Ethical Climate in Organisation

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1.0 Introduction

In modern business environment it is imperative to have an ethical climate. Traditional commerce is fundamentally based upon performance and profit. With the ever changing workforce, it is imperative that organisations open themselves up to reorganisation, including the application of ethical and moral decision-making, and incorporating interest of ethics in the corporate structure. According to Victor and Cullen (1988 cited by Cohen 1993, p.343) organisational norms and values are means to show how ethical problems should be addressed, creating an ethical climate which has a powerful impact on employees capacity to do the right things. However, the degree to which organisation encourages ethical practices varies distinctly. .

2.1 Definition: Ethical Climate

Business ethics is concerned with truth and justice and has a variety of aspects such as the expectations of society, fair competition, advertising, public relations, social responsibilities, consumer autonomy, and corporate behaviour.
Victor and Cullen (1988 cited by Cohen 1993, p.344) defined ethical climate as the persistent moral atmosphere of a social system, characterised by mutual perceptions of right and wrong, as well as common assumptions about how moral concerns should be addressed. Ethical climate in organisation refers to the way in which an organisation typically handles issues such as responsibility, accountability, communication, regulations, equity, trust, and the welfare of stakeholders.
Hence, an ethical climate is usually about standards of behaviour in the workplace as well as with customers and partners. Companies known for high ethical standards usually have an ethical code stating that they treat everyone with dignity, do not present misleading information, and strictly follow rules and regulations.

1.2 Importance of an ethical climate

Having an ethical climate naturally leads to more effective business practices. For example, people are



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