The ethical behaviour of an organization is a key essential for doing business in today’s competitive market. This type of behaviour plays an important role in the organization’s overall success and in this regard, an ethics professor Brenner observed, ‘A corporate ethics programme is made up of values, policies, and activities which impact the propriety of organization behaviour.’
Business ethics is another crucial factor in organisations to measure the success and dedication of an employee. It is often the managers who are handed the task of making ethical and unbiased assessments. However, they constantly face moral dilemmas while making these evaluations because questions can be raised on the morals of a manager. Companies now provide training sessions on business ethics to employees, including managers, to reduce moral and ethical ambiguity and dilemmas. These training sessions are put in place primarily to avoid crimes, litigations and reputational loss. When management conducts performance assessments, they need to be mindful of all internal and external factors contributing to an employee’s performance. In addition to that, they need to take account of their personal biases that may skew their assessment positively or negatively. Hence, it is imperative that businesses establish a shared understanding and standard to react appropriately in certain moral situations. It is the primary responsibility of an organisation to assess those risks and uncertain moral situations beforehand and to ensure that those situations are dealt with proper judgment and transparency to protect the employee and, in return, the organisation as a whole. In the case of performance assessments, management must be aware of the biases that can cloud their judgement. They must understand how they can protect their employees against improper evaluations and provide their employees an accurate, complete and unbiased job evaluation.
Biases in place and possible arguments
According to research done by Daniel Kahneman, a Noble prize psychologist, most human decisions are made based on biases, beliefs, and intuition but not on facts or logic. Bias is when a person relies on their emotions, beliefs, or intuitions rather than facts and evidence to take a decision. This can have some crucial implications in performance evaluations and decisions about one’s promotions, retentions, bonuses and pay hikes. Hence it is necessary for an organization that the evaluation metrics in place are fair and transparent. Though there are a lot of techniques or methods for performance evaluations, biases might have the upper hand in some situations. There are different kinds of biases. Let us discuss some of the critical and common types of biases often noticed
- Recency bias: This is kind of bias where people think about the most recent events encountered with the person of interest in an evaluation. A manager could choose this path to finish the job quickly or couldn’t recall the events from the past. This is a very common and critical bias. If someone recently could not attend a client meeting or committed a mistake, this could be the only thing a manager could recall at the time of evaluating an employee’s performance. He or she might not recall or will not remember the past instances where the employee was at his or her best at work.
- Primary bias: This could be more simplified as “Judging a book by its cover” or “First impression is the best impression”. Some managers allow their first impressions or primary information they have on a candidate to make their decisions about that person in later stages irrespective of the potential for improvement a candidate possess.
- Leniency bias: This is where a manager would try to be neutral or do not want to hurt his employees by giving equivalent ratings for different employees with different skills and performance backgrounds. This could directly impact the job satisfaction of employees and demotivate them to work and produce outputs as they used to.
A Code of Conduct and Public Engagement
According to the CGMA study, employers actively seek out candidates who value ethics in the workplace when they’re hiring. 46% of employees want solid ethics in their workplace because having an ethical guideline that is followed is “the right thing to do,” and another 47% want to show that their business is ethical because it helps the business’s brand and reputation. As a result, 89% of businesses have implemented at least a code of conduct, while others have reached out further to help their communities.
Despite the high rate of companies with codes of conduct, the CGMA’s study states that only 13% manage to effectively communicate this code to their employees, and nearly half never see the code of conduct at all. An ethical key performance indicator will show that all of your employees have seen and understood the code of conduct, adhere to it and that there is two-way communication with management when it comes to upholding it.
Ethical Decision-Making and Accountability
Ethical decision-making can come with many grey areas, which is why it’s best to follow a framework. When it comes to measuring whether you made the most ethical decision, you’ll have followed a series of well-thought-out steps that can help you avoid a lawsuit or the media spotlight.
Reviewing the outcome of your decision can help you reflect on what you would do differently if faced with a similar situation in the future. When it comes to tasks within the workplace, always ensure everyone is aware of their own responsibilities.
When hiring candidates, employers need to be frank about everything pertaining to the job including salary, benefits, growth and training opportunities, and responsibilities. It affects the decision that the employee will be making, and withholding information is an unethical decision that may lead to all kinds of problems in the future. You are responsible not only for your brand but for the well-being of your employees, so don’t make promises you can’t or don’t intend to keep.
Most candidates appreciate transparency when they’re applying for jobs as it indicates employers who will be transparent with them when they work at that company. When hiring, make sure that your decision is merit-based. Nowadays, most employers will do a background check that involves social media. While candidates can be ruled out based on discriminatory attitudes that can worsen the workplace culture, they should never be ruled out because of religion, race, gender, or age.
Nurturing Workplace Culture
One of the best metrics to measure ethics in the workplace is to get feedback on your workplace culture. A good way of doing this is through anonymous employee surveys and questionnaires, where employees can air out concerns about ethical dilemmas and suggest solutions for how to make the company better. Their opinion will feel valued.
Employees want to work at a company where they feel safe and comfortable. Understanding how they feel about their current work situation will provide you with an indicator of your company’s ethical performance.
All businesses require compliance programs and many have compliance officers and reporting entities (REs) to make sure that the company is adhering to specific regulations and laws set out by the federal government. With the compliance program, you meet your requirements for reporting, record-keeping, client identification, and other know-your-client information.
The reporting entity must appoint a compliance officer, develop, apply and update written compliance procedures and policies, conduct risk assessments of the business, and document any risks of money laundering and terrorist activity finance offenses. They should also develop and maintain compliance training for employees, institute and document a plan for continued compliance training, and implement a review of the effectiveness of the training.
Many companies don’t implement anti-corruption training, which means they’re missing out on a chance to install ethical KPIs. If employees and management executives are all adhering closely to the training, it indicates a company that is performing well ethically. Anti-corruption training is an absolute must, and yet it is often neglected. According to the CGMA report, the World Bank estimated that worldwide bribery has an annual cost of about US $1 trillion.
Not all forms of bribes were covered in this estimate, however; there are both monetary and non-monetary bribes, so this is a conservative number. To avoid an ethical pitfall, include anti-corruption training in your onboarding and have regular refreshers, especially for individuals in high-risk positions like Chief Financial Officers.
External Reporting and Whistleblowing Policies
Workplaces with an emphasis on ethics normally utilize an external reporting system, ensuring employees don’t have to fear retaliation if they do spot ethical misdemeanors in the office. Having such a system in place shows that management cares about the mental well-being of the employees and takes the ethical performance of their business seriously.
This allows businesses to focus on fixing the problem instead of getting tied up in much more tedious “who said what” fights. With a good whistleblowing policy in place, corruption is harder and far less frequent, and there is more compliance in the workplace.
Remove Personal Prejudice
Everyone has personal prejudices, although some are more pronounced than others. The first step in eliminating personal feelings from what should be an unbiased process is to acknowledge them, according to California State University Long Beach. Otherwise, you may unintentionally tap into these feelings when conducting performance evaluations.
This unethical approach allows personal issues and preconceived notions to impact staffers in an unfair manner. For example, if you know you tend to be harder on up-and-coming professionals who remind you of yourself, this constitutes a personal prejudice. Evaluating a staffer based on how you see yourself rather than on his performance is not ethical.
Use Uniform Evaluation Criteria
Eliminate some of the potential for ethical missteps in your performance management system by using the same standard evaluation criteria for all employees. Using different scoring matrices can be unethical because you’re judging people on different scales. Develop individual, objective goals and measurements in advance of reviews so you can better gauge performance in an unbiased manner. Develop standardized assessment forms and consider using a numerical scoring system to help even the playing field among employees.
Eliminate the Friendship Factor
It can be difficult to be objective about employees you consider personal friends, according to Employeepedia, but letting friendships overshadow professional responsibilities is unethical. You may view friends in a better light than reality presents, or feel you have a better understanding about their deficiencies.
This can make you justify and defend poor performance in a way you might not necessarily do for an employee you don’t know as well, which creates ethical issues and is unfair to all staffers. It creates a non-objective review that can shortchange the employee you favor, as he isn’t given constructive criticism that will help him improve his professional performance in the future.
If you don’t feel you can be objective in a performance evaluation, the ethical thing to do is defer the task to another manager or superior. This is especially important if you have a dislike for a staffer, have a history of conflict or are otherwise prejudiced against that person and unable to evaluate her in an ethical and unbiased manner. If you can’t conduct a fair and accurate performance evaluation, that staffer may file a complaint or otherwise challenge your evaluation. This can call the ethics of your entire organization into question.