Ethical behaviour involves respecting moral principles such as honesty, fairness and integrity. Ethical behaviour tends to be good for business, whilst unethical behaviour has long lasting damaging effects on a company’s reputation. Employee behaviour and organisational climates are coming under increased scrutiny in the financial industry. McCormick and Kinder reported that the accounting regulator levied £43 million of fines on large accounting firms in the year 2018. It is therefore evident that ethical behaviour is a major managerial challenge facing organisations today. This academic essay will look at why the culture of an organisation is a leading factor that influences employees to make unethical decisions, as well as discuss strategies that organisations can use to develop a culture that supports ethical behaviour in order to meet this challenge.
Organisational cultures can have a powerful influence over their employees, even those employees who had steadfast ethical standards to begin with. It is therefore the organisational culture that evidently shifts the employee’s belief system, because organisations tend to develop counter norms, which are practices that conflict with ethical business conduct. A typical counter norm to an ethical practice such as “follow the rules at all cost” would be to “do whatever it takes to get the job done”. The massive Wells Fargo debacle reported on by Corkery best explains this counter norm. Wells Fargo employees secretly issued credit cards without a customer’s consent to rake up fee income in order to meet targets. Ideas and strategies are therefore required in order to develop organisational cultures to help address the ethical behaviour challenge facing organisation today. Discussed below are some ideas and strategies that institutions can use to encourage ethical behaviour and shape organisational cultures.
Ronald states that the first strategy that should be implemented to attempt to address unethical behaviour in the workplace, is for executives to encourage ethical consciousness in organisations. Fichter states that ethical consciousness can be encouraged through leaders welcoming the opportunity to be challenged and ensuring that values and integrity always trump power. Fichter states that this can be done through advocating for dialogue with employees on the organisation’s ethical standards and through expressing willingness to change it when required. The second strategy in developing an ethically oriented organisational culture, is to create opportunities for debate. Leaders should ensure that majority vote does not rule. According to Fichter, ethical leaders should actively hold discussions with those employees who have different perspectives in order to generate new ideas to challenge unethical dilemmas. Discourse opportunities should be created to increase communication regarding current ethical standards. Team meetings and training sessions should be used as a platform where leaders can discuss ethical mistakes of the past.
Fichter explains that organisations tend to punish unethical conduct, but do not reward ethical conduct. According to Fichter, organisations already understand the power of driving employee behaviour though incentive programmes, and they should be encouraged by this to use tools such as compensation, promotion and recognition to celebrate actions that promotes doing the right thing, which ultimately strengthens the organisations ethical standards. Finally, escalating mechanisms are required for sustainable ethical conduct. Fichter mentions that escalating channels should make employees feel safe, and they should be able to trust where the information is heading. Fichter states that organisations should implement escalating procedures that are done through an external, neutral source outside of the organisation.
In conclusion, ethical conduct within organisations has propelled into the spotlight. Increased levels of scrutiny are being placed on organisations by regulators to identify reasons for unethical behaviour. Organisational culture is the predominant factor that promotes unethical behaviour due to gaps between ethical standards and actual practices. An organisation’s culture may differ from its standards because organisations create counter norms which conflict with ethical conduct. Strategies that could help narrow these gaps and help develop ethical organisational cultures that meets the ethical behaviour challenge facing organisations today include challenging authority, creating debating opportunities, rewarding ethical behaviour and strengthening escalating procedures.