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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