Organizational Behavior Trends Increasingly Two Major Factors

Organizational Behavior Trends

Increasingly two major factors are influencing corporate decisions makers. The first is a reenergized campaign for corporate ethics. The second is technology and work-related stress. This paper describes why these trends are occurring and the results on how decision makers behave. It then concludes with an assessment of whether ethics and technology pull the manager in two different directions.

The long held notion that companies will profit from unethical behavior is now being dispelled. Many research studies such as those conducted by the Institute of Business Ethics, a promoter of corporate ethical best practice, have shown that companies with a clear commitment to ethical conduct outperform those which do not (Webley and More). The Institute of Business Ethics carried out its research on large companies in the United Kingdom, studying those with a demonstrable commitment to ethical behavior through having a published code of business ethics, and those without. The Institute analyzed four indicators of business success, economic value added (EVA), market value added (MVA), price/earnings ratio volatility (P/E ratio), and return on capital employed (ROCE) over a five-year time period from 1997 -2001. The research concluded that:

On EVA, the sample of companies with codes outperformed those without over a four-year period.

On MVA, the performance gap was even more marked.

On P/E Ratio, the more demonstrable ethical companies showed far less volatility than the remainder

On ROCE, companies with codes underperformed those without between 1997 and 1999. Between 1999 and 2001, however, the trend was reversed, and ethical companies were clearly superior performers.

New government regulations, particularly in the United States, are forcing companies to behave more ethically. In 2001, Enron became infamous for its fraudulent accounting practices. Unfortunately, this company's criminal behavior would soon prove not to be an isolated incident as federal and state regulators initiated fraud investigations against dozens of companies such as WorldCom, Adelphia, HealthSouth, McKesson, Tyco, and Qwest (Brickey, 2003). Closer scrutiny revealed that corporations were aided in their misconduct by intricate business relationships that included financial analysts, auditors and bankers. After the corruption discoveries, governance reform quickly gained unexpected momentum in Congress with the enactment of the Sarbanes-Oxley Act in 2002. The primary purposes of Sarbanes-Oxley are to address systemic weaknesses in corporate governance structures and augment prosecutorial tools available in major fraud cases.

As a result of a changing attitudes and regulation, corporate ethics is taking on increased prominence at U.S. companies, according to a 2003 survey by Deloitte and Corporate Board Member magazine of 4000 publicly traded companies (Business ethics and compliance in the Sarbanes-Oxley era). Eighty-three percent of companies surveyed had developed formal codes of ethics or conduct. Further, more than 98% of the survey participants agreed that an ethics and compliance program is an essential component of corporate governance. Ethical codes of conduct are influencing decision making by documenting a company's commitment to certain principles or characteristics and serve as the basis of all corporate activity: integrity, quality, responsiveness and teamwork (Hatfield). The code of conduct also includes desirable norms, such as honesty, fairness, respect and dependability and explains how they should play out in the daily operation of the business.

In addition to being asked to behave more ethically, decision makers are under increasing pressures due to the prevalent use of technology in corporations. Researchers at the Indiana University School of Journalism surveyed more than 450 journalism professors and administrators about their attitudes toward technology and about its impact on their professional lives (Dainow, 2001). The study revealed that technology ranked second only to general time constraints in the amount of stress caused to the faculty members surveyed. For 73% of the faculty members and 74% of the administrators, technology caused a moderate or great deal of stress every day. Technology-induced stress also contributed significantly to job dissatisfaction and burnout.