According to Jon Elster (1989), all organizations ultimately act and decide through people, it is the people who set the tone for organizational goals and behavior. This is especially true for the leaders who are often in a position to control multiple outcomes that affect employees (e.g., strategies, goal-setting, promotions, appraisals, resources). It is not surprising, then, that the differences and preference between the individuals causes many ethical questions or problems for the organization (Treviño, 1986).
However, each individual has their own perception, and their own process to select, organize, interpret and respond to the information that is called perception process according to Hellriegel (2011). The perception process is influenced by several factors, external factors such as the cultural issues and communication and internal factors such as personality, learning and motivation. For example Brown et al. (2005) suggests that individuals can learn standards of appropriate behavior by observing how role models (like teachers, parents, and leaders) behave. Accordingly, ethical leaders "teach" ethical conduct to employees through their own behavior, by treating others fairly, honestly, and considerately, leaders become worthy of emulation by others. Otherwise, followers might ignore a leader whose behavior is inconsistent with his/her ethical pronouncements or who fails to interact with followers or not respect their culture differences (Yussen & Levy, 1975).
The way in which people come to understand the cause of their own and others behavior will determine the organizational ethics, by the ability of each one of the employees to incorporate values and principles to distinguish right from wrong and transform in right attitudes (Hellriegel, 2011). In other words, the attributions made by each employee in the company will result in behaviors, feelings and expectations that will affect and determine the organizational ethics.
Ethical issues are very important for companies, in some cases neglect can result in serious legal penalties for the company. Most companies recognize the value of ethical concepts to give directions for the whole company because of this most companies decide to make a guide of ethical procedures that employees should use to base their behavior and decision making.
By using policies and procedures companies create organizational norms that provide an objective base for determining whether a behavior is right or wrong for the company. The policies and procedures will help the employees to learn the ethical practices and understand that rules should be followed because they are necessary in place for the effective functioning of the entire organization (Miles, 1978).
For the organizational policies and procedures to impact positively on the company’s ethical behavior, the leaders must demonstrate their commitment to ethical behavior and decisions made by other managers and employees also it is very important to make sure that the code of ethics is very clear and has to be followed. The procedure must have a policy to protect retaliation against those who report wrong doing. Managers and employee alike should be involved in solving ethical problem and lastly the company should publicized all the efforts related to the ethical issues (Hellriegel, 2011).
While the organizational policies and procedures are explicitly what the company believes what is right or wrong, the employees need to learn and practice the desired behavior. The learning process can be through reward or punishment, according to Hellriegel (2011) a reward must increase the frequency of the behavior it follows, on the other hand punishment stops undesirable employee behavior, however it will have a negative effect especially over long periods of time and the consequences can be even greater than the original undesirable behavior.
Ethical decision making deals with moral issues, employers facing a dilemma between their interpersonal stage of moral and the universal moral stage (Hellriegel, 2011). Employer that knows that an important person in the company, has been unethical behavior. Based on universal ethical principles that are founded in justice the public welfare for the dignity of the individual this employer felt like should tell the truth so everybody else could solve the problem.
In other hand most employers understands that if they are not doing anything wrong and is a “good person” approved by their family (sometimes). They knows the truth severely affected in their professional life. In this dilemma most people would to keep their own self interest preserved by being quiet and waiting for a better moment to come. It is interesting to look at the whole ethical decision-making process, recognizing ethical dilemmas and acting ethical. It seems that reward or a lack of reward impacts decisions also if the company had some instrument to facilitate for her to tell the truth without damage to herself, she probably would have done so already (Jex et al., 2003).
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