...Ethical Behavior and Morality in Organizations begin with “The Tone at the Top” Executive Summary Unethical behavior in organizations creates many intractable problems which climax in fraudulent acts. When behavior in an organization is not ethical regulations are broken, and the likelihood of legal suits increase. Fraud in Enron and Adelphia in the early 2000s led to big bankruptcy filings resulting in huge losses in investments. Employees also lost jobs as well as significant portions of their retirement savings. Most of the fraud in these companies were committed or influenced by senior management. Executives did not demonstrate ethical leadership by sounding ethical tones at the top. The “tone at the top” has a trickle down on employees. If top management is comprised of ethical leaders, the employees are likely to behave ethically. Such leaders lead by example, and one important way to cultivate an ethical organization is to have an organizational code of ethics that is followed by all. However, these codes can only be as good as those who are responsible to enforce them. The Securities and Exchange Commission (SEC) has placed high importance in codes of ethics. In spite of the aforementioned disadvantage that is hinged on the values of unethical leaders, codes of ethics are good internal controls. Leaders can act morally and avoid unethical behavior if they also avoid setting unrealistic goals. If daunting goals are set for employees, they are likely to commit fraud...
Words: 2465 - Pages: 10
...Chapter 5 Social Responsibility and Ethics How important is it for organizations and managers to be socially responsible and ethical? In this chapter, we’re going to look at what it means to be socially responsible and ethical and what role managers play in both. Focus on the following learning outcomes as you read and study this chapter. LEARNING OUTCOMES 5.1 Discuss what it means to be socially responsible and what factors influence that decision. 5.2 Explain green management and how organizations can go green. 5.3 Discuss the factors that lead to ethical and unethical behavior. 5.4 Describe management’s role in encouraging ethical behavior. 5.5 Discuss current social responsibility and ethics issues. SPOTLIGHT: Manager at Work Chapter 5 presents contemporary concepts of managerial ethics and social responsibility to help your students explore and appreciate the critical role of these issues in today’s complex business environment. In the opening case, “A Manager at Work,” we see firsthand the complications that arise when companies are caught in the middle of unethical and illegal allegations. The case revolves around allegations of attempted bribery by three Renault executives. After an investigation, all three of the employees were dismissed, but the story doesn’t end there as the Paris prosecutor in charge of the case later dismissed the charges for lack of evidence. Renault would eventually backtrack on the firing of the executives, rehiring all three...
Words: 5313 - Pages: 22
...Managers’ Ethical Evaluations of Earnings Management and Its Consequences* ERIC N. JOHNSON, University of Wyoming GARY M. FLEISCHMAN, University of Wyoming SEAN VALENTINE, University of North Dakota KENTON B. WALKER, University of Wyoming 1. Introduction and motivation The purpose of this study is to investigate, in an experimental setting, how favorable versus unfavorable organizational consequences influence managerial responses to an employee’s earnings management behavior. We focus on the following question: Do the ends of positive organizational consequences justify the means of earnings management? Earnings management is defined as ‘‘the choice by a manager of accounting policies so as to achieve specific objectives’’ (Scott 2003: 369). Earnings management can be fundamentally classified as either accounting related, involving the manipulation of accounting records through aggressive or fraudulent applications of accounting principles, or operating related, involving choices made by management regarding the timing of investment or operating activities, with the result that reported earnings are influenced by these choices (Lev 2003; Cohen, Dey, and Lys 2008; Roychowdhury 2006; Gunny 2010).1 The effect of earnings management on the value of the firm and the related issues of financial-based incentives for managing earnings has been widely examined in the accounting literature (e.g., Healy 1985; Dechow, Sloan, and Sweeney 1995, 1996; Healy and Wahlen 1999; Fields...
Words: 9443 - Pages: 38
...The three studies researched were, Selart and Johansen (2011), “Ethical decision making in organizations: The role of leadership stress”, Mohr and Wolfram (2010), “Stress among managers: The importance of dynamic tasks, predictability, and social support in unpredictable times”, and Ghahroodi, Ghazali, and Ghorban (2013), “Examining ethical leadership and its impacts on the followers' behavioral outcomes”. All three articles had themes related to job stressors which impacted motivational relationships between leaders and followers. The impacted motivational relationships in turn affected the ethical behaviors of leader engagements with subordinates. The distinction between the articles hinged on whether motivational interactions suffered due to ethical dilemmas (Selart and Johansen, 2011), or dynamic work demands (Mohr and Wolfram, 2010), or pressure to be an ethical role models (Ghahroodi et al. 2013). The authors accredited their study importance to recognizing and understanding how stress affects ethical leadership actions. Research Question Comparison Selart and Johansen (2011) considered how stressful conditions affected the behaviors of leaders and their decision making processes. The authors query was toward evaluating if stress affected leadership behaviors, did it also affect how the leader was motivating subordinates. They examined if manager stress inhibits manager ability to identify ethical dilemmas. Mohr and Wolfram (2010) were seeking to connect dynamic...
Words: 1077 - Pages: 5
...Ethics Behavior and Social Responsibility International Accounting Member of Group : 1. Rahmawati Yulistya C1I015026 2. Muhamad Ilham Akbar C1I015012 3. Astria Wulan P C1I015013 4. Siffa Sandi Sasmita C1I015025 5. Cita Husna Raisya C1I015026 6. Wulan Nilam Sari C1I015031 7. Karina Aprilia W C1I015037 8. Riyan Ardiyana C1I015043 Jenderal Soedirman University Faculty of Economics and Business I. Introduction I. Background Ethics Behavior and Social Responsibility Ethical behavior is that which is morally accepted as “good” and “right”. And opposed to “bad” and “wrong”. Social responsibility is a moral principle of an entity, be it an organization or individual, to act towards betterment of society at large. It is a duty that every firm and individual should perform so as to maintain the balance between the environment and economy. Their actions should lead towards sustainable development so as to safeguard the interests of the coming generations and at the same time fulfilling the needs of present population. The responsibility can be active, by performing activities that directly advance social goals, or passive, by avoiding any engagement in socially harmful act. Organizations can manage ethics in their workplaces by establishing an ethics management program. Brian Schrag, Executive Secretary of the Association for Practical and Professional Ethics, clarifies. “Typically, ethics programs convey corporate values...
Words: 2862 - Pages: 12
...Design- A Literature Review Abstract This literature review observes the views of organizational design and business ethics as they relate to one another in business. The first portion of this paper defines organizational design and business ethics to establish their importance and also examines managerial ethics and corporate social responsibility, sources of ethical principles. The second portion pursues to explain the relationship between business ethics and organizational design and how managers shape ethics through use of value-based leadership and formal structure systems. The third portion pursues to review the importance of ethics to organizational design and the structures that support or enforce ethical behavior in organizations. The fourth portion links literature reviewed and published over the past few years together based on their reference to ethics and organizational design. The literatures are linked together based on commonalities found in the opinions of the authors relating to a spiritual perspective, ethics and corporate structure, organizational and ethical theories, and ethical strategy. Last but not least, the review concludes with a summary of the important role that ethics plays in the organizational design and structure of a business and how it applies to members of management. Keywords: business ethics, organizational design, corporate social responsibility Outline INTRODUCTION I. Organizational Design/Business Ethics A. This...
Words: 5201 - Pages: 21
...September 22, 2014 Ethical Meltdown This case describes one of the biggest corporate collapses due to unethical practices in the history of the United States. Before the ethical meltdown, Enron was the world’s largest wholesaler of natural gas and electricity. In a competitive market, companies are constantly struggling to improve their services or products in order to gain a competitive advantage. The pressure to succeed sometimes allows for companies to forget their morals and participate in unethical practices. “It turned out that the lack of accounting transparency enabled the company’s managers to make Enron’s financial performance look much better than it actually was” (Dessler, 2013, p. 242). As a result, several top executives were convicted of manipulating Enron’s profit statements and investors lost most of their investments in Enron. This is a perfect example of a company that lacks professional ethics and proper management. Enron was able to succeed and become a huge corporation in the United States economy. However, the loss of morality and ethics eventually led to the collapse of the corporation. In order for a company to become successful and maintain their success a proper ethical culture is needed within the organization. Enron’s Ethical Culture Dessler describes ethics as, “the principles of conduct governing an individual or a group and specifically to the standards you use to decide what your conduct should be” (2013, 240). In order for a company to...
Words: 1074 - Pages: 5
... Ethical Behavior In this chapter we look at the ethical behavior when it comes to business management. Ethics is defined as the code of moral principles that sets standards of good or bad, or right or wrong, in one’s conduct. You learn how ethical dilemmas complicate the workplace and how high ethical standards can be maintained. Social responsibilities and governance plays a part in ethical behavior as well. Ethical behavior is that which is accepted as “good” or “right” as opposed to “bad” or “wrong”. For the reason an action is not illegal does not necessarily make it ethical in a given situation. Values vary, so that brings up the question, “What is ethical behavior? Honestly it can be answered in many ways by different people for the reason of different values.Values help determine individuals behavior. Terminal values are preferences about desired ends, such as the goals one strives to achieve in life. Instrumental values are preferences regarding the means for accomplishing these ends. Among the instrumental values held important by managers are honesty, ambition,courage, imagination,and self discipline. The value pattern for any one person is very enduring, but terminal and instrumental values vary from one person to the next. This variation is a reason why people respond quite differently to situations and their ethical challenges. The utilitarian, individualism, moral-rights, and justice views offer alternative ways of thinking about ethical behavior...
Words: 790 - Pages: 4
...www.elsevier.com/locate/ijproman E-ethical leadership for virtual project teams Margaret R. Lee * Capella University, 225 South Sixth Street, Minneapolis, MN 55402, United States Received 30 March 2008; received in revised form 21 May 2008; accepted 27 May 2008 Abstract This paper presents a review of current literature on ethical theories as they relate to ethical leadership in the virtual business environment (e-ethics) and virtual project leadership. Ethical theories are reviewed in relation to virtual project management, such as participative management, Theory Y, and its relationship to utilitarianism; Kantian ethics, motivation, and trust; communitarian ethics, ethic of care and egalitarianism; Stakeholder Theory; and the use of political tactics. Challenges to e-ethical leadership are presented and responses to these issues discussed. The conclusion presents four propositions for future research. The purpose of this paper is to identify secondary literature on e-ethics and how this new area of business ethics may affect the leaders of virtual project teams. Ó 2008 Elsevier Ltd and IPMA. All rights reserved. Keywords: E-ethics; E-leadership; Virtual project management; Virtual teams; Project management; Ethics; Project leadership; Ethical project leadership; E-ethical project management; Sensitive material; Code of conduct; Social isolation; Virtual community; Stakeholder involvement 1. Introduction The need for ethical leadership in project teams has always...
Words: 6774 - Pages: 28
...above the law. However, the ethics officer considered the EVP’s tenure and 30 years authority and was at the very highest levels officer in North America. He wanted to avoid personal involvement in the case he should take action. The controller of company confronted the unethical behavior. He decided to strictly enforce the standards of BMI and disclose the ugly fact. How did company deal with the issues? How did company foresee the importance of the internal control in business and improve it and achieve its budgeted objective? IMPORTANCE OF INTERNAL CONTROL IN BUSINESS 3 Discussion In this case, EVP admitted to everything quickly and had apologized sincerely, and asked to keep his job. (Source) BMI should make the decision based on EVP’s attitude for his fraudulency instead of how huge his contribution to the organization for the past 30 years. Today, the legal and moral culpability of top-level company managers and the ethical dilemmas which auditors faced are the challenging issues that affect internal control in business organizations and even damage the interests of company stakeholders, such as stockholders, employees and the community. Managers are responsible for attaining the goals of the organization, targeting particular levels of budgeted income and implementing internal control system. To achieve...
Words: 839 - Pages: 4
...PROBLEMS' IN PARTICULAR HOW MUCH RESPONSIBILITY DOES AN INDIVIDUAL MANAGER HAVE FOR THE ETHICAL CULTURE OF HIS/HER ORGANISATION? Ram Visvanathan Business Ethics May 28, 2014 Introduction. Ethics is very important for the prosperity of any organization. Every employee or stakeholder of an organization has got an important role to play in nurturing an ethical culture in an organization. This research paper discusses the level of responsibility that an individual manager has in the ethical culture of his or her organization. This is done with close attention to academic journals and research. The paper will derive its arguments from veteran theories like the Utilitarian and the Kantian theories. The paper will also relate its discussions with the case study about Enron a USA company that collapsed as a result of unethical behavior in the management. Some of the components that will be highlighted in the paper include; the importance of an ethical culture in an organization, the dangers of lack of ethics in an organization and the strategies that can be used to promote ethics in an organization. Justification of the research. The study of the role of individual managers in the ethical culture of an organization is a justified venture. This is because of the increased calls for ethical behaviors in organizations. The expectations of the staff and the society at large on ethical behaviors have increased tremendously over the past decade (Kansas & Plain...
Words: 5413 - Pages: 22
...Making Ethical decisions always involve two things. Firstly, it involves normative judgments and secondly, it the decision has to consist of a question of morality. Morality is referred to as the society’s highest standard of behavior and it is widely accepted (Dessler, 2010). What is Business Ethics? According to various individuals, each has their own meaning of Business Ethics, but generally it is the understanding of knowing what is right and wrong in the workplace in regards to the effects of products, services and the relationship with stakeholders. According to Wallace and Pekel, the attention to business ethics is condemnatory throughout fundamental change, i.e the circumstances that businesses now face both for non-profit and for...
Words: 1434 - Pages: 6
...explain the ethical issues that managers must abide by when hiring new employees. There are many issues that must be reviewed before a final decision is made. Managers should not discriminate against race, religion, sex, disabilities, marital status, or sexual orientation. There have been several companies that have had legal trouble because of their hiring ethics. Ethical issues are important in the workforce. Managers should be trained in ethics so that any ethical issues that may arise during the hiring process can be stopped from escalating and becoming an issue later on. The article will go into detail on what to do and what not to do when hiring. Ethical Issues in Hiring The main characteristics of a profitable and long lasting company are ethics and social responsibility. There are many companies that have stood the task of time, all being built on a strong ethical background. There have also been some companies that have shown some less than outstanding ethics and social responsibility, examples include Enron, ImClone, and Wal-Mart. Unethical behavior can be found in all aspects of a business, which may include insider trading, employee relations and unethical accounting practices. One issue that is surrounded by ethics and morals is employee hiring. When a company acquires new employees they need to make sure that they are facilitating the ethical behavior which should...
Words: 1101 - Pages: 5
...Scott Columbia Southern University Business Ethics: The Responsibilities of Employees and Employers Ethics are an extremely important aspect of every successful business; they are crucial on the end of the employer as well as every employee. Employees and executives need a clear definition of business ethics and a clear explanation of the significance of ethics in relation to the position and to the business as well. It is shown to be beneficial to employees and executives to use a decision making process in the development of making important decisions; there are many approaches as well as many consequences to making ethical decisions. Good ethics start with the employer and how they handle and execute their ethics and provide a good working example for their employees. There are many viewpoints on what ethics are, especially in relation to business, “Ethical obligations are a set of “ought to” standards that define a moral course of action and draw a line between right and wrong” (Lohrey). Business ethics can be comprised of written and formal guidelines in relation to an organization’s morals. Many businesses use their code of conduct or credo as their guidelines to communicating their organizational ethics, “Business ethics manifests both as written and unwritten codes of moral standards that are critical to the current activities and future aspirations of a business organization. They can differ from one company to another because of differences in cultural perspectives...
Words: 2028 - Pages: 9
...W. EDWARDS, PhD LEADERSHIP AND ORGANIZATIONAL BEHAVIOR – BUS 520 10/22/11 Ethics are generally formed from culture, behaviors, backgrounds, religions, and policies. Ethical behaviors are generally derived from experience and common sense. It is been argued that Ethics are not considered as benchmarks, however, groups of individuals constitute the power of firms and bad ethics will be driven out by the majority of opinion. Obviously issues that have ethical overtones are presented to everyone, and they make decisions on those issues. Are those ethical decisions? We try to imagine that only the 'right' choice is an ethical decision. But often all options may appear to be somewhat ethical. An ethical decision then is made when one fairly assesses the outcome on all those involved, even those barely involved. Considerations like legality and morality may have to be taken into account, but ethics is not about laws or morality if laws and morality harm rather than help. An ethical decision may ignore national boundaries and seek to help people on either side of them equally. This may not be legal, even though it is moral. An ethical decision might be to allow a polygamous family, for example, to go on living together in love and peace even though by most standards of morality and law this may be illegal and immoral because the ethical person will look at the good or harm that will come to the people involved. An ethical person might foresee problems in society that might...
Words: 1949 - Pages: 8
