Development Of Ethics And Governance In Modern Organizations

Discussion

Discuss about the Development of the Ethics and Governance.

Leadership plays a big role in managing the organizational operation, every small and large agency. However, outcome of the implementation of the leadership may not provide desired results as there are different types of leadership with characteristics such as autocratic, democratic and others. In order to deal with the ethical barriers, the organizations implement the policies and the regulations imposed by the industry. Ethical principles provide the foundation for various different modern concepts for work, business and organizations. This could widen the individual and corporate priorities for beyond the conventional business aims and profits.  The leaders make the ethical decisions as well as take responsibility for positive and negative result that come out of the operation.  In the essay, I will argue regarding the fact that leadership is essential in the modern organizations. In order to support my views on the fact I would provide the evidences that support my view regarding the importance of leadership in decision making in modern organization.

The ethical issues in the operation could damage the brand name. Therefore, it is important for leaders of the firm to take the wise decisions that cause no harm to the stakeholders involved in the business. While taking an ethical decision, the organization must have to consider certain area such as positive consequence of the decision, possible support from the government of the country. The firms might have to think of the external impact that might have on the organizations. Hence, Demirtas and Akdogan (2015) commented that ethical decision always provides the foundation for different modern concepts for work, organizations and business that could widen the individual and corporate priorities beyond the conventional business aims of profits as well as shareholder enrichment. On the other side, Chughtai, Byrne and Flood (2015) mentioned that ethical factors are also a significant influence on the institutions as well as public sectors organizations.       

I have studied and observed that many executives and business planners believe that ethical leadership is just a matter of  effective characteristics. There is a belief that by having the right values and strong character, the ethical leaders could set the example for others.  As opined by Carraher (2015), it is essential for leaders to tell a compelling story as well as morally rich story; however, when the leaders need to deal with the ethics, they must live the story. Shapiro and Stefkovich (2016) mentioned that ethic is a philosophical term originating, which is mainly concerned with describing as well as prescribing moral requirements. It is also concerned with the behaviours that indicates that there are acceptable and unacceptable ways of behaving that serve as a function of philosophical principles. The ethical leadership require ethical decisions. The ethical leaders practice and carry out the ethics throughout the organizations. The leaders are naturally in a position of power both on and off the job. Thereby, ethical leadership should focus on how leaders leverage this power in the decisions they take. The leaders are responsible for influencing the others to perform the required actions, complete the tasks, and behave in a particular manner.

Importance of Ethical Decision-making in Modern Organizations

I have also observed an incident occurred in Johnson & Johnson in early 1980s when the McNeil Division of the firm hit with a crisis (Demirtas, 2015). Tylenol in Chicago drugstore had been laced with cyanide; as the result, seven people lost their life. Burke, the CEO of Johnson & Johnson took the stand, responded with a recall of 31 million bottles, and developed a crisis hotline to respond customer’s questions. The CEO of the company repeatedly mentioned that organization’s credo puts the customers first and the profit last. Burke effectively dealt with all issues and guided decision-making throughout the organization. As the consequence, Johnson & Johnson continued to develop the temper resistant packaging as that people expect and rebuilt the brand.

In the context of importance of leadership in ethical decision making, Wu et al., (2015) commented that the experience of academics often contrary to the image of business executives and owners one finds in a public discussion while they are often observed as greedy, competitive as well as concerned with the compensation. As discussed above, it is important for the leader to live a moral and compelling story instead of telling them, but Men, (2014) commented that this could be a difficult task in the recent business environment where everyone wants to live in a fishbowl. Many political leaders are seen to be telling the high-minded story and the business leaders have become the major focus of the similar criticism through the disclosure of different scams and bad behaviours. However, I personally believe that both large and small business organizations to some great extent rely on their skilled leaders who give the effort to make a better world for living. This concept would be clearer if we consider the scenario of Tony Hseih of Zappos.com (Palanski, Avey & Jiraporn, 2014). Tony succeeded in building an environment with Zappos make the attempts to ignore several common ethical failings. For example, he developed the culture of equality by using the same cubic as other employees. He recently developed the organizational culture to avoid hierarchies but the culture carries the value of each individual.

I have learnt from the studies and personal observations ethical leadership means developing an ethical organization that nurture trust, fairness, integrity, transparency, values and objectivity. A leader who believes and embraces such elements must effectively lead the ethics for the betterment of the organization. A leader who lacks such elements in his leadership could vulnerably bad for the organization. For example, Lance Armstrong whose decisions to dope was sustained by an infrastructure of colleagues within his firm, now serves as the reminder cheating can be a Slippery Slope” (Sharif & Scandura, 2014). Thus, without leadership, the organization as whole finds it difficult to respond to changing nature of environment or society. Furthermore, it can also added that employees prefer to work under a genuine leader whose skills inspire them and encourage them. Likewise, the employees develop their trust on the leader. Therefore, it is essential for the leaders to have integrity, fairness, transparency and ethical values.

Leadership and Ethical Decision-making

In the social learning theory developed by Bandura, it is learnt that individuals in the society learn from one another, through observation, imitation and modelling (Steinbauer et al., 2014). People learn from through others’ behaviour and outcome of those behaviour. One of significant aspect developed in the theory is motivation. This means having a positive reason to imitate. The individuals rely on some particular motives as past (conventional behaviourism), promised (imagined incentives) and vicarious (reinforced model) (Newman et al., 2014). When people learn something or inspired by something that is “good” or acceptable, he/she might apply that in their life. Likewise, people are inspired by each other qualities and application of values. In addition, Bandura also mentioned about “reciprocal determinism” in the theory, which means an individual’s behaviour might cause each other, but behaviourism essentially states that environment of an individual cause the behaviour.

This means when an individual or a leader in an organization believes in or nurtures the culture and ethics that is unacceptable for the society, the other individual in the organization could adopt that unaccepted ethics. For example, when a discloser of an organizational scam comes in the news accusing the CEO, but the organization as a whole is involved in the scam. Bandura in his social learning theory, considered  personality as an interaction between three different elements  such as environment, psychological process of the individual and behaviour (McLeod, 2012). As discussed above, these three components are related to each other and the characteristic of an individual is built through these components. This theory effectively indicates two traditional concepts such as the person who plays the role and the followers. In this context, it can be mentioned that, leadership indicates a relation between a leader as well as his followers within an organizational context.

Shapiro and Stefkovich (2016) considered leadership as the power and value-laden relationship existing between the leaders and the followers who bring the changes that reflects their mutual objectives and purpose. Moreover, the leadership in the normative organizational ethics should be defined with regard to the behaviour of the individuals in the organization. This might involve the speculation regarding the criteria that define ethical decisions as well as personality characteristics. These statements of the researchers help to learn and support the fact that ethical leadership is crucial as well as vital in providing the direction which strengthen the organizations to fulfil its objectives, visions and declared goals. As put forward by Brown and Treviño (2014), the ethical leadership can be regarded as the key factor in the management of the company’s reputation in the external environment.

Social Learning Theory and Ethics in Organizations

In today’s business environment, one of the most suited traits needed to exercise leadership is integrity. It is identified that leaders that observe integrity are honest with themselves as well as others. They learn from the mistakes and they lead by the example.  The leaders take the responsibility to become judgmental regarding the significant decisions as well as attempt to balance competing interests.

As put forward by Hassan, Wright and Yukl (2014), it is not easy enough to adopt high standards and it is not easy to live up to this standards and help other do the same. An ethical castoff min is required to adopt the standards that let individuals practice their own principles persistently. In the business world, an organization needs to be fair to its employees, customers and all stakeholders involved in the business. Being ethical is about playing fair with both external and internal environment and thinks about the welfare and betterment of others as well as considers the consequence of one’s action. The ethical leader often considers about the long-term consequence, drawbacks as well as benefits of his/her decisions. Moreover, for the sake being honest and true to own values and principles, the leaders become prepared to deal with the battle on the competitive market. Thus, an organization without such principles may not be able to deal with the battle on the field.

The leaders tend to serve others as the role model for their followers as well as demonstrate the behavioural boundaries developed within an organization. As put forward by Carraher (2015), the appropriate as well as expected behaviour is improved through the culture as well as socialization techniques of the newcomers. As discussed in Bandura’s theory, people learn from each other and observing other behaviour in the environment. Likewise, Demirtas and Akdogan (2015) also mentioned that the employees in the organization learn about the values and the principles observing the leaders in actions. In addition, as managers take the issues of ethical responsibility in a real sense, they certainly become more sensitive to their followers’ needs and demands. As mentioned by Men (2014) a good leader is designated by an enhanced capacity to feel morally obligated to a greater range of followers. The modern organizations need a leader who is surrounded by such principles and worldly perspectives. In order to bring favourable con sequences for betterment of the organizations or the stakeholders involved the company an ethical leadership.

Conclusion

On the completion of the essay, I must raise the concern whether or not a company could become successful as well as competitive on the market and at the same time ethical. It can be mentioned that market success and ethical conduct could go hand in hand. Eventually, it can be ascertained that a leader is foremost a member of the company as well as its spoke person. Therefore, his deeds should serve the purpose as well as bring in benefits to the company.

References

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Carraher, S. (2015). Objectivism, Lyman Porter and ethical leadership. Journal of Management History, 21(1).

Chughtai, A., Byrne, M., & Flood, B. (2015). Linking ethical leadership to employee well-being: The role of trust in supervisor. Journal of Business Ethics, 128(3), 653-663.

Demirtas, O., & Akdogan, A. A. (2015). The effect of ethical leadership behavior on ethical climate, turnover intention, and affective commitment. Journal of Business Ethics, 130(1), 59-67.

Demirtas, O. (2015). Ethical leadership influence at organizations: Evidence from the field. Journal of Business Ethics, 126(2), 273-284

Hassan, S., Wright, B. E., & Yukl, G. (2014). Does ethical leadership matter in government? Effects on organizational commitment, absenteeism, and willingness to report ethical problems. Public Administration Review, 74(3), 333-343.

McLeod, S. A. (2011). Bandura-social learning theory. Retrieved from.

Men, (2014).Internal Reputation Management: The Impact of Authentic Leadership and Transparent Communication. Corporate Reputation Review2014, Vol.17(4), p.254

Newman, A., Kiazad, K., Miao, Q., & Cooper, B. (2014). Examining the cognitive and affective trust-based mechanisms underlying the relationship between ethical leadership and organisational citizenship: a case of the head leading the heart?. Journal of Business Ethics, 123(1), 113-123.

Palanski, M., Avey, J. B., & Jiraporn, N. (2014). The effects of ethical leadership and abusive supervision on job search behaviors in the turnover process. Journal of Business Ethics, 121(1), 135-146.

Shapiro, J. P., & Stefkovich, J. A. (2016). Ethical leadership and decision making in education: Applying theoretical perspectives to complex dilemmas. Routledge.

Shapiro, J. P., & Stefkovich, J. A. (2016). Ethical leadership and decision making in education: Applying theoretical perspectives to complex dilemmas. Routledge.

Sharif, M. M., & Scandura, T. A. (2014). Do perceptions of ethical conduct matter during organizational change? Ethical leadership and employee involvement. Journal of Business Ethics, 124(2), 185-196.

Steinbauer, R., Renn, R. W., Taylor, R. R., & Njoroge, P. K. (2014). Ethical leadership and followers’ moral judgment: The role of followers’ perceived accountability and self-leadership. Journal of Business Ethics, 120(3), 381-392.

Wu, L. Z., Kwan, H. K., Yim, F. H. K., Chiu, R. K., & He, X. (2015). CEO ethical leadership and corporate social responsibility: A moderated mediation model. Journal of Business Ethics, 130(4), 819-831.