The notion of business ethics is very popular nowadays. It appears to be necessary for any company that strives to maintain a positive reputation. However, every business is a very complex system of interrelated elements. As a result, not only its reputation but also other aspects and characteristics get affected by and in their turn affect the notion of business ethics as it is adopted by the company and modified to suit the needs of a company and fit its corporate culture. One of the characteristics that appear to depend on business ethics is the integrity of a company’s employees. This notion appears to be rather difficult to define, but the trustworthiness of the employees that it presupposes makes it particularly alluring for managers (Dodd & Dodd, 2014).
The two popular and most certainly beneficial business phenomena are going to be studied in this paper. Its primary aim is to make an attempt at characterizing the relationship between business ethics and employee integrity. Attention will also be paid to other relevant issues and similar notions, first of all to that of the corporate culture. The objectives of this paper include defining the following notions: business ethics, corporate culture, integrity in a general sense, and employee integrity. Upon describing these phenomena, ideas will be suggested concerning their interactions and the impacts they may have on each other. Finally, conclusions about the possible relationships between the named phenomena will be made.
As it has been pointed out in different studies, all the notions discussed in this paper are rather vague and difficult to define, although attempts at describing them have been undertaken (Stanford, 2013; Ferrell, Fraedrich & Ferrell, 2014; Dodd & Dodd, 2014). In this section, a number of studies on the matter will be analyzed, a description of the terms will be provided and an opinion about their significance will be presented.
According to Ferrell et al. (2014), “business ethics comprises organizational principles, values, and norms that may originate from individuals, organizational statements, or from the legal system that primarily guide individual and group behavior in business” (p. 5). This definition was suggested since it appears to comprise all the most important characteristics of the notion, even though its constituents may seem difficult to identify. Pointing out this difficulty and the vagueness of the terms “principles” and “norms”, the authors provide the definitions for them, suggesting that principles are the limits that a person or an organization chooses to respect, while values are the “beliefs” and “ideals” of that person or that organization (Ferrell et al., 2014, p. 6).
The origins of business ethics are also suggested as it is argued that the notion arises from the principles and values of people as well as from companies’ guidelines and the law. Finally, according to the definition, business ethics governs most aspects of a company’s life, including the actions of workers and managers as well as overall companies’ strategies, both long- and short-term. This is why studies of business ethics have been included in managerial studies. According to Acevedo (2013), “since almost every managerial decision has a moral dimension, it is essential that ethical reasoning be integrated into problem-solving and decision making” (p.67).
While indeed defining many actions of a company, business ethics is in turn defined by the stakeholders of this company, for example, the customer’s expectations or the employees’ actions. Besides, business ethics can be influenced by the “outer world”, by the society, as it responds to political, cultural, and economic changes (Ferrell et al., 2014). An example of such influence is the modern trend of corporate social responsibility (CSR). The part of this concept that presupposes taking into consideration the impact of a company’s activities on the environment reflects the change in public opinion. Such environmentalist trends would seem rather strange and inconvenient several decades ago but today outright disrespect towards the idea of preserving the planet may discredit any company (Vallaster, Lindgreen & Maon, 2012).
According to Ferrell et al. (2014), abiding by the laws of business ethics brings positive results: employee loyalty and customer satisfaction increase, new investors are attracted, and, as the reputation of an organization rises, the stakeholders’ trust is fortified (Ferrell et al., 2014, p. 15-17). All of this is beneficial for any kind of company which explains why business ethics is considered to be an important part of every long- and short-term strategy. Obviously, failing to conduct business in an ethical way may result in the loss of stakeholders’ trust, but one has to keep in mind that profit is necessary for any company to survive. In the case of business, ethics is too “costly”, its payback may be questioned which can result in ethical “misconduct” that has become a serious problem for the modern business world. Such misconduct includes criminal activities like harassment, discrimination, fraud, and thievery that cannot be beneficial for the company’s stakeholders and, in severe cases or due to the cumulative effect, may threaten the economy at large (Ferrell et al., 2014, p. 85-86).
The relationship between corporate culture and business ethics is not one-dimensional. At the first glance, it appears that corporate culture is the less capacious term. While business ethics is a universal phenomenon that applies to business in a general sense, corporate culture appears to be a company’s “variant” of business ethics, which is not completely true.
According to Kotter (2008), corporate culture is an aggregation of “values and practices that are shared across all groups in a firm” (p. 6). While the term is supposed to apply to the whole company, its divisions may possess a “divisional culture” that can in some way be different from the major one. As the definition points out, the constituents of such a culture are the “patterns of values, norms, beliefs” (Stanford, 2013, p. 8). The authors argue that it is the specific combination of these “ingredients” that make up the unique corporate culture of a company that is capable of maintaining both the brand and the loyalty of stakeholders (Stanford, 2013; Kotter, 2008).
A culture of a company is supposed to be stable, but it can change with time as it adapts to new circumstances. It is maintained through the example of managerial circles and positive reinforcements (Kotter, 2008). The relationship between employees and their corporate culture appears to be that of mutual influence: while corporate culture defines the guidelines and determines the limits for a worker, it is the worker who in the end maintains the corporate culture and affects its gradual change.
Both corporate culture and business ethics are affected by the same factors and in turn affect the company in similar ways (Stanford, 2013). Corporate culture does encompass a “variety” of universal business ethics and it is obvious that ethical issues are among the most important ones to be governed by it. Still, corporate culture is not limited to these issues only as it includes the brand and exists in close correlation with corporate identity (Abratt & Kleyn, 2012).
It could be said that the fields of business ethics and corporate culture overlap. Also, they appear to be in the relationship of interrelation. While the impact of business ethics on corporate culture is obvious, the reverse influence, as has been pointed out above, also takes place. In the end, it appears that business ethics is not only influenced by the cultures of different companies but is also defined by them and possibly even comprised of their features (Ferrell et al., 2014). In any case, the two notions are obviously connected to each other, which justifies the study of their combined influence on a company’s development.
According to Ferrell et al. (2014), nowadays integrity is one of the most desired business ethics and corporate culture features.
The third notion (that originates from the Latin word “integer” the literal meaning of which is “whole”) could be defined as “the quality of being honest and having strong moral principles”, “the state of being whole” (Dodd & Dodd, 2014, p.5). Still, it is obvious that such definitions leave room for misinterpretation. Realizing this, Dodd and Dodd (2014) proceed to dwell on the possible perspectives from which the notion could be viewed. According to them, the perspective of the law is not sufficient to describe integrity since the notion is connected to the public moral system. They point out that integrity is not a set of rules but rather a “set of virtues” which presupposes balancing “between institutional loyalty and moral autonomy, moral courage in a social context, respect, altruism, global norms of justice, openness to community evaluation” (Dodd & Dodd, 2014, p.6).
It seems the notion could be described as a kind of inner, ethical wholeness that “can be described as internal consistency, combining beliefs, words, and actions” (Tullberg, 2012, p. 90). This means that people who exhibit integrity are supposed to possess some kind of a moral “spine” which makes them both reliable and predictable. It appears an inherent set of qualities, although, without doubt, it can be “nurtured”, and it is the task of managers to create an environment that is capable of improving their workers’ integrity (Dodd & Dodd, 2014, p.6). Still, employers suggest that their nominees’ integrity is assessed before they are given a post.
The Relationship between Business Ethics and Employee Integrity
The Importance of Integrity for Business
As it has been pointed out, integrity is a set of personal qualities that are quite beneficial from the point of view of management. The importance of integrity for business has been described, for example, by Dodd and Dodd (2014). According to them, integrity is a quality of a reliable and responsible employee (or employer) that can positively affect the working process and its result. The predictability of employees possessing these qualities facilitates the management process. Besides, integrity encourages trust among employees which is beneficial for teamwork and improves workplace relationships. On the other hand, missing “integrity is the primary reason for the numerous cases of corruption, workplace violence, decision stagnation, wasted resources” (Dodd & Dodd, 2014, p.4).
It is obvious that the qualities that comprise integrity should be promoted among employees and business ethics or the corporate culture of a company can be used for this purpose.
Business Ethics, Corporate Culture, and Integrity
Given all the positive outcomes of maintaining employee integrity, business ethics, and corporate culture are often aimed at creating a foundation for it. Emphasizing the importance of ethical attitude towards their work and incorporating business ethics into corporate culture establishes a proper environment for integrity development. When realizing their own responsibility and feeling the support of their colleagues, employees work more efficiently and become more satisfied with the organizational climate (Dodd & Dodd, 2014).
On the other hand, employees also contribute to the development of corporate culture and, in the long run, of business ethics. Higher employee integrity presupposes better knowledge of business ethics as well as a better understanding of its importance. Besides, employees possessing the set of qualities that define integrity are more likely to contribute to the improvement of their company’s ethical guidelines.
As a result, the three notions we discuss in this paper appear to be closely correlated. The fields of business ethics and corporate culture overlap, influencing each other in order for a company to find its own balance between the ethical and the profitable. The resulting guidelines are used by managers to introduce employee integrity at every level of a company. In turn, employee integrity may contribute to the development of corporate culture and later to business ethics as the latter adapts to the changing environment.
In order to provide examples let us return to the notion of corporate social responsibility (CSR). The keyword of the phrase, responsibility, determines the meaning of this term. It may be defined as a part of corporate culture, a set of principles that encourages companies to go “beyond legal obligations and their own interests to address and manage the impact their activities have on society and the environment” (Vallaster et al., 2012, p. 35). As it is overtly stated in this definition, abiding by these principles may result in loss of profit, which is against a company’s best interest and may close this path for a number of businesses. At the same time responsibility is a part of the qualities described by the notion of integrity and can definitely be described as ethical. The paper of Vallaster et al. (2012) is devoted to the research of companies introducing this element into their corporate cultures and to the analysis of the possible ways of avoiding its harmful side-effects. Let us dwell upon some of the issues raised by the authors.
While Vallaster et al. (2012) point out that, according to their research, it was the smaller and the younger businesses that found it most easy to adopt CSR, the examples of “older”, traditional companies incorporating CSR into their cultures have also been given in the paper. Vallaster et al. (2012) have come to the conclusion that the number of CSR-conscientious companies has been increasing throughout the recent decades, which proves that the idea is entering the worldwide business ethics guidelines. Also, this demonstrates that corporate culture, steady and consistent as it should be, is sensitive to change.
Vallaster et al. (2012) give examples of the positive impact of CSR adopting on companies’ reputation (they name the brand’s Interface, Avenida and IKEA), but they also emphasize that this idea does not need to become a promotional event (the example is the Hennes & Mauritz fashion company). This proves that the decision of incorporating CSR guidelines into corporate culture is not only attractive from the point of view of the society; it also increases the satisfaction of the environment-concerned employees (and employers) which in turn raises their loyalty, devotion, and integrity. Besides, it may be pointed out that by adopting CSR companies contribute to the spreading of this conscientious and potentially life- and world-saving approach first among their employees and then throughout the world.
Economic Situation and Employee Integrity
Another factor that can influence employee integrity is the economic situation. Money is the typical reward used to ensure employees’ satisfaction (Ferrell et al., 2014). It is obvious that loyalty maybe not be achieved through this kind of encouragement. However, most often this is not the only kind of motivation that an effective manager has to offer.
Employees with high integrity levels tend to be more devoted to their company in general and to their team in particular. They begin to associate their own success with the success of the company; they also gain satisfaction from their work and do not intend to leave it. As a result, even in case of a difficult economic situation, their motivation will be sufficient to keep supporting their company, and this is another proof of the importance of employee integrity encouraging. While business ethics and corporate culture are the parts of the efforts aimed at creating and maintaining employee integrity, economic difficulties are the “hardship” that may serve to test the results of these efforts (Tullberg, 2012).
This paper addressed three widely promoted business phenomena: business ethics, corporate culture, and employee integrity. Upon defining them and emphasizing their importance for a company, we provided our ideas on the relationships that link the notions together. With the aim and objectives fulfilled, conclusions on the matter can be drawn.
The three notions discussed in this paper seem to interrelate. The most capacious term, business ethics, being a general aggregation of ideas about an ethical way of conducting a business, influences corporate culture, as managers attempt to determine the kind of ethical guidelines that would be most beneficial for their companies. The corporate culture of a company provides both the suggestions and the rules that determine the actions of its employee and provide a proper environment for the development and maintaining of employee integrity. It is the integrity of a company’s employees that makes them most receptive to the guidelines of corporate culture and at the same time spurs them to promote and modify it. The employee’s opinion and attitude towards corporate culture have a great impact on the latter.
At the same time, business ethics does not appear out of thin air. It is produced with the help of the employees whose integrity allows them to take up and promote ethical decisions and it is comprised of the most successful ethical guidelines that were produced by individual corporate cultures. Even though the concepts of business ethics and corporate culture are supposed to be consistent and stable, they change in accordance with political, economic, and cultural changes in society.
Employee integrity could be regarded as a crucial characteristic of a company, the level of which should be raised with the help of introducing proper ethical guidelines into corporate cultures. The benefits of employee integrity can be noticed every day, as it encourages responsibility, trust, reliability, and devotion of workers along with improving teamwork and organizational climate. Still, integrity is most important during challenging times when it motivates employees not to give up, but to support their company and their colleagues and search for a way of improving the situation (Tullberg, 2012).
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