The Associations between Ethical Organizational Culture,Burnout, and Engagement: A Multilevel Study

Mari Huhtala, Asko Tolvanen, Saija Mauno, and Taru Feldt
J Bus Psychol
DOI 10.1007/s10869-014-9369-2

Abstract/Purpose

Ethical culture is a specific form of organizational culture (including values and systems that can promote ethical behavior), and as such a socially constructed phenomenon. However, no previous studies have investigated the degree to which employees’ perceptions of their organization’s ethical culture are shared within work units (departments), which was the first aim of this study. In addition, we studied the associations between ethical culture and occupational well-being (i.e., burnout and work engagement) at both the individual and work-unit levels.

Design/Methodology/Approach

The questionnaire data were gathered from 2,146 respondents with various occupations in 245 different work units in one public sector organization. Ethical organizational culture was measured with the corporate ethical virtues scale, including eight sub-dimensions.

Findings

Multilevel structural equation modeling showed that 12–27 % of the total variance regarding the dimensions of ethical culture was explained by departmental homogeneity (shared experiences). At both the within and between levels, higher perceptions of ethical culture associated with lower burnout and higher work engagement.

Implications

The results suggest that organizations should support ethical practices at the work-unit level, to enhance work engagement, and should also pay special attention to work units with a low ethical culture because these work environments can expose employees to burnout.

Originality/Value

This is one of the first studies to find evidence of an association between shared experiences of ethical culture and collective feelings of both burnout and work engagement.

A copy of the article is here.

Business Leaders Get an ‘F’ in Ethics, Yet Again

Bruce Weinstein

Fortune

Updated: Jan 09, 2016 

Here is an excerpt:

Business ethics can be improved

Public perception is malleable, so there is no reason why business executives have to remain stuck in the bottom of the Gallup poll. I propose the following four strategies for businesses that want to be regarded as honest and trustworthy:

—Publicize your values. It never ceases to amaze me how few businesses list their company’s values and ethical commitments on their websites. This is the first Call to Action that I give businesses that hire me as a consultant: put your organization’s mission statement, code of ethics, and core values on the home page where they can be readily accessed.

—Hire for character. The values and ethical standards you post on your website don’t mean anything if they’re not embodied by your employees. You understandably devote a lot of energy, time, and resources to hiring people who are knowledgeable and skilled. Isn’t it at least as important to hire people who are consistently honest, accountable, loyal, and fair—that is, men and women of high character?

—Fire for character. Just as it’s crucial to bring high-character people into your organization, so too is it to get rid of those who don’t share your organization’s values. No matter how much the senior vice president of marketing knows about his or her field, if he or she has played fast and loose with the truth or hasn’t honored commitments to clients, why keep him or her on the payroll?

—Reward excellence. I recently spoke at a Fortune 100 company on the day when five employees who embodied the company’s values were flown in to receive a prestigious award and a handsome bonus. One young man had found a $15,000 diamond ring in his store’s parking lot and had gone to considerable lengths to track down the owner. Imagine how the customer felt when her ring was returned. And imagine the positive word-of-mouth she gave the company.

The article is here.

Why Ethical People Make Unethical Choices

By Ron Carucci
Harvard Business Review
Originally posted December 16, 2016

Most companies have ethics and compliance policies that get reviewed and signed annually by all employees. “Employees are charged with conducting their business affairs in accordance with the highest ethical standards,” reads one such example. “Moral as well as legal obligations will be fulfilled in a manner which will reflect pride on the Company’s name.” Of course, that policy comes directly from Enron.  Clearly it takes more than a compliance policy or Values Statement to sustain a truly ethical workplace.

Corporate ethical failures have become painfully common, and they aren’t cheap.  In the last decade, billions of dollars have been paid in fines by companies charged with ethical breaches. The most recent National Business Ethics Survey indicates progress as leaders make concerted efforts to pay holistic attention to their organization’s systems. But despite progress, 41% of workers reported seeing ethical misconduct in the previous 12 months, and 10% felt organizational pressure to compromise ethical standards. Wells Fargo’s recent debacle cost them $185 million in fines because 5300 employees opened up more than a million fraudulent accounts.  When all is said and done, we’ll likely learn that the choices of those employees resulted from deeply systemic issues.

The article is here.

Do It Well and Do It Right: The Impact of Service Climate and Ethical Climate on Business Performance and the Boundary Conditions

Kaifeng Jiang, Jia Hu, Ying Hong, Hui Liao, & Songbo Liu
Journal of Applied Psychology
Vol 101(11), Nov 2016, 1553-1568.

Abstract

Prior research has demonstrated that service climate can enhance unit performance by guiding employees’ service behavior to satisfy customers. Extending this literature, we identified ethical climate toward customers as another indispensable organizational climate in service contexts and examined how and when service climate operates in conjunction with ethical climate to enhance business performance of service units. Based on data collected in 2 phases over 6 months from multiple sources of 196 movie theaters, we found that service climate and ethical climate had disparate impacts on business performance, operationalized as an index of customer attendance rate and operating income per labor hour, by enhancing service behavior and reducing unethical behavior, respectively. Furthermore, we found that service behavior and unethical behavior interacted to affect business performance, in such a way that service behavior was more positively related to business performance when unethical behavior was low than when it was high. This interactive effect between service and unethical behaviors was further strengthened by high market turbulence and competitive intensity. These findings provide new insight into theoretical development of service management and offer practical implications about how to maximize business performance of service units by managing organizational climates and employee behaviors synergistically.

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In conclusion, service excellence has become a strategic imperative for service organizations, and prior research has established an unequivocal picture of the value in building a service climate that guides employees to satisfy customers and generate value. Our findings suggest another indispensable and complementary route to service success: in addition to emphasizing service excellence, organizations should highlight high ethical standards to uniquely inhibit unethical behavior. Additionally, both excellent service behavior and adherence to ethics functioned synergistically. Last, our results showed that the synergy between service and ethical behavior was most salient when the market was turbulent or competitive.

The article is here.

The Leadership Blind Spots at Wells Fargo

By Susan M. Ochs
Harvard Business Review
Originally posted October 06, 2016

Here is an excerpt:

This leadership blind spot is the result of misguided reverence for their culture and its ability to inoculate the bank from systemic problems. It represents a governance breakdown of the highest order for executives and board members. But it appears that some red flags never even reached them: Investigations revealed the bank has ignored, discouraged, and even fired employees who tried to voice concerns about the intimidating culture and unethical practices.

In the worst cases, whistleblowers claim they were fired after reporting violations to the bank’s ethics hotline or trying to alert supervisors to illegal behavior.  Concerns raised by other employees were reportedly ignored, including an alleged email sent to Stumpf directly, and a petition, signed by 5,000 colleagues, that sought to lower sales quotas and combat unethical conduct. Stumpf called the firings “regrettable” and assured Congress that the bank has a policy of non-retaliation against whistleblowers.

But the damage goes beyond the employees who were terminated — it sends a signal to everyone else that they should keep quiet. At best, problem-raisers will be ignored; at worst, they will lose their jobs. Why risk it? If the bank doesn’t care, why should they?

The article is here.

Four Ways Your Leadership May Be Encouraging Unethical Behavior

Ron Carucci
Forbes.com
Originally published June 14, 2016

Most leaders would claim they want the utmost ethical standards upheld by those they lead. But they might be shocked to discover that, even with the best of intentions, their own leadership may be corrupting the choices of those they lead.

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1. You are making it psychologically unsafe to speak up. Despite saying things like, “I have an open door policy,” where employees can express even controversial issues, some leadership actions may dissuade the courage needed to raise ethical concerns . Creating a culture in which people freely speak up is vital to ensuring people don’t collude with, or incite misconduct.

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2. You are applying excessive pressure to reach unrealistic performance targets. Significant research suggests that unfettered goal setting can encourage people to make compromising choices in order to reach targets, especially if those targets seem unrealistic. Leaders may be inviting people to cheat in two ways. They will cut corners on the way they reach a goal, or they will lie when reporting how much of the goal they actually achieved.

The article is here.

“We Didn’t Know”: Silence and Silencing in Organizations

Nina K. Thomas
International Journal of Group Psychotherapy 
DOI:10.1080/00207284.2016.1176489

Abstract

This article examines the dynamic processes within organizations that contribute to systemic silence and silencing and the “we didn’t know” defense, particularly for those groups in which secrecy replaces transparency to the detriment of the organization and its members. The events of the past more than 10 years within the American Psychological Association (APA) surrounding the role of psychologists in interrogation of detainees, including advising on and monitoring interrogations that have been construed as torture, will serve as a case example of the systemic forces that may contribute to leading an organization away from its principal mission. I explore how what was done was turned into its opposite. That is: “We are protecting psychologists by providing them with ethical guidelines in detention centers with detainees” became the explanatory rubric for a position that violated the association’s stated mission and exposed the organization and individual members to public shame. In addition, I explore how self-silencing becomes a way of adapting to a culture that censures dissent.

Introduction

We didn't know" is the all too common legitimizing trope used to establish distance from disturbing events of a sociopsychological and political nature.  Is such a plea of ignorance consciously or unconsciously motivated lest the speaker be implicated in the acts being opposed?  "We didn't know" typically is invoked when a threat of shame, culpability, or punishment of a sort hangs in the balance.  It may be utilized when social service agencies fail to respond to negligent, abusive, or violent behavior toward those for whom they are responsible for care, or in instances of sexual abuse in military, academic, or religious institutions.  Examples also may be found in the justifications of neighbors of concentration camps during the Second World War, or corporate officers deaf to workers' complaints of malfeasance or corruption within an organization.  It is a widespread self- justificatory response to situations in which the individual might have known, even ought to or could have known what was going on, but for a variety of reasons turned away from knowing.

The article is here.

Will Your Ethics Hold Up Under Pressure?

Ron Carucci
Forbes
Originally published FEB 3, 2016

Here is an excerpt:

In an ironic appeal to self-interest, for which Haidt readily acknowledges the paradox, he says there are four important reasons “ethics pays.” First, there is the cost of reputation, which most analysts and experts acknowledge links closely to share price performance. Second, ethical organizations have lower costs of capital, as evidenced by Deutsche Bank’s commitment to focus on clients with higher ethical standards. Third, the white-hot war for talent, both recruiting and retaining top talent, takes a painful hit with an ethical scandal. Conversely, the best talent wants to associate with the best reputed companies. And finally, the astronomical cost of cleaning up an ethical mess can soar into the billions after shareholder losses, lawsuits, fines, and PR costs are added up. Still those aren’t the real reasons to focus on this, claims Haidt. The longer-term benefits to a world with greater ethical substance far outweigh the costs of cutting corners for short-term gains. Sadly, unethical choices have paid well for too many executives.

The article is here.

Doctors Behaving Badly

By Roni Caryn Rabin
The New York Times - Well
Originally published

Here is an excerpt:

Nancy Berlinger, a scholar at The Hastings Center who writes about ethical challenges in health care as well as issues of power between junior and senior clinicians, disagrees. “Doctors must be respectful even if a patient is sedated,” she said. And in these cases, she said, the supervising physicians also did harm to the medical students they were responsible for training and mentoring.

“This is the worst thing a role model can do: to suggest that wrong behavior is acceptable, to nudge junior people to be callous and to misuse power,” Dr. Berlinger said. In both cases, the senior doctors made a trainee student complicit in their abuse and “made them feel dirty at an early stage of their careers.”

The entire article is here.

How to influence the right corporate culture in your business (and why it matters)

By Rick Spence
Financial Post
Originally published on August 17

Here is an excerpt:

A culture not built on authenticity is an illusion. But there are many things a good boss can do to influence development of the right culture:

• Live the values you set for the company. If you want honesty, courage, creativity and collaboration, demonstrate those traits every day. Make sure your entire leadership team follows suit. Employees will sense – and resent – hypocrisy.

• Make sure HR and/or your hiring managers understand and reinforce the culture you’re trying to create. Develop interview tools that identify candidates with desired characteristics. Weed out employees who don’t share these values. When employees see you tolerating people who don’t honor the culture, they will conclude that it’s not that important to you.

• Identify other organizations with cultures similar to the culture you wish to build (e.g., Design = Apple; Innovation = Google, Happiness = Zappos). Communicate regularly with your staff to show how those companies build, maintain and benefit from their unique cultures.

• Take every opportunity to restate your company’s values. If your employees can’t explain their culture using the same words you do, you’re not there yet.

• Conduct regular satisfaction surveys to measure how engaged your employees feel with the culture.

The entire article is here.

Accountability for Research Misconduct

By Zubin Master
Health Research, Research Ethics, Science Funding
Originally posted September 23, 2014

Here is an excerpt:

This case raises important questions about the responsibilities of research institutions to promote research integrity and to prevent research misconduct. Philip Zimbardo’s Stanford prison experiments and other social psychology research have taught us that ethical behavior is not only shaped by dispositional attribution (an internal moral character), but also by many situational (environmental) features. Similarly, our understanding of the cause of research misconduct is shifting away from the idea that this is just a problem of a few “bad apples” to a broader understanding of how the immense pressure to both publish and translate research findings into products, as well as poor institutional supports influence research misconduct.

This is not to excuse misbehaviour by researchers, but rather to shed light on the fact that institutions also bear moral responsibility for research misconduct. Thus far, institutions have taken few measures to promote research integrity and prevent research misconduct. Indeed, in many high profile cases of research misconduct, they remain virtually blameless.

The entire article is here.

Whistleblowing and the Bioethicist’s Public Obligations

By D. Robert MacDougall
Cambridge Quarterly of Healthcare Ethics / Volume 23 / Issue 04 / October 2014, pp 431-442

Abstract:

Bioethicists are sometimes thought to have heightened obligations by virtue of the fact that their professional role addresses ethics or morals. For this reason it has been argued that bioethicists ought to “whistleblow”—that is, publicly expose the wrongful or potentially harmful activities of their employer—more often than do other kinds of employees. This article argues that bioethicists do indeed have a heightened obligation to whistleblow, but not because bioethicists have heightened moral obligations in general. Rather, the special duties of bioethicists to act as whistleblowers are best understood by examining the nature of the ethical dilemma typically encountered by private employees and showing why bioethicists do not encounter this dilemma in the same way. Whistleblowing is usually understood as a moral dilemma involving conflicting duties to two parties: the public and a private employer. However, this article argues that this way of understanding whistleblowing has the implication that professions whose members identify their employer as the public—such as government employees or public servants—cannot consider whistleblowing a moral dilemma, because obligations are ultimately owed to only one party: the public. The article contends that bioethicists—even when privately employed—are similar to government employees in the sense that they do not have obligations to defer to the judgments of those with private interests. Consequently, bioethicists may be considered to have a special duty to whistleblow, although for different reasons than those usually cited.

The entire article is here, behind a paywall.

How Unethical Behavior Becomes Habit

by Francesca Gino, Lisa D. Ordóñez and David Welsh
Harvard Business Review Blog
Originally posted September 4, 2014

When a former client’s secretary was arrested for embezzlement years before his own crimes were uncovered, Bernie Madoff commented to his own secretary, “Well, you know what happens is, it starts out with you taking a little bit, maybe a few hundred, a few thousand. You get comfortable with that, and before you know it, it snowballs into something big.”

We now know that Madoff’s Ponzi scheme started when he engaged in misreporting to cover relatively small financial losses. Over a 15-year period, the scam grew steadily, eventually ballooning to $65 billion, even as regulators and investors failed to notice the warning signs.

The entire article is here.

5 Ethical Responsibilities of Corporate Boards

By Kirk O. Hanson
Markkula Center for Applied Ethics Blog
Originally published August 14, 2014

Most corporate boards have learned to act quickly when a scandal breaks. General Motors’ board is moving much more quickly to clean up the fallout from its vehicles’ ignition failures than Toyota’s board did to address its rapid acceleration problems of several years ago. It is now the rare board that doesn’t launch an independent investigation quickly when misbehavior is reported.

But the responsibility of the board to prevent scandals is more important than the responsibility to clean up the mess once it has emerged. Here most boards are still at the starting gate. Recent legislation and guidance embodied in the Federal Sentencing Guidelines clearly require the board to take a key role in preventing ethics failures before they happened. This is more complicated than calling in the outside lawyers once disaster happens.

The entire article is here.

5 Reasons Ethical Culture Doesn’t Just Happen

By Linda Fisher Thornton
Leading in Context
Originally posted August 6, 2014

Don’t assume that an ethical culture will just happen in your workplace. Even if you are a good leader, ethical culture is a delicate thing, requiring intentional positive leadership and daily tending. It requires more than good leadership, more than trust building, and more than good hiring.

Why does building an ethical culture require so much more than good leadership? Ethical culture is a system of systems, and just putting in good leadership, trust-building and good hiring doesn’t make it healthy.

The entire blog post is here.

Five Key Ethical Issues

By Cynthia Schoeman
The Ethics Monitor
Published in HR Future

Here is an excerpt:

4. The new ROI: return on integrity

Embarking on a path of building an ethical culture is likely to give rise to some challenging questions, such as, ‘Does ethics matter?’ and, ‘Does ethics make good business sense?’. Leaders need to understand and champion the benefits of an ethical culture to ensure that its value is widely recognised.
The benefits include attracting and retaining top employees and board members; greater levels of trust amongst internal and external stakeholders; increased employee engagement and commitment; enhanced loyalty and support from customers and other stakeholders; improved investor and market confidence; and enhanced corporate reputation and brand equity. A strong ethical culture is also a sound defense against misconduct, which serves to reduce the risk of ethical failures and the associated costs and negative consequences.

The entire blog post is here.

Turning To Ethics When Trust In Business Is At An All-Time Low

By Dina Medland
Forbes
Originally posted July 24, 2014

Here is an excerpt:

The latest report from the UK’s  Institute of Business Ethics  (IBE) sets out why company directors need to be actively involved in setting and maintaining a company’s ethical values. One of the lessons of the 2008 banking crisis has been that ethics matters to business, both in terms of its reputation and its sustainability, writes Peter Montagnon, Associate Director  in Ethics, Risk & Governance: a board briefing paper. The challenge for business is how to develop and embed real values in order to regain public trust, needed if they are to secure their franchise for the long term.

The entire article is here.

Behavioral Ethics

PBS
Originally posted June 27, 2014

Why are people dishonest? From Main Street to Wall Street, at home and at work, questionable behavior defies people’s best intentions. Now experts in the social sciences are examining why people so often behave contrary to their own ethical aims and what can be done about it, especially in the world of business. “What we find is that when people are thinking about honesty versus dishonesty,” says Dan Ariely, a professor of behavioral economics at the Duke University Fuqua School of Business, “it’s all about being able, at the moment, to rationalize something and make yourself think that this is actually okay.”




The entire page is here.

Ethics is Contagious

By Linda Fisher Thornton
Leading in Context
Originally posted April 16, 2014

Here is an excerpt:

Ethics is catching, and leaders set the tone for the ethics of the organization. What would happen if everyone in the organization followed our lead? Would the organization be more or less ethical?  What kind of ethics are people catching as they work in our organization?

10 Reasons Why Ethics is Contagious:

1. We are social creatures.
2. People tend to “follow the leader.”
3. If their leader is unethical, people may be less likely to report ethical problems.

The entire article.

Leading an Ethical Culture: 6 Building Blocks

By Cynthia Schoeman
Ethics Monitor

The concept of organisational culture surfaced in the late 1970s and is as relevant in the workplace today as it was then. Amongst the wealth of theories and thought leadership on the topic, the definition of culture as “the way things are done around here” is widely recognised. So too is it generally accepted that values play a significant role in shaping culture and that, in turn, culture shapes behaviour in organisations. The quest for more ethical workplace conduct makes culture especially pertinent and it makes the attainment of an ethical culture a high-priority goal.

Leaders who aim to achieve this need to start by understanding the value of an ethical culture, such as that it produces higher levels of individual accountability and avoids the need for excessive regulation. An ethical culture serves to improve employee commitment, investor and market confidence and customer loyalty, which collectively enhance the company’s reputation and brand equity. A sound ethical culture also positively impacts risk management, reducing the likelihood of high costs and other negative consequences associated with ethical breaches.

The entire article is here.