A definition of ethics broadly stated could be as that 'ethics is the science that deals with conduct in so far as this is considered as right or wrong, good or bad.' (Shapiro; Stefkovich, 2001) The word 'Ethics' has its root in the Greek language where ethos was the word used for a custom or usage for individual groups. This later moved on to mean the general character of transactions, individuals and the way of acting and conduct. The question then is who has to approve the ways of acting? No doubt ethics is an important part of human life. If humans lack ethics they tend to become criminals and the decisions that they take tend to harm other individuals or the society. (Guy, 1990)
Ethics, laws and morals are different concepts but have a binding unity in the fact that in all these there is restraint in acting in such a manner that the results harm or cause apprehension to others, and in some cases to the individuals acting so. Individual ethics and principles form the basis of organizational ethics which then seeps into the process of decision making. What is the need for ethics? The idea of any endeavor is to create excellence and at the core of this is ethics. Where there are two alternatives the choice is made based on "assumptions that lie at the heart of a moral code. The code is grounded in values that provide the framework for principled reasoning and ethical decisions." (Guy, 1990) Thus ethics is a part of human life and at the workplace.
The theory that explains the actions and decision making of the individual pertains to the image a person has of himself or herself and the image that the mind holds about the work situation. In other words what is perceived as the corporate image? The image theory shows the way the values about the organization is created and has a significant impact on decision making processes in organizations. This force operates from the most personal level where the individual may be planning a career to the long-term organizational strategy, and corporate decision making. (Beach, 1996)
While the individual makes decisions based on pressures and the individual perceptions for what is right and wrong, corporate or organizational decision making is very complex and requires a lot of study regarding the issues that shape the organization. In law the organization is a person. In reality the decision making system of the organization depends on the organization system. Thus the propensity of the individuals that make the organization and their interrelations and the nature of the organization and its system and work culture determine the importance of ethics in that system. In the case of organizations, the individual inclinations make up the core of the organizations and again there are many theories on inclinations, for example, one theory states that people like to work and seek more and more responsibility, autonomy and freedom at work and thus a participative management is the better system because it includes worker involvement in management. The individual emotions and the perceptions of the individuals of threats and benefits also modify decisions. (Zerbe; Hartel; Ashkanasy, 2008)
There are also contentions that work flows with specialization and clear cut chain of command. The span of control is opposed in nature to the concept of self-control which is more autonomous. The work control pattern must promote self-esteem and autonomy rather than a strict organizational hierarchy which can actually create derision and even mental illness. (Kanungo, 1982) So the organization has to be such that the individual and the whole organization are to be based on ethical principles.
Commerce is based on the ethical behavior of the vast majority of the individual units and this means that contracts are honored, property and ownership is respected and above all commitments and promises are kept. Thus a decision made must be based on these sentiments and there also must be fair play and camaraderie. Ethical practices in decision making is a way of growing the business because the ethical companies always are on the right side of the fence and hence do not come in conflict with the law and there will be minimum regulatory oversight and the ethical managers and businesses earn the loyalty of the customers, suppliers and all those who have business with the firm, and have better treatment of employees and have employee loyalty. (Guy, 1990)
The exact perception of ethics varies from organization to organization. There are many types of organizations and the structure of the organization will determine the importance of the inclusion of ethical thinking in the decision making process. The basis of the organization is the individual. Personal opinions and the ethics of individuals in a group create derision and sometimes union in unethical acts. Individuals are forced by circumstances and conflicts that occur in the process of decision making to alter the views based on contingencies that may not strictly be ethical. "Conflicts of commitment force people to choose between promoting the interests of the employer for promoting someone else's interests." (Guy, 1990)
There can be interpersonal conflicts that are reflected in the decision made and some interpersonal issues that cause problems are not monumental decisions but often are everyday decisions that may have long-term consequences and these interactions reflect the core values that the persons had in finding the resolution to a problem. Thus in the analysis the result of the forces are created by the individual's internal, and personal values and standards. These features of personality affect the functioning and perceptions more than externally imposed goals and principles. Thus the inner self of the individual must be in tandem with the corporate mission. The individual's inclinations often exert pressure on the system and in the decisions taken by the individual there are organizational ethics which form the core part of the organization. Ethics of the company can be seen in the everyday business conduct. The business that do not have ethical leaders have ultimately been exposed and the public and have been wound up. (Fairholm, 2001)
Ethics and sound decision making can only go with a development in the organizational culture. Organization culture must make every employee a component of the decision making process. For that the leaders and managers have to show proper ethical behavior and adhere to formulated ethical rules of operation that must be made inviolable. Since it is known that a business cannot do without value and ethics, in the long run the company shown must have followed a proper ethical model and it will get better public good will and also be effective. Therefore it is necessary to emphasize on ethics at all levels. The personal influence in decision making where there is a chance of taking unethical decisions can be minimized wherein there is evolved a corporate culture that is based on accepted ethics and morals. While the corporate ethics can be an indefinable thing, it can be derived from the corporate value system. This system of values is conceived and created at the apex, flowing down from the CEO to the executives scattered down to each unit of the enterprise. (Fairholm, 2001)
Both individuals and the collective leadership thus first identify their core values and these are the basis of the corporate values. Policies and procedures are derived from the vision and perceived mission of the company. The vision is the ideal to be achieved in its particular lines of the business. There must therefore be a shared commitment absolutely to the core values of the company by all the constituents of the company. Where these values are absent or not followed properly, it can be seen that the absence of values also shows an absence of vision and mission. (Sims, 1994)
Corporate decision making involves the consideration of many issues like social responsibility, and settling of conflicts of company interests and decisions on payoffs, adhering to standards, advertising and the owning up of liability, and these are areas that are often in the news for corporate misbehavior. These types of conflicts occur because of a weak organizational culture coupled with individuals who are unethical. Sometimes the force of what is called a groupthink or the unification of many minds on an issue can trigger unethical behavior or in a positive way it can also alter behavior of the group to an ethical resolution. Again in such cases it is the role of the leader in the group that tends to affect the decisions. (Sims, 1994)
The leaders must therefore emphatically follow the core values in all decisions and the values which are fundamental to the creation and sustenance of ethics of the company must be shared by all the employees and management of the company. Values give direction to planning, and it is thus the value statement that ultimately motivates. Organizational policies that are not in line with the mission vision and values…