Wednesday, May 23, 2007

How do organizational goals affect ethical behavior? How do these goals interfere with ethical leadership?

One of the challenges for a business organization is that it is obligated by law to provide the best returns it can to its investors. In a competitive market in which the end can often be used to justify the means, it requires significant moral strength on behalf of its officers to maintain high ethical standards.

Some ethical failures are illegal behaviors as in the case of Enron where officers acted to obscure the true financial health of the company from its investors, including its own employees a large number of whom lost their savings and/or pensions. The pressure for ever growing profit has other effects that are only recently receiving mainstream attention and have given rise to the position of CRO or Chief Responsibility Officer to bring a focus to dealing with them. These are the effects of externalizing costs, that is passing on costs to people who are not involved in the business. Examples would include power and auto companies whose services and products generate pollutants or businesses that treat employees unfairly for short term gain.

Organizational goals, in the absence of clear ethical consideration are accidents waiting to happen. While CROs represent a positive investment in responsibility, corporate responsibility is exercised by individuals so it show up as individual decisions and behavior. Thus it is important that everyone in the organization takes personal responsibility for their behavior and resists behaving unethically even if pressured to do so. I am optimistic because the new media are raising public awareness, many human resource organizations understand the problem, and there are a growing number of public interest groups who will support those who want to take an ethical but organizationally unpopular position.

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