The Role of Ethics in the 21st Century – Building and Sustaining Ethical Organizations

Introduction

The establishment and adoption of a set of meaningful ethics is one of the most critical issues facing organizations across the globe. Throughout the 20th and into the 21st century, ethical scandals and illicit behavior have plagued organizations, resulting in insurmountable financial losses exceeding billions of dollars, bankruptcies, and failed moral leadership. These acts all could have been prevented if sound ethical programs and leadership accountability had been in place. There are numerous examples of ethical failures over the last thirty years such as the home mortgage scandal that contributed to the great recession of 2007, Bernie Maddoff and his ponzie scheme, and high profile organizations such Tyco and Enron. This article provides a modern-day definition of ethics, discusses warning signs of emerging ethical failures, and finally, presents best practices to create a moral and ethical organization for the future.

Ethics defined

What are ethics? While many definitions and interpretations exist, Ciulla (2014) posits that ethics, “is about how we distinguish between right and wrong, or good and evil in relation to actions, volition, and characters of human beings” (p. xv). Ethics form the relationship between followers and their leader who agree on specific values that create and build their culture (Schein & Schein, 2017).

 It is important to establish the basis for the determination of ethical values, as what one group may state as ethical, another group may claim unethical. For example, in the United States, bribery (accepting monetary gifts) is illegal for preferential treatment. However, in some cultures and countries such as Brazil, this behavior is well accepted and perceived to bring about the greater good for society and efficiency of business transactions. Determining if a bribe is unethical can become a complicated matter. For instance, a utilitarian ethicist (Fedler, 2006), takes a cost/benefits position of bribery. If they determine the bribe provides for the greater good of the organization, then a bribe is not immoral or unethical, but rather a normative behavior of the culture and geographic location of the organization (McGee & Hernandez, 2012). To avoid ambiguity, misinterpretation, and ethical “shades of grey” (Bishop, 2013, p.636), organizations must establish and maintain clarity as to their ethical standards and behaviors early on, if they are to succeed and remain relevant. A Christian leader should ask, how are their ethical standards transforming and guiding others to live an ethical and moral life? In tandem, how are they daily growing and refining their ethical standards and behaviors?

Warning Signs of Ethical Failure

The establishment of meaningful and effective organizational ethics are one of the most critical issues facing public and private organizations, including their leaders and the people whom they lead and serve. Scandals continue to emerge from leaders pursuing self-serving “political, religious, athletic, environmental, and social goals” (Ambrose, Reynolds, and Schminki, 2011, p. 1). What are early warning signs of ethical failures? What should organizations keep in check to ensure they do not progressively become unethical in their business or service to their customers or stakeholders? Ethics starts with leadership.

 One of the first signs of ethical failure is a leader who leads through ethical egosim, meaning “what is best for me” leadership (Fedler, 2006, p. 15). These are leaders who act in what is in the best interest of themselves. An egoism leader will defend their position as morally right, even in the face of knowing it will only benefit themselves. An example of this behavior is lying to protect a relationship that the leader benefits from, even if it is morally wrong. A Christian leader is to abstain from promoting themself above others and elevate their followers ahead of themselves as a servant leader (Greenleaf, 1970).           

Another sign of ethical failure can result from an evaluation of how fiscally responsible and accountable is the leadership and their staff. Do they spend company funds on exclusive items such as office furniture, vehicles, exotic trips, and dining at the expense of the organization? Christian leadership is just as vulnerable to these illicit behaviors. Even if these expenses are not overt or may seem small, they are wrong. Is the leader caught up in the pre-occupation of themselves where they seek symbolic and material success? This points to an organization becoming “CEO-centric” (Snow, 2009, p. 24). An example of this is Tyco corporation, who during the early 2000s, was brought up on corruption charges for unethical business dealings. The CEO, Dennis Kozlowski was accused of “operating the company as if it were his own personal, private bank”  (Carrigan & Alex, 2015, p. 530). He also secretly, without board approval, forgave company loans mounting in the tens of millions of dollars range to Tyco executives who were part of his “ring of favorites” (p. 531).

In organizations, “good news is accelerated, bad news is amortized and compromises soon create a toxic culture” (Snow, 2009, p. 24). As in the case of Tyco, they became a powerhouse in growing aggressively with revenue consistently exceeding expectations while its “long term debt more than doubled,” quietly without notice (Carrigan and Alex, 2015, p. 530). Leaders who only present positive results and do not reveal potential problems or risks, financial or otherwise, will eventually engage in unethical actions to cover up their behavioral wrongdoing. When a leader purposely takes advantage of these resources for personal benefit, they harm “the well-being of customers or other external stakeholders, and possibly even society” (Kalshoven, Dijk, and Boon, 2016, p. 502).

Developing and Implementing Ethical Standards and Practices

Building a vibrant, trusting ethical culture

According to leadership author and scholars, Edgar Schein and Peter Schein (2017), culture “can be defined as the accumulated shared learning of that group as it solves its problems of external adaptation and internal integration” and a “shared product of learning” (p. 6). An organization's culture is made up of individual and collective values, such as respect, honesty, integrity, responsibility, compassion, fairness, hard work, and individualism. Culture defines “the core values, assumptions, interpretations, and approaches that characterize an organization” (Cameron & Quinn, 2011, p. 35).

First, the most important and critical task of a leader is to create and support an ethical culture of core values everyone will embrace and share the same vision of the organization (p. 60). Second, the organization should have a standard or “shared language” (Grigoropoulos, 2019, p. 171) interwoven into the DNA of its culture. This will ensure everyone understands what is being communicated and the expectations for how they will engage and function as an organization. Third, an ethical program should be a significant component of creating and sustaining the culture. Leadership should routinely validate and examine the strength of the organization's culture through yearly assessments, ensuring ethics remains at the heart of all internal and external business transactions. For a Christian organization, ethics is based on biblical ethics. The greatest challenge is for a secular organization to embrace Christian ethics.

Modeling ethical leadership - the role of the Christian leader

Ethical behavior and its promotion to the organization begins with the leader. They hold the sole responsibility to lead by example for all to see and to embody the ethical values and virtues of the organization (Kouzes & Posner, 2012). They must espouse and model “integrity, moral behavior, honesty, trustworthiness, consistency” (Grigoropoulos, 2019, p. 172). A leader must set the right course for their followers, modeling the way of ethical engagement, while making fair and just decisions. In turn, followers align with the ethical behavior displayed building trust, “confidence, pride, self-esteem and self-worth” (p. 172).  Because of recent ethical failures in the public marketplace such as Tyco, and “Enron, Bernie Madoff,” (Bocarnea, Henson, Huzing, Mahan, and Winston, 2018, p.53), attention has shifted to the “moral and ethical behavior” (p. 54) of leadership and their character development. Virtues form behavioral habits, which in turn, creates and molds character. A Christian leader should always evaluate how they live out and apply ethics both in their work and personal life, mirroring each other. Ethical leadership that exhibits the fruits of the spirit, love, joy, peace, patience, kindness, goodness, faithfulness, gentleness, and self-control (Gal. 5:22-23), and accountability of actions, is critical for success of today’s Christian leader.

 Proactive and preventative ethical norms and behaviors

The Christian leader and their followers must always look to the bible to determine what norms and behaviors are acceptable both inside and outside of the organization. To define an organization’s ethics, questions should be asked such as, how are the employees treated, how do they relate and engage with customers, what is their involvement in the community, are they known for contributing to the greater good of society through charitable causes? Ethical conduct and behavior will clearly show in their actions inside and outside of the organization. How do the leader and follower respond to ethical decisions within their norms and customs? What values do they employ in the decision-making process to arrive at the expected outcome?

The Apostle Paul expressed concerns about knowing what he should do that is just and ethically right, yet he chose to do what he wanted to do instead. “I do not understand what I do. For what I want to do I do not do, but what I hate I do” (Romans 7:15). This scripture points that even Christian leaders cannot meet the ethical standards set by the bible. Therefore the organization should allow for ethical failures as well as provide ways for moving forward through confession and restitution. The ethical failures don’t change, the leaders and followers are given grace to change and become more Christ like. A Christian leader and follower are called to a higher standard to practice virtue ethics (Fedler, 2006), which looks to the character attributes of the leader in making ethical decisions. Does the Christian leader display honesty, integrity, compassion, humility, and trustworthiness, which come from the fruits of the spirit? Do they encourage and teach their followers to apply these character attributes? Effective ethics answers the question, how ought the leader respond according to God’s ethical standards and behavioral expectations?

The Ten Commandments as a value standard

All leaders and followers require a way to measure or quantify their behaviors and actions against what is morally and ethically acceptable in their organization. The Ten Commandments serve the Christian leader and follower as an excellent example for such a standard, calling out in black and white, “though shall or shall not” do. These commands or moral laws from God originate from the covenant relationship with Him (Ex, 20:1-17). “The ten commandments are based on fundamental values from which ethical standards are derived” (Bishop, 2013, p. 637).

Conclusion

Looking back at the first part of the twenty-first century, it may be said this period became known as the “age of ethical failures” (Bishop, 2013, p. 637), with numerous scandals and individual greed, resulting from unethical behaviors and practices. The role of ethics in all organizations remains unchanged: to prevent illicit and improper behavior and promote honorable and proper behavior by leaders and their organizations. Ethics must go beyond just abiding by the laws or rules of an organization or governing body, it must form and direct the thoughts and actions of its people towards fair, justifiable, morally right behavior and actions. Those organizations that invest in ethical programs and practices will be able to address ethical challenges of today and those in the future.

Peter Scheuermann is a Doctoral Student at Regent University pursuing a Doctor of Strategic Leadership (DSL). He has over 30 years’ experience in supporting, teaching, and advising customers on technology, organizational development, and change management.

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