Ethical Issues in OB - Essay Example

Besides reputational loss, these frauds and/or scandals have caused significant financial impact on their businesses resulting in their closure. Hence, it is extremely important for organizations to formulate strong ethical principles and practices, which need to be followed by the organization, its leaders and its employees. In fact, ethical standards/principles promote the organization and its products/services to a large extent. Therefore, organization’s success largely depends upon its ethical standards besides other factors related to business and its management.

Moreover, ethical standards form the guiding principles for various managerial decisions that get stuck in different types of dilemmas. Ethics involves moral issues and choices and deals with right and wrong behavior (Luthans, 1998; p.72). This behavior is with respect to employees, managers, organizations to the environment etc. The most significant role in maintaining ethical standards is played by members in the leadership positions. Ethical behavior is demonstrated by the leaders in maintaining business ethics on a regular basis.

For people in the leadership role, their character is extremely important to make an impact. This character is judged based on their actions and not words. Hence, ethical behavior becomes all the more important for leaders. In her article in the Forbes, Chairman of the board at Deloitte & Touche, Sharon Allen (2007) puts it, “ethical leadership counts--on the job and everywhere else that our employees and fellow citizens watch, assess and ultimately transform the examples of leaders into actions of their own.

” This clearly exemplifies what kind of impact leaders can have on their followers through ethical behavior. Further Allen (2007) explains that behavior of leaders give their followers clues about their personal value systems and set an example for the behavior that is considered as right. If leaders expect their followers to exhibit and adhere to specific business behavior, then such behavior has to be demonstrated by the leaders. If they lack or fail to do so, then followers will emulate their leaders’ behavior, even if unethical.

Recently, the New York Times reported internal charges levied against one of the union leaders of the Service Employees International Union for improper usage of funds official funds, which was not accounted for in the right manner. This report stated, “The charges accuse Mr. Raynor of falsely stating that he had 10 meals, costing $186 to $275, with a male union lawyer instead of the person he had actually dined with: Alex Dagg, a female executive vice president of Workers United and one of its Canadian directors.

The charges call for ousting him from his Workers United and S.E.I.U. posts, and state that he had falsified union records and made improper personal expenses” (Greenhouse, 2011, March 30). This charge is a serious offence because the union leader falsified organization’s money and also provided misleading information. If this behavior is ignored, then it might encourage sequence of such behaviors, which his followers too might adopt. In order to promote ethical behavior, organizations adopt ethical practices such as organizational values and ethical standards in all actions and communicating the same to its employees through various media.

Ethical standards have to pertain to