Part A: Ethical Culture
Ethical culture constitutes a set of experiences, assumptions, and expectations of employees and managers of an organization about how the organization makes them behave ethically. Ethical culture makes stakeholders avoid unethical practices that main ruin their reputation as well as the organization’s reputation (Huhtala et al., 2016). In every organization, employees and managers believe there is something that prevents them from engaging in ethical practices, this makes them have a culture of behaving ethically, and this culture becomes part of the organization’s identity. Formal elements of ethics are more visible when compared to ethical culture. It is difficult to assess ethical culture because it is deeply rooted in the beliefs and minds of the employees (Huhtala et al., 2016). Ethical culture forms part of the employees, and it can only be noticed through keen observation of how employees behave.
Measuring ethical culture can be done by way of reviewing contracts that define an organization’s values, expectations, and assumptions that employees and managers may have. Important aspects of an organization’s culture are found in its values, expectations, and what employees and managers believe have to be done to maintain ethical standards within an organization (Sami et al., 2016). Ethical culture defines the ethical conduct among individuals in an organization. Employees would do certain things in a certain way when they believe that the action adheres to the ethical standards of the organization. Employees are not reminded of what they should do to behave ethically, but they find themselves avoiding unethical practices since ethical culture is deeply rooted in them.
Ethical culture makes employees very sensitive to any unethical behavior, thus report any unethical behavior they notice within an organization. When ethical culture is deeply rooted in employees, they easily get irritated by unethical behavior, for they believe any unethical behavior may affect an organization’s productivity. Organizations with strong ethical culture are likely to have employees that are loyal and report any practice that may derail their reputation. On the other side, organizations with weak ethical culture may not easily address unethical behavior as employees are too reluctant to report the unethical behaviors (Sami et al., 2016). However, employees’ ability to report or address any unethical behavior can be affected by certain factors such as age, tenure among others. Newly recruited employees may not report unethical behavior because they are not well conversant with the ethical culture, so they are still taking time to adapt. The level of trust for recruits is also lower than that of employees who have served for a long time.
How Ethical Culture can affect stakeholders of an organization
Employees are one of the stakeholders of an organization. With ethical culture in place, employees can have increased job satisfaction (Huhtala et al., 2016). Employees find work enjoyable in an environment where ethical standards are observed and the employees are given the opportunity and the peace they need to discharge their duties. An ethical culture that is sensitive to employees’ welfare allows the employees to report anything that they feel is affecting their well-being and service delivery within an organization. Employees feel motivated when their issues are addressed and allowed to have a peaceful working environment.
Ethical culture affects every individual in an organization, including customers, employees, executives, and suppliers (Huhtala et al., 2016). A stronger ethical culture leads to a good relationship between a company’s stakeholders and other stakeholders from other organizations. Good partnership leads to better ideas that help an organization to improve its service delivery and profitability. Each stakeholder in an organization is very important for the success of an organization, and therefore it is important to manage the stakeholders through ethical culture. With an ethical culture, executives in an organization ensure that they come up with policies that maintain the well-being of employees. Managers and other executives are very sensitive to the welfare of employees and they make rules that ensure ethical standards are adhered to.
Under the influence of ethical culture, executives are very careful about their actions and try to conduct themselves in a manner that does not go against the organization’s ethical standards. Managers understand that a business deals with humans, and they tend to apply this notion in every decision they make in an organization (Sami et al., 2016). Ethical culture creates an opportunity where stakeholders can meet together and get involved in making decisions that affect an organization. Every stakeholder is respected and treated as part of the organization, and therefore, no decision can be made without involving all the stakeholders. Both leaders and employees work as a team as a result of having ethical culture. The productivity of an organization increases as stakeholders are more concerned about the organization’s success. Ethical culture makes stakeholders loyal to the organization they serve (Huhtala et al., 2016). Employees for example can report any unethical practice within and outside an organization that can affect its performance.
Ethical culture motivates stakeholders to be innovative. Organizations with strong ethical cultures have their cultures deeply rooted in employees, and the employees try to do anything that can benefit the organization they serve. The stakeholders get committed to finding new opportunities for the company and coming up with innovative ways of ensuring the organization continues to remain competitive in the market. Ethical culture affects how employees handle customers (Trevino et al., 2017). Ethical culture promotes handling customers with decorum. With ethical culture, employees are treated well by their bosses, they become motivated and happy, then transfer this happiness to employees. It makes employees committed to customer satisfaction and therefore tries to offer excellent customer service. Ethical culture affects how employees respond to customers when they raise any complaint. Ethical culture makes employees act swiftly to ensure that good relationship is maintained with customers.
Ethical culture makes stakeholders to be committed to protecting an organization’s reputation; for this reason, employees will always take actions aimed at maintaining an organization’s relationship with customers and other stakeholders (Huhtala et al., 2016). Ethical culture also affects how employees relate among themselves. Behaving ethically and adhering to an organization’s ethical standards promote peaceful coexistence among the employees. Ethical culture affects how employees resolve conflict among themselves. With ethical culture in place, employees ensure that no conflict situation goes out of hand. It affects the mechanisms employees use to resolve conflicts by compelling employees to find conflict resolution methods that are in line with an organization’s practices.
Customers are other important stakeholders in organizations. Ethical culture in an organization makes customers loyal to the organization. Customers love where they are treated respectfully, and at the same time get the services they pay for. Ethical culture promotes ethical practices such as pricing and this makes customers treat an organization as honest. Ethical culture builds trust, thereby affecting the frequency by which customers transact business with a particular organization (Trevino et al., 2017). The stronger the culture, the stronger the relationship an organization has with customers. Customers can contribute to promoting an organization with ethical culture, by referring other potential customers.
Part B: Ethical dilemma
An ethical dilemma is a situation where one has to make decisions and select an option among two available options that do not meet ethical standards. Sometimes neither of the decisions is ethical but one has to make a decision and take a stand. Anyone within an organization can find himself in an ethical dilemma where tough decisions have to be made (LaMontagne, 2016). The options available in an ethical dilemma gives someone an option to compromise or violate the ethical standards in place. Some characteristics make up a situation of an ethical dilemma; first, one has to be faced with an opportunity where decisions have to be made. Here, there is no option but to make a decision and help an organization move forward.
The second characteristic is having more than one course of action to choose from, and there is a need to choose a course of action that will eventually benefit an organization. The third characteristic is that an employee or any stakeholder involved in an ethical dilemma is required to pick just one option from the options available and implement the decision arrived at (LaMontagne, 2016). Failing to act responsibly can cause great damage to an organization or the company’s reputation. It is therefore important to weigh the options available and speculate the outcomes of each before making a decision. The ethical dilemma presents a tricky situation where creativity and strategic analysis is required before arriving at any available decision. When a company is in an ethical dilemma in making a decision that touches on the sale of its products, for example, the decision arrived at can affect either the customers or the organization.
It presents a situation where an organization has to adhere to ethical standards and then become unsustainable, or compromise its ethical standards and continue to be in business. In an ethical dilemma, the decision arrived at favors one party, both parties cannot gain from a single decision; it is either the company suffers or the customers (LaMontagne, 2016). Since organizations are concerned about their prosperity, stakeholders usually think about selecting an option that favors an organization when they are faced with an ethical dilemma. Ethical standards are moral parameters that organizations usually use to judge what is wrong and what is right (Figar & Dordevic, 2016). Sometimes stakeholders can be faced with a situation where they have to choose from the wrongs available, and this results in an ethical dilemma. In the end, a decision has to be made because failure to make a decision can result in a lot of consequences for the organization.
Organizations can come up with ethical standards that guide how they do business and advise employees to adopt those ethical standards (Ferrel & Fraedrich, 2016). However, an ethical dilemma presents a situation where an organization’s ethical standards have to be compromised or violated to help an organization remain sustainable and competitive. Common ethical practices that define an organization’s ethical standards include; being honest, taking responsibility for an individual’s action, adhering to the company’s policies, acting according to the interest of stakeholders, and handling people equally. Other ethical practices include putting in place sustainable business practices and acting in the best interest of customers. An ethical dilemma can make an individual engage in an activity that is the direct opposite of one or more ethical practices dictated by the ethical standards (LaMontagne, 2016). For example, one may be faced with an ethical dilemma where he has to act in the best interest of the organization alone and not customers since the decisions to be made in that situation cannot benefit both the organization and customers at the same time.
A time comes when the stakeholders making decisions have to be concerned with the company’s sustainability more than how customers feel. Ethical dilemmas usually happen since ethical standards are sometimes contradictory (Figar & Dordevic, 2016). For example, there can be a situation where certain employees have to avoid telling the truth so that they can retain their jobs when they get threatened with firing. If a mistake happens in an organization and the employees are well aware that the mistake can lead to someone getting fired, nobody will admit to being responsible for the mistake just to retain their jobs. Being dishonest is an unethical practice, but it can be very beneficial when saying the truth can land someone in hot trouble. An employee faced with an ethical dilemma will choose to go against the organization’s and societal ethical standards and make a decision that can benefit him, for instance, a decision that can help him retain his job and position (Figar & Dordevic, 2016).
There are four types of ethical dilemmas that stakeholders can find themselves in; epistemic, obligation, world-imposed dilemma, and self-imposed dilemma (LaMontagne, 2016). The epistemic dilemma happens where stakeholders cannot determine the ethical principle that should be adhered to more than another. This ethical dilemma leaves stakeholders wondering what should take precedence over another. They get into a situation where everyone is confused about what to pick and what to leave out. A self-imposed dilemma can be created by an individual, for example, making too many promises to people and later finding out that all these promises cannot be fulfilled. If people realize that the promises they made cannot be fulfilled, they begin to become dishonest and try to avoid the individuals they promised anything. One of the ethical practices dictated by ethical standards is honesty. However honesty can sometimes be costly to an individual or an organization, thus individuals decide to be dishonest and avoid fulfilling promises that can leave them broke.
World-imposed dilemmas are situations that are beyond an individual or an organization’s control. An obligation dilemma occurs where stakeholders have very many options to make while making decisions, and more than one options are obligatory. Business environments are not new to ethical dilemmas, as they normally occur where stakeholders have to make decisions that have an impact on the profitability of an organization (LaMontagne, 2016). An example of an ethical dilemma in a business environment is when employees have to make a decision on reporting an incident of harassment at the workplace or keep quiet. In such a dilemma, an employee is aware that harassment is wrong but may feel guilty to report for fear of making his colleague lose his job. Again, the employee understands his obligation to report any unethical practice in the organization that can affect the well-being of an individual. In this context, I will choose to speak this out to other colleagues than report directly to the management. I will engage few employees in a collective analysis of the situation and see whether the harasser can be advised to change before tougher actions are taken.
Part C: Reflection of business ethics through 1992 to 2015
The article by Wood (2017) delves into business ethics from 1992 to 2017. It reflects how business ethics has been for 25 years. The article also addresses what needs to be done in the future as far as business ethics is concerned. To come up with the article, an academic researched business ethics from 1992 to 2017 and came up with some conclusions and recommendations for the future of business ethics. The article touches on sensitive issues that affect commerce concerning business ethics now and in the unpredictable future.
In the examination of business ethics for 25 years from 1992, it can be noted that a lot of changes have not occurred in organizations when it comes to behaviors. Business ethics remains a matter of concern even for the developed countries. There is a loophole, as it can be seen that business stakeholders are not putting much effort to promoted business ethics. The same behaviors witnessed from 1992 have remained to be in businesses even in the 21st century (Wood, 2017). No notable changes appear in businesses in terms of business ethics. Whether businesses have moved forward, and how far they have moved have become very difficult to determine, as behaviors have remained the same, and they are deeply rooted in businesses.
The article cites a lack of change in business practices, but it has a limitation that the research was conducted by one academic. The conclusions drawn are based on the experiences that the academic had for the 25 years that he chose to examine business ethics. The article looks at business ethics at an international level and explains some of the considerations that businesses need to put in place to improve on business ethics. The article points out that the improvement in business ethics requires stakeholders to come together and agree that change is required, then work together to bring that change in the field of business ethics. The article can be related to the organization that I previously worked for; that is IKEA. As much as IKEA has gone through a lot of strategic changes since its inception in 1958, there is no much change that can be attributed to business ethics. It is difficult to tell whether IKEA has moved forward in terms of business ethics, or how far it has come in respect to business ethics.
References
Ferrell, O. C., & Fraedrich, J. (2016). Business ethics: Ethical decision making & cases. Cengage learning.
Figar, N., & Dordevic B. (2016). Managing an ethical dilemma. Economic Themes, 54(3), 345-362.
Huhtala, M., Kaptein, M., & Feldt, T. (2016). How perceived changes in the ethical culture of organizations influence the well-being of managers: A two-year longitudinal study. European Journal of Work and Organizational Psychology, 25(3), 335-352.
LaMontagne, R. M. (2016). Ethical Dilemmas in the Workplace: HR Managers’ Perceptions of Behavioral Influences with Implications for Building an Ethical Culture in Organizations. International Journal of Knowledge, Culture & Change in Organizations: Annual Review, 15.
Sami, A., Jusoh, A., Mahfar, M., Qureshi, M. I., & Khan, M. M. (2016). Role of Ethical Culture in Creating Public Value. International Review of Management and Marketing, 6(4S).
Trevino, L. K., Haidt, J., & Filabi, A. E. (2017). Regulating for ethical culture. Behavioral Science & Policy, 3(2), 56-70.
Wood, G. (2017). Reflections on business ethics through 1992-2017. European Business Review, 29(6), 628-641. https://doi.org/10.1108/EBR-07-2017-0144
