SOURCES OF ETHICAL BEHAVIOUR

Every business manager is the centre of a web of values which connect into various value systems that, while different from one another, have interconnections. Therefore, ethical behavior on the part of managers has its roots in numerous aspects of contemporary society. In particular, there are five sources of ethical behavior in any society. These are value-forming activities of various social institutions, values and goals of an organization, peers and colleagues in the organization, work and career, and professionalization and professional code of conduct. Let us see how each of these affects ethical behavior.

1.         Value-forming Institutions. The life and development of a society are both based upon and produce values. Therefore, there can be various institutions in the society which inculcate values in an individual. In particular, there are four major institutions which provide the basic sources of values for persons and organizations: family, school, state, and religion. Value systems are constructed over a lifetime of experience in which the value-shaping influences of these institutions predominate. A key characteristic of all these basic value-forming sources is their inter relatedness. The values fostered by each reinforces the values of the others and together. The values fostered by each reinforces the values of the others, and together they exert many influences on the value patterns exhibited both by individuals and organizations.

The basic process of value formation by these institutions is that they prescribe what is good or bad for an individual. Good behavior is rewarded and bad behavior is punished. This recurs in the daily routine of the individual and he learns a particular behavior which is rewarded and reinforced. Since an organization is an agglomeration of individuals, its values are the collective values of individuals. This is the reason why there is a conflict of individual and organizational values.

2.         Values and goals: There is an important relationship between the goals and values of an organization. The goals of a business organization and its managers may either be explicit or implicit. Clearly, a business is an economic institution and as such, pursues an essentially economic goal that is maximization of profit as put by classical economic theory. However, the goals of business organizations and managers are extremely complex and empirical evidence abounds that the ultimate goals of profit maximization are tempered by a much wider range of values explicit and implicit in an organization’s goals that temper the profit maximization concept. Among these are leadership, integrity, knowledge and skills, amity, influence and power and survival. All these factors change the goals of the organization and consequently the expected behavior from individuals.

3.         Peers and Colleagues: An individual gets clue of behavior from his peers and  colleagues. He develops and applies beliefs, attitudes, and values derived from the  groups of peers and colleagues with whom he is associated. An individual in a work g out tends to conform to the group’s norms as long as he values the friendship and approval of his associates or fears the possibility that they will cut him from rights, privileges, and benefits they can offer. In the case of values, the individual feels an intimate involvement with a number of people, a nation, a society or a business organization, or a work group. Values strengthen, protect, and solidify a given group, and while departure from values may invoke no immediate penalty, a sense of estrangement may follow. Therefore, the individual tries to follow that group norm of behavior. 

4.         Work and Career: Work consists of the tasks or responsibilities associated with a .particular job or position in an organization. Essentially work is human energy directed at the achievement of a desired end. In organizations, this work is organized, directed, controlled and entrusted to individuals willing to become employees through a more or less permanent association with the organization. An individual’s experience over a period of time constitutes his career. Generally, this career is within an occupation, and in an occupational career the individual follows a related, progressive series of jobs, positions, or stages of development. Work and career create special values that give its own values and persons performing the work will follow those values. For example, in an organization, sales people, accountants, engineers will have different values according to their specialty.

5.         Professional Codes: Professional codes are an increasing source of ethical norms for managers in business organizations. There are three types of codes available in an organization. First is the so-called company creeds or philosophies which usually cover those basic philosophies and behavior that govern the business. Most of the companies have such sets, either  Expressly or otherwise. Sometimes these documents are prepared to build the company’s image by showing the company’s concern for ethical behavior in the society. Second, a code is found in company operational policies which set up guides to action that have an ethical content. Such policy guidelines may be for various activities such as recruitment and selection, selling, handling customer complaints. etc. Third, since people belong to various professions, they are also governed by code of conduct framed by their associations. Such codes have been devised by various professional bodies like All India Management Association, Institute of Company Secretaries of India, Institute of Chartered Accountants of India, Institute of Cost and Works Accountants of India, and so on. These codes are consonant with customs, mores, beliefs, social values, public laws, and generally desirable behavior. The enforcement of these codes is by various sanctions such as fines or even the expulsion of deviant members. However, in the case of management codes, such sanction is not very effective because of lack of enforcement body and also because majority of managers are not the members of the association.