Organizational Ethics

Ethics has been called the study and philosophy of human conduct, with an emphasis on the determination of right and wrong. For managers, ethics at work refers to rules or standards governing the conduct of organizational members. Most definitions of ethics relate to rules, standards, and principles as to what is right or wrong in specific situations. For our purposes and in simple terms, organizational ethics refers to generally accepted standards that guide behavior in business and other organizational contexts.

One difference between an ordinary decision and an ethical one is that accepted rules may not apply and the decision-maker must weigh values in a situation that he or she may not have faced before. Another difference is the amount of emphasis placed on a person’s values when making an ethical decision. Whether a specific behavior is right or wrong, ethical or unethical, is often determined by the mass media, interest groups, the legal system, and individuals’ personal morals. While these groups are not necessarily "right," their judgments influence society’s acceptance or rejection of an organization and its activities. Consequently, values, judgments, and complex situations all play a critical role in ethical decision making.

Most people would agree that high ethical standards require both organizations and individuals to conform to sound moral principles. However, a couple of special factors must be considered when applying ethics to business organizations. First, to survive, businesses must obviously make a profit. Second, businesses must balance their desire for profits against the needs and desires of society. Maintaining this balance often requires compromises or tradeoffs. To address these unique aspects, society has developed rules—both legal and implicit—to guide owners, managers, and employees in their efforts to earn profits in ways that do not harm individuals or society as a whole.

Organizational practices and policies often create pressures, opportunities, and incentives that may sway employees to make unethical decisions. We’ve all seen news articles describing some "decent, hard-working family person" who engaged in illegal or unethical activities. Sometimes, these articles allude to an unethical corporate culture that either encouraged or ignored the unethical behavior. A study by the Ethics Resource Center found that 29 percent of employees surveyed felt pressured by management to compromise their standards of ethical conduct to meet business objectives. In other words, the integrity standards we learn at home, school, and in the community do not always prepare us for the intricacies of the business world and the pressures of work.

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