Organizational Ethics

Ethics - It is a discipline that examines the moral standards practiced by an individual or a corporate or a society. some activities may be legal but may not be ethical. ethics represent the practiced value system. If ethics at the societal level is not strong, it affects the performance and ethical climate of organizations, which in turn influences individual actions and work and life negatively. e.g. bluffing, discrimination, undue advantage, favors, benefits, influencing decisions from power positions etc.

Organizational ethics is about commerce without morality

Organizational Ethics
Giving due consideration to and performing up to the expectations of different stake holders of the companies is essential for an organization. These stake holders and a few expectations can be Customer safety, value for money, fair price, disclosures and information. Stock holders return on investment, transparency in financial dealings. Employees fair and adequate wage, safe working conditions, nondiscrimination. Host country / society following local laws and regulation, respecting cultural practices,

Ethical issues facing multinationals Unethical practices of companies

Political and business nexus Manipulation of stock markets Lobbying Fudging of accounts and balance sheet Product piracy Surrogate and deceptive advertising Discrimination in selection, compensation and promotion, Practice of product liability and safety standards.

Ethical issues facing multinationals

Ethical issues in the organizations

Issues arising out of employer - employee relationship rights and duties. Discrimination issues based on gender, race, religion, disability etc. Traditional view of at-will employment. Representation of employees and democratization union busting, strike breaking etc. Issues concerning privacy of employee ( work force surveillance, drug testing) and employer( whistle-blowing) Matters of fairness of employment contract and balance of power between employee and employer slavery, indentured servitude, employment law. Hiring and firing methods and practices

Ethics and business

Becker and Fritzsche (1987) In the long run sound ethics was good business. Hosmer (1994) - builds trust and loyalty among stake holders. Schwab (1996) unethical behavior can be damaging but not always. Stark (1993) - Companies tend to take midway point. Business is morally neutral. Wolfe (1993) business has to balance between the two extremes, for maximization of profits. Drucker (1975) Business is responsible to society. Organizations have to operate within moral standards and best interest of society.

Ethics and business

Badaracco and Webb Study (1995) of Harvard graduates Middle management might not share the ideals held by top management. Frequently given instructions involving unethical behavior e.g. doctoring research data. Top management seemed out of touch with reality. Individual was forced to resolve his ethical problems through personal reflection and individual values.

What organizations can do?

selection of top members after through investigation into background. Incorporate ethical behavior in appraisal system. Superior and subordinate discussion for achieving results. Establish ethical awareness programs. Training and workshops on ethical practices and related topics. Executive reward and punishment based on ethics. Working environment supportive of ethical behavior. Establish ethical code and insist commitment.

Ethics across the cultures

Values in the culture influence the ethical standards.
E.g. the movie Twelve angry young men In collective culture a loan person may not go against a group. 1985 Readers Digest closer of loss making Japanese subsidiary. Japanese priority work force American priority Stake holders

Different standards need to be applied when evaluating the behavior of different groups.

Ethics across the cultures

Ethical Values change with time and political system. Different standards need to be applied when evaluating the behavior of different groups.

Foreign subsidiaries need to care for

Adulteration and loss of quality for any reason. Environment and pollution control. Employment of women, children and minorities. Employment of local citizens. Remuneration, pension or severance benefits. Management-union relationship. Taxation and financial controls. Purchase of local and foreign materials. Purchase, lease and location of building and plant.