Recent Trends in Human Resource Management

Thursday, February 21, 2008

Ethical Behavior at work

Whether or not a person acts ethically at work is usually not a result of any one thing. For example, it’s not just the employee’s ethical tendencies, since even ethical employees can have their action influenced by organizational factors. So, the manager’s first task is to understand what shapes ethical behavior and then to take concrete steps to ensure that employees make ethical choices. Let’s look first at the factors that shape ethical behavior.

Individual Factors:

Because people bring to their jobs their own ideas of what is morally right and wrong, the individual must shoulder much of the credit (or blame) for the ethical choices he or she makes. One survey of CEOs of manufacturing firms explored their intention to engage (or to not engage) in two questionable business practices: soliciting a competitor’s technological secrets and making payments to foreign government officials to secure business. The researchers conclude that personal predispositions more strongly affected decisions than did environmental pressures organizational characteristics.

In any case, honesty testing shows that some people are more inclined toward making the wrong ethical choice. How could you rate your own ethics?
Organizational Factors :

WorldCom’s former CFO, pleaded guilty to helping the firm’s former chairman in masking WorldCom’s deteriorating financial situation. Among other things, the government accused him of instructing underlings to fraudulently book accounting entries, and of filing false statements with the SEC. Why, as a star CFO and someone trained to protect the interests of his shareholders, would the CFO do such thing? The CFO said that he took these actions, knowing they were wrong, in a misguided attempt to preserve the company to allow it to withstand what the CFO believed were temporary financial difficulties.

The scary thing about unethical behavior at work is that it’s usually not driven by personal interest. The results of one survey of the principal causes of ethical lapses, as reported by six levels of employees and managers. As you can see, being under the gun to meet scheduling pressures was the number-one factor in causing ethical lapses or most of these employees meeting overly aggressive financial or business objectives and helping the company survive were the two other top causes. Advancing my own career or financial interests ranked toward the bottom of the list. Thus at least in the case most ethical occurred because employees felt pressured to do what they thought was best to help their companies. Several years ago, three former CUC International executives pleaded guilty to federal charges. Authorities then called it the largest and longest accounting fraud in history. The former executive said they had done it to keep the price of the company stock high.

Having rules of the books forbidding this sort of thing does not, by itself seem to work. For example, in 2002 New York’s attorney general filed charges against Merrill Lynch, alleging that several of its analysts had issued optimistic rating on stocks, while privately expressing concerns about those same stocks. The allegations was that they did so (in violation of company rules) to aid and support Merrill Lynch’s investment banking relationships with these companies.

The boss’s Influence:

The boss sets the tone, and by his or her actions sends signals about what is right or wrong. Coring to one report for instance, the level of misconduct at work dropped dramatically when employees said their supervisors exhibited ethical behavior. Only 25% of employees who agreed that their supervisors set a good example of ethical business behavior, said that they had observed his conduct in the last year, compared with 72% of these who did not feel that their supervisors set good ethical examples.

A study by the America Society of Chartered life Underwriters found that 56% of all workers felt some pressure to act unethically or illegally and that the problem seems to be getting worse. Here are examples of how supervisors knowingly (or unknowingly) lead subordinates astray:

1.Tell staffers to do whatever is necessary to achieve results.
2.Over load top performers to ensure that work gets done.
3.Look the other way when wrongdoing occurs
4.Take credit for others work or shift blame.

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