Most organizations incorporate some form of ethics system regardless of whether it is formally established or informally understood. Campbell and Houghton (2005) contend that ethical behavior does not simply translate to complying with legal and professional regulations; it is a state of mind in which individuals follow unwritten tenets and exist in a culture of making choices that does not bring harm to others or the environment (Campbell & Houghton, 2005). For example, leaders of ethics audit programs should require that individuals that manage them should have adequate training to run ethical compliance programs. In other words, they should make sure the individual appointed to this position is sufficiently qualified. For example, one company that appointed an employee to manage the ethics committee for their organization was appointed merely because he was conveniently located near the office, not because of his experience in ethical or legal matters. In addition, he was reluctant to take the position unless he was substantially compensated for his time. This means his motives were driven by a reward system not by his moral values or principles. This component changes the dynamic of his role as an authoritative figure.
Rules and policies in an organization are made to include the culture and values of a company. Boatright (2009) posits that these guidelines are outlined in a company’s formal documentation which includes their mission statement, a code of ethics policy, personnel manuals, training material and management directives. Orientation training, compensation, promotion, auditing and monitoring systems serve as various devices that help support a company’s rules and regulations (Boatright, 2009). In another case study, the organization conducted its own ethics auditing report and concluded it was doing a good job of monitoring ethical issues and even complied with the report’s recommendations to establish a confidential hotline for employees to report legal concerns. However, one of the organizations top executives discovered another reality actually existed. One where: (a) employees are violating operational procedures, making unauthorized short cuts to meet deadlines that have resulted in harm to employees and the environment, (b) an inequality and glass ceiling situation that exists with respect to the compensation between male and female employees, and (c) discrimination issues in targeting a specific ethnic group and taking advantage of their unfamiliarity with labor laws. In addition without organizations like the EPA and OSHA monitoring their activities it is easier for them to engage in practices that violate regulations. Now that the leader is cognizant of these issues if he does nothing to change the situation or report it, when it is eventually discovered, he will find himself in dire need of an ethical crisis management and recovery plan to save his hide.
Organizations that do have an ethical program or implement an ethics auditing system will face challenges that can result in legal and ethical misconduct. Ferrell et al. (2013) suggest that to help prevent a crisis from erupting, the development and implementation of a crisis management plan can serve to help leaders respond and recover faster from unethical and scandalous events that may occur (Ferrell, Fraedrich, & Ferrell, 2013). Although executives are not responsible for the events of the past, they are charge of guiding the organization’s future. If they are not able to manage ethical issues they face, he and the organization could face substantial legal and financial ramifications which will in turn disrupt company operations, prevent employees from performing their duties, slow production, damage the institution’s reputation, and lose the confidence of their stakeholders. If leaders avoid these issues they will only escalate until they reach the tipping point and at that juncture, it may be too late to recover. In the meantime, the executive’s job and reputation will be on the line because investigators will look to them for answers. It is recommended therefore, that leaders work on developing a crisis management plan because executives that cultivate an unethical environment steer organizations straight into the maelstrom of a managerial catastrophe.
Boatright, J. (2009). Ethics and the Conduct of Business (Sixth ed.). Upper Saddle River, NJ: Pearson Education, Inc.
Campbell, T., & Houghton, K. (2005). Ethics and Auditing. Canberra, Australia: ANU E Press.
Ferrell, Fraedrich, & Ferrell. (2013). Business ethics and social responsibility (9th ed.). Mason, OH: Cengage Learning.