Influences Upon Organizational Ethical Subclimates: A Multi-Departmental Analysis of a Single Firm

Abstract

Organizational values and beliefs significantly influence employee decision making and behavior and manifest themselves as multiple climates existing within a single organization. A subset of organizational climate is an ethical climate, embodying normative values and beliefs involving moral issues shared by the employees of the organization. Researchers have found multiple ethical climates present in an organization. This research explores a plausible explanation for the discovery of multiple ethical climates, or subclimates, within an organization. Specifically, the research tests the assumptions that the departmental task and stakeholder relationships influence and differentiate the ethical decision-making framework used by employees and the resulting ethical subclimate. Categories developed by Thompson (Thompson, J. D. 1967. Organizations in Action. McGraw-Hill Book Company, New York.) are extended to identify distinct departmental tasks and stakeholder relationships in order to assess their influence upon the employees’ ethical decision-making process and departmental ethical subclimate. In order to uncover the various ethical subclimates within each workgroup, the Ethical Climate Questionnaire, developed by Victor and Cullen (Victor, B., J. B. Cullen. 1987. A theory and measure of ethical climate in organizations. W. C. Frederick, ed. Research in Corporate Social Performance and Policy: Empirical Studies of Business Ethics and Values, Vol. 9. JAI Press, Greenwich, CT, 51–71; Victor, B., J. B. Cullen. 1988. The organizational basis of ethical work climates. Admin. Sci. Quart. 33(1) 101–125.), was used in a modified form. The original instrument required the subjects to rate, on a Likert scale, the relevance of each ethical climate statement. In this project, a ranking of the statements was performed by the subjects, which minimizes the social desirability bias in the subjects’ responses. This research found that the departmental task and stakeholder relationships so strongly influence employee decision making in all three department types that the ethical subclimate was also affected. Employees in a technical core department tend to use an individual locus of analysis and an egoistic criterion for decisions, emphasizing an instrumental ethical climate type. Buffer department employees exhibit a mix of ethical decision characteristics, but clearly manifest a caring ethical climate type. Employees in boundary spanning departments show a preference toward a cosmopolitan perspective and principle ethical reasoning, as well as a law and code ethical climate type.

Professionalism and Ethics in Financial Planning

“…These include overt on the job pressures (Robertson and Rymon 2001), the importance of role (Grover 1997), remuneration and reward structures (Hegarty & Sims 1978;Trevino & Youngblood 1990); ethical leadership (Trevino & Brown 2004) and the ethical climate and ethical culture of the organisation (Weber 1995;Wimbush & Shepard 1994).…”

“…However, Weber and Seger (2002) and Ede and Legoz (2002) have hypothesized that perceptions of ethical climate may differ across departments and employee levels because of differences in departmental tasks and stakeholder accountability and due to the size and decentralisation of large national and multinational organisations. In this study it is conceptualised that differences in perception of ethical climate may therefore be evident between compliance officers and financial planners given their different roles, accountability and tasks.…”

“…In addition, perceptions of ethical climate may differ across departments and employee levels because of differences in departmental tasks and stakeholder accountability (Weber, 1995). • what employees/advisers believe constitutes ethical behaviour at work;…”

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“…Organizational ethical climate is a subset of organizational climate, embodying normative values and beliefs involving moral rightness and wrongness shared by the employees of the organization (Weber, 1995). The ethical climate survey distinguishes different climates on two dimensions.…”

“…Several recent business ethics studies have utilized this measure and validated the concepts of ethical climates and subclimates (e.g. Cullen, Victor and Bronson, 1993;Deshpande, 1996;Weber, 1995).…”