Leader and Ethical Role Modeling for Employees

 

Julliene Kay B. Saclayan

Divine Word College Of Laoag

ABSTRACT

 The paper addresses the ethical relationship between employees and management. The objective of this research is to show how to enhance the relationship between manager and employee. This research 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 behavior 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 ethics evident to influence the ethical behaviors of employees. Without a perception of ethics at the top, formal mechanisms likely fail to result in a more ethical workforce.

Management is "The art of getting the things done through people"; this is the phase of Mary Parker Follett (1868-1933). Just only several words, Mary Parker has depicted the relationship between management and people. If we want to get the thing done, you have two choices. One is you do it yourself. The other way is to organize someone to accomplish it. People are somewhat complicated. However, you should understand if you work with them.

An organization is a collection of people working together to achieve a common purpose (John R. Schermerhorn, Jr., 2005). With this explanation as a whole, Organizational Management can be interpreted as "The art of getting the things done through a collection of people working together to achieve a common purpose".These findings have critical practical implications, as well as the promise for further research.

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

INTRODUCTION

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, is 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 honest, candor, 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. And 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 behavior 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 the immoral acts. The study and understanding of ethical behaviors in organizations thus must advance if we are to minimize further ethical failures in business.

Considerable efforts have 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 recognized 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, behaviors, and actions are therefore inherently ethical. Whenever there are impacts due to a decision, behavior, or action that a leader or manager makes, there are ethical aspects to that decision or situation. While some skeptics 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 behaviors that 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 through 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 behaviors such as CCBs, which has been shown to influence 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 behaviors. Also, ethical leadership has been found to enhance employees' organizational citizenship behaviors (OCBs) (e.g. DeConinck, 2015; Mayer et al., 2009). OCBs are discretionary behaviors on the part of employees that enable the team to achieve its mission and goals (Graham, 1991). CCBs are similar to OCBs as they are both prosocial behaviors that seek to benefit others, however, the recipients of these behaviors differ. For CCBs they are focused on that 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 organizational 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 a system plays an important role in social influence processes; as Bandura (1977) argues, a person behaves by the negative or positive consequences that attach to his or her behaviors, such as avoiding behaviors linked to negative consequences and acting in ways that lead to positive consequences. Therefore, sanctioning unethical behaviors should encourage ethics among employees. Furthermore, this mechanism fulfills an informative, motivating, and reinforcing function in the business organization (Bandura, 1977). Top management efforts to discipline unethical behavior should offer an effective strategy to encourage ethical behavior.

 Top Management Role Modelling

 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 behavior thus affects the level of ethics among employees. In the role set theory (Merton, 1957), a referent's level of formal authority determines his or her influence on an employee's behavior and attitudes. Because top managers have great formal authority, their behavior, values, and decisions should exert strong influences over employees' ethical behaviors. It may be difficult for employees to perceive the personal behaviors 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, rumors about decisions, strategies, and behaviors (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 behavior 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 behavior 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 transdisciplinary 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, the 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 behavior in organizations is influenced both by individual behavior and organizational activity (Treviño and Youngblood, 1990). Notably, ethical problems negatively impact ―the trust and reputation of both leaders and organizations‖ (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 the responsible business practice.

 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 the manager should do is read and understand those documents. That means understanding the actual words used in the documents along with the spirit and the 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 transdisciplinary 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).

 REFERENCES

Ajzen, I. & Fishbein, M. (1980). Understanding Attitudes and Predicting Social Behaviour. Englewood Cliffs, NJ: Prentice-Hall.

Arnold, D. G. (2010). Transnational Corporations and the Duty to Respect Basic Human Rights. Business Ethics Quarterly, 20: 371-399.

Aronson, E. (2001). Integrating Leadership Styles and Ethical Perspectives. Canadian Journal of Administrative Sciences, 18: 244-256.

Beams, J.D., Brown, R.M. & Killough, L.N. (2003). An Experiment Testing the Determinants of Non-Compliance with Insider Trading Laws. Journal of Business Ethics, 45 (4), 309-323.

Cavanagh, G. F. (2005). American business values with international perspectives (5th ed.). New York: Prentice-Hall.

Cavanagh, G. F., Moberg, D. J., and Velasquez, M. The ethics of organizational politics. Academy of Management Review vol. 6 no. (3)(1981). pp. 363–374.

Ennals, R. (2014). Responsible Management: Corporate Social Responsibility and Working Life. New York: Springer.

Cherrington, D. J. (1980). The work ethic: Working values and values that work. New York: AMACOM.

 

Why Business Needs Ethics

By: Richard V. Tugas

Divine Word College of Laoag

                                                                     Laoag City, Philippines 

ABSTRACT

All businesses, small or big, must incorporate ethics into its organization.  It should be the core center and lifeblood of every business for them to succeed in their endeavors.  It should be the common ground of doing business.  Having a business is not just for profit alone but consider also for the social responsibility of the business.  How it will affect the consuming public, the market, the economy, as well as the environment?  Ethics plays a major role in doing business.  Having good ethics means building a stronger business that offers a lot of benefits not just to your business but also to the community.  It's a trust-building tool with customers.  Having a strong ethical core to your business can directly affect the strength of your business as a whole and it's future.

Keywords: Business ethics, business, ethics, ethical conduct

INTRODUCTION

Businesses can operate even without ethics incorporated in their organization.  They may gain profit, as well.  But the question is how long they will exist/survive?  Long-term sustainability, it's a goal of every business in the marketplace especially nowadays that we have a very competitive business environment.  How businesses strive in such an environment if they don’t have ethics, good moral character, good intention, social responsibility?  For a business to exist the people involved in the business must have some sort of minimal standards of ethics. A business would fail if all members think that it is normal and acceptable to steal, lie, and break agreements. Besides, a business also needs a stable society in which it carries out its business. The stability of a business depends on some standards of ethics.

So, a business cannot survive without some standards of ethics. Therefore, it is in the best interests of businesses to promote ethical behavior among their members and society. It can also be said that good ethics is good business.

The paper will reiterate the importance of ethics in all businesses.  Business ethics is about how a company incorporates ethics into its operations.  The argument is that, will a business survive even if it disregards ethics?

BUSINESS VS. ETHICS VS. BUSINESS ETHICS

Business is defined as an organization or enterprising entity engaged in commercial, industrial, or professional activities, it's referring to the organized efforts and activities of individuals to produce and sell goods and services for profit (Hayes, 2020).  Businesses can range from small operations operating in one industry to large operations operating in many industries around the world.  Ethics, on the other hand, is a code of conduct that covers the whole human lives and his surroundings which include the relationship of man and his /her fellow man, his society, other sentient beings, and his natural environment (Abun & Magallanes 2018). Ethics helps us to classify, what is good, and what is bad? It involves learning what is right or wrong and then doing the right thing. There's always the right thing to do based on moral principle, and others believe the right thing to do depends on the situation, ultimately, it’s up to the individual.  It tells us to do good things and avoid bad things.  So, if we want a successful business venture, then we are to do business and applying ethics at the same time.

Ethics involves people from different walks of life agreeing on some basic principles of how to conduct themselves.  Since business transactions involve businesses with employees and owners who come from different backgrounds interacting with each other regularly, business ethics provide a common ground everyone can agree upon.  Take for example the meat business.  Buyers of livestock who came from different provinces will adhere to the same standard, which is establishing a suggested retail price (SRP) of livestock.  In that case, sellers will sell their livestock fairly.

Business Ethics means various things to various people but the main point is knowing what is good and bad in the workplace.  However, it’s not enough to just know what’s good and bad but also doing what is good with regards to the products/services you are offering to the market and also to your workforce/employees.   Customers like to be associated with companies with a positive image; this includes a reputation for good ethical trading.  In doing so, you need to (1) treat your employees well, give them the wage due them, show them equal respect, motivate them to be productive; (2) be honest to your customers by giving them quality goods/services, to your suppliers by paying them on time, to your employees by giving them all their benefits, to the government by paying the right taxes; (3)know your social responsibility, don’t harm the environment by polluting it or by abusing its resources, practice recycle-reduce-reuse if necessary. 

By definition, business ethics are the moral principles that act as guidelines for the way a business conducts itself and its transactions. In many ways, the same guidelines that individuals use to conduct themselves acceptably – in personal and professional settings – apply to businesses as well (Corporate Finance Institute, ND).  It keeps the business working within the boundaries of the law, ensuring that they aren't committing crimes against their employees, customers, consumers, or other parties.  Business ethics can be a marketing tool, customers are likely to choose one who practices well in their operations over a company who just after the profit.  

APPLICATION OF BUSINESS ETHICS

Ethically doing it means you are doing it right.  Ethical business practice means doing what is right in your business operations.  For example, giving proper safety gear for your employees on the construction site.  This is very rampant in our country, where companies ignore safety gear.  Depriving them using such gears as a helmet will put workers in danger.  If a hard object falls into one of your workers’ heads, he may suffer injury. 

Determining what’s ethical or not is sometimes difficult.  For example, assuming your company needs a supplier of its annual supplies of personal protective equipment (PPE).  Supplier X offers the same price as Supplier Y, but the former gave you an "under the table" 10% commission of the total price of the contract.  Eventually, you chose the supplier that gave you a commission.  Technically, the transaction is not illegal.  However, there was bribery happened.  And it gave Supplier X due advantage because of the "commission" offered to you.

Now that we are in a war with this pandemic, the battle against Corona Virus Disease (COVID-19), new normal is being observed.  Minors below 21 years old and senior citizens above 60 years old are not allowed to go out of their homes.  During the onslaught of the COVID-19, lockdowns were being implemented.  The government together with its health experts warned the citizens to cooperate and begged to “flattened the curve”, to help each other curb the virus, a responsibility all we share, enumerating the behaviors to achieve that goal.  Without specific guidance on what ethical conduct is and why people will decide things like the ethics of ordering their food.  People are aware that delivery boys may be a carrier of the virus, so they opted to cook for their food.  To avoid crowded places like in public utility jeeps/buses.  To not going out if not necessary.  The ethical behavior at this moment is to just stay home.  The mandatory use of face mask and face shield, social distancing, and other health protocols.  There's now the ethical behavior being practiced with this public health crisis.  We observed that the prices of this Personal Protective Equipment (PPE) skyrocketed. Demand is very high, while demand is low, as a result, price increases.  As a manufacturer/dealer of PPEs, you may increase the price.  It is reasonable because of the market needs. But is it ethical/moral to double the price even though your supplies are from your old stock?  It’s your social responsibility to help stop the spread of the virus, hence selling your PPEs at a low price will help not just your customers but the government as well. 

Encourage Business Ethical Conduct

Conducting yourself ethically as a small-business owner and encouraging your employees to engage in ethical business conduct brings about several benefits for your company. Similarly, unethical conduct can hurt your business financially and tarnish its image, leading to diminished future opportunities for your company (Symes,n.d).  If your employees feel that they are treated well, they are less likely to do unethical in your business.  They will take good care of your equipment because they will treat it as theirs. After all, you treated them as family/friends.  When your business engages in a behavior that is either ethical or unethical, the consuming public or customers will notice it.  If your company acts in ways the public considers ethical, your company enjoys an increase in public trust.  Building a positive image in the public unlocks opportunities and avoid unnecessary negative feedback about your operations.  Practicing ethical conduct in your business will help your business to build customer loyalty, attract and retain talented employees, and avoid legal problems.  Customer loyalty means they will choose to patronage your products/services over your competitors’ products/services.  Having a loyal customer base is one of the keys to long-range business success.  This will generate an additional sale and eventually income.  Also, treating your employees well and giving benefits due them will choose to stay and help you succeed in the operation of your business. Talented individuals want to be compensated fairly for their work and dedication. They want career advancement within the organization to be based on the quality of the work they do and not on favoritism. They want to be part of a company whose management team tells them the truth about what is going on.  On the other hand, if you disregard practicing good moral ethics in your business then you may be facing a possible devastating lawsuit, negative publicity, wasted time, loss of money, and low employee morale.  At times, you may be tempted to cut corners in pursuit of profit, such as by not fully complying with environmental regulations or labor laws, ignoring worker safety hazards, or using substandard materials in your products. The penalties for being caught can be severe, including legal fees and fines or sanctions by governmental agencies. The resulting negative publicity can cause long-range damage to the company’s reputation that is even more costly than legal fees or fines. This may result in bankruptcy.

 CONCLUSION

 Now that we know what business ethics is, it is more important to walk the talk.  It’s not enough to just market your business as ethical, you should practice good ethical behavior.  Some businesses choose profits over ethics, they profited through unethical behavior. Even though there are many businesses that at one time have engaged in unethical behavior, it is not a good long-term business strategy.  Ethical behavior is the best long-term business strategy.  It is not always rewarded and unethical behavior is not always punished. But it can give your business significant competitive advantages over unethical companies.

 REFERENCES

1. Hayes, A. (2020). Business definition. Retrieved from https://www.investopedia.com/terms/b/business.asp

2. Abun, D. & Magallanez, T. (2018). Universal Business Ethics: A Challenge to Multinational Companies.

3. Corporate Finance Institute (n.d). Retrieved from https://corporatefinanceinstitute.com/resources/knowledge/other/business-ethics/

4. Symes, S. (n.d). Importance of Ethical Conduct in Business. Retrieved from https://smallbusiness.chron.com/importance-ethical-conduct-business-25163.html