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Ethical Behaviour in Organizations Essay Sample

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Introduction of TOPIC

In recent years, there have been many cases of corporate frauds and scandals which have caught the attention of many eyes. One of the world’s prominent cases would include the downfall of Arthur Anderson, which its management disregarded its ethic policies so as to enhance profit. So what are the causes of such behavior in the workplace? Could it be the influence of individual or organisational characteristics? This essay first proceeds to examine ethical decision making model. In this essay, I will be focusing on Locus of control, cognitive moral development (CMD) as part of individual charactacteristics, and rewards system, code of ethics as organisational characteristics in workplace. Finally the essay will examine factors that promote ethical behavior at work. According to Jones and Ryan (2001), ethical decision making model comprises of 4 stages, individual pass through the process of these stages in engaging either ethical or unethical behavior.

The process starts with individual recognizing moral issue which lead to moral judgment, individual will then establish their moral intention and finally engage in moral behavior. There are two major factors that will affect employees’ ethical decision mainly, individual and organisational characteristics. Organisational characteristics are defined as organisational context that influence individual to make particular behavior. System of rewards serves as an incentive in many organisations. In today’s context, many organisations have offered commission for salesperson so as to enhance more sales.

However many organisations seems to have forgotten that rewards has its implication for ethical behavior. This was primarily due to sales commissions that are tied to their basic pay and that the fact that relationship managers are oblige to meet monthly target (Tan 2008). Thus it is apparent that reward could contribute to unethical behavior. However in another prospective, the use of reward for whistle blowing may avert unethical behavior. The difference between the form and latter is due to the nature of reward system. To illustrate, Local retailer Second Chance Properties has offered up to $70,000 to any stakeholders who inform about any employees’ misconduct.

Code of ethics emanated from the organisation is defined as a formal documentation which consists of behavioral expectation that govern the behavior of individual in workplace. Code of ethics with or without enforcement could lead to different outcomes. According to Stevens (2008), a code of ethics no matter how cautiously constructed, it tends to be one component of an organisations policy and its presence will not be able to avert any unethical behavior. One prominent example is the down fall of Arthur Anderson; it shows how ethical culture can transform into an unethical culture.

The firm was formed by Arthur Anderson; his emphasis on ethical conduct was strong and precise. His

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methodology of “integrity mattered more than fees” was conveyed to all including the public. The answer is clear cut for the downfall of Andersen, the neglection of its ethics code. This justify that Codes of ethics are just merely window dressing documentation. It’s just rules and regulation which may not work without the enforcement by management. Thus an enforcement is needed if not such codes will become redundant.

This is supported by Kish-Gephart et al (2010), for code of ethics to be a prominent component of ethical culture, organisation would need to convey message to employees, for instance disciplining rule violators in a visible manner. One example of code enforcement was on Hewlett-Packard’s Ex-CEO, Mark Hurd was asked to resigned by the board of director. He was involved in falsifying his expenses report and had concealed a relationship with one of the firms’ contractors. In this case, by enforcing its code of ethic on its most senior officer, HP has passed the test of ‘uncompromising integrity’, which is a key shared value in its code. In this case, the message to all HP employees is clear: HP’s business code is strictly enforced regardless of the status of the employee, hence building a strong ethical culture that foster ethical behavior. Individual characteristic is defined as the unique characteristic that belongs to individual in making his decision.

Locus of control is a psychological factor which refers to the extent that an individual believes he has control over life events. There are two nature of Locus of control, mainly internal and external. Individual with internal locus of control believes outcome is determined by their own behavior, whilst individual with external locus of control believe that their life event are determined by external influences such as fate and luck (Haines & Leonard 2007). Locus of control is profoundly related to moral behavior. Internally oriented individual are likely to make ethical decision because they are likely to stick to their belief and hence tend to resist against social norm whilst externally oriented individual see their fate in the hands on their superior, hence are more likely to behave unethically (Trevino & Nelson 2006).

However Trevino and Nelson (2006) argued that most adults are at convectional level of CMD, they are highly vulnerable to external influence meaning they look out to their peers and superior and use these cues as a guide of action. This is supported by Weber (1990), which found out that most managers are at “conventional level to resolve organisation dilemmas, mainly due to external influences such as obedience to higher authority and reward system, thus suppressing their moral reasoning capacity. In short, individual in organisation, regardless of position are likely to react based on external influences. Another important justification for moral behavior is based on individual characteristic which derive from cognitive moral development (CMD). Lawrence Kohlberg’s CMD asserts that individual pass through stages in sequence as they morally develop and that each stage represent a level of moral maturity and the higher the positioning of stages, the more ethical one would be. Kohlberg’s six stages of moral development are categories into three levels.

The first level is “preconventional” which signify individual considering with their interest and does not comprehend the rules of society. The second level, “conventional” level implies that people recognize rules, laws and expectation. The third level, “post conventional’ represented individual accepting society rules if they agree with the moral foundation that rules are based upon (Robertson & Fadil 1999).

Examples of individual who are likely from “post conventional” level are whistle blowers, Sherron Watkins who tried to convince Enron’s CEO to address financial deceit (Trevino & Nelson 2006). Thus it is evident that higher stages of CMD are positively related to ethical behavior, vice versa. Several researches, for instance Kish-Gephart et al (2010) Meta-analytic research has shown that individual who obey superior unethical acts or act merely to avoid punishment are lower in CMD. These support the notion that individual characteristics is of paramount importance factor in determining particular behavior in organisation.

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