Ethical Leaders And Workplace Culture: The Foundation Of Ethical Decision Making

Guest post by Dr. Steven Mintz:

Ethical leaders create a culture in the workplace that promotes moral values and establishes an ethical tone at the top. Creating an ethical culture means setting a standard that decisions are made and actions are taken that are right, not wrong; good, not bad; and they benefit the stakeholders of the organization. Ethical leaders are role models for others in the organization to follow. They “walk the talk” of ethics in everything they say and do. Ethical leaders empower others to achieve success through right actions. They make decisions that contribute to the common good.

Employees want to work for ethical organizations. Ethical organizations treat employees with respect and promote fairness in the performance evaluation process. Employees are compensated based on results and not biased choices where one employee is favored over another and compensated higher for the same quality of work. The gender pay gap is one such example.

An ethical workplace culture is one where moral values define relationships between employees, the organization and other stakeholders. The congruence of employee-employer values facilitates ethical decision making while gaps in those values can promote conflict and create an ethical dilemma. For example, a superior who pressures a subordinate to overlook financial wrongdoing creates a dilemma for the employee that can best be expressed as: Should I do what my superior demands or what I know to be the right thing? 

Turning Moral Values into Virtues

The moral values of an ethical leader include honesty, integrity, respect for others, fair treatment, being responsible for decisions and accountable for one’s actions. Moral values encourage positive relationships built on respect, trust and transparency.

One way to understand the role of moral values in an ethical workplace is through the concept of virtue. Virtues are characteristic traits of behavior that ethical leaders should aspire to adopt. They are often thought of as excellences of character and categorized as either moral or intellectual. Moral virtues govern our behavior (e.g., courage, justice, self-control and truthfulness) while intellectual virtues deal with our thought process and are acquired through understanding, good judgment, reasoning abilities and practical wisdom. Intellectual virtues are gained by deliberating about what should and should not be done.

Turning virtue into ethical action requires a commitment to do the right thing regardless of the costs to oneself and the organization. Sometimes this is easier said than done because internal pressures create barriers to ethical decision making as in the case of financial wrongdoing.

Ethical Decision Making

The ethical decision-making process begins by identifying the moral values in play. The following example illustrates how ethical judgments are made.

It is 5 p.m. on Dec. 29 and the chief operating officer (COO) meets with the production manager about a major shipment of product to a customer. The COO tells the production manager to ship the product within the next two days to ensure it is counted as revenue in the current year. The motivation is to pay larger bonuses based on the higher level of revenue and profit. The production manager reminds the COO that an agreement exists with the customer to inspect 100 percent of the product prior to shipment and it cannot be done by December 31. What should the production manager do?

The production manager knows that what is being asked is wrong. After all, why should the customer be burdened by possible defects in the product that went undetected because inspections were not made? The COO is motivated by short-term considerations – higher profits and greater bonuses – rather than long-term ethical behavior.

An ethical production manager should be guided by the following virtues:

Honesty. Shipping the product without inspecting it violates the agreement and potentially compromises the trust of the customer.

Responsibility. The ethical question for the production manager is: How would I feel if the customer identifies a defect in the product and I failed to insist on 100 percent inspection? What if the product defect caused harm to the customer? Can I ethically defend my decision to go along with the COO?

Courage. Integrity is the key meaning to have the courage of one’s convictions to do the right thing precisely because it is the right thing to do. The production manager should be willing to stand up to the COO and not give in to the pressure, even if threatened with retaliation.

Good judgment. An ethical leader relies on reasoning methods such as teleology, or consequence-based ethics, and deontology, or duty ethics. The reasoning process for the production manager follows.

Ethical Reasoning Process

Teleology. Teleological ethics relies on an ethical analysis of the outcomes or consequences of each action. The best choice is that which maximizes the benefits to the stakeholders while minimizing the costs. The benefits are higher revenue, greater profits, and bonuses. The costs are largely unknown because it is unclear whether any defects exist and, if so, how they might affect the customer. This uncertainty is why cost-benefit analysis is problematic. 

Deontology. Deontological ethics, or duty ethics, bases moral decision-making on foundational principles of obligation. A major approach is rights theory under which each individual has certain rights that should be respected and decision-makers have an obligation to satisfy those rights. Simply stated, the customer has a right to use a product and expect it to operate as intended. The company has an ethical duty to meet the legitimate rights of the customers for a fully functioning product.

Ethical Decision

Knowing what the right thing to do is and doing it are not the same. The fear of retaliation can negatively influence ethical decision-making. However, an ethical production manager should understand that going along with the COO can create an ethical slippery slope problem where decisions in the future are tainted by unethical behavior in the present that has to be covered up. This is no way to promote ethical leadership and create an ethical organization environment.

Dr. Steven Mintz (www.stevenmintzethics.com), author of Beyond Happiness and Meaning: Transforming Your Life Through Ethical Behavior, has frequently commented on ethical issues in society and business ethics. His Workplace Ethics Advice blog has been recognized as one of the top 30 in corporate social responsibility. He also has served as an expert witness on ethics matters. Dr. Mintz spent almost 40 years of his life in academia. He has held positions as a chair in Accounting at San Francisco State University and Texas State University. He was the Dean of the College of Business and Public Administration at Cal State University, San Bernardino. He recently retired as a Professor Emeritus from Cal Poly State University in San Luis Obispo.