Employers Must Take Closer Look At Ethics Issues

Harrisburg Patriot
Azriela Jaffe
(Copyright 2002)

Linda Treviño, professor of organizational behavior and chairwoman of the Department of Management and Organization at Penn State's Smeal College of Business, believes many organizations and businesses are devoting substantial resources to ethics programs in efforts to discourage unethical behavior, and she wonders how successful these efforts have been.

Treviño recently released a co-authored empirical study conducted with Gary R. Weaver of the University of Delaware. The study, "Organizational Justice and Ethics Program Follow-Through: Influences on Employees' Harmful and Helpful Behavior," appeared in Business Ethics Quarterly (Volume 11, Issue 4), and it includes a warning to employers:

"The success of efforts to discourage unethical behavior will depend, in part, on whether employees perceive that their organization treats people in a generally fair way."

The randomly selected sample for the study was drawn from a larger survey of ethics/compliance management in four companies with formal ethics/compliance programs in place: a utility company, a telecommunications company and two energy-related companies. Surveys were then sent to 3,800 employees' homes.

The employees were asked a series of questions on items representing ethical or illegal behaviors. Treviño explains one of the key findings:

"When employees perceive the organization to be unfair, employees engage in harmful unethical behavior in order to rebalance the scales of justice and improve their own outcomes at the organization's expense, by stealing for example. "However, when they perceive that the organization treats employees fairly, they give back by going above and beyond the call of duty to help management by reporting ethical problems."

I suspected that few companies have formal ethics policies, but Treviño corrected me. She reports:

"In a recent survey of employees conducted by the Ethics Resource Center ( www.ethics.org ), they considered three features to constitute a formal ethics program -- codes, training, dedicated advice lines and offices -- and found that a third of companies have all three. Thirty-nine percent say their company has written standards plus one of the other elements. ... 72 percent of employees say their organizations have formal programs that go beyond just written standards."

Since an employee's perception of fairness is a significant indicator of his or her later ethical behavior, I thought it important to understand what the research suggests an employee means when he or she says "my employer treats people fairly." Treviño explains:

"Fairness perceptions are thought to include 'distributive fairness' (fairness of outcomes such as rewards and discipline), 'procedural fairness' (fairness of the procedures used to arrive at those outcomes), and 'interactional fairness' (fairness of interpersonal treatment or treatment with dignity and respect).

"So, employees need to believe that rewards and discipline are fairly distributed in the organization, that these decisions are made in a fair manner, and that people are treated with dignity and respect in these and other processes.

"Also, a current important process involving fairness perceptions would be downsizing decisions -- who gets laid off, how is that decided, how are people treated. Employers need to be concerned about how people will react, and it isn't only the people getting the bad news. Observers watch carefully to see how others are treated and make inferences about what that says about the organization and how it treats employees."

Although ethics programs are widespread, Treviño warns that they are sometimes perceived to be "window dressing." In order for employees to respond positively to them, they need to perceive that their organization means what it says by following through on ethical failures and addressing problems.

Follow-through is perceived as an indication of justice. Ethics programs are likely to raise the question of fairness in the workplace because they call attention to issues of ethics in the organization. So, employers should not delve into formal policies in these matters without understanding that attention also must be paid toward creating a working environment where employees feel that there is congruity between the organization's policies and how they feel they are being treated as an employee in their daily work.

Treviño sees how ethics-related issues are becoming more commonplace in today's working environment. She suggests: "Because employees today are more likely to work unsupervised than in the past in jobs that are less precisely defined, they face opportunities for a broad array of unethical behavior directed against the organization.

"For example, many employees are out meeting with customers and suppliers. They are working laterally on project teams with others who are at the same hierarchical level. In much of their work they are not directly supervised. The organization must rely upon them to represent the firm well, to work hard in the corporation's best interest, and to report back honestly regarding time worked and expenses.

"An employee who is unsupervised has untold opportunities to cut corners, lie, cheat or steal in ways that harm the organization and its relationships."

If you have an ethics programs in your company that is administered separately from other human resource programs and practices, Treviño warns:

"Ethics program administrators may have little influence on employees' broader evaluations of organizational justice. Ethics/ compliance management should be more tightly coupled with the management of the broader organizational culture to improve employees' perceptions of fairness in the organization in general, and in the ethics/compliance program."

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REPORTERS & EDITORS: For more information, please contact Wyatt DuBois in the Smeal College of Business Media Relations Office at 814-863-3798 or wed112@psu.edu .

Penn State's Smeal College of Business offers highly ranked undergraduate, MBA, executive MBA, Ph.D., and executive education opportunities to more than 5,500 students at all levels. Featuring academic departments of accounting, finance, marketing, insurance and real estate, management, and supply chain and information systems, the college is also home to major research centers such as the Center for Supply Chain Research, the Institute for the Study of Business Markets, the eBusiness Research Center, the Farrell Center for Corporate Innovation and Entrepreneurship, the Center for Global Business Studies, and the Center for the Management of Technological and Organizational Change.

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