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What Is the Role of Ethics in Organizational Behavior?

Jessica Ellis
Updated May 16, 2024
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The functionality and success of an organization may be attributed to many factors, including productivity, business acumen, and a healthy organizational culture. The role of ethics in organizational behavior underlies many of the keys to success and sustainability by creating a set of rules and guidelines that promote safety, trust, and responsibility in the workplace. When considering the role of ethics in organizational behavior, it is important to consider both individual and communal ethical issues.

Ethics is generally defined as behaving in a morally correct fashion, although the exact definition of “moral correctness” may vary between organizations. In general, an organizational code of ethics exists to promote a culture in which all actions promote the good of the individual, the organization, and the community serving or surrounding the organization. By creating and enforcing workplace culture with a strong ethical code, an organization can reap the benefits in several different ways.

For individuals, the role of ethics in organizational behavior helps ensure that each person is treated fairly and maintains personal responsibility. Ensuring that each person earns a fair market wage based on his effort, experience, and performance is one example of an ethical guideline that greatly affects individuals. Similarly, by clearly outlining personal responsibility, such as not padding expenses or abusing sick leave, ethical codes can help ensure that a high level of trust exists between co-workers. In general, if an employee feels that he is treated fairly and can trust his co-workers and superiors, loyalty, and thus productivity may rise.

The role of ethics in organizational behavior can also greatly impact how the entity acts as a whole. Even if individuals follow a strong code of ethics, if the larger organization acts unethically, the positive effect may be negated. For instance, even if all mid-level workers in an office act fairly and morally toward one another, if managers are allowed to get away with sexual harassment or insider trading, the entire system can become a hostile, dangerous environment that can erode loyalty and beget more problems. One of the keys to promoting a healthy organizational culture is ensuring that the rules are the same throughout all levels of the organization.

In addition to maintaining internal behavioral standards, part of the role of ethics in organizational behavior is to ensure that the entity is behaving positively in the community at large. If a company engages in behavior that damages the community, the ramifications will often filter down into the organization itself. One example of this might be a significant decrease in employee loyalty after a newspaper article discloses that the business uses sweatshop labor to manufacture products. Assisting the community in a positive way can help improve employee loyalty, attract better employees, and bring new business opportunities by maintaining an ethical reputation.

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Jessica Ellis
By Jessica Ellis
With a B.A. in theater from UCLA and a graduate degree in screenwriting from the American Film Institute, Jessica Ellis brings a unique perspective to her work as a writer for SmartCapitalMind. While passionate about drama and film, Jessica enjoys learning and writing about a wide range of topics, creating content that is both informative and engaging for readers.

Discussion Comments

By fBoyle — On Jul 17, 2014

Large companies seem to do better with ethics and organizational behavior. I feel like both employees and managers get away with a lot more in small businesses where there really isn't anyone to complain to.

Of course, large companies have their share of issues as well, like equal pay and environmental concerns. But unethical treatment towards employees and between employees are probably more likely in smaller businesses or in organizations where there isn't a large chain of supervisors and managers.

I'm not an expert on this topic though so I might be wrong.

By ysmina — On Jul 17, 2014

@ddljohn-- Business ethics and organizational behavior is a highly complex topic. It's complicated because some businesses give more importance to ethics than others. Some organizations structure an organization's values and behavior based on ethics. Others impose such values, but to a lesser extent and may make exceptions. It's really something that depends on management and how they choose to manage a business.

I personally think that if an organization's management and its employees do not behave in an ethical manner, that business cannot be successful. Fairness towards employees and customers and taking decisions that are good for everyone increases success and productivity.

By ddljohn — On Jul 16, 2014

Sometimes ethics rules can be a hindrance to business productivity and success right? I'm surprised to read that ethics actually increases success.

Jessica Ellis

Jessica Ellis

With a B.A. in theater from UCLA and a graduate degree in screenwriting from the American Film Institute, Jessica Ellis...
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