THE ROLE OF ETHICS IN 21st CENTURY ORGANIZATIONS

Phuoc D. Nguyen

Abstract

We are living in a period of globalization and deepening international integration, in which economies and businesses are simultaneously cooperating and fiercely competing. Besides, organizations in the 21^st century that operate in the globalization age, enjoy every advantage and face the challenges of globalization. The common perception in the world today is that the competition among businesses in the environment of globalization and international integration is a cultural competition in which leadership ethics is a decisive factor. This paper defines ethics and discusses the role of ethics in 21st-century organizations; leadership ethical values; leadership ethics challenges; leadership ethics’ contribution to leadership behavior, and the application of leadership ethics.

Introduction

Globalization is a complex result of three major elements, including the advancement of science and technology, the development of the market economy, and the expansion of multinational companies. Bishop (2013) indicates “The twenty-first century has seen its share of ethical failures in the business world.” (635). Therein the expansion of multinational companies causes ethical problems and scandals at companies such as Dick Smith, retailer, Australia in 2016; Dynegy, energy, U. S.; Anglo Irish Bank, banking, Republic of Ireland; Nortel, telecoms, Canada; Enron, energy, U. S., etc. Therefore, the role of ethics is very important for organizations in the 21^st Century. Indeed, ethical problems and scandals come from unethical leadership thus ethics and ethical leadership mutually support each other to contribute aim minimizing ethical problems and scandals and enhancing leadership ethics and business ethics.

Brimmer (2007) states “Ethics have become an organizational priority. In the 21st century, ethics is neither a luxury nor an option. There is a growing impatience within society with selfish and irresponsible actions that impoverish some while enriching the crafty.” (p. 1). The importance of leadership ethics for an organization is a controversial issue with several different perspectives. Many business leaders consider ethics programs as a luxury activity that benefits society only but not the organization. The role of ethical concern in business relationships continues to be misunderstood.

Profit is one of the essential elements for the survival and growth of an organization and is the basis for assessing the ability of an organization to maintain its business. However, if a business executive misconstrues the essence of profit and sees it as the unique and primary goal of the business, it is obvious that the existence of the business can be threatened.

What is Ethics?

According to Maheshwari and Ganesh (2006), “Ethics is defined as that characteristic which constitutes good and bad human conduct and that which decides what is good and evil, right and wrong, and thus what we ought and ought not to do.” (p. 76). Ethics arises from a person’s perception and thinking, then the people will have their characteristics that lead to their ethical behavior and action to do the good and right things; conversely, they should avoid doing the evil and wrong things. A person who is trained and learns leadership ethics perceives ethics that they own appropriate characteristics and virtues to implement their duty, obligation, and responsibility to follow the good and right things and avoid the evil and wrong things with justice and fairness in their community. “The study of ethics generally consists of examining questions about right, wrong, good, evil, virtue, duty, obligation, rights, justice, fairness, and responsibility in human relationships with each other and other living things.” (Ciulla, 2014). The study of ethics focuses on the answer the questions such as what are right, wrong, good, and evil; which characteristics and virtues create the right and good. Furthermore, it surveys the correlation between education, perception, culture, cultural values, personal values, behavior, attitude, and action to create and implement right and good things and how to avoid evil and wrong things. Additionally, the correlation between education, perception, culture, cultural values, personal values, behavior, attitude, and action is based on descriptive ethics because it discovers closed relationships as the interaction of every element of education, perception, culture, cultural values, personal values, behavior, and attitude which create ethics; it means that the discovery of root elements as a matrix or a cycle to constitute ethics. Presently, education is based on all elements of perception, culture, cultural values, personal values, behavior, and attitude. Moreover, education creates perception; then perception combines with culture, cultural values, and personal values to produce behavior and attitude. Perception combines again with the way of thinking to generate the deportment. At last, deportment creates ethical actions, likewise, ethical actions arise in good feelings to do the right things, and deportment is the way of thinking feelings. “Descriptive ethics is not geared toward asking what people ought to do or how they should feel. Rather, it is concerned primarily with discovering how people behave, think, and feel in relation to morality.” (Fedler, 2006).

“Ethics comprises complex ideas, applications, and interpretations about not only what is right and wrong, but also why things are considered right and wrong.” (Bishop, 2013, p. 623). Ethics is a form of social consciousness; a synthesis of principles and norms of the society, whereby human beings are self-conscious and adjust their behavior accordingly with the benefits and the happiness of the people for the progress of society in the relationship between the human beings each other and between individuals and society.

The Role of Ethics in 21^st Century Organizations

Leverett (2014) states “With a clear picture of values and organizational culture, we can now look at the disposable ethics 21st-century leaders seem to have adopted. For leaders of global organizations, understanding the behavioral process underlying ethics across national cultures helps the leader to make sense of an individual’s ethical decision-making process and behavior, which allows further insight in the attempt to avoid offending others.” (pp. 61-62). Business ethics is the most important component of a business culture which is a fundamental factor to the credibility of partners, customers, and consumers. Additionally, business ethics is considered the basis for building confidence, cohesion, and loyalty of the staff in the organization, it ensures that the leaders of all the staff in the organization follow ethical standards; thereby constantly improving the image and reputation of the organization. The survival as well as profitability of the organization are decisive by the consumer thus the organization wants to achieve high-profit margins and sustainable success so it must build a leadership ethics foundation for itself.

Randall (2012) indicates “One of the most difficult leadership challenges in all organizations is to create and maintain an ethical climate. Leaders have a unique opportunity to shape an ethical climate because they have access to power.” (pp. 28-29). Although ethical behavior in an organization is very important in terms of social and personal perspectives, economic aspects are also an important factor. Many leaders think that one of the difficulties in gaining the support for ethical ideas in the organization is the cost of ethical programs which is not only costly but also not beneficial to the organization. Being ethical alone will not bring about financial success, but ethics will help shape and sustainably develop organizational culture.

Bishop (2013) demonstrates “The role of ethics in this century is much the same as it has always been – to establish right and wrong and protect individuals and organizations from engaging in illicit behavior and practices.” (p. 637). Leadership ethics contribute to regulating leadership behavior. Consequently, Leaders should always review and adjust their activities in line with recognized business ethics criteria. Most of all, the survival of the organization is not only due to the quality of the product and service itself but also mainly due to the leadership style and leadership ethics. As a result, leadership style and leadership ethics will affect greatly the success or failure of the organization. Last of all, a leadership style that fits ethical principles to achieve operations effectiveness.

“The ethics of leadership—whether they be good or bad, positive or negative—affect the ethos of the workplace and thereby help to form the ethical choices and decisions of the workers in the workplace.” Ciulla (2014). Leadership ethics contribute to regulating leadership behavior. Therefore, leaders should always review and adjust their activities in line with recognized business ethics criteria; clearly, the survival of the organization is not only due to the quality of the product and service itself but also mainly due to the leadership style and leadership ethics. In addition, leadership style and leadership ethics will affect greatly the success or failure of the organization, leadership style should fit ethical principles to achieve operations effectiveness and community responsibility.

Maheshwari and Ganesh (2006) claim “In order to ensure ethical business practices in an organization, it is important to have an ethical orientation among the people who own, manage, and work for it.” (p. 76). Leadership ethics contributes to enhancing corporate image and reputation. In the same way, an organization is interested in leadership ethics that it will have the loyalty of employees, the trust, and the satisfaction of customers and investors. On the other hand, the rewards for moral responsibility and corporate social responsibility in business decisions include an increase in efficiency in operations, staff dedication, and improvement of product and service quality thus organization’s image and reputation are enhanced.

Brown and Treviño (2006) state “Ethical leaders should influence employee positive and negative behavior because employees will view their relationships with ethical leaders in terms of social exchange.” (p. 606”. The level of sustainable development of the organization depends on business ethics and the growth in profitability which is linked to the practice of leadership ethics.

Bowie and Schneider (2011) propose the application of business ethics in the 21^st Century such as developing an effective code of ethics and maintaining a strong ethical culture, including generating the right incentives, rewarding ethical behavior, punishing unethical high performers, and eliminating the fear that sometimes impedes ethical decision making; eliminating the fear that sometimes impedes ethical decision making, including taking corrective action, providing for informers’ confidentiality, and refusing to tolerate retaliation. Leaders based on mission statement, corporate culture, and core values to develop a code of ethics with easy-to-understand language to apply to all levels of the organization and its stockholders. The code of ethics is announced to the public, stock market exchange, and stakeholders. It drives leaders and staff ethical behavior to behave ethically. It combines with corporate policies and procedures to create a transparent and accountable working environment. It is also revised and updated periodically to fit business complex and growth. Additionally, the code of ethics regulates ethical culture. Besides, leaders establish regulations to enforce and control the code of ethics compliance; the regulations instruct leaders and staff on how to handle ethical dilemmas.

Conclusion

The paper explores leadership ethical values; leadership ethics challenges; leadership ethics’ contribution to leadership behavior, and the application of leadership ethics.

In short, we can see the important role of leadership ethics toward leaders, the organization, the society, and the strength of the national economy in general. Shareholders want to invest in organizations that have an effective ethics program and a good reputation. Employees prefer to work in a company so that they can be trusted and customers value integrity in business relationships. A great ethical environment will bring confidence to customers and employees, employee dedication, and customer satisfaction, and it will bring profitability to the organization.

References

Bishop, W. H. (2013). The Role of Ethics in 21st Century Organizations. Journal of Business Ethics, 118 (3), 635-637.

Bowie, N. E. and Schneider, M. (2011). Business Ethics for Dummies. Retrieved from www.construstone.com/library/download/asin=B01GMIHRTK&type=full

Brimmer, S. I. (2007). The Role of Ethics in 21st Century Organizations. Leadership Advance Online, 1 (9), 1-5.

Brown, M. E. & Linda K. Treviño, L. K. (2006). Ethical leadership: A review and future directions. The Leadership Quarterly, 17 (1), 595-616.

Ciulla, J. B. (2014). Ethics, the Heart of Leadership. Santa Barbara, California: ABC-CLIO. Leverett, M. (2014). Going Green with Values and Ethics in the 21st Century. Journal of Practical Consulting, 5 (1), 53-65.

Maheshwari, S. K. and Ganesh, M. P. (2006). Ethics in Organizations. Retrieved from https://www.scribd.com/document/101329222/2006-apr-jun-75-88

Randall, D. M. (2012). Leadership and the Use of Power: Shaping an Ethical Climate. The Journal of Applied Christian Leadership, 6 (1), 28-35.