Ethical Relationship between Employees and Management

 Julliene Kay B. Saclayan

Abstract 

The paper addresses the ethical relationship between employees and management. The objective of this article is to review how to enhance the relationship between manager and employee. This article will describe the roles of managers and employees as they achieve the strategic goals of organizations. Despite growing professional and academic interest in business ethics, moral lapses continue in the business sector, which suggests a need to rethink the efficiency of existing ethical strategies. That is, top management’s efforts to promote ethical behaviour among employees tend to focus on the implementation of explicit formal mechanisms, whereas in practice, more informal elements that communicate the true attitude toward ethics may be more useful and necessary. Thus, top managers must work actively to make their personal ethics evident to influence the ethical behaviours of employees. Without a perception of ethics at the top, formal mechanisms likely fail to result in a more ethical workforce.

Keywords: Ethical Role of the Manager; Ethical Leadership; Top Management; Role Modelling; Responsible Management.

Background

The employer-employee relationship should not be looked at simply in economic terms. It is a significant human relationship of mutual dependency that has a great impact on the people involved. A person’s job, like a person’s business, are highly valued possessions that pervasively affect the lives of the employees and their families. With stakeholders everywhere, the relationship is laden with moral responsibilities. Though the pressures of self-interest are very powerful and compelling, both workers and bosses should guide their choices by basic ethical principles including honesty, candour, respect and caring.

Every day, managers and employees need to make decisions that have moral implications. And those decisions impact their companies, company shareholders, and all the other stakeholders in interest. Ethically conducting business is incumbent upon everyone in an organization for legal and business reasons. As a manager, it’s important to understand your ethical obligations so that you can meet your company’s expectations as well as model appropriate behaviour for others.

Despite great attention to and efforts by academics, professionals and society to avoid immorality in the business sector, moral scandals have not ceased. Ethical failures in the business sector (e.g. bribery, falsifying reports, stealing, deceptive advertising) appear in media reports, many of which point to the involvement of high levels of management in immoral acts. The study and understanding of ethical behaviours in organizations thus must advance if we are to minimize further ethical failures in business.

Considerable efforts have been aimed at implementing ethical standards in international business spheres (Weaver, Treviño & Cochran, 1999; IBE, 2008), yet most of the companies that gained reputations as “rotten apples” had in place organizational procedures, mechanisms or systems to promote ethics (Sims & Brinkman, 2003)

Ethical Role of the Manager

In a broad construction of the ethical role of the manager, managing and leading can be said to be inherently ethics-laden tasks because every managerial decision affects either people or the natural environment in some way—and those effects or impacts need to be taken into consideration as decisions are made. A narrower construction of the ethical role of the manager is that managers should serve only the interests of the shareholder; that is, their sole ethical task is to meet the fiduciary obligation to maximize shareholder wealth that is embedded in the law, predominantly that of the United States, although this point of view is increasingly accepted in other parts of the world. Even in this narrow view, however, although not always recognised explicitly, ethics are at the core of management practice. The ethical role of managers is broadened beyond fiduciary responsibility when consideration is given to the multiple stakeholders who constitute the organization being managed and to nature, on which human civilization depends for its survival. Business decisions affect both stakeholders and nature; therefore, a logical conclusion is that those decisions have ethical content inherently and that managerial decisions, behaviours, and actions are therefore inherently ethical in nature. Whenever there are impacts due to a decision, behaviour, or action that a leader or manager makes, there are ethical aspects to that decision or situation. While some sceptics claim that business ethics is an oxymoron, the reality is that decisions and actions have consequences and that reality implies some degree of ethics, high or low. Thus, ethics and the managerial role cannot realistically be teased apart.

 Ethical leadership

In the development of the ethical leadership framework, Brown and Treviño (Brown et al.,2005; Brown and Treviño, 2006; Trevion et al., 2003) proposed that ethical leadership is comprised of four components. First, by engaging in behaviours which are normatively appropriate in the eyes of subordinates such as exercising responsibility and showing respect to others, ethical leaders are viewed by subordinates as legitimate and credible role models (Brown and Treviño, 2014). Second, ethical leaders engage in two-way communication with their subordinates about ethical issues. They not only talk to subordinates about ethics and stress the importance to them of acting ethically, PR but also encourage subordinates to voice their concerns and provide feedback (Avey et al., 2012; Brown and Treviño, 2006), thus helping develop the employee’s ethical mindset for future moral-laden interactions and decisions (Zhu et al., 2016). Third, ethical leaders establish ethical standards and ensure their subordinates abide by those standards by rewarding or disciplining subordinates based on their ethical conduct or misconduct (Trevion et al., 2003). Finally, ethical leaders take into account ethical principles when making decisions and ensure that the decision-making process is observable by subordinates (Brown and Treviño, 2006). Taken together, this presents a narrative akin to the social learning process (Bandura, 1977) whereby employees are observing, internalizing, emulating, and then being rewarded for engaging in ethical behaviours such as CCBs, which has been shown to have an influence on employees’ ethical mindsets ( Jennings et al., 2015; Miao et al., 2019; Zhu et al., 2016). As highlighted in recent meta-analytical work (see Bedi et al., 2016; Hoch et al., 2018), growing research over the last decade has examined the relationship between ethical leadership and employees’ work outcomes including job satisfaction, organizational commitment, job engagement, job performance and counterproductive work behaviours. In addition, ethical leadership has been found to enhance employees’ organizational citizenship behaviours (OCBs) (e.g. DeConinck, 2015; Mayer et al., 2009). OCBs are discretionary behaviours on the part of employees which enable the team to achieve its mission and goals (Graham, 1991). CCBs are similar to OCBs as they are both prosocial behaviours that seek to benefit others, however, the recipients of these behaviours differ. For CCBs, they are focused on those outside of the organization (i.e. charities) (Rodell et al., 2016), whereas OCBs are directed at members of the team or organization (i.e. co-workers) (DeConinck, 2015; Lau et al., 2016).

Top Management Sanctioning Behaviour

Traditionally, the tactics used by top management to reduce immorality in their companies have involved the implementation of organisational and formal mechanisms (Ford & Richardson, 1994; O’Fallon & Butterfield, 2005), such as codes of conduct, training initiatives, ethical officers, ethical auditing and reporting or ethics ties to the performance system. According to previous research, these tactics also are some of the most commonly used instruments in European companies, especially in the Spanish business context (Guillen, Melé & Murphy, 2002). A system of rewards and punishments based on ethical actions has been cited as a necessary element for achieving a reputation for ethical leadership (Treviño, Hartman & Brown, 2000; Treviño & Nelson, 2004). Such system plays an important role in social influence processes; as Bandura (1977) argues, a person behaves following the negative or positive consequences that attach to his or her behaviours, such as avoiding behaviours linked to negative consequences and acting in ways that lead to positive consequences. Therefore, sanctioning unethical behaviours should encourage ethics among employees. Furthermore, this mechanism fulfils an informative, motivating and reinforcing function in the business organization (Bandura, 1977). Top management efforts to discipline unethical behaviour should offer an effective strategy to encourage ethical behaviour.

Top Management is a Role Model

Even if formal mechanisms are valid and effective in improving the ethical quality of a business organization (Ford & Richardson, 1994; O’Fallon & Butterfield, 2005), if ethics are absent at the top management level, an ethical organizational climate might not be easily achievable (cf. Schroeder, 2002; Weaver, Treviño & Agle, 2005). Top management’s behaviour thus affects the level of ethics among employees. In role set theory (Merton, 1957), a referent’s level of formal authority determines his or her influence on an employee’s behaviour and attitudes. Because top managers have great formal authority, their behaviour, values and decisions should exert strong influences over employees’ ethical behaviours. It may be difficult for employees to perceive the personal behaviours of top managers directly, but the top management level likely develops (even if unconsciously) a reputation for ethical or unethical, hypocritical or ethically neutral leadership (Treviño & Nelson, 2004). For example, rumours about decisions, strategies and behaviours (both in private and corporate settings) by top managers likely circulate throughout the organization and contribute to their ethical image. Therefore, top management needs to develop a reputation for ethical leadership if ethical behaviour among employees is desired to be encouraged. Ethics must start at the top; even if the firm implements various formal, ethics-related mechanisms, they cannot truly influence employees’ ethics if those mechanisms do not match the ethical image at the top (cf. Schroeder, 2002), in which case top management instead could be perceived as hypocritical (Treviño et al., 2000; Treviño & Nelson, 2004). Thus top management ethicality is one of the most important determinants of company ethics (Zabid & Alsagoff, 1993; Vitell, Dickerson & Festervand, 2000), and making such ethics evident to all organizational members should strongly affect the ethical behaviour of employees.

Responsible Management

Responsible management is defined as managerial practices that integrate and assume responsibility for the triple bottom line (sustainability), stakeholder value (responsibility), and moral dilemmas (ethics)‖ (Laasch and Connaway, 2015: 25). Within this quickly emerging field of research, there is a move towards a more holistic approach to disparate aspects of organizational activity, which used to be researched separately. A new research topic called the trans discipline or inter-discipline of Sustainability, Responsibility, and Ethics (SRE) (Laasch and Moosmayer, 2015; Laasch, 2016), is gaining increasing attention from scholars, with the view to establishing a more accurate approach to responsible business practices and management. As business organizations function with the approbation of society (Donaldson and Dunfee, 1994), they need to adapt to the changing societal conditions, for instance, by adopting a new conception of market success where traditional financial bottom-line indicators are being complemented with social and environmental factors‖ (Hilliard, 2013: 365). Responsible management provides a good answer to such challenges by promoting practices that lead to prime management. Prime management refers to superior management practice leading to performance that, at the same time, is socially, environmentally, and economically sustainable; optimizes stakeholder value; and leads to moral excellence‖ (Laasch and Conaway, 2015: 27).

To be able to advance such a holistic perspective, proper use of the basic components of responsible management is crucial. To this end, we address in this chapter the ethics component of responsible management, both in terms of what ethics is and how to manage it. Based on our examination of the literature, we focus on two issues. First, we present an overview of the various ethical criteria for the organizational and managerial levels. Second, we map the mechanisms, strategies and interventions that managers may use to embed ethics within organizations. Ethical and unethical behaviour in organizations is influenced both by individual behaviour and organizational activity (Treviño and Youngblood, 2004)

1990). Notably, ethical problems negatively impact ―the trust and reputation of both leaders and organisations (Kalshoven, Hartog and Hoogh, 2011: 51). We thus argue that developing responsible management research as a holistic approach necessitates taking a step further and addressing not only ethical management at the individual level and ethics management at the organizational level, but also their interconnections, how they complement each other, and how they may enable responsible business practices

Conclusion

In the wake of corporate scandals over the past several years, most organizations have written or updated their Codes of Conduct and Ethics Rules. The first thing a manager should do is to read and understand those documents. That means understanding the actual words used in the documents along with the spirit and intent behind the words. The second thing to do is to be sure that your staff also reads and understands the documents and can come to you with any questions.

If you act consistently with Codes of Conduct and Ethics Rules, you provide a foundation of trust in your relationships with others. Part of your goal is to show others what it means to make ethical decisions. The other part of your goal is to encourage others to come forward if they suspect that someone is not acting ethically. As a result, your organization will be in a position to look at that behavior and stop it before it is out of control or worse, crosses the line into illegal conduct.

Society is changing and so are the institutions that are part of our social reality. If they are to remain competitive in the long run, business organizations need to respond to the growing demands of society (Hilliard, 2013) through wise managerial practices. As ethical, social, and environmental performances are currently under the spotlight of public opinion, financial performance is no longer enough to ensure business success. To be able to achieve long-term, sustainable performance,business organizations need to operate ethically and be socially and environmentally sound while they aim for financial gains (Constantinescu and Kaptein, 2019). This calls for a new managerial perspective for business organizations, one that is robust and visionary enough to lead towards such performance. The umbrella concept of responsible management (Buckingham and Venkataraman, 2016; Ennals, 2014; Haski-Leventhal, 2018; Hibbert and Cunliffe, 2013; Laasch, 2016; Laasch and Conaway, 2015; Ogunyemi, 2012) encompasses these dimensions of an emerging type of management practice. The growing body of research supporting managerial integration of ―triple bottom line (sustainability), stakeholder value (responsibility), and moral dilemmas (ethics)‖ (Laasch and Connaway, 2015: 25) puts forward the new transdiscipline of Sustainability, Responsibility, and Ethics (Laasch and Moosmayer, 2016; Laasch, 2016). One aspect emphasized by current research on responsible management is the need to ensure that ethical decision-making processes are adequately responsive to moral dilemmas and that they strive for moral excellence in managerial practice (Laasch and Conaway, 2015).

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