Creating an Ethical Culture

Learning Outcomes

  • Describe how upper management impacts ethical culture

Each organization is responsible for creating and fostering ethical culture. The organizational level of a company creates a code of ethics to support the company mission statement and business principles. It is then passed down to every level of the organization to align everyone to the same goals. Individuals are then responsible for using the code of ethics to guide their daily decisions. So does it end there, where individuals are responsible for acting independently under the guidance of the code of ethics? In some ways, yes. Individuals are responsible for their own actions and decisions. However, management also plays a big role in helping to foster an ethical environment.

Management at the highest level creates the company code of ethics. They are the first level of management to influence company culture. It is up to them to ensure the code of ethics aligns with all of the company’s values and principles. As we discussed in the last section, the human resources management team is next in line to help implement the code of conduct by developing training programs for all employees to attend. They are also responsible for enforcing the code of conduct through managing ethics violation concerns. While the top dogs in the company and human resources each have a large role to play, the lower-level managers are equally important.

One woman is talking, while the other woman takes notes.Managers interact with their team on a regular basis. Therefore, they tend to have a better idea of what ethical culture looks like in their department. It is up to managers to reinforce ethical standards on their team. The best way for a leader to create an ethical environment is to act ethically themselves, to lead by example. That is the number one responsibility of leaders. When a leader is acting ethically, they become a role model for other employees. In addition, it gives them credibility and makes them more approachable. If someone witnesses an ethics violation by a coworker, they are more likely to report it to their manager if the manager follows ethical guidelines. It is then up to the manager to continue up the chain of command to report ethical concerns. If a report of an ethics violation is swept under the rug, more than likely, the unethical behavior will continue and possibly worsen. It is up to the management team to follow all policies and procedures in place to handle ethical concerns. There need to be repercussions in place for unethical behavior. On the other hand, it is wise for management teams to reward ethical behavior. This can help to create a positive incentive for acting ethically.

Practice Question

It is also important to note that even one manager or employee has the ability to damage a company’s reputation. Earlier in this module, we examined recent lawsuits and investigations; these cases are the perfect example of how even a few employees can destroy ethical culture and company reputation. Consistency in how ethics violations are handled is key to developing a strong ethical culture. If some ethical concerns are addressed while others are not, it creates inconsistencies that may suggest that unethical behavior is sometimes tolerated. Unethical behavior should never be tolerated. It is up to the management team, on every level, to enforce each component of the code of ethics and lead their team to do the same. Without a strong ethical management team, companies face an uphill battle to establishing an ethical culture.

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