An organization’s ethical climate is the importunate moral atmosphere within a work environment. It pertains to the shared perceptions in a workplace. Essentially, ethical climate involves the pressures, environment, and culture of an organization. The ethical climate topic is important to me. Ethical climate entails the shared perceptions of the ethically acceptable behavior. My career orientation towards human development and leadership makes it even more central in my career development. For the one who would wish to become a leader amongst leaders in the near future, understanding the need to create a healthy climate is imperative. This will help me in executing my career goals. Unhealthy ethical climates derail decision-making processes. Possessing effective leadership, competencies, and skills is indispensable for any leader.
Statement of the Problem
The ethical issue in the question is a climate of ethical behavior. This is because the issue of ethical behavior plays an integral part during the decision-making processes. Most organizations face an ethical dilemma during the decision-making processes. Conflicts also signify the unhealthy ethical climates. Conflict of interest occurs when individuals play double roles. In such a case, many stakes are at stake. Company officers may get profit from the company at the employees' and stockholder’s interest. Bad ethics leads to poor business. A leader should act as the ethical officer of his/her organization by exercising authority through creating a positive ethical climate and social learning. Such an ethical climate has zero tolerance towards the destructive behavior. Mostly, leaders without the positive ethical behavior cause conflicts within an organization.
Leaders assume ethical responsibilities within an organizational context. If a leader engages in immoral behavior, then the followers take after him. Research indicates that people learn through observing as well as emulating the attitudes and behaviors of credible, legitimate, and attractive people (Tsai, Joe, Lin, & Wang, 2014). In the same way, people look upon the leaders as their role models. Ethical leaders bolster their legitimacy by ensuring that they treat their followers fairly. Moral leaders ensure that they focus their concentration on ethics through regular communication about corporate standards, missions, and values. By using punishments and rewards, the leaders enhance the followers' learning.
Ethical climate is a part of organizational culture. From a cultural vantage perspective, organizations are tribes. When tribal members assemble, they create their own assumptions, language, stories, power structures, beliefs, and ceremonies. Management professors - John Cullen and Bart Victor – formulated an ethical climate typology with five distinct climate types (Mendonca & Kanungo, 2007). Law and order climates rely upon an external criterion like professional ethics, while caring climates place a lot of emphasis and concern on the others. On the other hand, independence climates provide their members with latitude to formulate their personal decisions. Instrumental climates tag along the ethical egotism principle. Ethical egoists formulate decisions in a manner that satisfies their selfish interests. Lastly, rules climates give premium to procedures, rules, and organizational policies.
It is important that leaders understand their ethical orientation, since all the five ethical climates have their own unique challenges. For instance, in instrumental climates, the needs and requirements of others do not form a substantial part of major organizational decisions. In caring climates, leaders overlook the rules with the intent of assisting their colleagues and friends. Followers and leaders in law and order climates do not take their coworkers’ needs into consideration, since they rely upon external standards for the direction. Conversely, organizational rules fail to recognize societal norms. Independence climates yield the best outcomes, particularly when the members possess skills and knowledge needed to make sound decisions. Self-interests inhibit ethical performance. Notably, immoral behavior is common in organizational and work units with an instrumental climate. While law and order as well as rules climates enhance ethical behavior, caring climates bolster employee loyalty. Satisfaction arises when individual ethical preferences rhyme with the organizational ethics.
Signs of Unhealthy Ethical Climates
Studies indicate that we have no single one-size-fits-all approach towards creating ethical climates. Contrariwise, organizations must identify practices, policies, and principles that characterize a positive ethical climate. Organizations that are zero tolerant to destructive behaviors and antisocial actions, which harm the organization or others, succeed. Self-interests drive unethical behaviors such as discrimination, aggression, incivility, and sexual harassment. Aggression entails a conscious attempt to hurt the organization or others (Saint-Martin & Thompson, 2006). Aggressive behaviors take various forms. Victims of such behaviors experience stress. This culminates to depression, anger, and loss of concentration as well as anxiety and poor health. It reduces organizational performance.
Incivility involves discourteous and rude actions that disregard other people. They violate norms and organizational standards. It decreases task fulfillment, job satisfaction, loyalty, creativity, and performance. Sexual harassment interferes with a smooth job performance. Demeaning comments, sexual assault, suggestive propositions, gestures, and threats decrease the work performance (Rua, Lawter, & Guo, 2014). The targets suffer both physically and psychologically. Discrimination amounts to segregating people based on age, gender, race et cetera. Prejudice and stereotypes do not augur well with most people. Modern organizations experience destructive behaviors.
Therefore, zero-tolerance policies, guidelines, and constant monitoring of possible violations are important. On the other hand, integrity involves ethical consistency, soundness, and wholeness. All organizational levels and work units require integrity. Integrity entails a consistent behavior that reflects fairness and honesty. For this reason, fairness and honesty are important components of integrity. Consistency enhances trust and encourages members to work together. Without consistency, it is difficult to demonstrate integrity. Ethical leaders see integrity as an important tool in fostering organizational growth. Lack of integrity signifies unhealthy ethical climates.
Signs of Ethical Collapse
Oftentimes, employers put pressure on their employees to maintain favorable numbers, in the sense that employees are pressurized to attain the set financial goals. The obsession to meet quantifiable goals signifies ethical troubles. Most companies hide expenses, incur bad loans, and overstate sales with the intent of inflating numbers. Silence and fear depict moral meltdown. Most people do not want to challenge their organization’s status quo publicly due to the fear of dismissal, demotion, or reprisal. Loan packages and generous salaries silence employees and inhibit them from voicing their concerns.
Additionally, Bigger-Than-Life Chief Executive Officers (CEOs) and Young ‘Uns may also symbolize unhealthy climates. The media and the community adore iconic CEOs. People do not like criticizing legendary CEOs. Additionally, weak boards in companies lead to a moral collapse. Weak boards with inexperienced members who are the CEOs compliances characterize unhealthy ethical climates. Some members do not attend meetings, neither do they devote the requisite time to the board roles (Parboteeah et al., 2010). Additionally, highly successful organizations think they can easily defy both business and economic realities. Such arrogance prompts them to innovate with the intent of outmaneuvering a difficult situation. Through the tax evasion, defective business models and unlawful accounting practices, fraud, insider trading, and misdeeds the companies defy business realities (Sauerland, Marotta, Peinemann, Berndt, & Robichaux, 2014). Moreover, most fallen leaders and organizations atone for personal sins through doing things in another area. Philanthropy should be motivated by common good, as opposed to self-aggrandizement.
Concern for the manner through which the company attains its objectives indicates healthy ethical climates. In most organizations, leaders lay down the demanding performance objectives but inadvertently or advertently ignore the manner through which the goals are reached. Leaders pressure the workers to produce high profits and sales through any possible means. Followers feel alienated and powerless. This is anomie. This decreases their confidence. Alienated employees retaliate. Leaders should address the anomie problem by ensuring that the goals remain realistic through ethical ways.
An organizational structure should appreciate its members’ ethical standards. Both followers and leaders should pursue ethical performance. Non-monetary and monetary reward systems ensure that organizations do not encourage unethical behavior through rewarding it. Organizations should put in place the elaborate rewards tailored to foster ethical performance and promote desirable moral behaviors. Furthermore, evaluation and performance processes should represent a balance between the ends and means. It is important to monitor how organizational goals are achieved to enhance ethical behavior. The monitoring process should be ethically sensitive. Evaluation and performance processes should seek to detect and eliminate immoral and illegal behavior. Leaders and employees should not condone poor behavior. Moreover, ethical conduct occurs when the workers take responsibility for their actions (Chang, Kim & Li, 2013). Managers within organizations should empower their followers with the sole purpose of making and implementing their choices. Unluckily, workers with competence and knowledge do not take part in the decision-making processes.
Healthy ethical climates also give attention to the organizational external environment. Ethical organizations realize that they have a huge obligation towards their communities. Such organizations pay close attention to environmental and social performance, aside from financial results. Organizations have Corporate Social Responsibilities (CSRs). Organizations should incorporate CSRs in their corporate values in order to participate in the activities that benefit local communities (Davila Gomez & Crowther, 2007). All stakeholders, such as suppliers, local communities, unions, customers, suppliers, competitors, and governments, have their requisite legitimate claims and interests which those organizations should take cognizance of in order to cultivate a healthy ethical climate. Moreover, organizations should strive to minimize adverse effects of their activities.
Ethical Climate Building Tools
Creation of ethical climates requires the leaders to utilize ethical learning, code of ethics, and core values. To begin with, organizations should identify and apply ethical values in creating a moral climate. Leaders should promote integrity by giving premium to the organization’s core values. A core ideology is the central character or identity of a company. It is made up of core values and a core purpose (Jennings, 2006). The core values form a part of the core ideology, while the core purpose is the organization’s reasons for existence. Anyone within the organization must take part in the Value Adoption Process (VAP). VAP begins with public meetings or face-to-face conversations. Leaders and followers meet to identify core organizational values to be followed. Organizations convert internal values to the external environment. This is conveyed through the organization’s market position, service, and products.
Secondly, a code of ethics is an important ethics tool. It has many benefits. Codes describe the organization’s ethical deportment to all the relevant stakeholders. Newcomers use such a code to guide the ethical standards. It helps an organization avert further regulation and lawsuits. It enables the followers and leaders to resist unethical behavior (Verschoor, 2004). Additionally, it helps avert a conflict of interests and fraud. Organizations consider ethical learning important, as it ensures that stakeholders participate in the creation of a healthy ethical climate within an organization. Organizational leaders must ensure that they involve everybody in the formulation of a code of ethics. This is important, as it ensures that everyone appreciates the rationale behind the creation of an ethical environment (Reilly, Sirgy, & Gorman, 2012).
Continuous Ethical Improvement
Total Quality Management (TQM) is important in ethical improvement. It provides a description of an unremitting improvement process that helps in reducing product defects, eliminating waste, as well as enhancing response times. High-tech organizations recognize the essence of continuous learning (Johnson, 2009). In the same way, organizations should seek to utilize Total Ethical Management (TEM) for continuous ethical improvement in enhancing their products. Change, ethical learning, and ethical weaknesses encourage ethical learning.
Enhancing a Company’s Ethical Learning
Ethical learners utilize the external environment to gather information. First, scanning the environment is important for budding ethical issues. This requires a sound scanning imperative, in the sense that an organization must find a proper rationale behind the creation of an ethical climate. Monitoring trade journals and newspapers to take note of problematic industry practices is important to consider the ethical effect. Again, an organization should determine its performance gap to define its ethical strengths and failings.
Towards this end, creating an openness climate helps in establishing a free information flow. In the same berth, continuous education also enhances ethical learning, as it helps an organization determine its priorities and the centrality of on-the-job training. All this is impossible without the involved leadership. Indisputably, the involved leadership helps in enhancing an organization’s ethical learning. This is possible through the involved leadership (Proios, Gianitsopoulou, & Efremidou, 2010). Lastly, all this is possible when an organization looks at the bigger picture by taking a system perspective.
Case Study: Tata Steel
Tata Steel is one of the oldest steel companies in Asia. Since the inception of this company, it focuses upon employee welfare, citizenship, operational excellence, customer focus, and social responsibilities. Its values are based on dynamic practices, competitive performance, and ethical practices. It aims at improving the lives of the communities it serves. With an elaborate code of conduct, Tata has an ethics counselor who reports to the company’s Managing Director. The study indicated that performance appraisal is integral regarding the success of Tata. Ethical problems involve making decisions during the decision-making processes. Employees who report incidences of moral values receive rewards (Bhal & Sharma, 2001).
Additionally, violation of the code leads to an immediate dismissal of an employee. The study showed that enhancing moral intensity develops a social consensus. They become big problems due to people’s propensity towards evil, resulting from conflicting interests and standards. Every company must be accountable to its stakeholders – capital investors, employees, competitors, suppliers, community members, government, and consumers. A healthy ethical climate requires an ethical orientation. Practices, policies, and structures within an organization affect ethical behavior through the communication flow. The case shows that socialization is important in achieving orientation of employees and managers towards the work ethics, particularly during the decision-making processes.
Promoting a healthy ethical climate requires openness, as it bolsters system thinking. Effective communication enables the members to unearth possible ethical problems and their implications to the overall organizational performance. Leaders should serve as ethical officers to exercise the requisite influence over the followers. Organizations and their leaders have a dissimilar ethical orientation, and this influences their decision-making processes. Self-interest promotes unethical behavior within the organizations.
First, for organizations to eliminate unhealthy ethical climates, they must establish zero-tolerance policies towards sexual harassment, incivility, discrimination, aggression, as well as other possible destructive actions. Secondly, developing integrity is equally important, as it facilitates clear communication of commitments and values. Compliance is not equal to integrity. Organizations should participate in CSRs too. Thirdly, organizations must determine how their organizations attain their goals. Failure to do this breeds anomie with the effect of undermining ethical performance. This way, it is easier for organizations to avert ethical dilemma during the decision-making processes.