Islamic Ethics

Importance of Ethics in Organizational Behavior

Jawad Bashir L11-5206Asad Illyas L11-5218

Ahmed Rabbani L11-5285

Objectives

OrganizationalOrganizational BehaviorEthics Why its important in organizationsImportance of leadership and cultureOrganizational challenges and safeguards

2

What is an Organization?

An organization is a collection of people who work together to achieve individual and organizational goals.

3

What is Organizational Behavior?

Organizational behavior (OB) is the study of factors that affect how individuals and groups act in organizations and how organizations manage their environments.

Ethics

A concept of right and wrong conduct beyond legal compliance

Ethical principles are implicit contracts that represent who you are and what you stand for—what your constituents expect to rely on

Michigan Business School Guide to The Ethical Challenge, How to Lead with Unyielding Integrity

Why is Ethics Important in Organizations?

Attendance Safety Quality Productivity

Loyalty Security Profitability

Character and ethical behavior in organizations affects:

Why Should Organizations Behave Ethically? Prevent harm to others, avoid

reputational harm and reduce potential liability

Fulfill public expectations and improve external relations

Protect organization from others (employees, competitors, etc.)

Improve workforce productivity but protect employees if needed from their employers

Promote personal morality

Reasons for Ethical Problems in Organizations

Personal Gain and Selfish Interest

Competitive Pressure on Finances

Organizational Goals vs. Personal Values

Organizational Safeguards

Leadership/Open door policy Ethics officer Ethics committee Code of conduct Discussion forums Conflict of interest assessments Periodic risk assessments Ethics and compliance training Help line Recognition effort Corporate citizenship

Best Practices

Impact of the Individual Leader/Manager

“The behavior and ethical attitude of an employee’s boss

is seen as the most important factordetermining whether the

employee will behave unethically on the job” (Liebig, J.E. 1990)

PNM Resources

– Do the Right Thing: Principles of Business Conduct– Ethics & Compliance Staff and Volunteers– Risk Assessment– Continuing Education– Integrity Line – Integrity in Action Awards– Community Leadership

New Mexico ethics consortium

Corporate Ethics & Compliance Program

New Mexico Ethics Consortium

MissionSeek to make New Mexico a better place to live and do business by creating and sustaining ethical business cultures within New Mexico communities, businesses, organizations and governments

HOW?


Guiding Principles

• Community includes all organizations• Don’t reinvent the wheel• Complement vs. compete• Organizational vs. functional ethics• Cannot “buy in”• Sustainable business model

• Partnership/membership• Services for fees


Implementation

Standards

Education

Resources

Thought for the Day

All that is necessary for the triumph of evil is that good men [people] do nothing.

Edmund BurkeIrish orator, philosopher, &

politician (1729 - 1797)

Copyright © 2002 by South-Western 3–16

The Nature of Managerial Ethics

• Ethics– The set of standards and code of conduct that

defines what is right, wrong, and just in human actions.

• Sources of ethics– Socialization—the process through which people

develop beliefs (social values, norms, and mores) about what is right, wrong, and just.

• Organizations teaching ethics: religious, educational, cultural, and family.


Moral Development Models

• Ethic of care– An act is judged as ethical depending on whether

the act derives from feelings, emotions, and empathy for others.

• Ethic of justice– Abstract rules (personal

moral principles) are used to define which actions are fair and which actions are not.


Managerial Ethics

• Managerial ethics and responsibilities– The application of personal ethics within the

context of the management of organizations.– Ethical responsibilities:

• Personal decisions and actions• Actions taken at the direction of superior• Actions taken by subordinates following orders• Inaction that allows unethical behavior to occur


An Organization’s Ethical Responsibility

• Top management’s responsibilities– Infuse ethical behavior into the organizational

culture.– Provide role models for ethical behavior.– Punish unethical behavior when it occurs.– Make explicit statements of what ethical conduct is.– Establish a ethical code of conduct.– Encourage the reporting of unethical conduct

(whistleblowing) and protect those who report it.


The Impact of Reward and Punishment on Unethical Behavior

Unethicalbehaviorpunished

Unethical behaviorrewarded andpunished

Unethical behaviorneither rewardednor punished

Unethicalbehaviorrewarded

Mostlyethical

MostlyunethicalBehavior

Man

ager

ial R

espo

nse

to B

ehav

ior

FIGURE 3–6Source: W. H. Hegarty and H. P. Sims, Jr. 1979. Organizational philosophy, policies, and objectives related to unethical decision behavior: a laboratory experiment. Journal of Applied Psychology 64:331–338.


Theories Affecting Ethical Standards

• Utilitarian theory– An action is considered morally right if its

consequences for everyone affected by the action are greater than those which would be realized by a different action.

• Rights theory– Decision makers’ paramount concern is respecting the

moral and/or legal rights to which people are entitled.• Procedural justice is applied to ensure that, while all

individual outcomes may not be equal, the process of outcome allocation is perceived as fair and impartial.


Ethical Dilemmas

• Ethical dilemmas– Situations that arise when managers attempt to

balance the utilitarian (future-oriented) ethic and the formalistic (perpetuating rights and the status quo) ethic.


Encouraging Ethical Behavior

• Encourage ethical behavior in short-term by:– Hiring persons who are not prone to unethical behavior.– Making public statements (e.g., a code of ethics) about

the importance of ethical behavior.– Developing policies that specify ethical objectives.– Rewarding ethical behavior; punishing unethical

behavior.– Avoiding competitive situations where there is a

potential for unethical behavior.– Using groups to make decisions requiring moral

judgment.


The Interactionist Model of Ethical Decision Making in Organizations

EthicalDilemma

CognitionsStage ofCognitive MoralDevelopment

Ethical/UnethicalBehavior

SITUATIONAL FORCES

Immediate Job ContextReinforcementJob Pressures

Organizational CultureResponsibility for Consequences

Characteristics of the WorkRole TakingResolution of Moral Conflict

Individual Belief SystemsLocus of Control

FIGURE 3–7

Source: Modified from L. K. Trevino. 1986. Ethical Decision Making in Organizations: A Person-Situation Interactionist Model. Academy of Management Review 11:603.


Diversity—A Contemporary Issue of Ethics and Social Responsibility

• Organizational diversity– The goal of having a heterogeneous work group

where no one group occupies a majority position, and all members are expected to work effectively with people different from themselves.

• Why value diversity?– Diversity is ethical.– Diversity is socially responsible.– Diversity is good business (competitive

advantage).

Definition of the Managing Ethics Competency

• Involves the ability to incorporate values and principles that distinguish right from wrong in making decisions and choosing behaviors

Ethics

• Definition: Values and principles that distinguish right from wrong. NOT IN TEXT: Ethics are often based upon laws, organizational policies, social norms, family, religion, and/or personal needs, and may be subject to differing interpretations with problems in proving “truth”

• Ethical Dilemma*: A situation in which an individual or team must make a decision that involves multiple values.

Core Abilities of the Managing Ethics Competency

• Identify and describe the principles of ethical decision making and behavior

• Assess the importance of ethical issues in actions

• Apply laws, regulations, and organizational rules in making decisions and taking action

• Demonstrate dignity and respect for others

• Demonstrate honest and open communication limited only by legal, privacy, and competitive considerations

Definition of the Managing Across Cultures Competency

• Involves the ability to recognize and embrace similarities and differences among nations and cultures and then approach key organizational and strategic issues with an open and curious mind– Culture = the dominant pattern of living, thinking, and

believing that is developed and transmitted by people, consciously or unconsciously, to subsequent generations

– Cultural values = those consciously and subconsciously deeply held beliefs that specify general preferences, behaviors, and define what is right and wrong.

Core Abilities of the Managing Across Cultures Competency

• Understand, appreciate, and use cultural factors that can affect behavior

• Appreciate the influence of work-related values on decisions, preferences, and practices

• Understand and motivate employees with different values and attitudes

• Communicate in the local language• Deal effectively with extreme conditions in foreign

countries• Utilize a global mindset (use a worldwide perspective to

constantly assess threats or opportunities)

A Model of Ethical Behavior in the Workplace

Cultural Influences Family Education Religion Media/entertainment

Organizational Influences Ethical codes Organizational culture Role models (age military, teams) Perceived pressure for results Rewards/punishment system

Individual- Personality

- Values- Moral

principles- History of

reinforcement- Gender

Political/Legal/EconomicInfluences

Ethical behavior

Rol

eEx

pec

tation

s

Copyright© The McGraw-Hill Companies, Inc. 2003 Permission required for reproduction or display

A-1Figure A-1

McGraw-Hill © 2004 The McGraw-Hill Companies, Inc. All rights reserved.

What does research show about the effects of gender?

Men:• Justice Perspective

based on the ideal of reciprocal rights and driven by rules and regulations

Women:• Care Perspective

involves compassion and an ideal of attention and response to need

Men and Women view moral problems and situations differently

A-2


General Moral Principles

• Dignity of human life• Autonomy• Honesty• Loyalty• Fairness• Humaneness• The common good

A-3Table A-1


Improving On-the-Job Ethics

• Behave ethically yourself

• Screen potential employees

• Develop a Meaningful Code of Ethics

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Documents

Islamic Ethics