Ethical Compromises in Organizations

Organizations have their own set of ethical issues. On July 12th, former FBI Director Louis Freeh requested a blistering report about the cover up associated with the Jerry Sandusky case. Freeh’s report found coach Jerry Paterno (now deceased), former president Graham Spanier, athletic director Tim Curley, and vice president Gary Schultz had ‘repeatedly concealed critical facts about Sandusky’s child abuses.” 

The reviewers found handwritten notes and emails in a decision to hide information from child welfare and police authorities. Sandusky is awaiting sentencing after being convicted on 45 criminal counts of abusing 10 boys. 

Freeh noted, “The most saddening findings by the Special Investigative Counsel is the total and consistent disregard by the most senior leaders at Penn State for the safety and welfare of Sandusky’s child victims. The most powerful men at Penn State failed to take any steps for 14 years to protect the children who Sandusky victimized.” 

Reports showed Paterno and administrators knew about Sandusky’s child abuse activities as far back as 1998.  However, they attempted to conceal this information for the school’s reputation and perhaps—Coach Paterno’s legacy as a dynamic coach. The blanket cover up went beyond the school. 

 

The local district attorney when provided with evidence of Sandusky’s child abuse did not prosecute.  Many people in the community were in denial because Coach Paterno was a national icon and local legend.  

For many organizations, it is the proverbial “doing as I say and not as I do” for some managers.  Most managers can get away with this philosophy. As businesses continue to falter and competition begins to bear down on the economy, workers are looking for leadership.  

However, it is virtually impossible to lead an organization if you’re unethical. Why is this true? Well, followers will not respect leaders without integrity. A leader can’t trick them with promotions or bribe them with money. In the long run, character does count in an effective organization.  We will discuss the dangers of empowering unethical leaders.  

Ethics plays a critical role in good leadership. Charles Hill, author of International Business, defined as ‘accepted principles of right or wrong that govern the conduct of a person, the members of a profession, or the actions of an organization.  It is one situation when an individual makes an unethical decision.  However, it is a very complex matter when an institution or a group of leaders representing an institution acts in an unethical manner.

Richard Daft, an organization management expert, explains that leaders at the highest management levels develop internal moral standards that can often allow them to break laws if necessary. However, managers should be personally connected with their organizations’ values. Sadly, some managers feel they are bigger than their organizations. 

In fact, ‘they are the organization!’ In this scenario, leaders become the problem, not the solution. They become trapped by the “Seven Deadly Sins,” which consist of pride, avarice (greed), envy, wrath, lust, gluttony, and slothfulness.

These attributes are not good leadership qualities. Evidently, these unethical leaders bring about their own demise, shaming their organizations. Penn State was no exception. Unfortunately, it only takes one bad leader to destroy the core values of an organization.  

How does Penn State recovery from this leadership void?

 © 2012 by Daryl D. Green                                    

 

Social Mobility in America

Economic turbulence has overtaken the American way of life.  In Europe and Asia, investors stand uncertain of their next moves.  Even America is part of an economic casualty. 

Yet, these problems are very personal to the average citizen. Higher gas prices and costs of living; the housing bust; and the financial crisis cause most people to worry about their future. With a weak job growth, many U.S. jobs continue to be shipped abroad. 

Global competition continues to cause Fortune 500 companies to search for cheap labor to increase profitability.  This reality often places developed countries like the United States at a clear disadvantage.  Consequently, there has been an increasing gap between the wealthiest people and the poorest people in this country.  The reality has become the shrinking or disintegrating of the middle class.

America is a shining symbol for social mobility across the world.  Social mobility can be defined as “the passage of individuals from one social class to another.” Most people feel that if they work hard, they can achieve a better life, regardless of their social standing. 

In some countries, a person is stuck in an economic class with no hope of further advancement.  If your parents are uneducated and work a low paying occupation, the children will grow up in this same status.

Marketing expert Michael Solomon argues the natural progression of social mobility: “People do improve their positions over time, but these increases are not usually dramatic to catapult them from one social class to another.”  The current economic picture makes social mobility more difficult.

Michael Snyder, editor of theeconomiccollapseblog.com, argues the systematic destruction of the middle class: “The rich are getting richer and the poor are getting poorer at a staggering rate. Once upon a time, the United States had the largest and most prosperous middle class in the history of the world, but now that is changing at a blinding pace.” 

Snyder supported his claims with 22 statistical facts.  Below is a sample of his analysis:

  • Eighty three percent of all U.S. stocks are in the hands of one percent of the people.
  • American workers now must compete against situations like China where a garment worker makes approximately 86 cents an hour and in Cambodia a garment worker makes approximately 22 cents an hour.
  •  Sixty one percent of Americans “always or usually” live paycheck to paycheck, which was up from 49% in 2008 and 43% in 2007.
  • Average Wall Street bonuses for 2009 were up 17% when compared with 2008.
  • More than 40% of Americans who actually are employed are now working in service jobs, which are often very low paying.
  • Sixty six percent of the income growth between 2001 and 2007 went to the top one percent of all Americans.
  • Only the top 5% of U.S. households have earned enough additional income to match the rise in housing costs since 1975.
  • In 1950, the ratio of the average executive’s paycheck to the average worker’s paycheck was about 30 to 1. Since the year 2000, that ratio has exploded to between 300-500 to 1.
  • As of 2007, the bottom 80% of American households held about 7% of the liquid financial assets.
  • The bottom 50% of income earners in the United States now collectively own less than 1% of the nation’s wealth.

Many people hold that a political change will rescue the middle class.  As we have witnessed in the 2012 Presidential Election, petty politics are more important than solving the economic crisis.  Therefore, all families are held hostages. Any rescue will not be soon. 

Snyder doubts there is any hopeful solution for the stale social mobility occurring today: “The reality is that no matter how smart, how strong, how educated or how hard working American workers are, they just cannot compete with people who are desperate to put in 10 to 12 hour days at less than a dollar an hour on the other side of the world.”  Many people hope that America can compete in the future without sacrificing her core values related to social mobility.  Others have given up this hope.

 Do you feel social mobility is unsustainable in the U.S. , given global competition?

 © 2012 by Daryl D. Green

Sustaining Ethical Behavior

Americans are increasingly worried and cynical of today’s leaders. Traditional institutions are losing favor, leaving citizens unable to trust their neighbors, churches, and government.

Additionally, America has a history of unethical behavior by leaders. The private sector has been riddled with tons of examples (i.e. Enron, Exxon, etc.) of unethical behavior on Wall Street. Furthermore, political parties market family values and personal integrity like they are selling used automobiles.

In the quest for power and their own personal ambition, many government officials have been drawn to deadly vices that have led to their personal self-destruction. Graham Tomblin, The Seven Deadly Sins, notes this natural selfish behavior has destroyed families, friendships, happiness, and peace of mind.

These moral break downs can seep into other factions of the political landscape. For example, in 1998, the media reported the sexual exploits of Democratic President Bill Clinton with Monica Lewinsky. However, political scandals are nothing new for the federal government. During the months of May to August of 2007, Republican President Ronald Reagan’s administration was suspected of trading weapons for hostages in the Iran-Contra hearings.

This topic explores the American political environment and how amoral behavior associated with ‘seven-deadly sins’ impact contemporary organizational culture.   For this discussion, we evaluate Congressman Mark Foley’s scandal. Foley was a Florida congressman, who was reported to have sent sexually explicit emails to male pages who were high school students.

He abruptly resigned on September 29, 2006, which set-off a political landmine. House Republicans had to do damage control, whileDemocrats went on the attack. Some Democrats claimed that some House leaders knew for months of Foley’s inappropriate behavior. House SpeakerDennis Hastert found himself on the political hot seat. Hastert declared he knew nothing about Foley’s actions, but others disagreed with his proclamation. Hastert continued his claim of innocence as he asked the JusticeDepartment to investigate this matter.

Because of Foley’s resignation, he couldn’t be punished by his peers. Foley also apologized publicly, sought treatment for his alcoholic addicted, and pointed to a childhood abuse experience by a priest as a cause of his problem. Once again, Americans were asked to address another ethical issue among government officials.

In many cases, unethical decisions made by individuals who allow their ethical principles to influence their decision-making, led to laws being broken or the compromise of organizational values.  Moral principles, values, or beliefs about what is “right” or “wrong” are known as ethics.

Consequently, individuals who make decisions outside of the organization’s values sustain their moral principles internally. Ethics and organizational culture can impact the success of an organization. In fact, ethical behavior is directly related to culture.  

In the long-term, unethical behavior impacts an organizations ability to function effectively.  Employees watch what leaders do more than what they say.  Therefore, organizations that want to sustain future success must pay attention to their ethical behavior, at all levels.

Describe your professional experiences with ethical behavior by executives as well as others in the organization. Discuss what can be done to instill good ethical behavior throughout the organization

© 2011 by Daryl D. Green

Spotting Unethical Leadership in 2010

 Today, many employees grumble when their leaders discuss being ethical. During the massive economic downturn, many executives got rewarded for underperforming. For example, Fannie Mae’s CEO Michael Williams and Freed CEO Charles Haldeman Jr. were slated to receive up to $6 million each for 2009 despite the companies’ poor performance. Yet, it cost the American taxpayers more than $100 million for these company bailouts. With the continual unethical behavior of several executives, American workers are more cynical about their leaders than ever.

Ethics plays a critical role in good leadership. Ethics is defined as the code of moral principles that governs the behavior of a person or group according to what is right. Richard Draft, an organization management expert, explains that leaders at the highest management levels develop internal moral standards that can often allow them to break laws if necessary. 

For many organizations, it is the proverbial “doing as I say and not as I do” for some managers.  Most managers can get away with this philosophy. As businesses continue to falter and competition begins to bear down on the economy, workers are looking for leadership. However, it is virtually impossible to lead an organization if you’re unethical. Unfortunately, it only takes one bad manager to destroy the core values of an organization. Here are some ways to identify an unethical leader:

This unethical leader…

1. Leads with a bad attitude
2. Lies to his followers and peers
3. Takes advantage of people
4. Takes personal credit for group accomplishments
5. Uses politics to gain power in an amoral manner
6. Does not focus on the common good of the organization
7. Does not support his followers
8. Displays a “double-tongued” behavior
9. Sacrifices his followers for personal gain
10. Fails to model the way for followers

Emerging leaders cannot afford to behave unethical. People become less trusting of organizations and people. People, especially leaders, need to act in a manner that sets the example for the rest of the organization. Therefore, it can be concluded that effective leaders must be careful to stay humble and have accountability mechanisms in place so that they won’t hit any ethical mine fields. Organizations can’t afford to wait.

Can today’s unethical behavior be stopped? If so, how? If not, how can today’s organizations minimize their losses?