in the

telecommunications field, admitted fraud and

misrepresentation in financial statements.

WorldCom's former CEO went on trial for alleged

crimes related to this accounting ethics scandal.