Managing Ethics in the Workplace

Businesspeople giving a thumbs up sign.

Promoting ethics in the workplace creates a positive culture for managers and employees, as well as a successful business. The Society for Human Resource Management (SHRM) notes that the stock price growth of the 100 firms with the most ethical cultures outperformed stock market and peer indices by almost 300 percent, based on the most widely used measure of ethical workplace culture.

“The evidence indicates that a positive workplace culture predicts shareholder value by enabling superior value-creation,” according to the SHRM. “The ethics of a firm’s culture plays a significant role in creating and sustaining value.”

Businesses with strong workplace ethics add value to the organization and support an environment where employees feel safe and valued. Leaders can help create an ethical workplace culture that benefits shareholders, the organization and people in the company.

Employee Ethics

The study of business ethics refers to the ethical dimensions of productive organizations and commercial activities, and it applies to the production, distribution, marketing, sale and consumption of goods and services. Misconduct by employees and organizations can include anything from conflicts of interest to violations of company internet policies to falsifying time reports to bribery and illegal political gifts.

Misconduct happens in every organization,” Patricia Harned, chief executive officer of the Ethics and Compliance Initiative (ECI), told the Center for Association Leadership. “No organization is free from ethics and compliance challenges.”

Harned’s assertion is based on 20 years of results from the ECI’s National Business Ethics Survey of the U.S. Workforce. Highlights of the latest survey include the following statistics.

  • More than 40 percent of workers said they had observed on-the-job misconduct that violated their employers’ standards or rules.
  • Of those who witnessed misconduct, 63 percent reported what they saw.
  • Of those who reported misconduct, 21 percent said they experienced some form of retaliation.
  • Sixty percent of misconduct involved someone with managerial authority. Roughly a quarter of observed misconduct involved senior managers.

Promoting Workplace Ethics

How can managers help create a more ethical workplace culture? Leadership and talent development consultant Steve Nguyen summarizes a list of practices for management to accomplish this goal.

Be a Role Model and Be Visible

Employees look at top managers to understand what behavior is acceptable. Senior management sets the tone for ethics in the workplace.

Communicate Ethical Expectations

An organizational code of ethics can reduce ethical ambiguities. The code of ethics should state the organization’s primary values and the ethical rules that employees are expected to follow. Managers should remember that a code of ethics is worthless if leaders fail to model ethical behaviors.

Offer Ethics Training

Managers should set up seminars, workshops and similar programs to promote ethics in the workplace. Training sessions reinforce the organization’s standards of conduct, to clarify what practices are and are not permissible, and to address possible ethical dilemmas.

Visibly Reward Ethical Acts and Punish Unethical Ones

Performance appraisals of managers should include evaluations of how actions measure up against the organization’s code of ethics. Appraisals need to include how managers achieve these goals, as well as the goals themselves.

Provide Protective Mechanisms

The organization needs to provide formal mechanisms that allow employees to discuss ethical dilemmas and report unethical behavior without fear of reprimand. This could include developing roles for ethical counselors, ombudsmen or ethical officers.

Enhancing the Workplace

A better workplace requires leaders to model behavior in every aspect of their role. In your career, the ability to demonstrate leadership with a sound ethical basis is essential to your success for any role.

Alvernia University offers an online MBA to help you reach your potential as a leader. Learn the skills and knowledge you need to pursue management-level positions, start a business or reach other career goals. The program takes place in a completely online learning environment, enabling you to maintain your work and personal schedule.