Encouraging ethics in organizations: a review of some key research findings.

• Author: Weaver, Gary R.
• Position: Reducing Corporate Criminality: Evaluating Department of Justice Policy on the Prosecution of Business Organizations and Options for Reform

Ethical and unethical workplace behaviors (and their relations, legal and illegal behavior) are complex phenomena, reflecting a mix of individual characteristics, contextual influences, and specific ethical questions or problems. (1) Any effort to grasp and manage the influences on ethical behavior will thus need to recognize that a narrow focus on one or another particular initiative or situational influence might lead to ethical improvements that are marginal at best, or even sometimes, by themselves, counterproductive. For example, empirical research has been clear that, at least by itself, an organizational code of conduct has limited, if any, influence on ethical behavior. (2) But in the context of an organization whose overall climate is highly ethical, something like a code (or other formal policy interventions) will be more likely to provide value and effectiveness. (3)

Legal policy toward organizational behavior seems, at a general level, to recognize this complexity. Thus, the Federal Sentencing Guidelines speak generally of promoting "an organizational culture that encourages ethical conduct and a commitment to compliance with the law." (4) But in recommending specific practices, the Guidelines (similarly to the Department of Justice's memorandum on prosecution of organizations, and to the requirements of the Sarbanes-Oxley legislation (5)) focus heavily on "command-and-control" (6) or "compliance" (7) activities, emphasizing employee direction through formal policies and training, detection of wrongdoing through monitoring and reporting systems, and discipline and incentive policies to encourage proper behavior (8)--what I will refer to broadly as "direction, detection, and discipline." This focus is somewhat understandable, given the "institutional logic" of the legal system, with its emphases on prevention through detection and punishment. (9) Also likely relevant to this focus is the related need of businesses, judicial systems, and political actors to demonstrate that they are doing their job by being able to show something concrete to the other social actors on whom their legitimacy depends. (10) Formal policies, monitoring systems, tallies of investigations and penalties issued, and related practices likely are relatively easy to demonstrate in that regard.

There are, however, multiple other factors that influence ethical behavior in organizations and have implications for the effectiveness of conventional initiatives focused on direction, detection, and discipline. In what follows, I review a range of research in the organizational sciences that is relevant to understanding the influences on ethical and unethical behavior in organizations, with particular attention to factors that are relevant to the goal of fostering an ethical organizational culture that can encourage the kind of organizational "commitment to compliance" that will be convincing and worthy of support from an individual employee's perspective. I focus on three primary topics: (a) the nature and effectiveness of the ethics and compliance initiative itself; (b) the role of organizational leaders (at all levels) in fostering ethical behavior; and (c) the implications of recent moral psychology research highlighting the non-deliberative, non-calculative nature of much moral thought and action. (11)

1. ETHICS AND COMPLIANCE INITIATIVES

   Following an article by Paine (12) and an empirical study by Weaver, Trevino, and Cochran, (13) it has become common to distinguish organizational ethics and compliance initiatives according to their control orientation. (14) Initiatives with "compliance" orientations strongly incorporate and rely upon "command and control" features. (15) They typically focus on direction, detection and discipline, providing rules that delineate proper and improper actions by employees, and incorporating monitoring and/or reporting systems (including, possibly, anonymous reporting systems or reporting systems operated by independent third parties). (16) Failure to act according to the organization's ethics and compliance policies also typically is linked (at least in theory) to some kind of disciplinary action against the wayward employee(s). (17) This kind of approach seems rooted in the idea that employees are engaged in a kind of social exchange relationship with their employing organization--a "you do this, we do that" quasi-contractual command-and-control arrangement. (18) This arrangement also could be perceived as a "don't get caught" imperative. (19)

   By contrast, a so-called "values" or "aspirational" control orientation relies on social and psychological processes of identification and internalization through which employees recognize organizationally espoused values as congruent with their own aspirations, and internalize the organizationally-specific contextualization of those values as their own. (20) Thus action in harmony with those espoused values seems natural, an extension of one's own identity or of the organization's identity, along the lines of "do this because it's part of who we are (or who I am)." (21) Trevino and Weaver described one organization's values program as focusing on multiple actions and policies aimed at creating this kind of identification. (22) This company's program focused on articulating broad categories of ethical values, such as "respect" and "responsibility," as ideals for all employees to aspire to and as goals that would be intentionally modeled by organizational leaders in multiple functional areas (in contrast to designating just one department, such as legal or human resources, as the center of responsibility for the initiative). (23) Moreover, this company paid attention to symbolic aspects of organizational life that would aid or undermine a sense of shared commitment to a specific set of organizational values and goals. (24) Thus the fact that the company eliminated separate executive dining facilities was taken as a supporting policy, insofar as it helped convey to all employees that everyone in the organization should be (and, ideally, is) committed to the goal of mutual respect. (25)

   Importantly, values orientations and compliance orientations are not mutually exclusive, up to a point. (26) Support for particular broad ethical goals sometimes can require discipline or removal of employees who egregiously violate them (as will be discussed in more detail below). (27) In addition, the supportive and aspirational context provided by a values-oriented initiative can help to enhance the effectiveness of the more compliance-oriented aspects of an ethics and compliance program. To see this, we need to look at empirical research on the outcomes of ethics and compliance initiatives.

   1. Ethics and Compliance Program Outcomes

      One can hope to achieve multiple outcomes from ethics and compliance initiatives. These include obvious and directly relevant ones, such as reduced levels of unethical and/or illegal behavior, as well as other valued organizational outcomes, such as increased employee commitment or greater employee willingness to report ethical or legal problems. Both values- and compliance-oriented aspects of ethics and compliance initiatives generate positive outcomes, but to different degrees, and with some amount of interaction between the two approaches.

      1. Outcomes of Values-oriented Approaches

         Social identity theory indicates that strongly affirmed values in an organization will help to define role expectations for employees. (28) Such role expectations have clear positive influences on behavior. Moreover, repeated interactions with others who embody a particular set of ethical values make it more likely that those values become part of a focal individual's identity, or sense of self. (29) Identity (including an identity as a moral person) in turn is a strong driver of behavior. (30) So repeated talk about, symbolism of, and modeling of ethical values in the workplace--as is central in values-oriented ethics initiatives--makes employees more likely to identify with and act in harmony with those ethical expectations. (31)

         In addition, a values orientation in an ethics and compliance program has been argued to represent a more positive stance toward employees, rather than one involving the potential for suspicion and distrust, as signaled by efforts to monitor, detect and punish employee wrongdoing. (32) Values orientations in ethics and compliance programs--with their emphasis on proactive advice and counseling, and a shared sense of responsibility across the organization--signal support for employees; employee perceptions of organizational support are important influences on employee conscientiousness and commitment to the organization. (33)

         In light of these reasons, Weaver and Trevino proposed that the values-oriented character of a compliance program would have multiple positive impacts in an organization. (34) Specifically, we argued (and found empirically, in a study of employees across several large organizations) that when employees strongly perceive an ethics and compliance initiative to be values-oriented, there are reductions in observed unethical behavior. (35) There are also significant increases in employees' awareness of ethical issues in the workplace, their sense that it is acceptable to deliver "bad news" to management, their willingness to report ethical problems to management, and their solicitation of ethical advice in the workplace. (36) In addition, we found that employees showed higher commitment to their organizations, reported experiencing greater levels of personal integrity, and thought their decision-making was better in such an environment. (37)

      2. Outcomes of Compliance-oriented Approaches

         Although the compliance-oriented aspects of an ethics program--direction, detection, and discipline--should also affect employee behavior, they primarily do so not through shaping identity and showing support, but rather through a...