Craig E. Johnson, Organizational Ethics, Third Edition
Instructor Resource
Lecture Notes
Chapter 10
Building an Ethical Organization
Organizational Ethics: A Practical Approach (3rd ed.)
Making Ethics Matter
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•Decoupled approach to ethics
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•Focus on compliance
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•Rarely discuss ethical issues
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•Decisions made without reference to values
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•Transformational approach to ethics
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•Puts ethics at the center of the workplace
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•Ethics impact every decision
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•Values driven
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•Ethics matter
Craig E. Johnson, Organizational Ethics, Third Edition
Instructor Resource
Components of Ethical Culture
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•Culture: how organizations develop shared meanings
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•Ethical culture: how cultural elements promote or discourage moral
action
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•Formal cultural elements (oicially recognized, recorded)
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•Informal cultural elements (unoicial, not written down)
Formal Cultural Elements: Core Values/Mission
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•Core Values (3-5 enduring, guiding principles)
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•Implementation guidelines : determine what members value and
then constantly communicate these standards
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•Mission (Purpose) Statements (the organization’s reason for being)
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•Implementation guidelines : Capture the passion of members and
evaluate how well it promotes moral behavior
Formal Cultural Elements: Codes of Ethics
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•Codes of Ethics
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•Common Code Provisions
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• Conlicts of interest
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• Records, funds and assets
Craig E. Johnson, Organizational Ethics, Third Edition
Instructor Resource
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• Information
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• Outside relationships
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• Employment practices
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• Other practices (health and safety, technology, use of
organizational assets for personal use)
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•Implementation guidelines : write in understandable language,
distribute to all members, provide training, enforce provisions
Formal Cultural elements: Structure
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•Structural elements include authority relationships, lines of
accountability, allocation of decision-making rights
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•Implementation guidelines :
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• Modify structure that promotes unethical behavior
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• Encourage followers to challenge orders
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• Give those closest to the problem input to its resolution
Formal Cultural Elements: Governance
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•Boards of Directors are the link between owners and managers; select
organizational leaders
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•Board Duties
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•Duty of loyalty—always be loyal to shareholders/donors
Craig E. Johnson, Organizational Ethics, Third Edition
Instructor Resource
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•Duty of care—make a diligent efort when making choices
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•Implementation guidelines :
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•Separate the role of board chair and CEO
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•Ask managers for options, not reports
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•Make a concerted efort to gather information
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•Prevent corporate oicers from serving on the boards of other
companies
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•Limit directors to no more than two boards
Formal Cultural Elements: Reward and Performance Evaluation Systems
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•Measure and reward actions that promote a positive ethical culture
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•Anomie = the normlessness that arises when leaders focus on ends,
not means; encourages illegal activity
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•Implementation guidelines :
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•Catch people doing good
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•Evaluate reward and performance systems to ensure that they
are not reinforcing undesirable behavior
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•Avoid a bottom-line mentality
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•Evaluate based on processes as well as results
Craig E. Johnson, Organizational Ethics, Third Edition
Instructor Resource
Formal Cultural Elements: Reporting and Communication Systems
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•Reporting systems: solicit reports of ethical violations
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•Hotlines, staf members
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•Communication systems: send ethics messages to members
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•Implementation guidelines
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•Get buy in of top management for reporting systems
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•Ensure conidentiality of reports
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•Constantly send ethics messages through a variety of channels
Formal Cultural Elements: Ethics Oicers
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•Ethics oicers ensure legal compliance and promote ethical conduct
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•Keys: must have suicient power and independence
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•Implementation guidelines
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•Should be a full time position
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•Give the EO the power to interview, challenge and discipline
anyone
Craig E. Johnson, Organizational Ethics, Third Edition
Instructor Resource
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•Consult regularly with the CEO
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•EO should report to the board of directors
Informal Cultural Elements: Language
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•Deinition: talk used in daily conversations
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•Challenges
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•There may be reluctance to talk about ethics
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•Constant temptation to use euphemisms
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•Implementation guidelines
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•Become comfortable with moral terminology
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•Use moral terminology when discussing routine decisions
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•Reject terms that hide the moral dimension of activities
Informal Cultural Elements: Norms
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•Deinition: widely accepted standards of behavior that reveal how an
organization “really works”
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•Can support or undermine ethical conduct
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•Implementation guidelines