What Happens when Senior Management is Itself Unethical

It is often the practice in organizations that whenever new recruits are being on-boarded, they are required to attend sessions on ethics and values. These sessions cover the need for ethical and transparent behavior by the employees and usually, someone from the compliance team or the senior management addresses them to impress upon them the ethical imperative and the importance of values. However, when we considers the situation that has manifested itself in the recent past with several top management and business leaders being implicated in scandals, we wonder what the new recruits are being told in these sessions. When the senior management themselves are implicated in wrongdoing, it becomes difficult to preach to the middle and entry-level employees about following ethical standards and practicing values. In other words, when senior leadership does not practice what they preach, the ensuing hypocritical situation resembles chaos and confusion in the organizations. Indeed, the ethical imperative must come from the top and the values must be inculcated by the senior management through personal example of honesty and transparency. The point here is that when business leaders themselves become implicated in unethical practices, we can only speculate what would happen to those lower down the hierarchy who see no point in being ethical or transparent and practice values.

Some Real World Examples

The examples of companies like Apple, Google, and Infosys are illustrative of how the senior management ought to lead by example. In all these companies, the founders of the companies ensured that they were setting high standards of ethical behavior for the other employees to follow. As the tagline of Google, Do No Evil, and that of Infosys, Powered by Intellect and Driven by Values, shows, the founders in these companies set the benchmark for ethical behavior and hence, these companies are often cited as examples of how ethics and values can be actualized in the practice of organizational behavior. Of course, another matter once the management changes in many companies, it becomes difficult for those who succeed them to emulate or follow their examples and this is an example of how ethics and values must be part of the organizational DNA and not limited to individuals. The point here is that the senior leadership must first raise the bar for ethical and value based behavior and then ensure that the organizational structures and processes are established where any deviation from the norm is dealt with strictly. In other words, the ethics and values must be institutionalized so that they become part of the organizational culture and are not person dependent. After all, no individual is bigger than the organization and hence, the objective must be to establish leaders at all levels of the hierarchy who act as benchmarks for ethical and value based behavior.

Need for Ethics as part of Organizational Culture

Returning to the main theme of the article that is what happens when the senior leadership becomes unethical. In that case, the organization loses its mojo or the motivation and the sense of purpose and as we have seen in the case of Enron in the US, Satyam Computers in India, and other companies in Asia, they either are wound up or become part of another company so that at least the organization in some basic form survives. Indeed, this is a sad state of affairs where the organization suffers because of the senior management and this situation must be avoided at all costs. Hence, the need for top management to institute and inculcate ethical and value based behavior becomes that much more important.

Closing Thoughts

Finally, though ethics and values depend to a large extent on the personality of the individual, the fact remains that organizational structures can help in fostering a sense of purpose and ethical attitudes. The key theme here is that when ethical behavior is rewarded and incentives exist for the same and when unethical behavior is punished and the organizational culture has zero tolerance towards the same, it is possible for organizations to follow lofty ideals.

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