Ethics are a useful set of moral and inherent guidelines an organization and its leader needs to ensure employees, stakeholders, and the organization are protected from toxic leadership and toxic decisions that can lead to lawsuits. Even though ethics are evident in an organization and within a leader, leaders can still fall victim to unethical behavior (Johnson, 2012; James, 2002). Leaders and ethical officers can make huge contributions to helping prevent unethical behavior with the development of appropriate governing mechanisms (Brown, Trevino, & Harrison, 2005; Ruiz-Palomino & Martinez-Cañas, 2011). In fact, Brown et al. (2005) explained the governing mechanisms as the governing controls, which are also checks and balances necessary to prevent organizational and leader toxicity. Therefore, in order to understand the governing mechanisms needed in an organization, it is important to: define an appropriate framework for ethical behavior, what is a chief ethics officer and what are the parameters needed to prevent organizations and leadership toxicity, develop ethical guidelines with an organization to avoid toxicity, identify the necessary internal controls to remove any contributing behaviors or factors, and define an appropriate level of leadership required to effectively implement internal governing controls.
Ethical Framework
To further understand the ethical behavior needed for a leader implementing internal governing mechanisms, it is essential to develop a framework for ethical behavior. Trevino, Weaver and Reynolds (2006) posited that ethical behavior as “those acts that reach some minimal moral standard and are therefore not unethical, such as honesty or obeying laws” (p. 952). In addition, Trevino et al. (2006) discovered ethical behavior includes awareness, moral judgment, and disengagement, which are indicators of unethical or ethical behavior. Similarly, Monin, Pizarro and Beer (2007) explained that ethical behavior is not only understanding the difference between right and wrong, but also having the resilience to refrain from submitting to any moral temptations. Brief and Motowidlo (1986) described ethical behavior as prosocial behavior such as positive acts towards others, integrity of others, developing coworkers, sharing, and cooperating with followers. Lastly, ethical behavior includes moral and ethical virtues such as honesty, respect, fairness, responsibility, reliability, integrity optimism, humility, and trust (Brown, 2005; Johnson, 2012). Thus, ethical behaviors are the honesty, integrity, trust, moral judgment, resilience from submitting to moral temptation, and prosocial behavior based on collaborating with colleagues and followers. In the next section, the focus will be on developing a job description for a chief ethics officer who will prevent an organization, leader, and followers from becoming toxic.
Ethics Officer
An ethics officer has many duties within an organization; however, the job begins by having high levels of moral and ethical beliefs. First, an ethics officer will need to develop a code of ethics that incorporates organizational values, principles, and standards (Kaptein, Huberts, Avelino, & Lasthuizen, 2005). In fact, Messikomer (2010) explained that organizations that have an established code of ethics decrease the probability of leaders and follower from committing unethical acts. Second, an ethics officer needs to incorporate the assistance of employees and stakeholders when developing the code of ethics (Gilley, Roberston, & Mazur, 2010). Collaboration from employees and stakeholders ensures the “ethical analysis is part of the administrative, policy-making, and interpersonal aspects of organizational life” (Ray, 2006, p. 442). The third requirement for an ethics officer would be the training and communicating of the established ethics policy. Ethical and moral conduct needs to be deeply imbedded and transparent with the organizational culture (Thompson, Thach, & Morelli, 2010). To further expand on communication, the fourth duty of an ethics officer is to connect ethical standards to business strategies and decision-making processes. In fact, Gilman (2002) explained that it is an ethics officer’s responsibility to communicate values and data behind strategies and decision-making. A fifth duty is to develop a policy where leaders lead by example and give followers an opportunity to learn from their mistakes (Thompson, Thach, & Morelli, 2010). The sixth duty would be developing a reward system to supports the policies, procedures, and objectives of the organization (Berenbeim, 2005). A seventh responsibility is designing safeguards, which is called a system of checks and balances or governing mechanisms that will monitor the ethical behavior of the leaders and employees (Berenbeim, 2006). The eighth duty of a chief ethics officer would be to establish a strict conflict of interest policy that will include shareholders, board of directors, leaders, and employees (Thompson, Thach, & Morelli, 2010). In fact, Lindblad (2005) explained, “a reasonable policy is essential to providing a clear set of guidelines to prevent conflicts of interest from arising that could significantly impact the company” (p. 217). The last duty of the chief ethics officer would be the implementation of a whistleblower policy. Thompson, Thach, and Morelli (2010) commented, “this type of policy protects people who expose negligence, abuse, or danger in the work environment” (p. 114). Overall, the nine duties described above focus on developing policies, internal support, training or educating, and communicating that ethics is an essential component that couples organizational values, principles, and standards. The next section of the paper will explain guidelines necessary for an organization to avoid toxicity.
Ethical Guidelines
When developing ethical guidelines it is important to consider Dienhart’s (1995) three critical components of establishing ethical guidelines. For example, Dienhart (1995) explained that ethical guidelines are “conceptually and ethically incoherent, are not effective, and promote unethical behavior” (p. 226). Avoiding incoherence can be accomplished with language that all employees can understand and comprehend so employees can understand their ethical and moral responsibility. In addition, to making the ethical guidelines more transparent and rigid, it is imperative to hold board of directors and top-level management equally responsible for their unethical, immoral, and illegal behavior. This idea stems from Briloff’s (1978) research that upper-level management typically avoid punishment when they commit complex offenses while petty offenders are usually punished more severely.
Therefore, the recommended ethical guidelines include: 1) Representatives will maintain business practices that are ethically based, which will be accomplished by utilizing fairness, justice, integrity, honesty, reliability, social, personal, and organizational responsibility, and trust; 2) Representatives will make decisions based on sound ethical and moral principles and not be influenced with bribes, gifts, kickbacks, and other monetary or nonmonetary rewards that might place them in a position where there is a conflict of interest; 3) Representatives will protect the reputation and integrity of the organization by not sharing important information such as the marketing plan, new research and designs, important knowledge product, customer databases, and daily operating records that might put the organization at a competitive disadvantage; 4) Representative will report information to all stakeholders and the public in a truthful and accurate manner so the public will see the organization operates with a high-level of ethics; 5) It is the duty of representatives to report dishonest, fraudulent, illegal, and unethical behavior through the whistleblower hotline or to human resources; 6) Any representative caught breaching these ethical guidelines could face discipline or termination, which would depend on the extent of the unethical, immoral, or illegal behavior.
When looking at the ethical guidelines it is important for the chief ethics officer to communicate to employees that the guidelines are not a set of regulations, however, they are ideals that encourage rational, ethical, and moral judgment (Dienhart, 1995) when representing and making decisions for the organization. In addition, the ethical guidelines are designed to hold board of directors, leaders, and employees to a higher level of accountability so they see themselves as moral agents for the organization and society (Johnson, 2012). In essence, the organization, its leaders, and employees are responsible to the corporation and society (Kotler & Lee, 2005; James, 2002). The next section of the paper will establish the internal controls needed to remove any contributing behaviors.
Internal Controls
Internal controls of an organization are an integral strategy for identifying and removing contributing behaviors. Gazzaway, Burton, Gates, and Newton (2009) commented, “good internal controls is good business-it helps organizations ensure that operating, financial, and compliance objectives are met” (p. 1). As mentioned before, removing conflicts of interest is one internal control that creates a separation of duties. More specifically, the organization needs to separate and prevent a board of director from being part of the upper-level management team. In fact, Padilla and Mulvey (2008) explained that formal separation of the two positions would be a deterrent of destructive leadership. In addition, to make the internal controls more rigorous, the organization could seek outside board members (Beasley, 1996), which in turn would also bring other ideas to the organization. Another strategy previously mentioned is the creation of whistle-blowing hotline. A hotline is an internal reporting system where employees can report any misconduct, unethical behavior, or illegal activities (Miceli & Near, 1984).
However, the impetus is on developing a culture of openness by empowering employees and their leaders accountable for their actions and behaviors. Gazzaway et al. (2009) discusses five additional internal control systems that can assist an organization to achieve their objectives. More specifically, the five components are: risk assessment, control environment, control activities, and information and communication. Risk assessment entails analyzing any risk that might occur when decisions are being discussed as well as assessing the risk of new ventures. Controlling the environment and activities will occur when the organization adopts the ethical guidelines, conflict of interest policy, provides training and education for employees about the ethical guidelines, and the adopts the whistle-blowing policy. In addition, with the internal controls the organization will need to gather information and communicate the information to the appropriate departments.
In order for these internal controls to be effective, the ethics officer and department need to collaborate with the different department so they can monitor the controls. Gazzaway et al. (2009) explained that implementation alone does not ensure the removal of contributing factors or unethical behavior, but the controls need to be monitored so they do not deteriorate over time. Overall, the internal controls can be effective if they are periodically and continuously monitored to make sure the controls are accurately assessing the contributing factors to organization and leader toxicity. The next section will address the responsibility a leader needs to possess to ensure implementation is viable and sustainable.
Leadership Responsibility
The level of leadership needed to ensure implementation and success, will require a leader that is ethical, transformational, and transactional. One particular leadership style will not ensure success, but a combination of three styles will make a tremendous impact on developing, implementing, and monitoring the governing mechanisms. To ensure success, Brown et al. (2005) explained ethical leadership entails: 1) conveying the purpose and values of the organization, 2) collaborating with departments in an ethical manner, 3) concentrating on the success of the organization rather than individual performance, 4) constantly dialoguing about the impact ethics, values, and morals make on organizational decisions and strategies, 5) create an avenue for followers to voice their ideas, 6) open to criticism from followers, and 7) understanding that leadership has limits. Having an ethically ground style will ensure that decisions, strategies, policies, and procedures are coupled with a level of ethics.
In addition, to guarantee the governing mechanisms are implemented, leaders will need to transform the organizational culture and beliefs. Thus, a transformational leader will provide a clear vision, empower followers to implement and monitor the controls, and focus on changing the organizational culture to avoid toxicity, unethical, and illegal behavior (Bass & Avolio, 1994). However, a visionary leader alone will not secure success-it will also take a transactional leader that will attend to the minute details. Having a leader with transactional leadership characteristics will be responsive to the policies and procedures adopted by the board, use objectives to achieve organizational goals, motivate followers to achieve goals, and focus on the daily routines to improve performance (Hargis, Wyatt, & Piotrowski, 2011). Overall, to implement and monitor the governing mechanism, it will take a leader who is ethically and morally grounded, proactive, visionary, and empowers followers to implement the controls and policies, and responsive to have employees achieve organizational goals specified in the policies.
Conclusion
Governing mechanisms are a set of control systems developed, implemented, and monitored by a chief ethics officer. The governing mechanism or ethical guidelines ensure employees, stakeholders, and the organization is protected from toxicity, unethical behavior, and/or lawsuits. However, governing mechanisms or governing controls do not always prevent unethical behavior, toxicity, or illegal acts, but are a framework for changing the organizational culture and encouraging employees to consider ethics when making decisions or developing strategies. The ethics officer has a number of duties such as developing policies, providing internal support, training or educating, and communicating that ethics is are an essential component that couples organizational values, principles, and standards. Similarly, the ethical guidelines are developed to hold board of directors, leaders, and employees to a higher level of accountability so they see themselves as moral agents for the organization and society.
There are a number of internal controls, but the controls are most effective when they are periodically and continuously monitored to make sure the controls are accurately assessing the contributing factors. Finally, to ensure the governing mechanism, internal controls, and polices are adopted, implemented, and monitored it will take a leader who has a combination of the characteristics of an ethical, transformation, and transactional leader.
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