How to build an ethical organisation

Nov 10, 2019

Creating an ethical workplace isn't just about punishment when things go wrong – it's essential to foster an ethical outlook within the organisation. Stephanie Casey explains how to give employees the tools to deal with ethical dilemmas.

When corporate scandals arise, the senior leader is often reprimanded, but the issue of ethical misconduct cannot simply be solved by firing the manager. Award-winning research from Amanda Shantz and Catherine Baily indicates that while managers are key to cultivating an ethically strong environment, organisations must invest in ‘distributed’ ethical leadership in order to ensure lasting change. In other words, they must hire and cultivate leaders at all levels who promote ethical behaviour.

According to the study: “an ethically strong situation is one in which people understand events in the same way, where there is clear information about the consequences of behaving (un)ethically, and where employees have the skills and motivation to do the right thing.” By contrast: “an ethically weak situation is one in which employees respond idiosyncratically, where the appropriate ethical response is unclear, and where there are few incentives to behave ethically.”

Fostering ethics

So, how do managers foster ethically strong situations? Shantz and Bailey sought to address this question by conducting in-depth case studies of five organisations, as well as surveying a representative sample of over 1,300 workers, across the UK. Their research reveals some important recommendations for managers.

Acknowledge ethical ambiguity

Many organisations fail to discuss ethical challenges their employees may face. This drives individuals to internalise their decision-making processes with potentially negative consequences.  Instead, managers should encourage open discussion on ethical issues and possible solutions. This gives employees a clear understanding of the organisation’s ethical values and the confidence to seek support from their managers without fear of judgement.

Clarify ethical trade-offs

In 1950, Johnson and Johnson founder, Robert Wood Johnson, identified four stakeholder groups that he saw as vital to the success of any corporate endeavour: employees, customers, the community and shareholders. He maintained that if a company looked after the first three groups, then the shareholders would be the beneficiaries. Although the needs of all stakeholders can sometimes be met, trade-offs are usually necessary. When employees are unsure of how to manage this tension, unethical approaches can develop. In these scenarios, managers should establish a consistent ethical framework with guidelines for balancing stakeholder interests to help employees weigh up competing concerns and make appropriate decisions.

Ensure role-modelling from the top down

Employees pay more attention to how leaders behave than what they say about ethics. The key is for leaders to not only be ethical but to also be seen as ethical by championing ethics and values at every opportunity.

It’s clear that no organisation is immune to ethical breaches, but by equipping employees to deal with daily ethical dilemmas and enabling them to raise any concerns they may have in the knowledge that they will be protected from any form of penalisation or retaliation, the next corporate scandal could be prevented.

Stephanie Casey is the Programme Manager of Integrity at Work at Transparency International Ireland.

Amanda Shantz will address the Integrity at Work Conference at the Radisson Blu Royal Hotel, Dublin on 20 November 2019.