By Dr Renate Scherrer, MD at JvR Consulting Psychologists

In a country where unethical behaviour and blatant corruption by political and business leaders seem to be the norm, more and more people are asking what causes it and how it can be prevented. To do this, we need to understand what it means to be an ethical organisation.

If the leaders of an organisation have a strategy, vision and promise that is inspiring, and financial returns are actually positioned as a consequence of the company’s purpose and not the reason for its existence, the call for principled action resonates throughout the organisation.

The factors that contribute to the level of ethical behaviour in the organisation are environmental-, organisational- and individual-level factors.

  • Environmental: Factors in the macro environment of the organisation often sets the tone for what is seen as acceptable and “the norm”. When corruption is rationalised in the environment, organisations have to work hard at creating a climate where acting in an ethical way becomes “the way we do things”. Everybody must have a clear understanding of the rules and the underlying values which dictate what the organisation will do and what it will not do.
  • Organisational: The manager’s own behaviour is one of the key variables impacting subordinates when it comes to acceptable and unacceptable behaviour. Policies and procedures will either facilitate ethical behaviour or promote unethical behaviour. If people are expected to achieve certain targets, but do not have the proper resources to do so or reward systems are unfair, they will become resentful and may start acting in a self-serving manner. Unethical behaviour will increase when employees feel that their peers will not condemn their actions.
  • Individual: Make informed decisions about the people you appoint. Screen and analyse them to understand: what drives them; their attitude towards risk; whether they will manipulate others for personal gain; if they believe ethical choices are driven by circumstance.

It starts at the top

Leaders need to model good behaviour. Their unethical or self-serving actions will authorise others to do the same. Ethical leadership is not about what is said, but about what is done, every day, in the big and small moments. As they say: “A leader leads by example, whether he intends to or not.”

The ethical disablers

If the only goals are profit and shareholder returns, the company may be opening the door to behaviour that will ensure success, no matter the cost. The way organisations reward their employees has a major impact on their behaviour. When there is no regard for the economic environment the business finds itself in and managers insist on targets that are unattainable, people will take shortcuts in a desperate attempt to meet the targets.

The ethical enablers

HR policies and procedures must embody the values of the organisation and reward good behaviour. Transgressions must carry real consequences. It is also important to have effective whistle-blowing mechanisms in place.

Leaders and managers must have the necessary tough conversations with employees who do only what is best for themselves. When the top sales performer in the company is engaged in any form of unethical conduct or his behaviour is toxic in the workplace, this needs to be addressed. By not acting the message is that money is more important than being ethical or acting in the best interest of all stakeholders.

Benjamin Franklin said: “An ounce of prevention is better than a pound of cure.” Organisations must continuously prepare and nurture the soil to produce healthy ethical behaviour.  It becomes almost impossible to get rid of weeds when it has started to overtake the garden.

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