Published: July 19, 2008 11:50 pm            

McDONALD: Ethics in organization

EDITOR’S NOTE: This is the second part of a two-part series on ethics in leadership. The first part appeared in Saturday’s edition.



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“Our Credo is more than just a moral compass. We believe it's a recipe for business success. The fact that Johnson & Johnson is one of only a handful of companies that have flourished through more than a century of change is proof of that.”

-— Robert Wood Johnson, Johnson & Johnson



Robert Wood Johnson, former chairman of Johnson & Johnson from 1932 to 1963 and a member of the Company's founding family crafted the company credo himself in 1943, just before Johnson & Johnson became a publicly traded company. This was long before anyone ever heard the term “corporate social responsibility.” A good friend of mine works for a unit of Johnson & Johnson and every major decision must comply with the company credo. The credo is their true north and guidepost.

Organizations have a reason for being and a direction the organization will take exhibited in the mission and vision statements. A code of ethics sets the boundaries for defining acceptable and unacceptable behavior since shareholders, clients and employees prefer dealing with establishments that uphold high levels of ethical and moral standards of practice. A code of ethics is a document that assures the public that the organization is intent doing what is legal but also going well above legally proper to a higher standard of ethical behavior. Sadly when I investigated several in southern Indiana including corporations, public schools and nonprofit organizations, a code of ethics was lacking.

A code of ethics benefits the organization, the employee and society in general. For the organization internal dilemmas are not often black and white types of situations but more complex problems requiring well defined policies securely in place in order to facilitate fairness and moral management. A code of ethics also provides guidance for dealing with clients, shareholders and the government. For the individual, a code of ethics provides guidelines for behavior and for the community an assurance from the organization of community participation and stewardship of the environment.

A key component to effective implementation of a code of ethics is modeling by senior executives and effective training. The best way to launch an ethics program within your organization is to set positive goals - to prevent employees from doing anything wrong, to assist and support them, not to trap them.

Ethical behavior in addition to having the approval of the board of directors must also set guidelines for board behavior as well. For example, what should the members of the board know about the daily management of the organization and how should they acquire that knowledge? The board must establish policies of ethics and disclosure that set the standards for directors and senior executives.

Max Dupree said “the first responsibility of the leader is to define reality. Going back to a premise that humans are inherently evil, the reality the leader is faced with is one of the nature of man, and that is yielding to temptation. Given that proposition, the leader defines the reality by recognizing frailties of nature in each of the areas of leadership.

Personal Authenticity

Some individuals lead shadow lives in that their personal lives are not congruent with their professional lives. A person may battle addictions that are kept in check in the workplace; a code of ethics marries personal responsibility with corporate responsibility.

Organizational Learning

As stated earlier in the discussion of implementation of codes of ethics, training is an integral part of an ethical organization. It demonstrates the seriousness of the mandate from the leadership. Through organizational learning and the training function of human resources, real life situations are used as examples to give relevance and meaning to situations encountered by employees throughout the organization. These situations could be gifts to clients in the sales and marketing roles or gifts to manufacturing managers from vendors.

Change and Innovation

As technology drives innovation into quicker cycles of change, the potential for unethical behavior increases along with the rapidity of change and this increases the need for employees to adhere to ethical guidelines and standards. For example, in the area of biotechnology abound all sorts of ethical issues involving cloning and stem cell research. Medical ethicists exist in hospitals but the need is ever present in medical and biotechnological research facilities.

Global and Multicultural Perspectives

While standards exist for negotiations with government officials of foreign governments, the waters of global business are a bit murkier. The imposition of accepted western standards do not always (seldom do) translate to an Asian context, African context or the Russian and Ukrainian context. Much of the world's nations are in their infancies after years of colonial domination or from Soviet domination. Corruption is rife in these areas beyond cultural differences and traditions. What is perceived ethical from a western standpoint may be perceived as either rude or unethical from a foreign standpoint. The allusion to an ethical hotline for corporations with international operations is becoming a corporate necessity and not a luxury.

Someone once said that leadership is taking people where they would not necessarily go on their own. It has been my observation that people want to do the right thing but often do not. In today's business climate it is nothing short of negligence of origination leadership to go without a code of ethics. In my estimation, it is morally repugnant for the leader not to model the behaviors desired in employees.

Tim McDonald can be reached at timothy.mcdonald@agsfaculty.indwes.edu

        

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