This essay analyzes the case study on Marisa Baridi’s actions when she was the legal compliance officer at Morgan Stanley. Marisa revealed important information about the company and therefore contravened the ethics of the company. This essay evaluates the ethical issues in the case of Marisa and identifies the ethical dilemma that she was facing. The paper also identifies recent developments in ethical issues in organizations. The role of ethical leadership in cultivating and building an ethical organizational culture is also discussed widely. Institutionalization of business ethics plays an important role in minimizing ethical issues in an organization by ensuring employees and stakeholders understand the importance of ethics for an organization. It also helps employees to understand the consequences of acting unethically and ways in which they should act in case of ethical dilemmas. The evidence and examples of good ethical leadership and how they have helped to build high standards of ethics within an organization is provided to show how ethics are important in an organization.
Elements of ethics
Ethics refers to an accepted code of conduct, principles and values that governs the actions and behavior of an individual. Ethics in an organization refers to the values, principles and policies that guide individuals in an organization as they undertake their day to day functions (Cummings, &Worley, 2013). An organization is formed by individuals with different interest and backgrounds. An organization unites these individuals to share common goals and objectives for the organization. A code of ethics within an organization is a set of principles that is used to guide the organization in decision making and designing its programs and policies. An ethical organization is an organization whose employees, culture and leaders adhere to the code of ethics. Morgan Stanley is an ethical organization despite the case of Marisa trading information about the company.
Fairness is an important aspect of ethics in an organization. This refers to dealing and treating people equally without discrimination. An ethical leader is expected to be fair in all the activities that they partake inside and outside of the organization. This helps to assure the people being led that no one is getting favor and no one is being treated badly. This goes a long way in ensuring employees adhere to all the ethical standards set by the organization. In the case study on Morgan Stanley, Marisa was not fair since by trading the information for a tip, she was not fair to the other stakeholders in the organization who would suffer the consequences of her actions.
Honesty is an important virtue in an organization. Honesty can be defined as being true and not telling lies and being worth of trust. An employee in an organization is expected to be honest in all their dealings relating to the organization. All stakeholders are expected to tell the truth at all times and to do the right things according to the policies of the organization. In Morgan Stanley case study, Marisa was dishonest by deciding to take a bribe and giving information about the company which she was expected to safeguard. She was dishonest to her senior managers and the profession she practices and this is against the ethical code of the organization.
Integrity refers to the virtue of being honest and trustworthy.A person with integrity does not lie, steal or cheat. A person with integrity also keeps the promises they make. For ethics to work well in an organization, the people in the organization must have high levels of integrity. A company should employ people with integrity to ensure that the reputation of the organization is not at risk.Marisa destroyed the confidence that customers had in Morgan Stanley and it will be difficult for the company to regain the trust of the customers.
Ethical Issues and Ethical Dilemma
An ethical issue is where a matter can be either right or wrong, it has to be submitted to some measure in order to determine on which side of the scale it lies. In the case study provided for this assignment,the ethical issue is that of the employee taking bribes in order to give useful information to stock brokers. This is against the code of ethics of the organization. Example of an ethical issue in an organization is bribery,conflict of interest and being dishonest. Discrimination and revealing of business secrets is another important ethical issue in most organizations.The ethical issue in this case is bribery where Marisa is given tips in exchange for confidential information about the company.
An ethical dilemma occurs when a person is faced with a binary or two choices where they have to pick one and they get confused since both options are have negative repercussion.In this case Marisa is faced with the ethical dilemma of deciding to do the right thing or giving the information and taking the bribe. Marisa decides to take the tip and this contravenes the ethical standards of the company as well as the Trade practices Act of 1974.
An ethical conflict occurs when the dilemma that an individual or the organization was facing becomes more complicated hence decision making becomes more difficult. An ethical challenge is where the individual presented with ethical dilemma overcomes the challenges that they face to make an ethical choice. From time to time, employees within an organization are faced with ethical dilemmas as they undertake their daily activities. The employees have to come up with way of dealing with this ethical dilemma so that they can make the right decision. An example of an ethical dilemma is when a person has to lie either jokingly,lying by commission or by omission.In the case study involving Marisa and Stretch, Marisa was faced with the ethical dilemma of either accepting the huge tip she received whenever she give useful information about the company or decide to be ethical and be loyal to her work. Maris a decided to become greedy and traded the information of the company in exchange for money. She should have instead decided to uphold ethics in her profession and refuse to take the tips that were offered to her.Ethics are very important in an organization because they set the expected code of conduct which should be adhered to by all employees (Crane & Matten, 2016). This helps in reducing incidences of ethical issues that may destroy the image of the organization or affect it in many other different ways.
Ways in which institutionalization of ethics helps in minimizing ethical issues
Institutionalization of ethics is very important for organizations today. Institutionalization of ethics means putting ethics into the policies of the company at the top decision making organs of the organization through a formal code. This helps to make the ethics part of daily decision making and work place practices for all employees in the organization By institutionalizing ethics, an organization makes the code of ethics part of employees` daily life at the organization.
By institutionalizing ethics, an organization is able to help employees better understand the code of ethics of the organization. Without making the ethics that an organization sees as being important to help guide the organization towards the achievement of its objectives, an organization won’t be able to inform workers adequately of the rules and principles regarding ethics. When ethics in an organization are institutionalized, an organization is able to communicate more effectively to its employees on issues to do with ethics. When the ethics are put in the formal code of the organization, they are able to inform the employees of all the ethics that should be adhered to on the organization through writing and reminding them on a regular basis, this is unlike when an organization does not have a formal ethics code. Ethics that are not formally integrated into the organizations policies have to be transmitted to the employees through hear-say and this makes it difficult for employees to understand and synthesis the information they receive. Ethics can also be assumed to be common sense of doing right or wrong. This makes it difficult for an organization to monitor the behavior and actions of its employees regarding ethics.
Institutionalizing ethics in an organization helps to ensure that all the relevant possible ethical issues have been addressed in the formal code of ethics. Ethical issues regarding the insider information at Morgan Stanley should be put in a formal document in order to ensure all the employees are familiar with the code.This happens when the organization is designing its code of ethics and its involving various stakeholders in the organization. Some of the stakeholders involved in designing the code of ethics include the employees and senior members of management (Whyte, 2012) .By incorporating various stakeholders in the process, different ideas and views of people are incorporated into the code of ethics of the organization and therefore ensuring that there are no gaps in ethics. This is unlike a code of ethics that is not institutionalized where the stakeholders are not given a chance to present their ideas and views on the ethical code of the organization hence leaving many loopholes that can affect the organization negatively. By involving employees in designing the code of ethics, the employees feel important and recognized since they get involved and consulted on issues that affect them(Rendtorff, 2009). This therefore means that the employees will be more motivated and hence they will obey and adhere to the ethical policies stipulated in the formal code of ethics of the organization. This is therefore very effective in reducing ethical issues in an organization.
Institutionalization of ethics in an organization helps to shape the culture of the organization. Organizational culture is a set of beliefs, values customs and traditions that have been practiced by people working together in an organization and have come to be accepted as the best way of doing things (Sethi &Williams, 2010). Organizational culture is the pillar of the success of each and every successful organization. The culture of the organization is influenced by the ethics that the organization has set. When an organization determines the ethical issues that are relevant to its operation, it sets policies and rules that help to implement these policies (Australia, 2015). The continued practice and application of the ethical principles and policies sets precedence where all the actions and activities of the organization are done according to the ethics standards of the organization. As time goes by, the employees get used to these policies and they become part of the culture of the organization and therefore they are transmitted from one generation of employees to the next. An organization with institutionalized ethics is able to do this more easily compared to the organizations that do not have institutionalized ethics code. This is because, without institutionalization, it is difficult for employees to integrate these ethical principles into the organizational culture of the organization. When ethics are not institutionalized, some employees may dismiss some of this principles and therefore increasing ethical issues in an organization. Institutionalization of ethical issues therefore is very important in minimizing the ethical issues in an organization.
Another way in which institutionalization of ethics helps in minimizing ethical issues in an organization is that it helps new employees understand the ethical requirements in an industry or in the organization. New employees are also able to integrate easily into the organization and carry out all the activities and responsibility without going against ethical code of the organization. A formal ethical code can be read and understood by employees more easily than where an organization depends on assumptions and word of mouth to inform employees of ethical policy of the organization (Gentile, 2010). In addition to this, a formal ethical code s more likely to be respected and adhered to compared to uninstitutionalized ethical code.Institutionalization of ethics in an organization helps to minimize cases of ethics issue relating to customers of the business organization. Consumers always need assurance that they get quality products and services at the right prices. Price gouging and accepting payments and then failing to deliver the goods destroys the trust that consumers have on the business organization. Receiving payments on behalf of the company without the authority of the company is also a common ethical issue for many organizations. Since customers lack business suvy, they expect the company to do the right thing to protect their interest. Therefore by institutionalizing ethics in an organization, employees are able to understand the importance of establishing positive relations with employees. Employees are able to relate professionally with customers and therefore they are able to maintain a professional relationship with employees and therefore they are able to uphold the ethics of the company.Since organizations do not operate in isolation, it is important for the organization to formulate ethical policies that help to govern the interaction between the local community and the organization. This can only happen through institutionalization of ethics. The employees of an organization need to respect the institutions that keep the community together and that govern the way of life of the people (FitzGerald, 2014). Such institutions include the local councils, county boards and state legislative bodies. The organization also needs to respect and conserve the environment in which it is operating. By institutionalizing business ethics, the company will be able to make employees understand how they should relate with their society and protect the environment around the company.
Institutionalization of ethics helps in promoting ethical leadership and therefore helping to minimize ethical issues in an organization.is very important in building high ethics standards in the organization. Ethical leadership involves knowing the ethical core values of the organization and taking the front seat in implementation of the policies to guide the organization towards achieving its objectives. It involves leading people in a manner that respects the right and dignity of other people. Institutionalization of ethics gives the leaders in an extra responsibility in leading the employees and other stakeholders towards achieving the goals and objectives regarding ethics in an organization.The moral and ethical standards in an organization leverage their powers on and off the workplace and in decision making for the organization so as to influence the people they lead. Institutionalized ethics will give leaders in an organization extra power to enforce the code of ethics of an organization and therefore the ethical issues in the organization will automatically reduce.Leaders in an organization are responsible for influencing the employees to perform tasks and behave in a manner that is attractive to the customers and acceptable in the organization. The type of leaders in an organization has influence on the code of ethics of the organization and therefore it is important that the organization emphasis on having ethical leaders at the helm of the organization. In the case of Marisa, she held an important leadership position in an organization and she failed to lead ethically. As the legal compliance officer of Morgan Stanley, Marisa was expected to lead the employees who were working under her ethically to guide and shape their behavior and actions in such a manner that is going to be in line with the principles and policies of the organization regarding ethics. Marisa did the opposite and received tips in exchange for giving important information on the company that influenced the decisions of the stock brokers. It therefore means that her juniors at the work place would have contravened the ethics code without worry since their leader did not act according to this principles,. By leading ethically, the employees follow the example of their leader and it becomes part of their character and personality to act ethically (Cameron &Quinn, 2011). Over time, the leaders are able to build a strong ethical organization where the ethical issues are minimum and employees are able to decisively deal with ethical dilemmas when they face them.
Habits of an Ethical Leader
There are several habits and characteristics that ethical leaders have. These characteristics help the leaders to guide the employees and other stakeholders in the organization to achieve the goals of the organization while maintaining high ethical standards. One of the common habit of an ethical leader is strong personal character. According to Rendtorff, (2009),an ethical leader should be of the personality that is able to overcome challenges in the organization and help the stakeholders deal with various ethical dilemmas that they face.
Another habit of an ethical leader is the passion to do the right thing. An ethical leader should be able to make the right decisions on behalf of the organization. They should also be able to overcome ethical challenges and do the right thing when presented with such a challenge.Richard,2016 argues that decision making is at the core of the success for every organization and therefore its very important for an organization to have a leader who is able to make the right decisions for the organization. Ethical leaders are proactive. This means that they act before events occur and therefore they are able to make very effective decisions. An ethical leader will also put the interest of the stakeholders above and beyond the interest of everyone else including personal interest. According to Crane(2016), an ethical leader always ensures that they act on the best interest of organization irregardless of how much is at stake for them personally. Ethical leaders are role models in the organizations which they lead. This means that people in an organization look up to them for guidance,motivation and leadership. In addition to this, they are transparent as well as active in all the activities of the organization. Transparency creates honesty and confidence among the various stakeholders in an organization and therefore trust is built over time. An ethical leader within an organization is usually actively involved in all the decision making of an organization. According to the journal on organizational ethics in financial sector in Australia transparency is very important in the financial sector and in stock exchange since it ensures that clients get all the material facts and information regarding their investments. Decision making is an important role of all leaders in an organization. This plays a big role in ensuring ethical code of conduct and ethical standards are respected in the organization. Finally, ethical leaders are competent managers with an holistic view of the firm`s ethical culture. An ethical leader within an organization is usually very effective in performing the task that they are required to accomplish and they don’t make many mistakes when it comes to doing the job they are trained to do. They also have optimal respect for the ethical culture of the organization and they adhere to all the ethical standards and regulation in the industry and the organization.
Marisa Baridi’s is found to have contravened the ethical code of Morgan Stanley by giving confidential information to stock brokers. In her position, Marisa was expected to perform the role of preventing the employees of the company from doing what she herself was found guilty of doing. This is a classic example of lack of integrity on the part of Marisa as well as lacking the ability to make the right choices when presented with an ethical challenge. Marisa had got used to exchanging the inside information of the company for a fee and it had become a habit since she had done it over the years (Akkucuk, 2015). The role of ethical leadership in establishing a strong code of ethics in an organization and building the organization culture is evaluated in this essay. Ethical leadership can only happen in the presence of ethical leaders and this therefore means, a leader who lacks ethics cannot lead the employees to become ethical and build a strong ethical culture in the organization. The paper also discusses examples of companies that have been able to build a strong ethical organization through ethical leadership.
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