Today, many employees grumble when their leaders discuss being ethical. During the massive economic downturn, many executives got rewarded for underperforming. For example, Fannie Mae's CEO Michael Williams and Freed CEO Charles Haldeman Jr. were slated to receive up to $6 million each for 2009 despite the companies' poor performance. Yet, it cost the American taxpayers more than $100 million for these company bailouts. With the continual unethical behavior of several executives, American workers are more cynical about their leaders than ever.
Ethics plays a critical role in good leadership. Ethics is defined as the code of moral principles that governs the behavior of a person or group according to what is right. Richard Draft, an organization management expert, explains that leaders at the highest management levels develop internal moral standards that can often allow them to break laws if necessary.
Emerging leaders cannot afford to behave unethical. People become less trusting of organizations and people. People, especially leaders, need to act in a manner that sets the example for the rest of the organization. Therefore, it can be concluded that effective leaders must be careful to stay humble and have accountability mechanisms in place so that they won't hit any ethical mine fields. Organizations can't afford to wait.
Can today's unethical behavior be stopped? If so, how? If not, how can today's organizations minimize their losses?
Unethical behavior will not stop until the consumer starts taking action. If a consumer is feed up with these unethical behaviors we need to stop purchasing their products or using their services. The government involement is unnecessary and that is the big part of the problem. To have capitalism to work the unethical and greedy companies should fail and someone else will take their place. The government is failing capitalism and rewarding failure. What is that teaching our childern and what is the worldview of our economy? The dollar value is falling and our economy is failing. The best way to stop unethical behavior is to stop rewarding unethical behavior. Unethical behavior usually negativley affects sales, stock price, culture, and employee morale and productivity. But why are we giving these unethical copmpanies a second chance?
I agree with a lot of what Griffin has posted. Glad he's in my group 🙂 It's disturbing to think that executives have established their own "golden parachutes" with the intent to cash out. They pad their accounting numbers just to let the bottom fall out from under the company.
However, I don't see a way to ever get consumers together to boycott these firms. It's easy to say that we'll avoid certain companies now because of who they are and what they've done, but hind sight is 20-20. No one had any idea some of these companies were being managed the way there were until it was too late. For example, of the firms that were bailed out, AIG received $180 billion from the government because it was "too big to fail". Why was it too big to fail? One reason is that it covered life insurance policies for roughly 180,000 companies worldwide (Time magazine, March 2009), which employ about 106 million people. They're also a huge provider of insurance to U.S. pension funds and other products that protect participants in 401(k) plans. "We have no choice but to stabilize [it] or else risk enormous impact, not just in the financial system but on the whole U.S. economy," said Fed Chairman Ben Bernanke (same article as referenced above).
Yes, if I have a choice in the matter now I would never deal with AIG. And while I know who my 401K is managed from at work (i.e., Wells Fargo), I have no idea who has insurance to cover those funds. Is it AIG? Maybe. Can I change that? Not unless I want to change employers. I guess the point I'm trying to discuss is that these companies get so big, they are more a part of our everyday life that we think. We cannot just simply boycott them.
Thanks for detail overview of the current issues! Who do you trust then? Big business? Government? It becomes problematic in society.
Based on your viewpoint, do you feel ethical standards are hopeless in America?
Landon, I could not agree more with your response. I can't recall the number of times I have received a chain letter email about boycotting a company for something they had done. As you pointed out it is usually too late by the time the consumer and the public get wind of it. Unless precedence is being set by the government we will probably only see the little guy being dealt a blow for his unethical behavior. Here are some more signs of unethical behavior that go unchecked due to someone not seeing the signs or actions. Many are also in fear of management reacting against them in a way that will not be in their best interest. Causing them to, "look the other way". Unethical behavior covers a wide array of deeds, however, the more common include: sexual harassment, falsifying documents, using company resources for personal use, taking or misusing company property–stealing. Workplace violence is on the rise and can lead to other unethical behavior like bullying or discrimination. More complicated and often illegal behavior could include altering business documents, such as sales receipts, or tampering with accounting methods and reports.
Here's a recent ethical test. The University of Tennessee's (UT) football coach Lane Kiffin announced that he was leaving to be the coach at Southern California. The situation surprised many people (administrators, coaches, students, fans, etc.). Some questioned the ethics involved.
(a) Is it ethical for a coach to break a contract even for 'a dream job' if the market allows it?
(c) Are sport organizations under different ethical standards than other organizations? If so, why?
Griffin, thank you being a leader and providing your passionate thoughts! Your message is timely. I agree with you that customers need to make organizations accountable.
Let's build from this discussion. It is open to anyone! Please explain the impacts on market forces (customer revolts) on corporate morality. James Gibson, John Ivancevich, James Donnelly, Jr., and Robert Konopaske argue that unethical decision making is a pervasive phenomenon in an organization. Therefore, it is difficult to root out.
About government control? It's all over the media. Many people think the government is destroying capitalism. Is less better (if so, how much)? Do you feel the government should return to a laissez faire approach to overseeing businesses? As you may recall, the government took this viewpoint during the early part of Industrial Age.
Absolutely not. I do not think ethical standards are hopeless in America. For every executive that has made an unethical decision that affected others, there are 10's if not 100's that would handle the same scenario ethically. But lets be honest… as a newly hired employee, or doing annual refresher training, no one likes to sit through and read the ethics portion of a handbook. It is rather boring, and most examples do not pertain to your job. However, now HR managers have an opportunity to add real life examples to possible scenarios, and to even add $$ amounts to show the impact the wrong decisions had.
There will always be corrupt people in leadership positions. But the majority of us do have the desire to do the right thing.
I agree with a lot of what Griffin has posted. Glad he's in my group :). It's sick to think how some executives have established their "golden parachutes" with the intentions to actually cash out once they've padded their firms accounting numbers just to have the bottom fall out from under the whole company.
American society has never been so confused. US citizens are not sure how to react to everything that has happened in the past few years. America used to be the most patriotic nation on the planet; now people are not sure whether they can rely on and trust the Government. The question that bothers everyone is: "What was the root of the problem?" Unfortunately, there is not a straight answer–this issue is very controversial and complicated. In order to find an answer for that question, we should take into consideration several aspects (i.e. unethical behavior of upper management, decisions that were made trying to "fix" revealed problems and so on).
I agree with Landon on his opinion about employees skipping "ethics" portions of their employee handbooks. Depending on organizations, refreshing courses (including ethics) could be as often as every year. Implementation of e-learning tools by HR help to create interactive forms of learning. When after completing every chapter, an employee has to answer questions in order to proceed with the session.
I am not saying that e-learning will "save the world", but it is a very helpful tool that forces employees to gain knowledge about company's ethics codes.
Alla, good commentary on the state of America!
Can we go deeper? Is this the worst state of ethics in American history? I ask you to review the Industrial Revolution and give me your assessment based on history? Where is our nation at?
a) Is it ethical for a coach to break a contract even for 'a dream job' if the market allows it?
Breaking a contract is unethical even for a dream job. But in sports today contracts are written to be broken, Kiffen's only cost him $800,000. It is all about the money and can money and ethics really mix? It does seem that ethics is situational, but it should not be. Ethics is the idea/practice of knowing what is universally right or wrong. People should do what is right and I believe the most people in their hearts are ethically good people, but you bring in money and greed takes over like we see in corporate america. There should not be in sports or business a diferent ethical standard. Kiffen is just another example of how our society rewards people for doing unethical acts for the greed of money. Parents will send their kids to USC knowing that their coaches are unethical and they will not care because they will believe that these unethical people with their unethical acts will make them and their kids a lot of money. Money and greed are at the root of most unethical acts! Remember when football was not about the money? I don't!
Griffin, I 'hear you' loud and clear! I agree too in part.
What is the purpose of contracts if they are to be broken? Has the institution of sports been set-up for failure as an institution? Can we go a little deeper? References? Theories of why this is the case (by experts supporting your position)?
If the $800.000.00 is paid no contract has really been violated. You can't force Kiffin to remain and work at UT no more than our employers can force us to remain on the job. Him leaving to pursue a dream job is not an ethical issue, as I am sure many of us may likely do the same thing. However, some of the actions his staff took at his behest, could be considered unethical. He worked one year and was compensated for his work. When you pay the buyout, the contract is actually honered. That is one of two options that the contract stipulates. Furthermore, if it was'nt for the big money involved it would likely be a boring and far inferior product.
Sadly, unethical behavior cannot be stopped 100% anymore than drug abuse can be eliminated 100%. Whether intentional or not, ethics violations are going to occur. An inherent problem organizations face with unethical behavior is the subjective nature or definitions of being ethical and the "gray" area that many times unfolds in real life business situations. Sometimes, employees have very little guidance as to what constitutes unethical behavior. However, there are various meta-physical or administrative controls that leaders within an organization can put into place to help reduce their frequency or minimize the negative impact to others within or outside the organization.
From a top-down approach, each organization's top leadership team (i.e., President/CEO/Board of Directors) must set the corporate credo regarding the importance of working ethically. In so doing, they need to be proactive and take the initiative to commission or charter an Ethics Program. An Ethics Program charter is commissioned and will define the creation and administrative structure of the "Ethics Committee or Panel". This committee or panel may or may not be the Human Resources Department, but if the Ethics Committee is a separate body, it needs to interface with the Human Resouces Department, due to the fact that some severe incidences of unethical behavior can result in termination of employment.
Formal training needs to be provided to all organization employees, including the distribution of approved policies & procedures (standards) related to guidelines for acceptable & unacceptable ethics behavior. An Ethics Hotline (example 1-800-555-1212) should also be established, again with approved procedures, instructing & encouraging employees as to how they can report suspected violations of organization ethics standards. Additionally, safeguards need to be in place (policy/procedure) within the organization to protect "Whistle Blowers", so employees will not fear the risk of illegal intimidation, discrimination, harassment, or termination.
Fred, good points. I like the idea about ethic program and training. The Federal government has done this; major corporations have it. Is the breakdown in implementation or what?
Dr. Green, I suspect there's many reasons for ethics breakdowns within organizations all across our nation & globe. But the one that strongly stands out in my mind as I look back on most of the companies I have worked for over the last several years is this: Most of the companies I have worked for did not have an "Ethics Program". What they did have was typically a basic "Rules of Conduct" handbook, or a policy about conduct. This handbook or policy would be distributed to the new employee during the 1st day of employment orientation, never to see daylight again, never discussed again, unless the employee was found violating the handbook rules, and either administratively reprimanded or terminated. Inside the handbook or policy, would be a list of rudimentary forbidden conduct, such as "Do Not Steal Company or Government Property"; "Do Not Cheat on Your Time Sheet"; "Do Not Sleep On The Job"; "Do Not Fight"; "Do Not Be Insubordinate With Your Supervisor", etc. However, two companies that I have worked for, including the present one, actually spend a separate 1/2 day to talk about ethics and why ethical behavior in the work place is very important. These 2 organizations have an Ethics Program on paper, but it's not a functioning on-going program with personnel conducting periodic refresher meetings, workshops, or annual certification. These companies I'm referring to have done more than perhaps a good percentage of corporations, but in my opinion they still need to do more such as implement an on-going program to educate employees about ethics and good examples of current events or case studies of what it takes to be ethical. So….as I see it, more organization leadership (starting at the top) should mandate that in addition to the development of a formal Ethics Program (policy & procedures), there should be annual requirements for ongoing refresher training to sharpen our ethical skill sets, just like organizations require of our primary skill sets which keep us valued by our employers and employed.
Can unethical behavior be stopped? No. And I believe we can all agree that the real question is can it be minimized or reduced? As we have recently seen with the government bailouts of large financial institutions the potential impact of unethical behavior can be far reaching. And while it is easy to lay all the blame on CEO's it is apparent that the underlying problems are much more wide spread. Just in the home mortgage crisis alone there were a number of culprits.
First, there were unethical borrowers who had to get a sub-prime mortgage in order to buy a house they probably couldn't afford in the first place. Secondly, the banks made questionable loans (i.e. sub-prime loans) to these borrowers knowing or ignoring the risk. Finally, the government was in the background encouraging these loans through the "corporate welfare" provided by Fannie Mae and Freddy Mac.
standing up to lawsuits and angry bankers." Accountability is the only answer that will truly minimize unethical behavior. Swift and relentless accoutability for and by leaders at every level of industry and governrment, no matter the cost. Each of us must exercise this in our spheres of influence in order to be our personal best and the best for our employers.
I do not believe it can be stopped, but minimized yes! Perhaps more emphasis needs to be directed at what the employee currently values and their decision making process. When a decision is tough examining all viewpoints is imperative.
Companies need to properly and effectively train all employees to make ethical choices and not just the managers. Training needs to include examples of unethical choices and solutions to areas previously identified within the company.
A) Is it ethical for a coach to break a contract even for a "dream job" if the market allows it? In the case of Lane Kiffin, I feel that it was definitely not ethical on his part, no matter what he says about USC being his "Dream Job". I and many other Vol fans feel Lane Kiffin should have stayed for the duration of his first contract term. However, because he has decided to legally "cut and run" he has hurt & disappointed untold numbers of student athletes, alumni, faculty, and Vol fans of all ages. We only knew what his reputation was when hired, but now we know what his character is. I'm confident it was legal for Kiffin to break his contract within pre-defined contingencies, but the consensus of everything I have read, heard, and seen in the various media says that he nevertheless did an unethical act, even if his wife was unhappy in Knoxville and wanted to go back to bling bling land.
B) Is ethics situational? I think it is most of the time, if not perhaps all the time. Every situation is so typically different, but it seems to me that he violated the very essence of what a team stands for. He didn't sacrifice himself for the team's prosperity by turning down a job offer. Instead, in Kiffin's situation, he chose to reward himself to the detriment of the team, after serving a very short time as team coach. In my mind, this act was backwards to the concept of team building.
C) Are sports organizations under different ethical standards than other organizations? I don't think they are suppose to be. However, because major league college sports and pro sports are so widely followed by their fans and the media, and there's so much money changing hands, I think there is more of an acceptance of unethical bad behavior, generally speaking. I don't like it, but I do think there is more tolerance of unethical behavior in the world of sports, especially in pro sports, than in business organizations in general.
When it comes to financial gain, my exposure of poor ethics has been repeatedly disspointing. Can it be stopped? Yes…one step at a time. "You" have to choose if you will take a stand and verbalize the infraction. "You" choose to continue to work for those managers or executives that have displayed a lack of integrity and ethics. "You" choose to continue to do business with those companies accepting bonuses after a government bailout has been provided with your tax dollars.
You can either talk the talk, or walk the walk.
Nothing is impossible so today's unethical behavior can stop. It will take each individual to make the right chooses. Everyone is capable of making the right chooses and capable of acting ethical. So why do managers display unethical behavior? For many reasons the power of greed and pride or the amount of pressure for managers to make money. Also there is a lack of punishment or consequences.
To break unethical behavior there has to be consequences for wrong doings. Unethical behavior covers a wide range of actions. This behavior can included destroying competitors, cooking the books, being dishonest with customers, polluting the environment, etc. There are laws and regulations to cover these behaviors but they are usually put in place after the fact or the punishment is not severe enough.
Unethical behavior is common everywhere. The Ethics is some rules that you usual use to run your life with a clear conscience that you are making everything correct. Unfortunately, those rules are personal thoughts and attitudes, a code of conduct. Unethical behavior can be stopped with education and mutual respect between personal attitudes. The personal values are important ethical decision that rules your life, work and studies. It's a code that changes from person to person, companies, government and organizations and each one of them can develop your own code of ethics. In a company are the standard procedures for human resources, contract suppliers, production process and all others process. For example at a human resources department, the code of ethics is how ethic a person must be to be hired, obviously without be racist. Some companies do not hire who have any debt historic or who had been dismissed for fair case.
As a citizen, we have some responsibilities and some rules of conduct that make us follow the ethics rules and better people like help the elderly, not throw garbage on the streets, respect other people. But the rule of ethics changes from person to person. For example, for some people help a homeless is a responsibility. For others, if you do, you are helping a vagabond and that's not ethic.
Governmental attitudes are complicated because whatever if ethical's or not, those attitudes represents a country and all your population and ideas. Governments have the power to make an intervention in a company that is making something wrong unethical or against some law. That's about the environment, labor laws (syndicates) or wrong policies about dumping or trust (economy polices). For example, one hundred years ago John Rockefeller had this company broken by the government in some other companies because his economy polices was making all the market works wrongly. And that was the best thing to do on that time.
Today we see the government working with protectionist economy policies. The government intervened and put money on some companies to don't let them broke. The government bought a huge part of these companies. These polices makes the government strong because transfer the power for their hands trough their own hands.
I think that is important for the government regulate, land money or in worst cases intervened in companies that needs help. That makes the local economy strong about follow the laws and work in line. In Brazil, the governments still have some companies and take almost total control of them. The Brazilian government developed these companies one hundred years ago or more. I am talking about banks, electricity companies, Oil Company and 28%of air plane factory. And these companies' works really well, they make profits every year. There, people don't see a reason to privatize. The Brazilians think that make our government stronger. Some other people think the economy must run free.
Can unethical behavior be stopped?
It starts with the shareholders, we are what drive company profits and allow them to continue to operate. If you quit buying from a company it alters their bottom line, which in turn can/will lead to corrective action.
How can today's organizations minimize their losses?
A way to combat negative consumer perception is to be open about your company, product, and services you provide. The company I work for provides a service in the IT Training industry, we urge our clients to comment on the experiences they have while attending our training sessions. This is not something we regulate the comments are there for prospective clients to get honest feedback from current/past customers.
In today's information age I think it is easier for consumers to research products/companies and make a very rational decision whether or not they want to do business with them. Honesty is the best policy.
In today's world, it's hard to stop unethical behaviour but it's not impossible. I believe ethical behaviour is taught when you were young. It comes from your parents and how you were raised. If you steal a candy from a grocery store when you were 10, then there's more likely for that person to cheat or do some unethical things when he's adult. If someone is doing wrong then stop him right away. The potential for unethical behaviour in business is everywhere. If someone is doing things that are unethical then he/she shouldn't be rewarded. Unethical behaviour should not be appreciated. As a matter of fact they should be fired. If you don't take action against them then they'll keep doing things which will not be ethical. It is very important to be honest on the job with management and co-worker.
If top management is doing things that are unethical then people might think that it is okay for them to do the same. For example, if the company has cheated another company for $50,000, then employee might think stealing $50 in office supplies doesn't seem so bad. If the top management is doing something wrong then it's the shareholders responsibilities to take action against him because it is directly going to affect the shareholder's earnings.
Unethical behaviour cannot be stopped completely but it can be minimized. To minimize the unethical behaviour many professions and corporations have developed codes of ethics to address their unique business situations. By developing a code of ethics, an organization makes it clear that employees and members cannot claim ignorance as a defense for unethical conduct.
The people who defy ethical behavior seem to think that what they do is OK if it gets them what they want. Ethics is not part of their decision-making process.
the number one objective of the compan's managers should be to maximize the value of the company. Its not that the top management of freed and fannie Mae didn't deserve thier bonuses because they were unethical they didnt deserve them because they were under performing as managers.
But manager's also have to answer to stock holders and its hard to say are numbers were down this year but we were very ethical. there is a difference between ethics and morals. there should be some kind of middle ground.
It is truly so amazing how our society has become so corrupt and dishonest. What ever happen to honesty? I would hate to be a fly on the wall in one of those corporate giants homes. What are they teaching their kids? By "any means" necessary.
Tracy, thanks for your insight. Unless new leaders can change the current climate of ethical behavior by leaders, we are all in trouble!!!
Unethical behavior ultimately depends on the person that is committing the behavior. Therefore unethical leadership will not end until unethical people are out of the picture. An organization can cut its losses by enacting a thorough screening and vetting process for those individuals that it places in leadership. Also, management training programs that allow employees to learn their role within the organization may help to inspire some sense of caring that would prevent an employee from committing an infraction against his or her employer. I also believe that organizations should educate managers and teach lessons about good and bad leaders, similar to the business ethics class taught here at LMU.