Organizational Ethics And The Law Essay Examples

Business

Reflections
The chapter on organizational ethics and the law is applicable in the business world today. We are surrounded by businesses in global stage. With increasing pressures to improve the profit margin, there is bound to be compromise on ethical front. That is where an organized attempt and instilling ethics in the organization comes in as useful.
The realm of organizational ethics is wide, encompassing all aspects of business. For any organization, “corporate culture” sets overarching tone and tenor of dealings between employees and with the environment. In times of external stress such as when the organization is faced with stiff competition or massive fines imposed by the government, employees come under pressure. How they perform in such situations upon the corporate culture of the organization (Graham). The “ethical climate” in organizations would determine what the employees deem to be ethical or otherwise. While some organizations would enable and support ethical actions, the corporate culture of some other organizations may turn a blind eye to wrongdoing. It is such organizations that ultimately sink in the corporate world, but not before tarnishing names and sinking careers.
The reason of existence of corporate entities is to generate profit. Therefore, there will always be a tension between the approaches of “egoism” and “principle” within a corporate entity. However, deeper examination proves the apprehensions unfounded. When a corporate entity acts ethically, it sends a positive signal to the environment. The consumers see the company as a force of good. As a result, the company becomes more acceptable, and its goods meet with success in the marketplace. In effect, ethics enables a corporate entity to ultimately remain relevant in the marketplace (Knehtl). Companies like Enron that employ short cuts are ultimately obliterated from the marketplace through the force of public opprobrium.
Ethics begins with individual and flows out into the organization. “Institutionalizing ethics” is an important task for organizations if they are to counter the frequent instances of illegal and unethical behavior by employees. A “professional code of conduct” plays a crucial role in institutionalizing ethics within an organization. Institutionalizing ethics depends upon a host of variables – organizational commitment, the psychological contract between the employee and the organization and the organizational culture. The organizational culture can be built over the long term by encouraging whistle blowing. In the short term, the management could make an indication that ethical behavior would be important to the organization. Permanent board level committees could be established to oversee the institutionalization of ethics. A code of ethics could be devised to indicate the value system of the organization, its purpose and guidelines to make decision-making consistent with the principles of the organization. Ethical training programs for employees are a good method of bringing the rank and file on board with the corporate framework of ethical conduct. While ethical training programs may be costly for the company to implement, they would be beneficial for the organization over the longer term (Sims). These activities could serve to instill “ethical safeguards” within the organization.
The “compliance based approach” would essentially be rule bound, with strict penalties for ethical misdemeanors. Employees in an organization where the compliance-based approach is in vogue would be insecure and would seek to avoid mistakes at all costs. Fear of failure is likely to be the dominant theme in such an organization. On the other hand, the “integrity-based approach” would seek to devolve faith to the employee. They would be made to sign integrity oaths and be expected to act in an ethical manner. The overarching theme in a company where the integrity-based approach is in vogue would be that the employees are honest till proven otherwise. As a result, the costs incurred in instilling ethics would be lesser as compared to a company practicing compliance-based approach. Also, the organizational climate is likely to be positive in such a company, and the overarching theme would be ‘hope of success’, instead of fear of failure.

Works Cited

Graham, John. “ The Role of Corporate Culture in Business Ethics.” Academia.edu. n.d. Web. 04 Feb 2015.
Knehtl, Maja. “Implement Business Ethics and Profit or Implement Business Ethics to Profit.” Alumni-MBA.com. n.d. Web. 04 Feb 2015.
Sims, Ronald R. “The Institutionalization of Organizational Ethics.” Journal of Business Ethics 10: 493-506. 1991. Web. 05 Feb 2015.