Ethical Climate

Organizational culture is key to fostering ethical decision making. The first step in establishing an ethical climate is for mangers, especially top managers, to act ethically themselves.

To encourage employees to report ethics violations, that is, to act as whistle-blowers, many companies have installed confidential ethics hotlines. The factor that does the most to discourage whistle-blowers from reporting problems is lack of company action on their complaints. Thus, the final step in developing an ethical climate is for management to fairly and consistently punish those who violate the company’s code of ethics.