Ethical Behaviour Policy and Practice in Organisations

1 ETHICS

1.1 Defining ethical behaviour

Ethics is a philosophical term derived from the Greek word "ethos" meaning character or custom (Sims, 1992). Ethical behaviour is behaviour that is morally accepted as good and right, as opposed to bad and wrong (Wood, Zeffane, Fromholtz & Fitzgerald, 2006). An ethical dilemma requires a person to make a choice between competing sets of principles based on how morally good and right as opposed to how bad and wrong they are (Wood et al., 2006). While striving to always do right, – with this paradigm – sound ethical conduct will likely become second nature in today’s world (Zazaian, 2006).

1.2 Ethical behaviour in the modern organisations of today

Philosopher and theologian Paul Tillich once said: “Ethics is not a subject, it’s a life put to the test in a thousand daily moments” (Lagan, 2006, pg.72). This wisdom is relevant to the modern organisations of today that are challenged in every way to uphold high ethical and moral standards which are demanded by the public for the betterment of society (Kranacher, 2006). Organisations have established codes of conduct to guide their employees regarding their ethical responsibilities while trying to minimise unethical behaviour and solve ethical dilemmas appropriately (Kranacher, 2006). Unethical behaviours such as lying to important clients and giving insufficient or inaccurate information to shareholders can result in misinformed strategic decisions and problems for organisations (Collins, 2006). One only has to look and ponder upon the fate of the large corporations HIH Insurance and One Tel, whom both suffered collapses due to their unethical decisions (Wood et al., 2006).

2 ETHICAL BEHAVIOUR POLICIES AND PRACTICES

2.1 Why ethical behaviour policies and practices are needed in an organisation

Ethical managerial behaviour in organisations conforms to the law and the broader moral code that is common to society as a whole, and yet ethical behaviour policies are especially created and implemented in organisations as well (Sims, 1992). This is because when new employees enter an organisation, they have already formed views and need formally structured workplace opportunities to reconcile these pre-existing values otherwise they will continue to make decisions using their personal values (Lagan, 2006). In today’s globalised environment, employees are expected to make business decisions for themselves and organisations therefore need to make it very clear what they stand for, what their corporate values or principles are and, importantly, what behaviours are consistent with the organisation’s values – not their personal values (Lagan, 2006). An example of an organisation taking an ethical stance when appropriate is the company Johnson & Johnson when their products were taken off the shelves – due to a poisoning threat – regardless of the cost (Sims, 1992). This action highlighted one of Johnson & Johnson’s ethics which was social responsibility regardless of the company losing time and money in the process (Sims, 1992).

2.2 Ethical differences that exist between different national cultures

Today’s work environment is becoming increasingly international in character, with managers having to deal with international issues and considerations (Wood et al, 2006). Organisations must also make a commitment to embrace the ethical behaviour policies and values upheld by international organisations to regain trust of all individuals involved (Kranacher, 2006). According to Cochran and Weaver (1995), over 90 percent of major corporations around the world have a code of ethics, or credos, addressing ethical issues and concerns. It is believed that it is these cultural and moral developments that exist between different national cultures that has influenced ethical decision making (Von der Embse and Desai, 2004). An acceptable business practice in one culture then may not be acceptable in another and employees may face dilemmas when a code of conduct is not consistent with the normal business practices of a culture, or a custom is not consistent with their ethical behaviour policy (Zakak and Douvas, 1999).

3 ETHICS STUDY COMPARING TWO NATIONAL CULTURES

3.1 America – the embodiment of the western, individualist culture

The George S. May International Company commented on the three “R”s of business ethics culture in America which include:

• Respect – that is behaviour such as treating everyone with dignity and courtesy, using company supplies,