A review of case studies of ethical problems encountered by various organizations shows that many common ethical problems faced by organizations arise from individuals protecting their own financial benefit and / or the short-term economic goals of their organizations and not protecting others. other key stakeholders of the organization. the company or organization. Organizations can avoid serious consequences by considering the consequences of their actions for six key stakeholders, including; business partners, customers, employees, opinion makers, community and authorities (Treviño and Nelson, 2005, p. 196). Analyzing decisions using these six groups as a guide; “One can begin to identify how a variety of calamities can affect a company’s reputation and brand equity, and how much those calamities can cost” (p. 196).
By reviewing how companies have responded effectively and ineffectively to severe ethical dilemmas, organizational leaders can identify 8 steps to prevent ethical dilemmas in their own organizations.
1. Top-down responsibility for ethical behavior must exist within an organization. The head of the organization must take responsibility for managing the ethical behavior of the organization. This responsibility cannot be delegated. Additionally, this responsibility cannot be downplayed to a lesser role than other key leadership responsibilities, such as short-term earnings. Senior leadership must set the ethical tone of the organization. They must communicate their vision regarding ethical behavior to employees often and with as much emphasis and clarity as they do with other organizational goals. The leader cannot leave the ethical tone of the organization to chance or to others within the organization.
2. Organizations must design a code of ethics for the organization. This code should be developed with the participation of a wide section of people within the organization. It should be distributed to all members of the organization and mentioned often in training and other types of communication to employees so that it is not just a manual that is in a file, but is seen as a valid document to answer questions about what is accepted. and not accepted as appropriate behavior within the organization.
3. Policies should be established and enforced in the organization on how to report ethical abuses. Employees must understand how to report problems and know that they can do so without fear of retaliation. Care should be taken that this is not just a theoretical exercise, but that actual reporting examples are given and employees are rewarded for reporting ethical dilemmas.
4. Ethical responsibility must be taught to members of the organization. This needs to be done in various settings, including new employee boarding, ongoing workshops, business meetings, roundtable discussions with leaders, newsletters, websites, etc. The training should include case studies in which employees should examine and discuss the ethical dilemmas that they could realistically face and the possible actions they should take. These case studies should include real cases that have occurred or theoretical cases that may occur in the organization so that people can understand the proper way to handle real life problems. Employees must clearly understand that they have an individual ethical responsibility shared with each of the stakeholders along with the responsibility of the organization.
5. Practices should be incorporated to ensure that discussions about ethics are included in the decision-making process. For example, a “devil’s advocate” should question decisions to explore whether unforeseen stakeholders may be compromised as a result of the decision; or decisions should be reviewed by an ethics committee or department to assess whether other stakeholders may be at risk. The practice of questioning decisions and openly exploring their consequences should be encouraged and rewarded.
6. All levels of the organization must take responsibility for ethical behavior seriously. Unethical behavior should be punished and should not be allowed to continue. Ethical behavior must be rewarded. Performance management systems must include ethical behavior as well as other key aspects of job performance. Those higher up in an organization should be punished in the same way as those lower down in the organization. In fact, it might be justified to punish those higher up in the organization more severely than those in entry-level positions because they should know more and by the example you set for others in the organization.
7. Organizations must act quickly to protect stakeholders when dilemmas arise. Crisis contingency plans must be developed in order to act quickly to protect stakeholders in times of emergency.
8. Members of the organization should know that their primary responsibility is to uphold and maintain the high reputation of the organization at all times. Leaders should encourage higher standards of behavior than are required by law. What is lawful should be considered a minimum standard; however, standards higher than this minimum should be set to enhance and protect the reputation of the organization. Behavior below that standard should not be accepted, and senior leaders should reward and acknowledge raising the bar.
Treviño, L. and Nelson, K., (2005). Corporate social responsibility and business ethics. Hoboken, NJ: John Wiley and Sons, Inc.