Chapter 2

Individual Ethical Behavior and the Influences of Organizational Culture

Kemi Ogunyemi

Introduction

Individual ethical or unethical behavior has been found to often reflect the culture, the ethical climate, or both,¹ of the organization in some way.² This is because although individuals may have their own tendencies to put self-interest above the common good, or may have deficiencies of the moral judgment required for ethical decision making, the company’s culture may still inspire, promote, discourage, or totally inhibit personal ethical action.³ As Gellerman observes, even good managers, at times, act without integrity.⁴ The reverse is also true—individuals’ unethical actions contribute to shaping the culture of companies and can therefore create an unethical climate over time.⁵

In countries where corruption is rife, such as Nigeria, it is particularly important to watch out for this, as the individual already has to contend with a difficult external environment and therefore nonenabling internal environs could deal a fatal blow even to the good desires of those employees who wish to do what is right. This is also important because unethical behavior, or negative behavior, can result in heavy costs to the organization⁶ since organizational performance depends to a large extent on employee behavior.⁷ Such problems could arise in numerous ways. For example, a perception that management—comprising those in formal leadership positions—is self-interested could lead others in the organization to react by taking care of their own interests;⁸ or there could be policies, value statements, or both, that embody altruism but are not applied;⁹ or sometimes a reward system may contradict the intention of the organization to promote other-regarding behavior as well as ethical behavior.¹⁰ In all three examples mentioned here, the organization would have set the stage in such a way that employees would find it easier to take unethical decisions than they would otherwise have done.

The organizational factors that influence ethical behavior could be a reflection of the extent to which a company’s culture promotes considerateness and altruism. Sometimes, companies can inadvertently allow elements of culture or climate to thrive that inhibit ethical behavior because they inhibit other-regarding behavior. According to Treviño et al., self-interest is one of the factors that affect the ethical climate of the organization and it is determined by testing how concerned the people in the company are about themselves or their own interests vis-à-vis their concern for others.¹¹ Thus one of the ways in which to promote ethical behavior could be to promote and reward selfless action.

This chapter talks about how unethical behavior could be a result of organizational culture more than individual decadence. It uses findings from case study methodology—three caselets and seven narratives of experiences of some young Nigerian professionals—to illustrate this and to discuss what facilitates or inhibits ethical behavior, especially emphasizing that best practices for improving workplace integrity include fostering an atmosphere that encourages other-regarding behavior and therefore inhibits unethical behavior. The use of case studies gives depth and detail to the study that might have been otherwise missing and that enhances understanding of how the integrity of individuals in organizations is influenced by what they experience within the organization.¹² As unethical behavior inevitably harms the firm and its stakeholders, as well as society in general, this chapter also advocates that fostering selflessness and the virtuousness that accompanies it as an organizational value works for long-run business success.¹³

The basic principle here is that many, if not all, human beings are influenced by the people around them. If a person can be influenced by a single person, that person can be even more easily influenced if there are many people within the organization who have similar values. This could be called a “bad barrel approach” to explaining unethical behavior¹⁴ and it is compatible with the other approaches since it deals with only one aspect of the phenomenon.¹⁵ The newcomer can be persuaded, consciously or unconsciously, to change his values in order to fit in with the rest of the group. We begin by looking at three real life examples of employee experiences in Nigerian businesses: the first showing a perception of self-interestedness in one’s reporting line, the second showing the impact of dead policy, and the third showing the benefits of an aligned reward system. The protagonists are Kole, Yakoub, and Abata, respectively.

Kole: Adapting to One’s Boss

Kole narrates his experience working with Mr. Obike, the then-head of operations of a Sarfa Bank branch:

“Let me give a brief profile of Mr. Obike. He was 36 years old. He had a beautiful wife and two children—a boy and a girl. He graduated with a first class in civil engineering from the university. He had no additional qualifications except an ICAN* certificate.

Mr. Obike had worked only in Sarfa Bank from his youth service till date—for 12 years. He has totally lost his individual will and functioned like a robot. He was efficient. He was not a very sociable person; he worked strictly by the book which was to an extent convenient for the industry he was in (banking), but at the same time alienated him from colleagues and created an unsympathetic and cold work environment among all the people who reported to him. No one cared about the others—each person did their own work and moved on. There were often minor but hurtful disagreements due to inflexibility on the part of one person or the other. Sometimes, this would impact customer service negatively, but no one cared.

During my first week in that branch, I reported directly to him and so we worked in the same office. He often told me sentences like ‘you do not have a choice’; ‘you have to harden yourself and work this way’; ‘there is no room for emotions here’; ‘you just have to cover your back’; ‘this is the only way to survive in this system.’ This started affecting my thinking pattern and I too started coming to work every day thinking I did not have a choice but to live and work that way. This mentality did not just end there; it spread to every other aspect of my life. I did not treat people well any longer; there was no point.

Mr. Obike was always the last to leave the office and most times the first to be in the office. During one of his late nights in the office (I had also started staying behind in the office because I really did not feel like going back to my empty house), something happened and we had our first and only ever real conversation. I discovered that it was not that he did not love his wife or his kids and did not want to spend more time with them, he just did not know how to. He was like an empty shell—like a madman that had lost his way. This discovery shook me. I saw clearly that I did not want to become a person like him, who I had also begun to realize derived pleasure from breaking his subordinates emotionally. I realized I was already changed and acting that way. I decided to get out of the system of Sarfa Bank.”

Kole was lucky. The others in the system had not realized the danger and had not reacted. According to Kole, “I am grateful to him because he unconsciously gave me my power of choice and I chose to improve myself and try to be of value to not only myself but to others around me. I chose not to end up like him. I got out of that system and I am a different person now.”

Kole was gradually changing to become like the people he found around him. However, he got a wake-up call and snapped out of it by leaving the system. Not every employee has that opportunity. They, like Obike, gradually become part of the system and pass on the values they have imbibed to those coming in after them. They exhibit antisocial behavior and end up harming themselves, others, and the company without even realizing the damage they have done. If the management realized what was happening and, through a few of them, deliberately pushed the growth of a counterculture of integrity in the organization,¹⁶ the strength of reciprocity might be able to turn the scales and eventually raise the level of altruism and integrity in the system.¹⁷

Akpabio, Yakoub, and Ulomma: Living with Dead Policies

Yakoub was the bank’s branch manager and Ulomma his operations manager. Akpabio was a marketing officer. These three were the only remaining experienced staff in the branch in 2007. According to the bank’s corporate statements, initiative and team spirit were valued aspects of its culture and way of doing business.

“Yakoub was well educated and smart. He was good at his job as he had more than fifteen years of banking experience. However, he was manipulative. Banking is a business that involves much risk taking. Yakoub did not like signing off on documents but preferred giving verbal instructions. He wanted to preserve himself from any possible trouble by making sure others would take the blame if something went wrong. The branch staff did not like this. They reacted by scrutinizing every instruction Yakoub gave to make sure that there was no underlying problem he was trying to push to them. This slowed down the processes and we lost prospective clients at times. Many of our customers were unhappy. Some left for other banks.

Yakoub was also very autocratic; he believed that as the branch manager he should always make the decisions. He was not the type of person who worked toward developing personal relationship with people except for the high profile customers. He picked on Ulomma a lot.

Ulomma was a new operations manager, having been promoted from being a customer service officer. She was target-driven and understood the importance of making her unit perform at all cost because she faced the risk of fraud constantly. The job was very demanding. She did not like the fact that the branch manager was always trying to overrun her work with her team. He would neglect the marketing staff and nag her all the time.

Akpabio was a good marketing staff. He was always ready to assist anyone in need and sometimes acted act as an intermediary between the branch manager and the operations manager. He was cool-headed and organized.”

It seemed that the conflicts between Yakoub and Ulomma started to affect other people, including Akpabio. Yakoub constantly tried to manipulate and force Ulomma into doing what he wanted. This usually backfired and led to arguments and after a while it created a rift between the operations and marketing staff. The operations staff felt that the branch manager gave preferential treatment to the marketing staff since he let them do whatever they liked while he persecuted the operations staff. They reacted by dropping their productivity level and refusing to do anything extra. They would always only just meet their operational target. There was little or no team spirit. The discord increased when Yakoub gave Ulomma very bad appraisals despite her hard work. Some of the traits identified by Schmincke as outcomes of selfishness in organizations can be seen here in the behavior that became the norm among Yakoub’s staff: blame shifting, avoidance of accountability, power struggles, and so forth.¹⁸

Akpabio was left alone often without the support of Yakoub who was after all his boss. He did his work and Yakoub’s excellently without complaining. He ended up being the one who knew most of the customers. Akpabio kept on with this for a long time until one morning he just walked in and submitted his resignation. He had not hinted to anyone of his intention to leave even though he had been planning it for months. He was the only experienced marketing officer and the branch had no backup for him. He refused to stay on to work out his notice but rather prefer to give the required salary amount in lieu. He apparently felt he had no reason to be considerate when that was not part of the organization norms in practice.

On his exit, the branch lost a lot of its customers and the balance sheet figures reduced. Yakoub could not manage the situation because unfortunately the discord between operation and marketing had been created and could not be easily wiped out. Many staff were not ready to help each other out in order to serve customers. Many more customers left. All attempts to get the staff to work together were futile. Reminding them of the bank’s corporate values of initiative and team spirit made no impact, especially coming from Yakoub. As at the time of writing this case, Yakoub was still heading the branch and the balance sheet had continued on a downward trend.

Yakoub had fostered a culture in which animosity was high and no one was ready to think about the others. Since there was no coherence between what was proclaimed through the company’s statements and what was actually practiced, there was lack of integrity in the organization and this affected the people within it. People tend to look outside themselves for guidance as to how the organization expects integrity to be lived and when they get contradictory signals, they change their behavior.¹⁹ For a long time things continued that way. No one noticed when Akpabio changed so much that he who ordinarily started out as a considerate person who had team spirit ended up leaving abruptly, without being interested in what would happen to those he left behind, or to the customers, or to the firm. This was the outcome of “systems that encourage or support flawed behavior.”²⁰ Policies have little or no effect unless they are implemented and lived in the organization.

Mr. Abata: Rewarding the Walk

Mr. Abata had an Information Technology company in Nigeria. The company had succeeded in acquiring a fair share of the Nigerian market and he began attempting to make it a multinational. It was tough. He frequently traveled to other countries to give lectures on the competence of his company and submitted proposals here and there, but he failed to penetrate the global market.

He gave up and decided that it was better to concentrate on the Nigerian market. At this point, he reflected that he had made a lot of profit from the business and decided to compensate his staff that had worked hard to move the company forward. He started giving scholarships, salary increase, holiday packages, and housing loans to them. He organized training programs for his staff periodically and when they became better in their various fields he gave them more freedom to bring ideas and suggestions. He made it clear that he was rewarding their diligence and commitment to the organization. After one and a half years, the company’s profit margin increased significantly.

One day, one of his staff who had gone for a three-month training program in England called with news that he had finished as the second best in his class and had got a job offer from a company in England. He had declined the offer and now told Mr. Abata that he would rather open a branch of Mr. Abata’s company there. The new branch was set up and within four months it had made double the returns from the Nigerian market.

Mr. Abata’s magnanimity with his employees had succeeded in establishing a culture of integrity in the organization within which other-regarding activity was acknowledged and rewarded. He had shown them he appreciated their committed contribution to the organization’s progress by investing in their personal progress. That was why his employee was able to act selflessly as he did in resisting the more financially attractive offer and instead further the interest of his employer who had trained him.

Walking the talk is not enough; the organization also should reward those who do the walk.²¹ If the organization rewards things other than the walk, then it will be difficult for others to walk the talk even if they see management doing it. Abata chose to reward the values he wanted his staff to practice and he got positive results for the climate of integrity within his organization and also for the financial performance of the business in line with the findings of Caza, Barker, and Cameron that organizational virtuousness impacts performance.²²

Organizational Integrity and Attention to Enablers and Inhibitors

The three caselets above clearly show that employees react to what they perceive or experience in the organizations in which they work.²³ They are influenced by the culture and climate of the organization and tend to act the way the others around them act. If they experience self-interest, they are more likely to take selfish decisions too. If they, on the other hand, are treated in an other-regarding manner, then they may commit themselves more to the good of the organization and their fellow workers and this gives them more reason to act in upright and ethical ways.

In trying to ensure that the barrel is not bad,²⁴ it could be useful to look for what makes it better and what makes it worse. Hence, further discussion of some cultural factors which can affect integrity in the organization by inhibiting or enabling ethical action and organizational commitment follows.

Cultural Enablers of Individual Ethical Action and Commitment to the Organization

When asked what they have found encouraging or discouraging in their effort to do things right and perform selfless actions in an organization, a number of young Nigerian professionals gave the following experiences. Each experience reflects the individual’s perception of the integrity in the organization and his or her reaction to it. Enablers comprise real experiences which make it easier for the employees to act well because they themselves have been treated well, while inhibitors are those real experiences which showed a lack of integrity in the organization in regard to the way employees were treated and therefore, in return, provoked those employees to act contrary to the common good.

Caring

A’s manager noticed that the young man was not looking happy so she took him out to lunch and asked what the matter was. He said he was tired of the marketing department and wanted a change. She immediately asked if he wanted to go back to his previous unit—the cash and teller department. He said yes. She advised him that he seemed to have the skills to do well in customer service and should try that unit if he was leaving marketing rather than go to the cash and teller. She did not mind that losing one staff from marketing might affect productivity; she took to heart A’s interests in a way that made him feel cared for and ready to care in turn for the organization and his colleagues.

Empathy

B had a boss who always noticed that something was wrong even before the person concerned spoke up. Once, B had lost a loved one the previous weekend and so was not able to submit her call reports for the previous week. She was expecting a query and instead the manager walked up and asked her what was wrong.

Assistance

B’s manager then helped with her tasks for the day and also counseled her through the problem. Before the end of that day, she was more cheerful and by the next day she was more than ready to take up her responsibilities with even more commitment.

In sum, experiences of caring, empathy,²⁵ and assistance reaffirm the level of altruism in the organization and thereby create a supporting environment for employees to also act ethically and other-interestedly toward their colleagues and toward the organization. This automatically reinforces the capacity for integrity in the organization.

Cultural Inhibitors of Individual Ethical Action and Commitment to the Organization

Biases

C’s boss seemed to operate on the assumption that some people had nothing to offer and he treated them thus. In reaction to this differential treatment, cliques formed within the company. Those who felt marginalized never saw the point of trying to give their best since they felt it would not be appreciated anyway. Team spirit was affected and eventually business was also.

Hostility

D spent 6 months in an industrial training program at a real-estate firm in Lagos. One of his key responsibilities was to supervise maintenance and repairs carried out on the facilities at CBN marina branch. He worked with a team of seven in-house technicians and with some contractors. His major challenge was to get some of the in-house technicians to be focused and stay committed to their jobs. Most of them had personal jobs outside the office because salary payments were usually delayed and could even be outstanding for months.

D’s supervisor, the facilities manager, was perceived by other staff to be arrogant and wicked because he hardly smiled and they felt that, for him, everything was all about work. No matter what happened, the job had to be done. The management felt that this was the only way to gain employees’ respect and make them do their jobs. This approach led to a communication gap between staff and management. Because D felt bad about this treatment they were getting, he could not bring himself to report to the management that the technicians had other jobs, contrary to their employment contracts. The culture was one of not caring about others and it eventually affected even the young man who had come to stay only six months in the company.

Indifference and Disregard

A technician at the power house of the company deliberately left the generator running on a little amount of diesel until it stopped working. As a result, the client, an important one, had no power for about 45 minutes and this really caused a problem in the facilities department. The technician, who was known to be very dedicated to his job, later confessed to D that it was a deliberate act. He said that he had often made sacrifices to make sure that there was always power. He would leave the office late just to make sure everything was in order for the next day but he got nothing in return. Rather, he got complaints and was once accused of stealing diesel. So he decided that he was not going to order as usual for reserve diesel since people did not respect him. His reaction to the disrespectful culture was to treat people the way he felt he was being treated.

Disrespect

E worked in a school that was reputed to be the best and oldest school in a local government in northern Nigeria. The owner was Madame F. The school was preparing for its 25th anniversary but the owner found it difficult to mobilize her staff to take ownership of the event. The school was characterized by meetings where superiors shouted at subordinates and, though ideas were solicited, they were often dismissed as “dumb” and never adopted. Therefore, a lack of enthusiasm for the job was common to staff. This affected the outcome of the event. The next days were filled with more recrimination, tongue lashing, and finger pointing. E got the distinct impression that there was an urgent need for a change in the school’s culture to one that communicates to staff their worth, in order to get the kind of initiative that could move the business forward, and he understood that manifestations of disrespect and aggressiveness would have to be totally eliminated for this to happen. He himself could not wait to get a new job. He had realized he had also begun to raise his voice unnecessarily from time to time, especially at the students.

Biases, outright hostility, disrespect, indifference, and disregard are examples of experiences on inconsiderate treatment that make employees unhappy with the workplace and because they reflect a high level of egoism and provoke employees to look out primarily or solely for their own self interest, they are likely to undermine the integrity in the organization.

Conclusion

In two of the three caselets discussed, different employees were influenced by circumstances within the organization to behave in ways that were unethical or at the very least counterproductive²⁶ and therefore unhelpful to the organization and damaging to its integrity.²⁷ The third caselet drives home the insight that in each of the three situations, an experience of other-regarding behavior as the norm in the organization would have led the employee to imitate it and be considerate of the organization and fellow workers in taking personal and professional decisions. It is important that those in leadership positions display integrity²⁸ and act ethically toward other employees,²⁹ that the policies and codes reflect these values, and that the reward system is aligned with them.³⁰ This is how the signal is sent to employees as to the organization’s expectations of corresponding integrity and ethical action, both of which ordinarily entail considerateness.

Thus, any organization that wishes to improve the practice of integrity and ethics among its employees would do well to look closely at the experience the employees get from the way they are treated themselves in the workplace. The more they experience selfless treatment, the more they themselves will be inclined to be selfless in their service to the company and to other stakeholders.³¹ Examples of what employees consider considerate treatment include the enablers above—assistance, care, and empathy. The opposite treatment is also exemplified above—bias, disregard, disrespect, hostility, and indifference. The first three fit within a selfless culture that can be the solid foundation for organizational integrity while the other five fit within a culture that promotes self-interest.

It is clear in all three caselets that having an other-regarding culture is also the way that better promotes the profitability of the organization, both, because it reduces unethical or deviant behavior and its possible costs to the organization³² and also because it promotes altruism and therefore a more successful organization³³ which in turn would then have a more positive impact on society. And, in the final analysis, for an organization to be said to have integrity, it should be that kind of organization that promotes and fosters ethical and other-regarding behavior by the people who work in it.

Key Terms

Integrity—unwavering adherence to moral or ethical values; honesty.

Considerateness—a habitual disposition to thoughtfulness and active attention to others’ feelings and needs.

Organizational culture—the underlying and intangible ethos of an organization, comprising values, beliefs, principles, and so forth, and reflected in the way its people judge situations, take decisions, and act. It is passed on almost unconsciously to every newcomer to the organization.

Organizational climate—the observable and tangible characteristics of an organization—its structures, policies, procedures, and practices; for example, reward systems, which influence the way its employees act. It is to an extent easily perceived by the employees or by parties interested though more external to the organization.

Ethical culture—the extent to which the organizational culture supports behavior that is in line with moral or ethical values.

Ethical climate—the extent to which the organization’s climate facilitates or obstructs ethical behavior.

Study Questions

1. What would you describe as a nonenabling environment? How could an organization communicate to its people in a practical way that integrity is a core value in the organization?

2. Is there a relationship between selflessness and virtuousness; other-regarding behavior and ethical behavior; considerateness and integrity? Please give reasons for your answer and illustrate it with practical examples.

3. Identify and discuss the inhibitors and enablers of ethical behavior in any organization to which you currently belong.

4. In your experience, what kind of behaviors would an employee expect to observe around him when working in an organization which states that integrity is one of its core values?

Further Reading

Elegido, J. M. (1996, Reprinted 2002–2004). Fundamentals of business ethics: A developing country perspective. LBS Management Series.

Elegido, J. M. (2003). Business ethics in the Christian tradition. LBS Management Series.

Melé, D. (2003). Organizational humanizing cultures: Do they generate social capital? Journal of Business Ethics 45(1), 3–14.

Melé, D. (2009) Business ethics in action: Seeking excellence in organizations. London, UK: Palgrave Macmillan.

Melé, D. (2012). Management ethics. London, UK: Palgrave Macmillan.

Ogunyemi, K. (2011). The importance of a culture of considerateness for business performance. Business & Management Journal 1(2), 72–82.