Unethical Organisations: Breakdowns in Ethics and Integrity

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Unethical OrganisationsBreakdowns in Ethics and
Integrity

• Jeff Malpas
• Centre for Applied Philosophy Ethics
• University of Tasmania

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Centrality of Ethics

• Increasing recognition of centrality of ethics to
  organizational success
• Evident in shift to more explicitly ethical
  orientation in state public service structures
• Evident in increasing shift in management
  organizational theory towards concepts of ethics
  integrity

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But to what extent is the theory matched by the
practice?

• To what extent are our own organizations and
  the management practices within those
  organizations ethically sound?

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Unethical Behavior Happens Somewhere Else

• Tendency to think of ethical failure as always
  occurring in organizations other than our own
• Spectacular examples of ethical failure - Enron,
  HIH, OneTel are taken as paradigmatic instances

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But Unethical behavior is probably more common,
more mundane and much closer to home
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Ethics is about more than financial propriety

• Spectacular and public examples of ethical
  failure usually focus on financial impropriety
• Financial impropriety is usually indicative of
  more basic breakdown in basic relationships
  within an organization and between the
  organization and the wider community
• Enron, HIH and other such cases are extreme
  examples of more common and everyday ethical
  failures at the level of relationships

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On what does financialimpropriety depend?

• An organizational structure that lacks
  transparency, allows secrecy encourages
  distrust
• An organizational culture of self-promotion
  self-interest that is often oriented towards
  results over processes
• An organizational culture that devalues personal
  integrity discourages dissent

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But these features are common to many
organizations especially in Australia

• Legal constraints undoubtedly restrict levels of
  financial impropriety they typically do not
  touch the organizational features on which it
  depends

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The Limits of Legislative Regulation

• Typically addresses only specific financial and
  audit issues
• Provides a set of principles, but not a strict
  compliance framework
• Cannot be effective unless senior management is
  properly committed to the principles at stake
• Cannot directly address issues of management
  style or culture

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Three sources of unethical practice

• Structural determinants often most directly
  related to systems of communication
  consultation, transparency accountability
• Cultural determinants aspects of organizational
  style rhetoric
• Behavioral determinants aspects of individual
  character, conduct commitment

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1. Structural Determinants

• Most easily modified, although change must be
  managed
• Typically modification of structure is the first
  port of call in organizational change
• Structural change achieves little in the absence
  of cultural behavioral change

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2. Cultural Determinants

• Often harder to modify than structural
  determinants, mainly because they are less
  readily identifiable understood
• Essentially tied to the style or ethos of an
  organizations management leadership
• Typically determined from the top largely
  dependent on the example set by senior management

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3. Behavioral determinants

• Behavioral determinants much harder to address
  than structural or cultural because based in
  personality and character
• Behavioral determinants often based in
  problematic features of character and conduct
  that are not recognized as such by individuals
  concerned
• Behavioral determinants are often related to
  features of character and conduct that are
  positively selected for in many organizations
  that are encouraged by the organizational culture

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Problematic aspects of character conduct

• Failure to listen or to respond properly to
  concerns
• Failure to open conduct to more general scrutiny
• Failure to face up directly to instances of real
  conflict
• Willingness to rely on physical presence or other
  forms of implicit or explicit threat to promote
  compliance
• Willingness to use insult or public disparagement
  against subordinates
• Willingness to exploit or sacrifice relationships
  to achieve ones ends

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Unethical conduct of individuals often based in

• Lack of appropriate self-understanding control
  often inability to engage in real questioning
  of self
• Lack of appropriate understanding of relations
  with others poor interpersonal skills
• Lack of appropriate organizational understanding
  failure to identify appropriate organizational
  goals values
• Lack of appropriate understanding of relation
  between organization and wider community often
  involving a failure to understand reciprocity
  between organization and wider community

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The Corrosion of Character

• American Social Theorist Richard Sennett
  described the way in which changes in the
  character of many contemporary work practices
  (structural cultural) appeared to lead to a
  loss of trust, fragmentation in social relations,
  lack of social and ethical responsibility (The
  Corrosion of Character, New York W. W. Norton,
  1998)

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Cultural factors that encourage unethical conduct

• Emphasis on results - positive evaluation given
  to the tough manager
• Devaluation of deliberative processes in favor of
  executive decision
• Emphasis on short-term perspectives in evaluation
  of success
• Individual integrity replaced by procedural
  adequacy
• Reliance on relations of personal patronage
• Inability to recognize the limited often
  failing character of all managerial practice

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The breakdown of ethics integrity

• Ethical conduct ultimately dependent, not on
  systems structures, but on character, style
  ethos
• Unethical organizations are those that allow
  promote the corrosion of character loss of
  individual ethical integrity understanding
• The corrosion of character occurs through the
  dissociation of individuals ( organizations)
  from a wider social context

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How to Build Ethical Organizations?

• Building ethical organizations is a matter of
  building personal character integrity
• Building character is a matter of establishing
  the right organizational ethos style
• Organizational structure can support ethos
  integrity, but cannot create it

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The Challenge of Ethics

• Ethics requires personal organizational
  development
• Ethics is not an option, but essential to
  personal organizational well-being
• There are no easy answers, no quick fixes, just
  ongoing attentiveness, reflection commitment