A review of case studies of ethical problems various organizations have encountered show that many common ethical problems that organizations find themselves facing arise from individuals protecting their own financial benefit and/or the short-term economic goals of their organizations and not protecting other key stakeholders of the business or organization. Organizations can avoid serious consequences by considering the consequences of their actions to six key stakeholders, including; business partners, customers, employees, opinion formers, community and authorities (Trevino and Nelson, 2005, p. 196). By analyzing decisions using these six groups as a guide; “one can begin to identify how a variety of calamities might affect a company’s reputation and the value of its brand, and how much those calamities might cost” (p. 196).
By reviewing how companies have both effectively and ineffectively responded to severe ethical dilemmas, leaders of organizations can identify 8 steps for preventing 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 to manage the ethical behavior of the organization. This responsibility cannot be delegated. Furthermore, this responsibility cannot be downplayed to a lesser role than other key leadership responsibilities, such as, short term profits. Top 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 organization 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 input from a broad section of individuals within the organization. It should be distributed to every member of the organization and referred to often in training and other types of communication to employees so that it is not just a manual that sits in a file but is seen as a valid document for answering questions regarding what is accepted and not accepted as appropriate behavior within the organization.
3. Policies must be established and reinforced in the organization regarding how to report ethical abuses. Employees must understand how to report problems and know that they can do so without fear of retribution. Care must be taken that this is not just a theoretical exercise but that examples of real reporting be given and employees are rewarded for reporting ethical dilemmas.
4. Ethical responsibility must be taught to members of the organization. This must be done in various settings including on boarding of new employees, ongoing workshops, business meetings, round-table discussions with leaders, newsletters, websites, etc… Training should include case studies where employees must examine and discuss ethical dilemmas that they realistically might face and 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 individuals can understand the proper way to handle real life issues. Employees must clearly understand what they have a shared individual ethical responsibility to each of the stakeholders along with the responsibility of the organization.
5. Practices must be incorporated to ensure that discussions regarding ethics are included in the decision making process. For example, a “devil’s advocate” should challenge decisions in order to explore whether unforeseen stakeholders may be jeopardized as a result of the decision; or decisions should be reviewed by an ethics committee or department to evaluate whether other stakeholders may be at risk. The practice of questioning decisions and openly exploring their consequences must be encouraged and rewarded.
6. Accountability for ethical behavior must be taken seriously by all levels of the organization. Unethical behavior should be punished and not allowed to continue. Ethical behavior must be rewarded. Performance management systems should include ethical behavior as well as other key aspects of job performance. Those higher in an organization should be punished equally as those lower in the organization. In fact, it could be justified to punish those higher in the organization more severely than those at entry level positions because they should know better and because of the example it sets for others in the organization.
7. Organizations should act swiftly to protect stakeholders when dilemmas occur. Contingency plans should be made for dealing with a crisis in order to act quickly to protect stakeholders in times of emergencies.
8. Members of the organization must know that their primary responsibility is to defend and maintain the high reputation of the organization at all times. Leaders should encourage standards of behavior to be set higher than what the law requires. What is lawful should be considered a minimum standard; however, standards should be set higher than this minimum in order to enhance and protect the reputation of the organization. Conduct below that standard should not be accepted and raising the bar higher should be rewarded and recognized by senior leaders.
Trevino, L., and Nelson, K., (2005). Corporate social responsibility and managerial ethics. Hoboken, NJ: John Wiley and Sons, Inc.