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Organizational ethical climate refers to the moral atmosphere of the work environment and the level of ethics practiced within a company. Instrumental, caring, law and order, rules, and independence are the five types of ethical climate that can exist in an organization.

Ethical Climate

Organizational ethical climate refers to the moral atmosphere of the work environment and the level of ethics practiced within a company. Instrumental, caring, law and order, rules, and independence are the five types of climates that can exist in an organization. Incivility, harassment, aggression, and discrimination can all produce an unethical and hostile work environment, which can create dissatisfied employees, while a positive ethical environment can make employees more productive and even happier.

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Instrumental

Let’s take a look at Ninja Corporation, which operates an instrumental type of ethical climate.The CEO of Ninja Corporation has been known to be cutthroat within his industry. He has created an instrumental ethical climate by managing via ethical egotism. He feels that he has every right to make selfish decisions if they benefit either the company or even him personally.

He even sabotaged one of his competitor’s sales events so that they would take a hit in corporate morale. He then had recruiters steal away the biggest sales reps from his competition. This type of ethical climate has the highest amount of immoral and unethical business behavior due to self-interest being the driving factor in decision-making.

Caring

Ninja Corp’s competitor, Martial Arts R Us, follows the opposite type of ethical standards. Martial Arts R Us believes in creating a caring ethical environment. Their CEO is concerned about employees’ well-being and offers support in career development and other opportunities. This second type of ethical climate is based on excellent leadership, fairness, and goodness. Employees can thrive in this ethical type of environment as there is usually excellent communication between subordinates and superiors. One negative to a caring climate is that rules can be overlooked to help out employees or friends.

Law and Order

The law firm of Cheapo and Rip-off instills the third type of ethical climate within their organization.

A law and order climate is when precise codes of conduct are followed. This type of climate relies on the laws from outside sources, like actual state or federal laws. Conservative types of companies usually cultivate this type of ethical climate because they fear legal ramifications if they do not follow numerous codes. This type of climate can tend to ignore employee issues and only be concerned about specific codes.

Rules

The next type is very similar to law and order.

The rules type of ethical climate is concerned with following rules, procedures, and policies established by the organization. In comparison to the laws climate, which depends on actual outside real laws, a rules climate relies on internal professional codes or policies. Employees and managers understand that varying from the rules could cost them their job. This can stifle creativity and can also ignore legitimate issues that employees may face. In addition, problems might not be solved because certain individuals are afraid to bend the rules even slightly.

Independence

The last type of ethical climate is the polar opposite of a rules climate.

An ethical climate that promotes independence gives employees wide latitude to make decisions. This can cause great success because employees are able to think outside the box for problem-solving, especially if they are given the skills and information needed. It can also lead to unethical decisions because individuals feel that there are no ramifications to any business dealings.

Ethical Improvements

There are some basic tenets that organizations can follow to improve their ethical climate. Companies can have a zero-tolerance policy for any type of incivility, immoral, or unethical behavior. They can also make sure employees are aware of guidelines, standards, and rules of the company and industry.

The company can consistently audit employees for any violations in ethics and then declare punishment.For example, if there is a call to investigate a manager sexually harassing an employee, a company needs to respond quickly and thoroughly to determine if the report is valid. If it is accurate, then the company needs to move swiftly in leveling punishment.

There can be a concern for companies that enforce their ethical policies too strictly in that the company can become a rules-enforced strict environment. This can stifle creativity, morale, and the ability for employees to think outside the box. There should be a give-and-take ethical conversation that is fostered within an organization.

Lesson Summary

Organizational ethical climate refers to the moral atmosphere of the work environment and the level of ethics available within a company. Instrumental, caring, law and order, rules, and independence are the five types of climate that can exist in an organization.

Companies can improve their ethical climate by ensuring that self-interest is not the main thrust of corporate activity. They can also audit themselves for any unethical, immoral, or uncivil behavior to be able to quickly identify and fix any issues.

Learning Outcomes

When finishing this lesson, students should be able to:

  • Understand what ethical climate is for an organization
  • List and describe the five types of ethical climate
  • Discuss how ethical climate can be improved

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