Ethics in OD: Meaning, Factors Influencing Ethical Judgement

An organization is generally defined as a group, in number from two people to tens of thousands of people, who intentionally aims to accomplish a shared common goal or a set of goals. In order to achieve shared goals, the organization acts as a system composed of:

(i) Inputs such as resources both human and monetary

(ii) Processes such as strategies to accomplish goals

(iii) Outputs such as products and services.

(iv) Outcomes such as end results or benefits to consumers.

The ethics of the organization refers to the active attempt of the organization to define its mission and core principles, to identify values which can cause tension, to seek best solutions to these tensions, and to manage the operations which maintain its values.

Organizational ethics includes all those actions which are embedded into several issues such as informed consent, research, marketing, access, conflict of interest, financial management, and public policy etc. They provide a means for them to be addressed by individuals within the organization. There are guiding principles which are to be used to guide ethical organizational behaviour which are to be considered, implicitly or explicitly, in every decision made by the organization and its representatives. The guiding principles include:

(i) Carrying out of the duties in a faithful and disciplined manner.

(ii) Honesty in financial dealings.

(iii) Giving work output which is of high quality.

(iv) Fulfilling of duties towards fellow employees.

(v) Respecting the organizational codes of conduct.

(vi) Respecting the disciplines connected with various organizational and technological processes.

(vii) Fairness in dealings with people both inside and outside the organization,

(viii) Fair distribution of scarce resources.

(ix) Complying regulatory norms without any violations.

(x) Fulfilling duties towards community and preservation of environment.

Reduces Financial Liabilities

Organizations that don’t develop policies on ethical standards risk financial liabilities. The first liability is a reduction in sales. For example, a real estate development company can lose customer interest and sales if its development reduces the size of an animal sanctuary. This doesn’t mean a company must abandon growth. Finding an ethically responsible middle ground is imperative to sway public opinion away from corporate greed and toward environmental responsibility.

Builds a Positive Corporate Culture

An organization devoting resources to developing policies and procedures that encourage ethical actions builds a positive corporate culture. Team member morale improves when employees feel protected against retaliation for personal beliefs. These policies include anti-discriminatory rules, open door policies and equal opportunities for growth. When employees feel good about being at work, the overall feeling in the organization is more positive. This breeds organizational loyalty and productivity, because employees feel good about showing up for work.

Minimizes Potential Lawsuits

The second area of financial liability exists with potential lawsuits. No organization is exempt from a disgruntled employee or customer who claims discrimination. Sexual discrimination in the workplace is costing CEOs, politicians and celebrities their livelihood because they are not appropriately dealing with accusations and harassment claims. Organizations must maintain policies and procedures addressing various types of harassment and discrimination. Moreover, organizations must remain consistent in the execution of policies dealing with accusations. This helps reduce frivolous lawsuits that could bankrupt smaller organizations.

Factors Influencing Ethical Judgement

Three of the important components of ethical decision making are individual factors, organizational relationships, and opportunity.

The eight steps are as follows:

1) Identify the problem or dilemma

2) Identify the potential issues involved

3) Review the relevant ethical codes

4) Know the applicable laws and regulations

5) Obtain consultation

6) Consider possible and probable course of action

7) Enumerate the consequences of various decisions

• Ethical intensity is the degree of importance of an issue for an individual or group. The factors that determine ethical intensity include the following:
• Concentration of effect, or the number of people affected.
• Magnitude, or significance of the consequences.
• Proximity of the decision maker to the victim or beneficiary of the decision.
• Social consensus that a proposed decision is negative or positive.
• Probability that the decision implemented will lead to the predicted consequence.
• Temporal immediacy, or the elapsed length of time between when a decision is made and when the resulting consequences occur.

Principles of Ethical Decision Making

After ethical intensity, a thoughtful manager will consider the principles that might apply to an issue. There is no one set of principles to check off, but the seven listed here are common to most people.

• Long-term self-interest means the pursuit of outcomes that will benefit the self in the long run. For example, a company must make choices to ensure its continued existence. The costs and harm from failure are substantial.
• Legal and regulatory requirements set the minimum standard for behavior. Any company or individual can disagree with the law, but given the consequences, it must be done carefully.
• Personal virtue refers to conformity to a standard of righteousness. You should make choices that are honest and truthful individually. The good of the company does not justify lying.
• Individual rights are related to the freedom to act and think without punishment through regulatory, legal, or societal means. For example, we make individual health decisions to smoke or drink beverages loaded with sugar even though the health costs are borne by many through private and government insurance programs.
• Utilitarianism seeks the greatest benefit for the maximum number of people. This is often difficult to judge over large groups of people.
• Religious injunction is the main moral and ethical guide for many people.
• Distributive justice is the fairness of the outcomes. That is, how are the benefits shared or distributed among the individuals in a group? The US market system can have winner-take-all outcomes. Our welfare system redistributes a little to the losers in the market game who are also part of our society.