Question

Topic 11a: Ethical Climate (MANDATORY TOPIC)

Ethical decision making, at the various levels within the organization, is characterized in an ethical climate framework developed by John Cullen and Bart Victor in the late 1980s. Simha and Cullen (2012) discuss the impact of organizational ethics on organizational outcomes in the context of this framework, which consists of nine theoretical climate types - five of which are empirically considered to occur most often: (1) instrumental climate; (2) caring climate; (3) independence climate; (4) rules climate; and (5) laws and code climate. Which one of these climate types best fit your organization? Explain your selection(s) and describe how this climate impacts, either positively or negatively, project performance.

Project Management

Answer 1

Ethical climate:

Ethical climate is the culture of an organization as it pertains to questions of right or wrong. It derives from the governance, values, norms and habits that exist in an organization. Ethical climate results both firm’s history and its leadership. In generally, poor ethical practices at top of an origination translate to a poor ethical climate.

Five ethical climate changes:

Five ethical climate types are comprising caring, independent, law and code, rules, and instrumental. An implementation of the ethical climate model could encourage ethical decision-making process and ethical behaviours at the business environment. Its consequences, therefore, support the mission of sustainable development.

Basically, ethical climate has a positive relationship with job satisfaction. The perceived ethical climate of an organization makes employees feel satisfied with work. Considering the relationship between different types of ethical climate and job satisfaction, a study by Martin and Cullen found that four types of ethical climate-caring, independent, law and code, and rules-influence job satisfaction positively. These four types of ethical climate can be applied to maintaining employees' job satisfaction.

Conversely, employees' perceptions of instrumental ethical climate have negative effects on job satisfaction. Additionally, ethical climate can influence organizational commitment. The term "organizational commitment" refers to a force that binds an individual to be involved in organizational activities and to remain in the organization. Since employees who perceive a positive ethical climate are committed to their organization.

What is your organization’s Ethical Climate? What is Ethical Climate and why is it important?

ORGANIZATION vs ETHICAL CLIMATES

An Organization’s ethical climate is the focus on the ethics of decision making and actions.   Ethical climate is a component of organizational climate which is the reactions of organizational members to the values and beliefs of that make up organizational culture (Bass, 1990, Kozlowski & Doherty, 1989).   Organization climate is important because it can be a driver and indicator of job performance, psychological wellbeing and withdrawal of individuals in an organization.   Organization and Ethical climate are important because these conditions will impact the behaviour, motivation and effectiveness of the workforce. These forces if positive and supportive can strengthen and increase morale and productivity, but when caustic and destructive, can cause withdrawal, dysfunctional and unwanted behaviours.

As defined by Ostroff in 1993, organization climate has three primary components;

Affective: Concerns for interpersonal/social relationships in the workplace

Cognitive: Concerns for one’s relationship with the work itself

Instrumental: Concerns for integration of people and tasks for getting the job done

The second dimension is called locus of analysis and is the perspective for judgement that a person users. As with the first dimension, there are three categories.

Individual: Looking from the perspective of oneself

Local: Looking from the perspective of those who are directly involved/affected

Cosmopolitan: Looking from the perspective of society as a whole.

If I then apply the characteristics of my current organization and leadership, I find the ethical criteria which best fits is benevolence and the loci of analysis is cosmopolitan because the company mission and values of the leadership is to do good things for the benefit of the world.   Based upon those characteristics, my organization and leadership ethical climate would be ‘Social Responsibility’.   The organization and leadership led by example and promote cooperation, open communication, mutual respect and an overall environment that is fair and safe.   There is a high degree of satisfaction and commitment by employees and for the past 5 years has been ranked as a top company to work at.

In contrast, the previous company I worked for had an ethical criterion of self-interest and a locus of analysis of local locus.   The company and management were driven by the bottom line of sales and profit so it is fitting that based on the Victor and Cullen (1988) matrix the company ethical climate was ‘Company Profit’.     The leadership was focused on doing whatever they had to do in order to make their numbers and were willing to blame and sacrifice others to do so.   The culture was one of fear and unhealthy competition with people stealing and sabotaging other people’s sales opportunities.   This climate led to a 20% annual turnover rate and dysfunctional problems such as people stealing and breaking company resources.   This was not enjoyable organization to work for and the ethical climate resulted in looking for new employment opportunities.

There are multiple ways to determine or attempt to measure a leader or organization’s ethical climate such as the holistic theory by Arnaud (2010). These approach individual and group/societal components are combined for a more holistic look.   This approach has four dimensions that require a higher degree of assessment before determining an ethical climate.   The Arnaud model is more specific, harder to use and more time-consuming than the Victor and Cullen model.

It doesn’t matter what approach you use to determine the ethical climate of a leader or organization, or what label you give it, I think most reasonable people instinctively are able to detect if a leader or organization is ethical or unethical.     Because of the influence of leaders on their followers, the leader’s behaviours and values are going to set the tone and direction for the entire company. As an organization can have layers of leaders and management, to help diffuse the impact of a single leader, an organization can help define and enforce its ethical climate by creating, socializing and enforcing a code of ethics.   This can then help with some of the potential bad/inappropriate decisions by individuals by providing guidelines for decision making and behaviour.   If your organization does not have a code of ethics, begin by referencing existing codes of ethics such as the APA (American Psychological Association) code of ethics.

Which one of these climate type best fit your organization? Explain your selection(s) and describe how this climate impacts, either positively or negatively, project performance. Project Management

As far as project management concern Independent climate is best fit.

In today’s competitive business environment, project managers and leaders need to ensure that ethics permeates all aspects of organizational operations. As strategic initiatives are implemented through projects, it has become imperative that these projects are managed effectively and ethically. Making ethical decisions is not easy, because not every ethical dilemma has a right solution. Ethics and leadership, together, can add a moral dimension to the decision-making process for the success of any organization. This presentation will outline a framework for ethical behaviour and effective moral leadership. As a result of this presentation, attendees will recognize the social and ethical responsibilities and consider the ethical dimensions to define strategies that will lead to success.