Unlike Employees, Executives Find Ethical Climate Of Their Companies "Lovely At The Top"

October 10, 2000

University Park, Pa. -- Many executives rate their company's ethical standards much higher than do most of their workers, according to two Penn State business management researchers.

"In order to manage ethics effectively, senior managers must be in touch with rank and file employees and understand their perceptions of the company's ethical climate, as well as its ethics programs and policies. Unfortunately, this is often not the case because of managers' need to identify with the organization and protect its image, as well as their own," says Dr. Linda Klebe Trevino, professor of organizational behavior in the University's Smeal College of Business Administration.

"While previous research has found that executives influence how and to what degree ethics programs are integrated into everyday organizational life, our findings suggest that these same executives may be seriously out of touch with how these programs are perceived by the average employee in shop and office," notes Michael E. Brown, graduate student in business administration.

Trevino, Dr. Gary R. Weaver, associate professor of business administration at the University of Delaware-Newark, and Brown are co-authors of "It's Lovely at the Top: Comparing Senior Managers' and Employees' Perceptions of Organizational Ethics," which was selected best paper in the Social Issues in Management Division at the recent Academy of Management conference in Toronto.

In their study, the researchers surveyed 875 employees from two oil and gas companies and 420 employees from a financial services firm, including both senior managers and production and clerical workers. The surveys were mailed directly to the employee's home, accompanied by a letter from the company endorsing the research and encouraging employees to take part. Questions focused on perceptions of executives' attention to ethics and values, the ethical climate in the firm and the extent of unethical conduct observed.

"Our data showed that executives are likely to have a rosier perception of organizational ethics than rank and file employees. This may be because of their identification with the organization and their need both to maintain the organization's image and their own," Trevino says. "Also, they devote much of their time and attention to the external management of the company, while entrusting management of internal ethics issues to professional staff such as ethics officers.

"Furthermore, information tends to be distorted as it moves up the organizational hierarchy, leaving senior managers somewhat naive about and protected from the realities of organizational ethics. In today's organizations, it is also arguable that senior managers are far removed from the average worker because executive compensation has grown to unprecedented levels. In some cases, the salaries of CEOs are several hundred times the pay of the lowest paid worker," Brown says.

The researchers' study makes clear that senior managers need to understand better the viewpoints of rank and file workers in order to give executives a more realistic understanding of company ethics.

"Typically, organizations conduct employee surveys that may include a few questions about ethics or the ethics program," Trevino notes. "However, even when presented with the findings of these surveys, executives often become defensive or find ways to explain away the discrepancy in perceptions."

The Penn State researcher adds, "Organizations need to create opportunities for regular employees to interact directly and regularly with senior managers about ethics issues so that management of organizational ethics is based upon accurate information."

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Contacts:

Paul Blaum (814) 865-9481 (o)

Vicki Fong (814) 865-9481 (o)/ (814) 238-1221 (h)

EDITORS: Dr. Trevino is at by email; Mr. Brown is at by email.