Business and Organizational Ethics

introduces fundamentals of business and organizational ethics including definitions, management foci, management styles, sustainable ethics, balance, and need. (1 credit hour)

Learning Objectives

After completing the course, participants will be able to:

  • Present definitions of business and organizational ethics
  • Indicate different management ethics foci
  • Indicate different management ethics styles
  • Create sustainable organizational ethics
  • Balance ethical power in an organization
  • Demonstrate the need for organizational ethics committees
  • Recommend improvements in dental business ethics

Please Review the Following Material:

Business Ethics

While healthcare is a service comprised of professionals providing highly technical and deeply personal interventions, a significant portion of healthcare is business. Dentistry is about 4% of the US health care dollar. (CMS Data 1960-2009) According to Machan (1990), business is “the institutional expression of . . . the good deeds people engage in while carrying out prudent endeavors” (p. 99). Following the fundamental ethics from Course 45 entitled “Healthcare Ethics: Morals, Ethics and Law,” the good deeds of healthcare may be impacted both positively and negatively by the business component of healthcare.

In this presentation, business ethics in healthcare are those interactions among individuals who support direct clinical care. In contrast to organizational ethics where an aggregate of individuals are represented by the organization to individuals and society, business ethics is an individual based unit of analysis. The first individual who should set the finest example of business ethics within the healthcare organization, then, is the clinical professional provider (e.g., dentist or physician).

The Professional’s Business Ethical Foci

How a professional provider interacts with both internal and external constituencies depends on the personal focus of that individual. For example, Worthley (1997) discusses the different foci that individuals may have when relating to others:

[the individual has a] locus of analysis with ethical criterion. Individual and egoism = self interest. Individual and benevolence = friendship. Individual and principle = personal morality. Local and egoism = company profit. Local and benevolence = team interest. Local and principle = company rules/ procedures. Cosmopolitan and egoism = efficiency. Cosmopolitan and benevolence = social responsibility. Cosmopolitan and principle = laws and professional codes. (p. 206)

Each of the loci of analysis has different consequences. For example, a cosmopolitan and benevolent professional has a great deal of understanding and commitment towards environmental issues (social responsibility). However an individual does not have to be focused within one of Worthley’s types—individuals may use different foci for different situations. Professionals typically work within a profession that is composed of a systematized organization using business and organizational ethics. Professionals typically work within a profession that is composed of a systematized organization using business and organizational ethics.

One benefit of using different foci, or a locus of analysis approach, is to ensure that a code of ethics is in place that addresses the relationships of individuals, the healthcare organization and society. Ferrell and Fraedrich (1997) provide a question to leaders and clinical professionals to help with business ethics: “[Does] the company have a code of ethics that is reasonably capable of preventing misconduct?” (p. 186). In essence, a code of ethics helps to guide proper conduct and to avoid many if not all major clinical ethical issues.

Not only are the foci important for sound business ethical leadership, but there must also be an orientation of that foci grounded in outcomes based vision. Crapps (1986) indicates that a good business ethic is founded upon a “healthy moral development [of leadership that] moves from fear oriented to goal oriented controls” (p. 271). For example, a leader and/or professional who continuously dominates the process of care as well as the structure may find few who are motivated to whatever vision, if there is one, that the leader and business has set. Rather than intimidate, the leader could give a vision with expectations and provide ethical guidance on meeting that vision (Beauchamp & Childress, 1989).

Business Management Styles and Ethics

Clinical Leaders in healthcare must not only lead, but they must also manage. Paul and Elder (2003) provide a list of required ethical management styles that are important to the success of a healthcare business:

1. Going beyond what is obligatory to improve the lives of others; generous, unselfish, charitable, altruistic, philanthropic, humanitarian, benevolent; 2. Dealing with people objectively in order to be fair; understanding impartial, equitable, unbiased, dispassionate, objective; 3. Relating to people in ethically appropriate ways: civil, polite, courteous, respectful, forbearing, tolerant, tactful; 4. Being forthright and honest, honest, truthful, integrity, loyal, faithful, trustworthy; 5. Relating to people in commendable ways; friendly, obliging, cordial, kind, gentle, gracious, tender, warm, warm-hearted; 6. Being willing to forgive in order to alleviate suffering; forgive, pardon, absolve, exonerate, compassionate, merciful; 7. Acting out of a concern to behave ethically; scrupulous, honorable, upright, open-minded, evenhanded; 8. Acting out of a concern for the feelings of others; sympathetic, empathetic, understanding, compassionate, and considerate. (p. 19)

Maintaining a high ethical base, and knowing the different ethical frameworks provided above, requires vigilance and sacrifice on the part of the leader. It is not easy to make the right decisions in the face of the easy ones, especially when the leader may not be the one with the final or fiduciary authority. Baier (1958) indicates that a change agent can be within any level of organization and:

is a person who is determined to do whatever is morally right and to refrain from doing whatever is morally wrong. It is an outstanding characteristic of morality that demands substantial sacrifices. (pp. vi-1)

One sacrifice might be that the professional cannot “agree to disagree” with the business climate of an organization and must leave the organization in order to sustain their own moral beliefs.

Going beyond one’s self and knowing when to maintain ethically sound behavior in others is a fine art acquired from both education and experience. Ross, Wenzel and Mitlyng (2002) support the need for maintaining ethical standards in others when they indicate that:

the leader should pay attention every day to the ethical behavior of all of the members of his or her staff and serve as an example beyond reproach. (p. 353)

The clinical leader is, however, not the only individual in the healthcare business who must maintain an appropriate business ethic. All individuals in the business must know what the business ethics are in their healthcare organization.

Business ethics can be presented from many different perspectives. The difficulty for all employees in a business is that they may not know the ethical framework to which they are expected to uphold, and that situation goes back to strong leaders who must ensure that the vision and ethics are known throughout the business.

In addition to principles, the healthcare business has responsibilities. Shaw and Barry (1998) provide several business responsibilities as:

1. Business should give safety the priority warranted by the product; 2. Business should abandon the misconception that accidents occur exclusively as a result of product misuse and that it is thereby absolved of all responsibility; 3. Business must monitor the manufacture [and service] process itself; 4. When a product [or service] is ready to be marketed, companies should have their product safety staff [or risk managers in services] review their market strategy and advertising for potential safety problems; 5. When a product [service] reaches the marketplace, firms should make available to consumers written information about the products [services] performance; and 6. Companies should investigate consumers complaints. (pp. 466-468)

How leaders ensure that the ethical principles and responsibilities are obtained and sustained can be supported by using the different ethical, religious and decision making ethical processes, and at the times they are appropriate.

Although not an ethical theory, the ethics of neutrality is a means of ensuring appropriate ethical principles and responsibilities, and that may be in conflict with a leader’s own convictions. According to Thompson (1988) the use of “ethics of neutrality” may lead to “administrators” who:

act neutrally in the sense that they should follow not only their own moral principles but the decisions and policies of the organization. Three sets of outcomes may be brought against the ethics of neutrality; 1. Because the ethic underestimates the distinction that administrators exercise, it impedes the accountability of administrator as citizen; 2. That office holding implies consent to the duties of office as defined by the organization; and 3. It limits their course of actions to two—obedience or resignation. (p. 30)

If the clinical leader is able to balance when to ensure their own convictions or morals to guide the ethics of the business, along with the appropriate amount of neutral ethics, than the healthcare business usually has a steady state of care processes. However, when the inappropriate mix of individual morals and neutral ethics are used, the healthcare business is in conflict, and either the business must be set straight or the leader is set “packing.” Knowing how to balance should not be based on experience alone, but rather using education as a means to understanding the development of business ethics and to not repeat problems from the past.

The evolution of business ethics has significantly increased since the 1960s and has grown out of a religious base. DeGeorge (1987) presents how business ethics has changed in the latter part of the previous century into:

a guiding behavior in the world of business. The study of business ethics in North America has evolved through five distinct stages: 1. Before 1960; 2. The 1960s; 3. The 1970s; 4. The 1980s; and 5. The 1990s [and beyond]. Until 1960; ethical issues related to business were often discussed theologically. The Protestant work ethic encouraged individuals to be frugal, work hard and attain success in the capitalistic system. The 1960s: the rise of social issues in business. This period witnessed the rise of consumerism, activities undertaken by independent individuals, groups, and organization to protect their rights and as consumers. Activities that could destabilize the economy began to be viewed as unethical and unlawful. The 1970s; business ethics grew as an emerging field focusing on corporate social responsibility. Business became more concerned with their public images, and as social demand grew, many businesses realized that they had to address ethical issues more directly. The 1980s;consolidation. Methods evolved for discerning best practices and tactics to link organizational practice and policy to successful ethical compliance. Codes of conduct had to be understandable with details provided on more subjective areas. The 1990s;institutionalization of business ethics. Incentives are codified into law for organizations to take action, such as developing internal ethical compliance programs to prevent misconduct. (p. 7)

Where is business ethics in healthcare heading? Visotzky (1996) helps answer that question when he asks:

What price did morality cost? Was life a matter of simply avoiding situations where the currency of morality was tested too severely? Were there hard and fast rules, or did situations change the ethics we held dear? (p. 26)

Each of those questions can help leaders determine their own vision and to choose what ethical theories, religious frameworks and decision making ethical processes that are important to their respective healthcare organization. And, the leader and all employees must ensure that this organizational level has an ethical framework, otherwise the shifting sands of technology and reimbursement will surely (and possibly sorely) make the future for that organization whether it be a hospital, an insurance company, a dental organization, or a dental practice.

Organizational Ethics

Using an analogy of the definition of ethics as the aggregate of individuals’ morals, organizational ethics is an aggregate of the different group ethics and individuals’ morals within an organization. With significant amounts of variation among groups, in terms of ethical codes and individual morals within a healthcare organization, organizational ethics can, at best, be focused and still varied—and chaotic in the worst situation.

Worthley (1997) helps readers understand the different levels of ethics when he discusses power levels as:

macro (organizational) micro (individual) and subtle micro (individuals and indirect). (p. 165)

Those different levels of power coincide with the different levels of business and organizational ethics in healthcare. Whereas the individual may represent what the business should do in terms of ethical vision, the organization may not—as a whole—go in that direction; it may be headed in an entirely opposite direction if the aggregate is different from the leader.

An Aggregate of Morals and Ethics

How to build organizational ethics that are focused, yet allow for variation, may best be described by Paine (1997) when he provides four tasks that must be accomplished:

Task one—developing the ethical framework, task two—aligning the organization with leadership and supervision, hiring and promotion, performance evaluation and rewards, employee development and education, planning and goal setting, budgeting and resource allocation, information and communications, audit and control, task three—leading by example, task four—addressing external challenges. (p. 99-103)

And Hoffman and Nelson (2001) support those tasks by indicating that in addition to strong business ethics from the leader there must also be a “planning” and “ongoing monitoring” process in the organization to improve the ethical decision making.

In addition to ensuring individual business ethics are appropriate for the organization, the organization must ensure that there is a minimal amount of power abuse, or none, if possible. With power comes the “dual edged sword” of possible abuse, and ethics can help decrease that abuse. Hoffman (2001) helps leaders and all employees take note on how to decrease ethical power imbalances, a very important note when the service is to vulnerable clients or patients:

1. Recognize the inadequacy of well-intentioned rhetoric, including organizational value statements unaccompanied by explicit programs to reinforce them; 2. Develop and implement a code of conduct for management, staff and physicians; 3. Perform periodic ethics audits that include questions about abuse of power; 4. Prepare a casebook with descriptions of unacceptable behavior and constructive interventions and use it in management orientation and training sessions; 5. Conduct educational programs to promote candid discussion of those issues; 6. Establish and encourage the use of a hotline to report inappropriate behavior; 7. Sanction improper behavior promptly; 8. Encourage the referral of physician problems to the medical staff’s physician advising committee; and 9. Emphasize the importance of sensitivity to the values of patients, families, and staff in routine employee performance appraisals. (p. 22)

Organizational Ethics Committees

While individual dental practices and large national professional dental organizations do consider organizational ethics questions, rarely is it within the formal context of an active organizational ethics committee that is directly focused on, and involved with, the macro (or organizations) decisions and behaviors. And, while all hospitals and large research oriented groups such as NIH, do have clinical ethics committees, organizational ethics committees are just being developed and few of these are fully integrated with the clinical ethics committees.  Organizational ethics committees, however, can help implement the strategies above as indicated below. The first step towards having appropriate ethics committees is providing an organizational ethic. According to Caplan (1997) organizational missions provide an awareness of the access to healthcare and the distribution of caring within a healthcare organization, and thus provide an organizational ethic:

When patients have no health insurance or cannot meet the requirements for copayment, they have reason to wonder when the doctors say all that can be done, has been done. (p. 91)

If indeed the mission is non-profit, than the healthcare organization can be trusted when they say “no more.” The difficulty in for-profit healthcare organizations is to keep the trust when they say “no more” and patients know that more is available.

Trust is created in healthcare organizations, beyond the leaders and providers, in part by ethics committees. The public can better trust a healthcare organization if it knows as a whole that not one individual is trying to create trust, but rather the entire organization “ethic.” Monagle & Thomasma (1998) help illustrate this trust building when they present the basic roles of the ethics committees as:

1. Education; 2. Multidisciplinary discussion; 3. Resource allocation; 4. Institutional commitments; 5. Policy formulation, and 6. Consultation. (pp. 460-461)

Veatch (1983) provides examples of how ethics committees can focus their orientation towards building trust:

1. Autonomy model—implements decisions of competent patients whose wishes are known; 2. Social justice model—grapples with broad issues such as organizational health care policy, resource allocation, and cost effectiveness; and 3. A patient benefit model—makes decisions for patients who are unable to make decisions for themselves. (p. 77)

Hinderer and Hinderer (2001) indicate further that more is needed in terms of improving or even establishing institutional review boards and ethics committees (IRBs and IECs).

Individuals who are on ethics committees must be knowledgeable not only of the healthcare topics but the ethics frameworks that may be used to make appropriate decisions. Nelson (2001) provides several recommendations on improving ethics committees by indicating that those committees:

should be populated by individuals who possess some level of knowledge in: 1. Moral reasoning and ethical theory; 2. Common bioethical issues and concepts; 3. Healthcare systems, including knowledge of managed care and governmental systems; 4. Clinical context; 5. Your healthcare organization, including the organization’s mission statement and structure; 6. Your healthcare organization’s policies; 7. Beliefs and perspectives of the local patient and staff population; 8. Relevant codes of ethics and professional conduct and guidelines of accrediting organizations; and 9. Relevant health law. (p. 208)

Without organizational leadership and organizational commitment from all employees for sound, valid and reliable ethical frameworks and committees, the type of healthcare provided will be low quality with reciprocal effects upon employees. Boyle et al. (2001) indicate that “ethical problems” can result in a wholesale fashion (e.g., greed, cover-up, misleading). How and to what degree those issues arise can be improved or reduced by having organizational ethics better known throughout the entire organization.

Kellar (1988) makes a distinction between internal and external ethical decision making when he indicates that:

public and private acts which relieve individuals of responsibility for acts undertaken in their public role fails because individuals generally gain some personal benefit from performance of their public or organizational role. (p. 24)

Whereas individuals may gain from ethical decisions unconsciously, it is the worst kind of ethical decision making when the outcomes are known and the ethical decision process is overtly warped to gain those personal benefits. Several professional codes prevent personal gains from the clinical care of the organization (e.g., American College of Healthcare Executives for health administrators). Bowman and Menzel (1998) further stress that ethics in organizations must be fully known by all employees and include knowledge on the following:

duties, organizational efficiency, conflicting rights, competitive costs, risk sharing, punitive damages [when wrong decisions are made], institutional shareholders, stakeholders, management, justice. (p. 77)

Improving Business and Organizational Ethics

At least three programs indicate how to improve organizational ethics in a healthcare organization. Perry (2002) presents a process of improving organizational ethics as recommended by the Ethics Resource Center in Washington, D.C.:

1. Assess organizational values and vulnerabilities to misconduct; 2. Create opportunities for management to discuss organizational values or risks; 3. Develop and communicate clear standards of conduct; and 4. Refine management systems and practices to support the ethics programs. (p. 189-191)

A second strategy for improving organizational ethics is presented by Whitley and Heeley (2001):

To develop an ethics program . . . some strategies you might consider include: 1. Adopting a continuous quality improvement approach to communicating and living your organization’s mission and core values; 2. Training senior executives to incorporate ethical considerations into daily activities and interactions with staff; 3. Educating staff, through large group presentations and small group discussions, on the ethics plans; 4. Developing tools and techniques for including ethics as a criterion for hiring and promotion, and 5. Including ethics on every meeting agenda throughout the organization. (p. 202-203)

And, a third means of improving organizational ethics is presented by Carroll (1991) as indicated through:

corporate social responsibility; 1. Philanthropic: be a good corporate citizen. Contribute resources to the community, improve quality of life; 2. Ethical: be ethical. Obligations to do what is right, just and fair. Avoid harm; 3. Legal: obey the law. Law is society’s codification of right and wrong. Play by the rules of the game: 4. Economic: be profitable. The foundation upon which all others rest. (p. 68)

Each of those three means of improving organizational ethics are representative of different means of improving healthcare in general. However, no matter how much the organizational ethics are known, it is still individuals who must ensure that organizational ethics are sustained, improved upon and increasingly known to all employees. Ross, Wenzel, and Mitlyng (2002) conclude best on organizational ethics as a means to improve healthcare when they stress:

how leaders act shows the importance they place on organizational ethics. References to the organization’s ethics, as a basis for decision making, builds credibility and support for ethical behavior in the organization. (p. 131)

Aggregating individual morals and creating professional environments, developing strong ethically sound clinical interventions, ensuring that valid business and organizational ethics are in place is the fundamental framework for appropriate business and organizational ethics.

Recommendation to Improve Dental Business Ethics

The American Dental Association and the American Association of Dental Consultants offer dentists and dental organizations many leads to individuals and companies that help incorporate business and organizational ethics in dentistry. Efforts to conscientiously and systematically incorporate business and organizational ethics in the dental office and in dental organizations in ways that will prioritize dentistry as a profession, as described by Friedson (2001), however, are still in their infancy. Friedson described the profession itself as a system; it is distinct from a large business organization, or even a large business network. If the dental profession desires to operate within a specific vision of professionalism, however, professionalism must hold priority over many of the competitive commercial influences both within society and individual professionals (Patthoff 2007; 2008). To further explore and develop these themes, Patthoff described several proposals. All proposals require strong systemic and philanthropic efforts from multiple dental organizations. Some have already been initiated within existing programs and organizations.

Implicit in all of these efforts is the view that dentistry struggles daily with complex and systematic challenges to the profession and its mission to serve society and each of its members by preserving and enhancing oral health.  Hundreds of ethics efforts, in and out of dentistry, involve codes of ethics, education protocols, credentialing standards,  major influential strategic plans—all now a normal part of health care.  The scope of these political and economic activities goes well beyond the professional ethics of individual dentists and major professional organizations (Irving 2000; Chambers 2008) and carries into the business ethics of dentistry.

To address dental ethics from a business ethics perspective, five proposals were discussed:

  1. A dental ethics institute
  2. An endowed dental ethics chair
  3. A one-year fellowship program for licensed dentists pursuing  theoretical/applied ethics in dentistry
  4. A program of ethics certification
  5. A self assessment to help practitioners build ethically sound practices with similar self assessments, for helping dental organizations and educational institutions build ethical practices.

A sixth component was added that brought together the broad organizational and institutional effort needed to provide leadership, participation, and financial support. It was not presented in a distinct and separate manner; it needed to be woven throughout the paper as a crucial element without which success is impossible.

The woven support efforts comprising this sixth component are not an option; they were described as interrelated efforts, each essential as underlying sustaining endeavors. With this support, inroads on the other proposals will continue.

Hundreds of business ethics institutes have been designed to increase fair competition and to raise product quality and customer service. Business ethics institutes tend to emphasize the characteristics of individual leaders and the construction of social and industrial systems, some aiming to control both human and non-human factors. These emphases are good for some forms of commercialism; they often underplay, however, the very nature and good of professionalism. Business ethics, like bioethics, needs deliberate and cautious evaluations when adapted to dentistry.


Annotated Bibliography and Suggested Reading

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