The organisational ethics are considered as one of the significant issue in every organisation or industry as it reflects the way in which an organisation reacts to the various functions and working environment. There are various values that bind the organisational ethics which shows the way in which the organisational employees behave at the workplace. The values and the ethics which are implemented by an organisation are the corporate ethics that are implemented in all the tasks of the organisation. Ethics of an organization can be defined as the rules of the organization, which decides the discipline of the organization, culture of an organization. Ethics regulates the organizational behaviour and organizational psychology (Jondle et al. 2013). Any individual in the organization has to maintain the business ethics or the decision making of that person towards the organization and the action of that person in the organization is influenced by the organizational ethics. The main objective of outlining an organizational ethics is to unite several people from different background within an organization. The organizational ethics deal with the duties and rights of the employees. It looks after the employee values, morality and aspirations of each employee. It is evident that organisations across the globe are working hard to have high organisational ethics so that they can gain a strong brand image as well as various competitive benefits (Avery and Bergsteiner, 2011). But there are numerous ethical risks that weakens an organisation and impacts an organisation which are required to be eliminate from the organisations to attain improved and productive outcomes. For the accomplishment of this objective, the organisations take use of effective mitigation strategies. The report will have a discussion on the importance of understanding the impact of ethical risks on the performance of the organisation and mitigating the ethical risks for improved results (Awadh and Alyahya, 2013).
Organisational ethical risks are on the agenda for several big organisations in the market and the significance of having an effective way for dealing with such ethical risks is highly acknowledge to achieve improved results and competitive benefits. The paper will address the importance of organisational ethics, impact of ethical risks on the organisational performance; the challenges faced by the organisational management and strategise to mitigate the organisational risks. In spite of various initiatives taken by the organisations, sustaining the organisational risks is still one of the key issues and challenge faced by the organisations and the managers which is not only deteriorating the image of the organisations but also impacting the overall productivity and performance of the company in a negative sense. Another research problem is to identify and recognize the most potential and effective approaches to eliminate the ethical risks. The unethical working of any organisation also poses a negative impact of the morale and performance of the employees as well as the absence of ethical leadership is a big factor in the deteriorated organisational culture. With strong analysis and through effective literature, the study will also try to lessen the research gap by developing a clear view of the impact of organisational ethical risks on the performance of the organisation (Bailey and Burch, 2016).
In regards with the above background, the key aim of the research paper is to understand the impact of the organisational ethical risks on the organisational performance and challenges faced by the management in the retail sector. The significance of the research is that it will demonstrate the advantages of following ethical principles and approaches in an organisational working, the benefits of mitigation strategies to eliminate the ethical risks and importance of existence of ethical values for success of any organisation. All in all, the paper will signify the importance of having high level of ethical principles in the success and growth of an organisation (Beeri, et al., 2013).
There is a wide scope of the study as it will present some of the major aspects that include organizational culture, employee behaviour, organisational performance and ethical leadership. The study will throw lights upon the importance of the subject by the means of literature review developed by getting gainful insights from various thesis, articles and peer-reviewed journals. For analysing the impact of organisational ethical risks on the performance of a retail sector organization there will be used both a qualitative as well as quantitative approach (Choi and Yu, 2014).
An organisational ethic can be understand as a system of the accepted values and beliefs which are established on the basis of moral imperatives which have a vital role in administering the behaviour of the groups as well as the individuals and the organisations to which these groups and people are belong to. The ethics can define as the way in which an individual, organisations or community communicate and interact with each other for determining the correct manner in a way these ethics can be practiced in the organisational environment (Chun, et al., 2013). According to the author, ethics are the one that poses a direct impact on organisational behaviour and the organisational culture as all these are interlinked and have a direct influence of each other. Organizational behaviour is highly influenced by the human psychology. An individual act separately when he or she is outside of the organization but that same person behaves in another way when that person is inside the organization (Wilson 2013). Organization behaviour can be determined in three levels, micro level, meso level and macro level. The organizational behaviour is highly influenced by the human psychology. When the stake holders defy organizational policies the problem occurs or the employees refuse to obey the rules of the organization the problem occurs. This result in increased ethical issue in respect with the organisational behaviour as when the employees found that the organisational works upon the unethical practices then they tends not to follow the ethical and moral principles because of the reason they seeks that the organisation itself is on an incorrect path. There is also important and vital aspect of organisational culture in the organisational ethics (Ciulla, 2014). The organizational culture defines as the hared beliefs, morality and values of an organization. These decide the behaviour of the employees work in that particular organization. The organizational culture is intangible and influences a group of people who work together in the organization (Alvesson, 2012). The organizational culture limit the people`s behaviour it decides how the employees would dress inside the organization, how the employees would act in the organization and how the performance should be inside the organization. The organizational varies from organization to organization. It is obvious that every organization has its unique culture. The main objective behind every distinct organizational culture is, to unite the employees who come from different strata of society. Both the organisational culture and the organisational behaviour have a direct impact on organisational ethics as if any organisation has an improved and strong organisational culture then there are high probabilities atht the organisations has robust working ethics as well as the behaviour of the employees is also appropriate at the workplaces (Crane and Matten, 2016).
The ethical business or organisational culture can be better explained with a framework named CEBC Model or framework stands for Center for Ethical Business Cultures. To have an ethical business culture in an organisation, according to this model there must be focus on five key characteristics that comprises of long-term perspective, process integrity, stakeholder balance, leadership effectiveness and values-driven culture. At the core of the framework, there is value driven aspect which means that the values of an organisation should never be compromised for any other factor whether short-term expediency or financial gain (Ferrell and Fraedrich, 2015). The core values of an organisation are the basis of the behaviour of the organisational employees and thus it is essential that the values and functions must be transparent so that there is building of organizational consensus (Hassan, Wright and Yukl, 2014). The values define the culture of the organisation, the culture defines the behaviour of the leaders, the way in which the stakeholders are treated and also the way there is functioning of the internal processes and thus all these factors define the organisational ethics. The next aspect of the framework explains that there must be leadership effectiveness that explains to have a robust organisational culture with high values there is a need that the leaders or the higher authorities of an organisation are required to be highly ethical and all their actions must be governed by ethical principles. This will help in reinforcing acceptable behaviour in the organisation (Hansen, et al., 2013).
The next aspect is stakeholder balance as because of the increased number and diversity of stakeholders, it is essential that there must be increased level of stakeholder balance to eradicate the various conflicts and satisfy their needs and demands. The stakeholder balance can be explained as the reciprocity theory which is based upon the ‘give and take’ aspect (Huhtala, et al., 2011). To have ethical business operations, it is essential that while dealing with the stakeholders the organisation must always take use of an ethical approach so that they can feel satisfied. Another aspect in the framework relating to the organisational ethics is the process integrity which can be explained as the mechanism where the desired behaviour is institutionalized among all the segments of an organisation. It comprises of business functions such as managing risk, communication, rewards, hiring etc. (Huhtala, et al., 2013). All these aspects are supposed to have high level of integrity and ethical values. The last aspect is the long-term perspective which means that there must be the ethical business should not be only be for short term perspective merely for achieving short term gains rather it must be long-term so that the organisation attains high level of value creation (Gino and Margolis, 2011).
Ethical risks in an organization define the lack of insight and judgment of situation. Any unethical actions in an organization pose a threat to the goodwill of the organization. The challenges can be face by an organization due the ethical risks is mainly legal and reputational. The transparency is hampered drastically due to some unethical steps which lead to breach of trust. The adversarial manner of stake holders has a negative impression on the organization. The unexpected behaviour of employees can create turmoil inside the organization (Wong. and Laschinger2013). Divulging of company’s secret facts is an example of breaching of trust. The organizational culture can be hampered if the employees do not follow the dress code, time table and job structure. The primary reason of ethical risks can happen due the lack of free flow of communication between the leader and the employees. Due the lack of proper communication the employees were left unaware of the unethical actions. There are various other organisational ethical risks that also pose a number of threats to the organisation and its future sustainability and improved performance (Huhtala, et al., 2015). In many of the organisations there cares several activities and operations undertaken which have high level of risks and the safety violations are the most vibrant ethical risk where the organisation do not take adequate measures for the safety of its employees. The other ethical risks comprises of improper recruiting practices where the organisation hire the employees on the basis of inequitable practices and there are unfair activities involved which made the recruitment process unethical (Isidorsson, 2010). There are ethical risks related to discrimination at the organisational workplace where there are discrimination on the basis of races and gender. The existence of discrimination results in un-ethicality in the organisation which ultimately impacts the performance of the employees, organisation and the overall productivity as a workplace where there exists discrimination, there is increased rate of turnover and declined organisational productivity. The researchers and theorists have discussed a number of other ethical risks too that comprises of putting own interests ahead of organizations by the organisational leaders, cases of sexual harassments, abusive behaviour and ambiguity in operations (Johnson, 2017).
Organizational performance defines the performances done by the different departments of the organization such as performance of finance department, marketing department (Jondle et al. 2013). The organizational performance largely influenced by the ethics as to perform a smooth task the factors like organizational behaviour, organizational culture and ethical leadership has to stay aligned. There is a direct impact of the ethical risks on the performance of the organisation in various aspects that weakens the overall growth of the organisation. Being ethical is extremely vital for eth present business organisations as the ethical behaviour ahs became a significant part of the business (Kuntz, et al., 2013). From the customers, employees or the societal point of view, ethicality of the business organisations play a vital role for attaining increased level of support from all these groups. The ethical behaviour of an organisation can increased the productivity and helps in gaining a number of advantages and on the other hand the unethical behaviour can result in a number of negative implications for the organisation (Lefkowitz, 2017).
According to the authors, the most dominating impact of the ethical risks on the organisational performance is in respect with the weakened financial performance. The ethical risk has a negative impact on the revenue of a company as there is a positive relation between the financial performance and the ethical behaviour. According to the modern theoretical aspects, if the ethicality of an organsiation decreases so the financial performance (Wang and Hsieh, 2013). Because of the unethical actions and behaviour, the customers tend to switch to other brands which results in defined sales of the products and services. The other result of unethical behaviour is declined on investments by the stakeholders and the investors that reduce the capacity of the organisation to undertake the huge business operations and thus the overall financial performance suffers (Trevino, den Nieuwenboer and Kish-Gephardt, 2014). The second key impact upon the organisational performance is lower competitive advantages. The organisation that has high corporate social responsibility and is ethical in nature and in business operations achieves increased level of competitive advantages where they can support from the Government as well as from the communities but unethical behaviour or ethical risks results in no cooperation from the Government and as a result there are decreased number of competitive benefits to the organisation (Ruiz and Martinez, 2014).
The next negative implications of the ethical risks on the organisational performance is increased operational costs as the companies who do not practice ethical practices of going green and have their regular business operations have increased operational costs of fuel, etc. And as a result the ethical risks also challenge the sustainability of the business operations which results in huge loss of the organisations in terms of increased operation cost. If the operational costs are increased, the revenue is decreased and so the performance of the organisation suffers from overall perspective (Ruiz, Martinez-C and Fontrodona, 2013). The next impact on the organisational performance is the deteriorated or the ruined brand image as once the ethical positions of any organisation is challenged or sound unethical then there is a major influence upon its brand image. The customers tend to perceive the brand image in a negative sense and there is detachment of the customers as well as the ruined or weakened brand image is unsuccessful in fetching the attention of the potential talent as employees as well as the customers. Therefore, the overall performance of the organisations gets declined (Michaelson, et al., 2014). The last key impact of ethical risks upon the performance is that these ethical risks are the barricades in the growth and success of the organisation. Every organisation needs the support from the community, customers, employees, Government and the various other stakeholders for a long term sustainability and continuous success. But the ethical risks is the biggest threat to get support from these group of individuals and therefore, the overall success and growth of the organisation is challenged because of the presence of the organisational ethical risks (Ferrell and Frederick, 2015).
Due to presence of ethical risks in the organisations, there are various challenges that the management of the organisation has to face. Because of the pressure imposed by the ethical risks, it becomes challenging for the mangers to have maintained the organisational behaviour as well as managing the various segments of the organisation in respect with the employees and their individual behaviour (Lindorff, 2007). The first and the most threatening challenge a faced by the management is the international competition as because of the ethical risks, the brand value or image of the organizations get ruined and so the overall success and competitive benefits of the company started declining. In such a global world of business, there is intense market competition and the ethical risks make it much difficult for ten companies to exist (Mason and Simmons, 2014). Therefore, sustaining the international competition becomes challenging for the organisational managers. Another challenge for the organisational management is to manage the commitment and motivation of the employees. Due to ethical risks and identified unethical behavioural practices of the organisation, the trust and commitment of the employees started weakening and the level of motivation also declines (Michaelson, et al., 2014). All such factors results in increased turnover rate as well as ineffective performance of the employees. It becomes challenging for the managers to boost the morale of the employees and attain better and improved performance level. Therefore, retaining the workforce and having efficient and productive results becomes a challenging task for the management. The next challenge faced is of ethical behaviour as when there are ethical risks in the organisation, the employees also tend to perform in an unethical way because of the growing practices of un-ethicality in the organisation (Piccolo, et al., 2010). The employees and other organisational staff started indulging in the practices which are unethical. Thus, maintaining an ethical organisational behaviour is tough for the organisational management. From the overall perspective it becomes challenging for the organisational management to find out the key reasons behind the occurrence of unethical behaviour in the organisations, highlighting the significance of the organisational culture in the establishment of the ethical behaviour within the organisation and implementing adequate strategies for developing and maintaining an ethically-oriented culture (Rahman, 2014).
To mitigate the ethical risks it is important to follow a systematic way to identify the problem first. A common mistake often happens is that, organization tries to cover up the problem in order to safeguard the goodwill but it has an adverse reaction which appears worse than the previous. It is important to investigate the issue in detail instead of suppressing it (Jondle et al. 2013). This solution in long will appear term sustainable to the organization at large. An organization should make the ethical training compulsory among its employees. Increase of communication may help to identify the illegitimate actions within the organization. To mitigate ethical risks in organizational performance the employees should be given the freedom to choose so that they will get the space to identify the unethical actions (Ruiz-Palomino and Martínez-Cañas, 2014). An organization should rationally analyze an issue to identify the root of the unethical actions. After the rational analysis alternate way and opportunity will come out to re-establish organization’s good will. Ample amount of time should be given to the employees in terms of reducing unethical issues, hence patience is essential (Voegtlin, Patzer and Scherer2012). In terms of constructing an organizational behavioural rule one needs to have proper insight so that it does not curb the rights of the employees that help to reduce ethical risks. A regular interval of communication is needed with the employees just to ensure that the employees can feel the fact that they are important people of the organization (Salleh, et al., 2013). The organization should look after the proper wages and promotion that are allotted to every scale of employees to reduce the conflict inside the organization. A regular interval of psycho analysis of the employees should be conducted as human behaviour is the representation of human psychology. There can be mitigation of ethical risks by having a strong and ethical leadership in the organisation. Ethical Leadership defines a leadership which highly depends on the morality, values dignity, ethical beliefs and rights (Sims, 1992). The ethical leadership maintains the balance of trust, honesty and fairness just to stay transparent to its internal and external people. The leadership maintains the ethical values which are socially acceptable without curbing anyone’s fundamental rights. To carry out the leadership ethically a leader should be particular in his or her action towards any issue (Bello2012). There are some other qualities that an ethical leader should own such as, unselfishness, sober and respectful towards its subordinates. A leader should be a good communicator unless he or she will be unable to teach ethics to the subordinates. Apart from the ethical teaching communication is needed to maintain constant good relation with the employees to prevent misunderstandings (Walumbwa et al. 2012). A healthy communication between a leader and employees helps to mitigate anxiousness and fear as transparency can be properly maintained.
This segment of the research paper provides an overview of the research methodology that has been used in this following study. It offers a complete description of the tools and methods employed for the collection of data, data analysis and the sampling. It also highlights the various ethical considerations in regards with the research undertaken.
For undertaking the following research, there are prominently taken use of two specific methods that comprises of a qualitative research method and a quantitative research method. There are studies which require both the methods to have effective and the adequate results as many a times the data is required to be analysed by both the qualitative as well as quantitative analysis. Following are some of the reasons because of which the researchers take use of both these methods in their research.
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Quantitative Method |
Qualitative Method |
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· Primary focus of the quantitative method is on the testing and verification of data. · The emphasis is on the facts and the various social events. · The approach used is logical and critical in nature · The research is objective in nature and there is some kind of distant from the data. · The researcher undertakes hypothesis testing · The research is result oriented |
· The primary focus of the qualitative method on understanding · The emphasis is led upon comprehending the respondent’s opinion or view point. · There is a use of interpretational and rational approach. · There is closeness towards data with a subjective approach. · The research is process oriented as well as explorative. |
To answer the research questions of the study, there will be used structured interview i.e. a quantitative method. In such type of research, there will be taken use of structured interview with open-ended questions. The primary reason behind the selection of this method is to gather an accurate view and insight opinion of the respondents as well as it also helps in the identification of the information that usually lacks in other researches. And for that there is an effective use of using quantitative approach ass it is much relevant. There is also taken sue of the qualitative methods for the research for analysing the interview questions as there is an extreme need to have an extensive or broader viewpoint to attain much improved results (Trevino and Nelson, 2016). The key reason behind the selection of the interview method is to gather broader set of info and discussion over the subject of the study. There will be performed analysis of the responses of the managers of various branches of Woolworths to get a broader aspect of info so that it can support in successful gathering of data and help the organisation to manage these ethical risks by the means of mitigation strategies.
The structured interview was performed by taking responses from the various managers of Australia’s one of the most recognized and well know retailer and supermarket chains named Woolworths. The key reason behind performing these interviews is to get complete and deep knowledge of the impact posed by the organisational ethical risks and to have a broader perspective of knowledge.
The data collected from the structured interview as well as the secondary data collected will be arranged through a Jig jaw puzzle technique which means that there will be a form of symmetry or connection among the data collected so that the readers can draw a meaningful conclusion and analysis from the study. And the data will be analysed through qualitative approach so that a complete and adequate insights can be gained with a concluding response.
There are few ethical considerations which are connected with the research as there is less of objectivity because of the fact that there is taken interview of few of the managers and not all as well as the data is also collected selectively from the secondary sources and thus there cannot be gained an accurate and correct statement which can be stated as completely reliable from all the aspects. Therefore, from the ethical point of view the results and outcomes are not much considerable (Treviño, den Nieuwenboer and Kish-Gephart, 2014).
There was conducted interview of the managers of Woolworths in response with the research questions of the structured interview which were framed for the study or the research conducted. There will be collected responses from the managers by taking use of a one-to-one approach. The following are the responses to the research questions which have been gathered from the interview:
The primary objective of this research was to understand and analyse the impact of the organisational ethical risks on the performance of the selected Australian organisation named Woolworths. The respondents were the various managers of the selected organisation who have a wide experience of working in the company and have also faced issues related to ethical risks in their working association with Woolworths. From the findings and the results of the research undertaken, it can be critically evaluate and analyse that the responses received and evaluated through the aspect of Reciprocity theory, it is analysed that the organisational employees as well as the organisation tends to perform in a more improved manner when there is increased level of ethical practices implemented in the organisation (Wang and Hsieh, 2013). The higher the levels of ethical practices in the organisation are, the better is the organisational culture and organisational behaviour which lades to a better working and productivity. From the results attained, it can be justified that there is a positive correlation between the ethicality of bushiness and its performance in respect with the factors such as ethical leadership, organisational culture and organisational behaviour. It explains that if the ethical position of any organisation will increase, the productivity and the performance of the organisation will also increase and if the ethical position will decrease, the performance for the organisation will experience a decrease (Weiss, 2014). The managers responded that when Woolworths have faced some ethical issue at that point of the the tome not only the sales of the organisation has decreased but also the performance of the employees also suffered as well as there was a negative brand image that developed in the market.
From the aspect of the utilitarian theory and response to the research questions of the impact in the organisational performance, it has been evaluated that if the organisations remain ethical and take decisions on the basis of the utilitarian ethical theory then there are chances that the organisation will attain a number of benefits as the decision will be ethical in nature as well as will do maximum benefit to the maximum number of people (Griseri and Seppala, 2010). The more ethical actions of the organisation is and the lesser the ethical risks, the better is the performance of the employees and so the overall results on the company. From the results and the analysis of the findings and the respondents’ answers, it is clear and evident that due to the presence of ethical risks in the organisation there are several challenges for the management which also impacts the performance of the employees at the individual level (Yidong and Xinxin, 2013). And therefore, it is analysed that because of the ethical risks not only the performance of the suffer but there is increase in the rate of employees’ turnover, decreased motivation level of the employees, ruined brand image, deteriorated workplace culture and organisational behaviour and many other negative impacts are experienced by the organisations. And from the overall analysis, results and the findings, it can be analysed that being ethical is one of the primary needs of the present business organisations as it is one of the key aspects by which the organisations are evaluated. It is essential to have ethical practices and policies to be followed by the organisations to gain better competitive benefits and achieve better outcomes (Dewey, 2016). As well as, it is also believed that there are several opportunities that are available to the organisation if it remain ethically upright and Woolworths can also get support from the governmental bodies and also increased customer bases if it emphasis on remaining ethical in all its operational, functional as well as human resource practices.
From the overall discussion and the analysis performed of the study, it is recommended that Woolworths as a retail giant of Australia must have its more key emphasis and focus on the ethical risks of the company as well as the level of ethicality present in its activities and functions. It is firstly recommended to Woolworths that it must have a complete analysis of all its processes and wherever there has been identified any sort of gaps or unethical behavioural practice, then it must have proper approaches and strategies for the elimination of the same. It is also recommended to the organisation that it must have implementation of ethical practices and must have a proper check that they are been practiced on a regular and continuous basis and all the organisational decisions are based upon those practices only. There is also a need to have trainings to the employees to remain ethical in their working and make them understand the significance of remaining ethical at both the individuals’ level as well as the organisational level. Such trainings will help in gathering complete support of the organisational employees in the process of getting ethically sound (Broad, 2014). Another recommendation which can benefit Woolworths is that there must be an external audit of all the programs and activities of the organisation. The external ethical audit wild help in analysing the presence of ethical aspects in the activities and functions of Woolworths and if there is found any kind of lack or deviation from the practice implemented, there can be in formed at the same time so that the company can be saved from eth various consequences and aftermaths of the organisational ethical risks. The next recommendation for the organisation is that there must be made improvements in the sourcing which means that there must have high focus on having ethical sourcing which illustrates that there must be least impact on the environment, have sustainable supply chains as well as the recruitment process should be free from any kind of discrimination or unethical practices so that Woolworths can be sound internally ethical and moral. It is also recommended that the organisation must publish the sustainability report highlighting the initiatives taken by the organisation for achieving increased level of ethicality in the business operations. This will help in gaining increased support from the society and the government as well as for achieving higher customer bases. Recommendation to have a more significant and positive impact on eth organisational performance in context with the organisational ethics, it is necessary that Woolworths must also work invest a proper budget for the implementation for the ethical practices, taking ethical initiatives and having increased level of ethical consideration in managing the human resource of the organisation so that there can be achieved better performances from the employees while maintaining strong organisational culture (Sekerka, Comer and Godwin, 2014).
Conclusions
The study offers vital responses to the objectives or the research questions. The primary objective of the report was to understand and analyse the impact of the organisational ethical risks on the performance of the organisation and it can be concluded that in Woolworths there are ethical practices and policies which are followed in the organisation but still there are various circumstances or situation when the organisation sounds ethically weak which in return affects the overall performance of the employees as well as the organisation. there is s need that a more emphasis must be paid by the company on its ethical practices of going green, equality in rewards and recognitions, ethicality and equitable behaviour in hiring and many other factors so atht it can be recognized as a more ethical organisation. It has been stated and concluded that if Woolworths take use of utilitarian approach in decision making then the overall decisions of the organisation will be ethical and have positive impact on all the stakeholder groups (Rahman, 2014). As well as there will also be imp-roved organsiatioanl performance in terms of employees’ productivity, efficiency, increased number for customer base, higher treveejnu8res, string brand image and effective organisational management.
The limitation of the study is that the sample size is randomly taken and is also considered as small for analysing the impact of the organisational ethical risks. Another limitation of the study is that the answers are based upon the personal beliefs and experiences of the respondents rather than the historical data of the company or past events. Thus, the responses comes individuality in the opinion. It is necessary to have a wider scope of eth analysis, there must be taken more relevant data from the past events, reports and more number of respondents (Trevino and Nelson, 2016). So that there can be gained a broader view of opinions and analysis for getting more accurate and correct outcomes of the research undertaken.
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