INTRODUCTION
Ethics refers to principles that govern a person’s behaviour. It reflects an individual’s ideals , judgement and moral. Over the past few years businesses have started focusing on ethical aspects apart from profitability. It is very important for an organisation to be ethical in their policies and practices as they influence the decisions internally and lead to sustainability. The decision to behave ethically in tricky situations may be difficult at times but it is the right path for an organisation. An ethical company wins customer confidence and experiences high profitability.
Over the past few years many news stories and articles about various unethical practices in certain organisations have come into the limelight. It is said that a man without ethics is a wild beast loosen upon the world, same goes for an organisation. Ethical and truthful behaviour can build a positive public reputation and give the workers utmost satisfaction. Once Warren Buffet quoted “ it takes 20 years to build a reputation and five minutes to ruin it. If you think about that , you’ll do things differently”. This quote has been proven accurate a multiple times when large multinational companies lose customer trust due to unethical practices and policies. A few examples of such companies are Hindustan Unilever , Amazon , Walmart etc. These companies indulged in practices which harmed the environment , took away basic human rights of employees , tampered with the product quality for attaining low costs etc. In face of such scandals and frauds, many researchers have been working on uncovering the causes of such behaviour.
Prevalent literature on ethics , morals and values reflects on the omnipresence of awareness about business ethics. This widespread belief is driven largely by numerous cases and news about companies indulging in different malpractices. All the news channels and newspapers focused on exposing the fraudulent activities of companies all around the world. Usually it is considered that bad people indulge in unethical practices. However this is profoundly inadequate as many people or organisations tend to make decisions that are unethical without realising it. Certain cognitive frames make humans blind to the fact that they are confronting an ethical behaviour.
The ever increasing developments results in fierce competition among organisations. This in turn makes the organisational structure more complex and dynamic. Most organisations have decentralised control leading to weak internal control in the firm. This gives rise to minor unethical practices on a daily basis. To combat such a menace early detection is necessary. Various measures like external audits , internal controls and audits , code of conduct , compliance programmes etc have come up to reduce the unethical practices in business.
Corporate frauds have increased rapidly over the years and ironically enough , companies consider it unavoidable. The article reviews reflects on the individual and situational factors that affect the ethical decision making in businesses and some interesting solutions to curb malpractices.
LITERATURE REVIEW
Stead E W, Worrell, Stead G J (1990) say that monitoring and managing ethical behaviour is the most prevalent and complex problem that organisations face. the decisions of employees are influenced by many situational and individual factors. Personality , managerial philosophy, background , decision history and reinforcement are a few determinants identified which affect employee behaviour when faced with ethical dilemmas. They point out how in recent times all the news articles and channels have highlighted cases relating to unethical practices and have stated such a behaviour as greedy, selfish , narrow minded etc. An exploratory research was conducted which focused on behavioural aspects of humans. At an individual level a lot of factors like ego , pity , mercy , locus of control etc play a major role in determining the decisions. They talk about the concept of utilitarianism which states that ethics are applied by taking into consideration the greatest good for a vast population.
Hargrove (1992) extended this theory through examining how surveillance and sanctioning systems affect cooperative behavior. To do this, they put participants in an ethical dilemma and primed them by putting them in two frames of mind: a business frame of mind and an ethical frame of mind. Participants then choose whether to not cooperate and possibly save money or cooperate and help the environment. Results supported the hypothesis that different frames of mind are characterized by different processing effects and lead to different cooperation rates, since there was a significant difference between the frames of mind. When an ethical frame was adopted, 90 percent of the individuals cooperated, whereas when a business frame was adopted, 53.3 percent of individuals cooperated. This shows that, similar to past research, with an ethical frame of mind, individuals will cooperate because it is the decision that maximizes the collective welfare by helping the environment. With a 6-business frame of mind, there is less cooperation because participants are concerned with profitability, which does not coincide with cooperation.
Verbeke, Ouwerkerk, Peelen (1996) Specifically focus on how sales people make ethical decisions. Sales is such a department that sometimes induces the seller to make promises to the customer that are utopian or exaggerated. The sales people can portray unethical behaviour due to situational determinants. Certain personality traits also affect the decision making of ethical sales people. For the purpose of study the authors created a structural model which configures how the firm’s environment and climate along with choice of control affect the ethical choices of employees. The main focus was on internal communication and it was observed that the machiavellism traits in an individual induce unethical practices. Theories like the utilitarian decision making and organisational structure are taken under observation. Many solutions were suggested to provide employees a pleasant experience at the workplace. Behaviour based control systems were emphasised as it was believed that the decisions are more valid when one is under a behaviour control.
Wyld, Jones (1997) in their research about the Indian market have demonstrated that the frame of a dilemma can influence the tendency to cooperate: a dilemma framed in an economic context produces less cooperation than a dilemma framed in an ethical context. Significant research has been done on how different frames of mind effect cooperation in an ethical dilemma. This is because with a dilemma framed in an ethical context, one thinks in a utilitarianism perspective and is concerned with the decision that maximizes the collective welfare. Thus, the dominant choice should be cooperation. With an economic frame, cooperation depends on the strength of the sanctioning system as well as if cooperation is the most profitable strategy
Gaudine , Thorne (2001) believe that emotions have a huge impact on individuals’ ethical decision process. Emotions may have a positive or a negative effect on the individuals and might result in differential actions as per the perspective of the individual. They address this gap and develop a model that explains how emotion affects the individual’s decision making process. The model is based on two basic components – arousal and feeling state. These components are applied into a cognitive-developmental perspective on the ethical decision making. Certain emotional states influence an individual’s propensity to identify ethical dilemmas, acts as a catalyst in formation of individual’s perspective judgements at the levl of morality, lead to ethical decision choices. Organisations make sure the employees recognise the triggers of their emotions in different situations and dilemma through experiments. The paper proves that emotion is not a rational bias or an antithetic but a rational and natural process.
Bartlett (2003) critically reviews the literature regarding the management ethics within organisation and observed a huge gap between the theory and practice. The paper highlights the role of management in bridging the gap. Managers are the key locus of control of the organisation and are looked up to as the ethical agency or an ethical role model. The author surveys the different literature to understand the theory and research specially the models and their relationship with work values. He considers this essential as the management is often neglected for ethical decisions. The paper thus mentions some solutions that can be useful in overcoming the gap between theory and practicality.
Selart , johansen (2011) conducted a small experiment and documented the interpretaions and observations. The hypothesis was that stressful situations affect ethical leadership, recognitions of ethical dilemmas etc. For the study the decision makers decide to recruit three. Swedish multinational civil engineering company helped provide personal information, made ethical decisions and answered confidently to stress outcome questions. It was inferred that stressful situations have a greater impact on ethical act than on recognising dilemmas. Negative incentives facilitated the observation and prove it accurately. The study showed one positive relation between stress and unethical behaviour. Sometimes people act unethically under peer pressure or influence. They feel that if other people are not being ethical it is very likely that the individual will also not be ethical. This behaviour clearly explains how the behaviour of the top is copied down below.
Kim (2016) says that the importance of ethical decision making in international business is ever increasing. The author studies potential employees and their ethical dilemmas. in recent years due to increasing competition the unethical practices of the multinational companies has started rapidly increasing. Many determinants play a role in influencing such decisions , some examples are – code of conduct , exchange policy, regulations etc. In such a scenario it is important to teach the global talent about how to face ethical dilemmas. The author explains that ethical dilemmas are a construct of the mind and arise out of perceptions to a particular situation. Using Kant’s deontology and Mill’s utilitarianism he argues that ethical foundations have appeared in every business decision.
CONCLUSION
Ethical dilemma should be dealt with in a very thoughtful manner. The above literature reviews were helpful in inferring the remedies for being ethical.
- Ensure all employees and managers review company rules and policies regarding a hostile workplace and retaliation. These policies should be discussed freely.
- Managers should be held to the same standards as employees. Evaluation of managers on ethical leadership practices and evaluating each employee’s ethical conduct should be done.
- Discussion of ethical issues and behaviours with employees during regular and personal meetings.
- Ideal ethical behaviour and integrity should be maintained by incorporating company values in all business transactions and communications.
- Provision of ethical behaviour and professional development opportunities and implementation of the best practices.
- Creation of a Code of Conduct is necessary. A written code of conduct will provide employees and managers with a gist of the type of conduct and behaviours expected. It outlines what behaviours are not acceptable and the measures to be taken if an employee violates the code of conduct
- Employees look up to a business owner or a manager for guidance on ways of conducting themselves
2019-12-7-1575697915