Organizational Ethics-It's Starts at the Top!

Organizational Ethics-It's Starts at the Top!
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Introduction
Those at the top in an organization have no reporting requirements to others that may have an instant ability to override or influence their decisions. They however have an indirect reporting relationship to other groups such as organizational boards. A leader or manager at the top in an organization bears responsibility over aspects such as performance and ethical leadership in the organization (Nekoranec, 2007). Top managers in organizations have increasingly garnered attention following corporate scandals over the last ten years. Some of the featured companies included Enron, Tyco, World.com and Bank of America among others. At the core of these companies’ scrutiny is a focus on the top leaders’ ethical sensitivity based on their character, conduct and formative experiences. A focus on top leaders is important because they set the moral tone for an organization.
How ethics begins with top management and flows down to the entire company
Reports indicate that when the management within an organization is unethical, it has a detrimental effect on the sustainability of the company (Kottke & Pelletier, 2013). Employees and stakeholders expect top managers to act ethically to avoid the public criticism and the collapse. Leaders also motivate others in the organization to act ethically when they engender an ethical organizational culture. Top leaders and managers are responsible for the critical ethical activities and their resultant outcomes within an organization (Nekoranec, 2007).
Ethical leadership in an organization is based on five vital principles namely respect for others, an attitude of serving others, displaying justice, epitomizing honesty and developing the communities. It is based on deontological and teleological perspectives of dutiful conduct to meet the expected obligations and engaging in activities that are justifiable by their outcomes. Ethical leaders are genuinely empathetic and this is evidenced by their respectful tendencies in listening to others. They also intentionally prioritize the welfare of others in the spirit of fairness while making important decisions within the organization. They include followers or employees in decision making processes while simultaneously modeling ethical conduct. Engaging employees in the organization also communicates the virtue of honesty in that the leader portrays heartfelt consideration of employees’ views even when decisions fail to accommodate all their wishes. Employees also feel that the leaders create an aura of community by facilitating meaningful work experiences that appreciates individual unique contributions to the organization (Nekoranec, 2007).
  Top management has the mandate to facilitate the implementation of both formal and informal ethics mechanisms. The formal aspect of organizational ethics communication is important as it allows employees to attain awareness of the organization’s ethical standards. More important in encouraging practical ethical conduct in the organization is how the top management makes its personal ethics it evident to influence its employees. It is important for employees to discern adherence to ethics for its replication throughout the organization (Ruiz-Palomino & Martinez-Canas, 2011).
The top management in organizations develops formal mechanisms such as trainings and code of conducts which serve to sanction unethical behavior. It is also responsible for modeling ethical behavior for employees to emulate. Reports indicate that top managements’ role modeling has a positive impact on ethical behavior among employees while sanctioning standards have no impact on employees’ ethical behavior. Sanctioning is a negative reinforcement that has a threatening impact on employees decreasing its influence in minimizing unethical behavior throughout the organization. This implies that role modeling of top executives is more effective in encouraging ethical thinking and behavior rather than formal standards (Ruiz-Palomino & Martinez-Canas, 2011).
Types of ethical dilemmas
Ethical dilemmas in business occur when a decision touching on organizations profitability and other organizational values may either be right or wrong. In such dilemmas, leaders must make decisions about the overriding value. Resolving the dilemma requires that the leader assigns priorities to the values in question to determine those that take precedence over others. For instance a business may be torn in between engaging in dishonest practices to increase profitability.
There are two types of ethical dilemmas namely the right versus wrong and the right versus right dilemma. In the later, leaders are torn between two conflicting but equally important values in an organization. Leaders require making a choice between the two equal core values. The former type is where a leader makes a choice between violating an important core value rather than upholding it. For instance, when a leader chooses honest dealings over dishonest ones, it is a right versus wrong dilemma (Mullane, 2009). The two also have other four perspectives. One of them involves a conflict between commitment and integrity. The second perspective involves a conflict between justice and mercy, the third perspective involves conflict between serving self- interests over gropes’ interests and finally a perspective entailing a conflict between short term and long term concerns (Mullane, 2009).
The financial crisis is an example of a right versus wrong dilemma because various stakeholders recognized that excessive investment in housing would exceed demand and cause stagnation in their prices. They also realized that it would cause rampant defaulting and the resulting problems such as liquidity problems and toxic debts in other countries. However, they abstained from making decisions that would challenge their career drive by greed for success and money. Financial institutions took up notoriously ambitious risks in the hope of amassing hefty personal and organizational risks. These institutions also withheld information that would have warned investors from flooding the housing market and continued their misleading promotions that failed to consider their common good (Argandona, 2012).
There were many other players in the unethical conduct that resulted in the financial meltdown. They included the lobbyists that convinced congress to untighten regulations on lending, those regulators that underestimated warning signs, those that devised ways of obscuring the risks involved, the finance agents that convinced homeowners to take the risk and the homeowners that took unaffordable risks. Their concerted participation in creating and bursting the economic bubble that resulted in a government funded banks bail out that has long-lasting effect on the public. For instance it has resulted in an increment in tax levied, stunted economic growth, reduced retirement benefits and increased unemployment and career disruptions (Posner, 2010).
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