Managing For Organizational Integrity By Lynn Paine

Managing for Organizational Integrity: By Lynn Sharp Paine

Lynn Paine, a Harvard Business School professor, explains how having an effective ethical managing system can improve competitiveness, create positive workforce moral, and help build strong relationships with all of the company's stakeholders. She believes that implementing an "integrity-based approach to ethics management" that "creates a climate that encourages exemplary conduct" is the best way "to discourage damaging misconduct." Paine's article tells the reader how most managers believe that it is not the organizations or managements responsibility when one "rogue employee" engages in actions that are unethical. She says feels that it is their business because "managers who fail to provide proper leadership and institute
systems that facilitate ethical conduct share responsibility with those who conceive, execute, and knowingly benefit from corporate misdeeds." Paine first describes how organizations shape an employee's individual behavior. She then illustrates how most organizations just do what law requires, in regards to legal compliance, so that they won't get into trouble for unethical behavior. Just being legally compliant has its pitfalls so Paine explains how "integrity as a governing ethic" can help strengthen companies. She shows different ways of approaching this by using examples from three companies: Martin Marietta, NovaCare, and Wetherill Associates.
A company can shape an individuals behavior and veer it towards acts that are unethical. As seen with Sears in the 90's when they were experiencing a decline in revenues in their automotive service department. Incentive systems and organizational pressures showed that it can lead employees to exaggerate needed repairs and sometimes mislead customers, even if that was not what was intended. The error on management to not set up a system, which emphasized ethical practices, cost the company lots of money and gave them a bad reputation as well.
In order to stop acts like the one's by Sears and Beech-Nut, laws and guidelines were put into place in order to establish accountability. According to Paine this lead companies to do only what was mandated by law in order not to get into trouble. The slogan "if it's legal, it's ethical" became the norm, and as Paine points out, "it is no guide for exemplary behavior." Thus, those who did just what was necessary to get by were "endorsing a code of moral mediocrity for their organization," which could hurt the company in the long run.
In order to achieve exemplary behavior Paine believes that legal compliance is needed but it must also include an integrity-based strategy that sets higher company standards.
The text defines organizational integrity as being "based on the concept of self-governance in accordance with a set of guiding principles. From the perspective of integrity, the task of ethics management is to define and give life to an organization's guiding values to create an environment that supports ethically sound behavior, and to instill a sense of shared accountability among employees." Some of the characteristics of such a strategy ensure that guiding values and commitments make sense and are clearly communicated, that company leaders are personally committed to take action on those values, that the values are integrated into all aspects of management decisions and activities, that the company's structure supports and reinforces those set values, and that all managers are knowledgeable and competent enough to make ethically sound decisions. There are different approaches to achieving organizational integrity as Paine exhibits from the examples of Martin Marietta, NovaCare, and Wetherill
Associates.
Martin Marietta had a system that emphasized on core values, such as honesty and fair play, later expanding to account for quality and environment responsibility. They created a code of conduct that was well communicated and established throughout the company. NovaCare on the other hand created a statement of vision, purpose, and beliefs that simply stated their purpose for existence and the core values that would be maintained when pursuing that purpose. Wetherill's approach was to create a Quality Assurance Manual that consisted of philosophy text, a conduct guide, a technical manual, and a company profile. All of which promoted the company's pledge to honesty and it's guiding principle of right action. Each method is similar in that it creates a strong ethical foundation that has proven to show improvement in all three companies since implementation.
I feel that Paine's article stated not only opinion, but also data that is supported by real-life examples on the benefits of managing an organization with a strong and ethical system. It was based on rhetoric, in that the writing communicated its point persuasively. After reading the article I really feel that implementing systems that promote organizational integrity can benefit a company's internal structure and also its reputation. This article reminded me of the shareholder vs. stakeholder debate (the stakeholder side) because it is essentially proving that doing above what is required by law can be beneficial in generating more revenue but also that it helps prevent any unethical misconduct. The strength of this approach can be seen in the examples provided. In conclusion I think the article argues that if a company promotes ethics above the bottom line (even though the costs could be high) it will in fact actually raise employee moral, competitiveness, all stakeholder relationships, and ironically it will also increase revenue too.