The price of ethics

The article “Building an Ethically Strong Organization” in MIT Sloan Management Review won the 2019 Richard Bechard Memorial Prize, which rewards the most outstanding article published in the journal in 2018. It shows that there is still a long way to go when it comes to ethical issues.  

Despite all the marketing, and political and strategic talk about ethical behavior, many companies are regularly lambasted for their questionable business practices and behaviors. Take, for example, Volkswagen’s Dieselgate or, more recently, the Salazar affair at Nike. 

According to authors Catherine Bailey and Amanda Shantz, the ethical tone of an organization depends on how dilemmas are handled on a daily basis at every level. Scattered minor behaviors, made in response to urgent situations, can lead to widespread scandals. The authors argue that it is management’s responsibility to infuse an organization with ethical mindset at every level in order to boost performance. Establishing a genuinely ethical culture requires management to acknowledge and know how to understand ambiguity. In addition, leaders need to be able to clarify the compromises that have to be made before making a decision. Above all, management has to set an example and adopt objectives broader than mere personal interest.  

This research provides a lucid theoretical framework for management’s role in disseminating responsible behaviors and proscribing mere lip service (greenwashing, etc.). Because ensuring that your teams understand how to respond properly to ethical issues on a daily basis is the best way to prevent disaster and scandal. 

 

  To go further:  Building an ethically strong organization by Catherine Bailey and Amanda Shantz (MIT Sloan Management Review, July 2018)