Managing workplace

ethics•- how to improve your

organisation's ethical health and
achieve organisational integrity

Kato Plant
Senior Lecturer: Department of Auditing
University of Pretoria

In recent years, the issue of management or governance of Ethical culture

ethics within organisations in the public and private sectors has
come to the fore. For several valid business reasons organisations Creating and maintaining an ethical organisational culture is an
have been forced to become socially responsible, to act with important part of the ethics management framework. Top
increased ethical sensitivity and to report on the organisation's management has a responsibility to oversee the process of
performance relative to its ethics statement to all stakeholders. establishing an ethical culture. A culture of ethics is
Organisations that recognise the strategic importance of ethics characterised by amongst others, an ethics awareness, ethical
within business and pro-actively manage ethics reap the benefits leadership, ethics talk, ethical decision-making and stakeholders'
of stakeholder confidence, public trust in the organisation and a satisfaction. Senior management should therefore ensure that
good reputation. the organisation has an ethics vision, an ethics strategy, and the
necessary systems and structures in place to empower and
An increased awareness of the ethical dimension of the enable ethics within the organisation.
governance of organisations has also shifted the focus away from
the approach that had to satisfy the owners only, to a more The ethical culture of the organisation can play a significant role
inclusive approach focusing on the needs, rights and interests of in stimulating or discouraging responsible individual behaviour.
all the stakeholders or constituencies that are affected by the Dubious or even bad apples (individuals) can be restrained from
organisation's decisions and activities. Improving governance unethical behaviour should they find themselves in barrels
within organisations includes considering the ethical (organisations) that are ethically healthy and have a strong
implications of all actions undertaken and consistently striving to ethical culture. Such organisations would not tolerate unethical
improving the organisation's ethical health by formally managing behaviour, and would reward ethical behaviour and encourage
its business practices with ongoing reference to the stated ethics an ethical way of thinking and doing.
of the organisation.
Ethical leadership
Managing ethics within an organisation is the responsibility of
senior management, who should buy into the fact that ethics can An organisation aspiring to improve its ethical health, should
and should be effectively managed. Senior management should identify and invest in ethical leaders. Landman and Punt
take a strategic decision to increase the ethical health of the (2006:11) state that ethical leadership is characterised by setting
organisation by establishing a formal ethics management high standards and communicating these standards loudly and
process, building ethics into its strategy and identifying ethical repeatedly in public and private, acting when someone violates
leaders to set the example and drive the process. the standards, funding and supporting ethics initiatives and
holding people accountable for ethical and unethical conduct.
Organisations aspiring to "walk the ethics talk" should recognise Furthermore, ethical leadership requires more than being an
the fact that organisational ethics is much more than a code of ethical person. Ethical leaders should shape the ethical culture,
ethics with a few ethical platitudes to aspire towards. model ethical conduct, require ethical conduct from others,
Organisational ethics is about making ethics real within the reinforce ethical conduct in others and pursue and root out
organisation by devising and implementing a formal ethics unethical conduct by others.
management framework within the organisation. A formal ethics
management framework typically includes an ethical People in management positions are not necessarily ethical
organisational culture, ethical leadership, an ethics strategy, an individuals demonstrating ethical leadership. An effective ethics
ethics management team (ethics officer, ethics committee, management framework should be managed by people who
integrity unit), and a formal ethics management process. All
these ethics initiatives should be effectively utilised to ensure an
improved organisational culture based on agreed ethics, applied • Workplace ethics or organisational ethics is defined as the principles, norms
and standards that guide an organisation's conduct of its activities, internal
and monitored continuously to ensure sustainable ethical health relations and interactions with external stakeholders (King II). The term "ethics"
for the organisation. as used in this article refers to the ethical standards identified, defined and
implemented within organisations to achieve a culture of
organisational integrity.

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have a reputation for ethical leadership. Rossouw and risk. Unethical behaviour is observed and recognised but
Van Vuuren (2004:240) identify cognitive (having analytical and normally ignored and remains unpunished. This strategy, also
decision-making skills), behavioural (commitment and courage referred to as laissez-faire ethics management, is used by
to implement ethical decisions) and managerial (the knowledge organisations who believe that a show of commitment in the
and skills to direct, control and reward the ethical behaviour of form of a set of ethical values (mere words on paper), will create
others) competencies as being required by ethically competent a sufficiently compelling context for ethical behaviour.
managers. These ethical leaders should be agents for change
within organisational ethics, ethics managers, as well as being The compliance strategy is a rules-based approach to managing
ethical in the performance of their own jobs. ethics and is selected by organisations who want to commit
themselves to monitoring and managing their ethics
The determination of ethical leadership is therefore a critical performance. These organisations use their codes of ethics to
part of the ethics management framework. Ethical leaders or prevent unethical behaviour and as a standard against which its
role models who have adopted praiseworthy values and are ethical performance can be measured.
consistently guided by these values need to be employed within
the organisation. Executives should develop a reputation for An integrity strategy on the other hand, is a values-based
ethical leadership and should set the ethical tone from the top. approach selected by organisations who want to "walk the ethics
Even though senior management remains the driving force talk". These organisations want to raise the level of corporate
behind the ethics management process, it is critical that they ethics performance and recognise the strategic importance of
continuously consult with stakeholders throughout the process, ethics. They pro-actively promote ethical behaviour and strive to
enhancing ethical decision-making and ensuring stakeholder obtain commitment to a set of shared values from individual
engagement and feedback. Once ethical leaders have been members of the organisation.
identified within the organisation, an ethics strategy needs to be
determined. An ethically mature organisation will choose a totally aligned
strategy where ethical behaviour is of strategic importance to the
Ethics strategy sustained success of the business. Ethics is integrated into the
corporate purpose, strategy and operations and reinforced as
An organisation has to develop a sustainable ethics strategy in part of the organisational structure and culture. The totally
pursuit of its ethical objectives. Rossouw and Van Vuuren aligned organisation (TAO) recognises ethics heroes who
(2003:389-402) present a model - Modes of Managing Morality embody the vision, purpose and ethical commitment of the
(Table 1) - which explains the different ethics objectives and organisation. The ethics management strategies of these
management strategies organisations adopt to manage ethics. organisations focus on continuous stakeholder engagement as
They highlight five primary strategies, each of which will be well as identifying and rectifying discrepancies between
discussed briefly. behaviour and organisational values.

The immoral strategy is characterised by a culture where An organisation's ethics strategy will determine the nature and
management does not see the need to make decisions extent of its ethics management process. An organisation in the
concerning ethics. There is no commitment to dealing with immoral mode will not be interested in managing ethics,
ethics and practically no sensitivity to ethical issues. whereas the ethics management process within a totally aligned
Organisations operating in the immoral mode have no ethics organisation will empower management at all levels to pursue
management interventions and the corporate culture makes their activities and decision-making in an ethically integrated
little or no provisions for an ethical way of thinking. manner. An effective ethics management process will therefore
include a strategy for managing ethics performance.
The reactive strategy is, for many organisations, a starting point
in managing ethics, but a defensive approach to managing ethics

Table 1: Summary of modes of morality model

Immoral Reactive Compliance Integrity Totally
Aligned
Organisation

Nature Bread first, Awareness of Prevent Promote ethical Ethics integra-

morals later ethics risk unethical conduct ted with corpo-
conduct rate purpose
and strategy

Purpose Unethical Create ethical Rules and Values and Ethics

practices standards, but external enforce- internal com- entrenched in
endorsed do not enforce ment mitment corporate cul-
it ture

(Source: Rossouw & Van Vuuren 2007:38)

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A formal ethics management process communication strategies. The ethics office could also identify
ethics advocates or champions at all levels within the
As discussed earlier, many organisations believe that the "right organisation who can stimulate and sustain continuous ethics
thing to do" is to develop a code of ethics in an attempt to dialogue to ensure that ethics is effectively built into the
formally manage ethics. The focus is on the product - namely the structure and culture of the organisation.
code - but the process behind the code development, as well as
the process to entrench the code into the organisation's culture A vital phase of the institutionalisation process is to regularly
is often overlooked or ignored. Management is satisfied if they monitor and assess the effectiveness of the ethics management
can answer "yes" to the question: Do you have a code of ethics? framework of the organisation. Ethics performance indicators
It is however important to move beyond compliance and answer can be used to measure effectiveness and monitor the
"yes" to the questions: Is there increased ethics awareness within organisation's improvement or decline in ethical health over a
the organisation and Is there a decrease in fraudulent activities by period of time.
employees? Enron, for example had a very impressive written
code of ethics, but no efforts were made to effectively • a report on ethics performance
institutionalise the code, to make ethics real within the Organisations should not only report on their financial
organisation, nor to actively promote ethical conduct. performance, but should also be encouraged to report on their
ethics performance to all their stakeholders. Globally,
organisations are increasingly publishing sustainability reports,
The immoral strategy is characterised by a and reporting on their economic, social and environmental
culture where management does not see the performance. A sustainability report should thus include a report
need to make decisions concerning ethics. on the organisation's ethics performance or the status of its
ethical health. Information that could be included in such a
There is no commitment to dealing with report is amongst others:
ethics and practically no sensitivity to ethical
issues. Organisations operating in the • an identification and description of the
organisation's stakeholders;
immoral mode have no ethics management • a description of stakeholder engagement
interventions and the corporate culture processes or stakeholder relations, including
makes little or no employee relations;
provisions for an ethical • corporate social responsibility initiatives; and
• details of fraud prevention initiatives as well as
way of thinking. statistics on the decrease in fraudulent activities.

The ethics management process is usually driven by the ethics

office or ethics committee, but could also be delegated to
The critical elements of a formal ethics management process independent ethics management consultants and other relevant
are: service providers. A summary of the formal ethics management
process is presented in Table 2.
• an ethics risk assessment
Organisations should perform an ethics risk assessment by Conclusion
conducting a formal climate/culture survey amongst its
stakeholders to identify ethics risks: for example, reputation risk. Organisations wanting to improve their ethical health should
A good reputation takes years to build, but can be damaged pro-actively build on an ethical culture by identifying ethical
overnight. An ethics risk assessment will identify the threats of leaders, implementing ethics strategies and following a formal
unethical behaviour and the opportunities for ethical behaviour ethics management process. A formal ethics management
and ethical performance, and should be conducted before process should include an ethics risk assessment, the
attempting to develop a code of ethics. development of a code of conduct, an institutionalisation
process and ongoing reporting on ethics performance.
• the development of a code of ethics
In response to the ethics risk assessment, a code of ethics should The challenges faced by organisations that want to "do the right
be developed to manage these risks. A code of ethics should be thing" and ensure organisational integrity are vast. Building an
a "living document" - not merely nice words on paper. A code of ethical organisational culture and achieving ethical business
ethics should be used as a guide to promote ethical behaviour competency is a long term process, but renders long term
throughout the organisation, and not merely a "window- benefits including a good reputation and stakeholder
dressing" exercise to comply with legislation or in reaction to confidence - critical in ensuring sustainable business success and
negative publicity. When developing a code of ethics the format, service delivery.
content and tone of the code should be carefully considered by
all the role-players within the organisation.
Organisations aspiring to "walk the ethics
• an institutionalisation process
Ethics should be effectively integrated into the organisation. The talk" should recognise the fact that
values and/or rules underpinning the organisation's code of organisational ethics is much more than a
ethics, as well as its vision and mission, should be embedded in
the organisation. An ethics committee or ethics office can play code of ethics with a few ethical
an important role in the institutionalisation process and should platitudes to aspire towards.
be responsible for establishing and maintaining the necessary
ethics policies and strategies, ethics training initiatives and ethics

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Table 2: Ethics management process

Elements Actions Role-players

Ethics risk assessment Identify threats posed by unethical Relevant stakeholders -
behaviour and opportunities management, employees,
presented by ethical behaviour suppliers, customers, community,
government

Development of a code of Identify the values and principles Ethics committee or an

ethics that the organisation aspires to and independent ethics management
formulate these in a code consultant

Institutionalisation of ethics Identify all the relevant ethics Ethics committee or an

initiatives that can be used to independent ethics management
effectively institutionalise ethics consultant
within the organisation - for
example ethics training
programmes, ethics communication
strategies, ethics help-line, ethics
performance measurement
systems, monitoring systems

Reporting on ethics Identify relevant performance Ethics committee or an

performance or ethical health indicators to measure the independent ethics management
organisation's ethics performance consultant
and report internally tomanagement
as well as externally via the annual
report or sustainability report to the
stakeholders

References
Landman, W.A. & Punt, W.J. 2006. Culture and ethics in the organisation. Ethics Brief, Ethics Institute of South
Africa.
Rossouw, G.J. & Van Vuuren, L.J. 2004. Business Ethics (3rd Edition). Cape Town: Oxford University Press.
Rossouw, G.J. & Van Vuuren, L.J. 2007. Ethics in business and the professions workbook. Randburg: Fasset.

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The highest qualification in government auditing

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12 Summer 2008/9