Abstract

This paper focuses on questions of ethics and unethical behavior in the workplace. It discusses what leaders can do to better create an ethical environment in which people are respected and ethical values are promoted. It provides some examples from the real world of what happens when organizations fail to act ethically, and it also examines some of the problems that led to the disaster that was the 2007-2008 economic collapse. Ethical principles such as utilitarianism and virtue ethics are explained in connection with these discussions. The issues of diversity and discrimination are evaluated at length, and the issue of corporate sponsored volunteer programs is discussed as well.

Keywords: ethics, workplace ethics, leadership ethics, organizational ethics

1

Some of the most common forms of unethical behavior in our workforce today consist of misuse of company funds, misuse of company time, fraudulent activity, and lying. There are many different examples of these unethical activities. Wells Fargo for instance was just punished for signing people up to accounts that they did not want and then charging them for the service. Other banks view their clients as “muppets” and attempt to manipulate them for the banks’ advantage (Coleman, 2016). Other issues include sexual harassment in the workplace (the #MeToo movement has exposed this) and continued inequality.

Leadership in organizations could help to minimize ethical misconduct by setting the example themselves and instituting a culture of virtue ethics, in which employees learn to promote the good rather than that by which they think they can gain an advantage over others. When leaders serve their workers and put their workers first, it sets a tone in an organization: the workers then set about serving their clients instead of trying to manipulate them, lie to them, or con them in to doing something that is not in their best interest (De Vries, 1998). Leaders have to show what it means to be a good worker by embodying that vision in themselves: when they fail to do so, they create atmospheres like that at Enron, where the leaders were shiftily trying to conduct “get rich quick” schemes; the underlings picked up on it and participated in their own forms of lying and manipulation to make themselves look good. The traders on the floor did so when they were manipulating energy prices to gain an advantage over buyers and sellers.

For workers to be ethical, they have to know what is expected of them: the organization has to be one that embraces ethics from the top down. Workers do not make the leaders but rather leaders make the workers. So if the leaders themselves are not representing the ethical values they wish to see in their workers, they cannot assume or expect that their workers will be any different. The head is the head for a reason: it is what sends out the messages to the rest of the body on how to operate. The same is true for the head of an organization: it has to send out the right ethical approaches.

2

As our businesses have developed over the last 100 plus years, our modern day businesses have not really evolved to be more ethical today. The reason is that human nature is still the same as it was 100 years ago and modern businesses are still run by human beings. People are always going to be looking for ways to cheat or scam others, and so to assume that just because our businesses have developed and evolved to be more refined thanks to technology is to assume that somehow human nature has changed as well. It has not, and a simple perusal of the latest headlines will reveal as much. In fact, this is one reason online shopping has become so popular: people simply prefer shopping online to having to go out and possibly engage with other human beings because they do not know what they will encounter when they go out. Whether it is a random act of insane violence (such as a terror attack or random shooting) or some other experience that people might wish to avoid, the world is full of risk.

Still, there are ways that technology has allowed for more accountability in our businesses. For example, social media has made it so that nothing remains hidden from the public any longer. If a business creates an issue (such as when one of the major airlines literally forced a passenger off a plane because it was too full), it is all over social media in the blink of an eye and the company has to immediately do damage control to salvage its reputation and keep its business from sinking.

3

The financial meltdown in 2007-2008 was both a failure of people and of capital market processes. It was a failure of people, first and foremost, because they were the ones creating the shoddy loans, chopping them up into shoddy bundles, giving these shoddy mortgage backed securities AAA ratings when in reality they were full of junk. People were getting greedy thinking they could sell insurance on these junk-filled mortgage backed securities without risk; those who knew better did not mind making a nice profit off the ensuing collapse. Those leaders in the government who bailed out the banks and other institutions with hundreds of billions of taxpayer money only incentivized risk taking still further and let the perpetrators off the hook (Taibi, 2010). Some could say that this was the state merely implementing utilitarian ethical theory and doing what was in the best interest of the greatest number of people—but when the greatest number of people (i.e., working class taxpayers) are saddled with billions in bailout dollars so that bankers can get away with devaluing the dollar, the utilitarian ethical theory falls to pieces.

However, it was also a failure of the capital market processes, because the credit agencies were supposed to catch the shoddiness of the securities and they did not (human error leads to market failure). The capital market processes were further disrupted when the Federal Reserve acting as the world’s central bank essentially began buying up the mortgage backed securities that no one wanted and began buying U.S. Treasuries to the tune of trillions of dollars worth in order to calm the markets and get the financial system rolling again. The Fed expanded its balance sheet exponentially and blew asset bubbles across all classes—equities, precious metals, housing, credit, etc. (Huston & Spencer, 2018). It was, in other words, the end of the free market: ever since, it has been nothing but a command economy with the only thing traders worrying about is whether the Fed is going to shrink its balance sheet or continue to be the buyer of last resort. Because so much of the modern economic system is dependent upon return-on-investment (ROI), the entire way of life of the developed world would collapse in a heap of rubble were it not for the central banks stepping in to keep asset prices inflated. Pension funds, sovereign wealth funds, hedge funds, and all manner of funds depend upon it. This is a system that is predicated on the Ponzi scheme: and no one ever accused Ponzi of being ethical. Far from it, they accused him of fraud, unethically misleading investors, and manipulating ROI to make it seem as though his fund was legitimate when really it was not.

4

Diversity and discrimination are important ethical factors that leaders should focus on while attempting to manage their workforce because diversity helps to ensure that the workplace is reflective of the real world, which is full of diverse populations, ideas, perspectives, beliefs, and attitudes. Discrimination is another ethical factor that is important to consider because it is the other side of diversity. If diversity is inclusive of reality, discrimination is exclusive: it seeks to exclude others because they are different. If a workplace discriminates against others it essentially says that they are not welcome, their views are not important, their attitudes and beliefs and lifestyles have not place in t the organization or in the real world.

Leaders should focus on these considerations while attempting to manage their workforce because these two sides of the same coin will eventually determine the type of workplace that is developed. The manager will either have a workplace that is reflective of the world and the values held by the community and the real world, or it will be closed off and reflect only the values that the leader wants reflected. The leader basically has the option of pursuing one of two paths: the path of the world in which the values of the world are upheld through respect for diversity and promotion of multicultural values; or the leader will pursue the closed circuit and the promotion of values that upheld only by a particular group.

Mismanaging these issues can negatively impact an organization and bring problems to it. For example, Google was embroiled in a scandal after firing one its workers for lamenting that the company was discriminating against white males and conservatives with some of its policies. This was an example of a tech company wanting to promote a culture in the workplace that was only tolerant of views that reflected a certain socio-political leaning (Tiku, 2018). Google received a black eye from the press for its mismanagement of its commitment to diversity and its alleged discrimination against conservatives. This has led to the reputation of many tech and Silicon Valley companies being tarnished as overly-committed to liberal values and discriminatory towards conservatives. While these are merely allegations, the stories were picked up by several news outlets, which did not help brand appeal.

I would explain the importance of these considerations to employees by stating that no two people are the same, everyone has his or her own unique ideas and beliefs. That is the way the world is. To try to force everyone to have the same beliefs is unrealistic. In a workplace, respect is crucial. People may not be able to agree on everything, but they have to show respect to one another. They cannot mock or discriminate against others because of their beliefs or views. That is how I would explain it to my workers.

5

Corporate outreach and company sponsored volunteer programs are a good idea for organizations to implement because they help the organization to connect with real people in the real world and bring community values into the workplace. Outreach and volunteer programs can serve as fundamental aspects of a positive corporate social responsibility program within the organization. From an ethical leadership perspective, I would choose to implement these programs because it is good for organizations to give back to their communities: it fosters good will and shows the community that the organization cares for it, cares for its values and wants to reflect them in it corporate social responsibility programs, and wants to develop positive relationships with other institutions and members in the community.

Kroger for instance is a Fortune 500 company that corporately sponsors volunteer work and outreach because it wants to give back to the communities that have helped the company to grow. Kroger is able to reflect the values of the communities that are important to its business by donating time and resources to the needy within the community. This is what it means to be an ethical leader in the community: you put others before yourself. It is the essence of servant leadership, which CEOs like Richard Branson show routinely (De Vries, 1998). This is why I would insist that our organization engage in promoting volunteer work and outreach.

References

Coleman, L. (2016). The Mutual Fund Industry: Structure and Conduct. In Applied

Investment Theory (pp. 121-129). Palgrave Macmillan, Cham.

De Vries, M. F. K. (1998). Charisma in action: The transformational abilities of Virgin’s

Richard Branson and ABB’s Percy Barnevik. Organizational Dynamics, 26(3), 7-21.

Huston, J. H., & Spencer, R. W. (2018). Quantitative easing and asset bubbles. Applied

Economics Letters, 25(6), 369-374.

Taibbi, M. (2010). Griftopia. New York, NY: Spiegel & Grau.

Tiku, N. (2018). New lawsuit exposes Google’s desperation to improve diversity.

Retrieve from https://www.wired.com/story/new-lawsuit-exposes-googles-desperation-to-improve-diversity/