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Advances in Social Sciences Research Journal – Vol. 8, No. 10
Publication Date: October 25, 2021
DOI:10.14738/assrj.810.11063. Deciu, V. (2021). Psychological Factors in Organizations Evaluation. Advances in Social Sciences Research Journal, 8(10). 292-300.
Services for Science and Education – United Kingdom
Psychological Factors in Organizations Evaluation
Valeriu Deciu
School of Economy & Business Administration
University: “Al.I. Cuza”, Iaşi, Romania.
ABSTRACT
When major corporate breaches have occurred, the blame and the punishment
always has been on the so-called “bad apples” in an organization. The trouble with
such an approach ignores the cultural and psychological context about which the
“bad apple” flourishes. Usually, corporate breaches seem to occur in two areas; they
will either involve ethical or legal violations. An understanding of ethical and
compliance issues in an organization is thus of utmost importance. These issues
herein inspired research. The concern of the study will be the psychological factors
within an organization that need understanding from an ethical or compliance
point of view.
Keywords: ethics; compliance; psychological factors; corporate breaches; organizations
evaluation.
INTRODUCTION
Corporate scandals are a common thing in the business world today. To mention but just a few,
Siemens’s corruption scandals discovered in 2006, Sani Abacha corruption scandals in Nigeria,
the Kadyrov’s Chechnya bikers, boxers, and bribe scandal; the Ben Ali anti-competitive laws in
Tunisia which allowed 220 family businesses to monopolize critical sectors of the country’s
economy; the Panama Papers, the Gupta family bribery, and capturing of the South African
economy are also on the list [15]. In the future, the list could even potentially increase.
Psychological factors, ethics, and compliance
This report begins by explaining the key terms that remain the central focus of the study. To
start with, psychological factors. The definition of psychological factors could be broad
depending on what the focus of an individual is. In this research, psychological factors are
workings of the mind that determine how an individual or an organization behaves. The focus
of this research is individual or organizational behaviour regarding ethics or compliance with
laws. To be specific, their motivation, learning, and socialization, attitudes, and beliefs that
employees express towards behaving ethically and in compliance with laws. The concept of
psychological factors at the workplace could be challenging to grasp since it represents
employee perceptions and experiences informed by several factors. It also reflects many other
considerations. Some of the concerns are affected by factors at the individual level, while others
emanate from the working environment. Still, others operate from the social-economic
environment around the organization where an employee works but outside the organization
per se. Organizations can control Individual and organizational psychological factors to ensure
that they positively impact the employees. However, organizations cannot adjust social and
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Deciu, V. (2021). Psychological Factors in Organizations Evaluation. Advances in Social Sciences Research Journal, 8(10). 292-300.
URL: http://dx.doi.org/10.14738/assrj.810.11063
economic factors operating from outside. Instead, the organization and the employee can adapt
to ensure that they do not impact negatively [7].
The other elements that need to be understood are Ethics and Compliance. In modern times,
discussions about corporate activities rarely end without mentioning the two words; “ethics”
and “compliance.” Many people like to use the words interchangeably unknowingly that they
do not imply the same thing. On the one hand, ethics refer to the decisions made by people, their
choices and actions reflecting what they believe as being right and wrong. To be precise, a set
of established standards of conduct for an individual or an organization based on duties
informed by core values. In this case, core values are cultural beliefs, values, and norms [10].
Conversely, Compliance refers to changing one’s behaviour because someone or a group asked
an individual to do so. Compliance could also be an adaption to a rule or a necessity. In
Compliance, while an individual has the option to fail to comply, they chose to comply without
being coerced to do so. Ethics differ from Compliance in that; Compliance is to externally set
obligations while ethics is to internal values and rules; that is, Compliance is to laws, and ethics
is to morals [10].
Ethics and Compliance are fundamental to an organization. They are the basis of an
organization’s reputation, and so they determine how an entity is perceived internally and from
outside. With these elements being this important, it would be essential to understand
psychological factors within an organization that impacts ethics and Compliance. A discussion
of these factors is in the sections below:
The Factors
Organizational Culture and Leadership
In the definition of ethics, one's surroundings influence their choice of right or wrong [7]. These
connote the significance of the surrounding environment on the judgments of employees. The
organization's culture that they work for influences their behaviour [7]. Organizations that
ensure an ethical culture prevails within also motivates employees to act ethically. It happens
even without being followed.
Regarding this, Borry conducted in 2017 a survey sampling 51 American firms. Borry wanted
to investigate if organizational behaviour influenced the behaviour of employees. He
discovered that organizations that were fair and just in their day-to-day operations, their
employees were likely to extend the same when dealing with other people. Thirty firms acted
ethically based on a Likert scale between 1 and 10; they scored above 7. When integrity was a
priority at an organization, employees were likely also to exhibit high integrity behaviour. The
converse was also true. Organizations that did not treat their employees fairly or that were not
just and revealed integrity malpractices are scoring below four on the Likert scale had
employees who were likely to act unethically and fail to comply with rules and requirements.
Twenty firms cut poor [4].
To ensure that people's attitudes and behaviour are motivated to act ethically and comply with
requirements, the top management leads by example. This type of behaviour stems from the
fact that employees look at the behaviour of the top management as a model of behaviour that
the entire organization finds an example and should follow. So, when the management practices
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Advances in Social Sciences Research Journal (ASSRJ) Vol. 8, Issue 10, October-2021
Services for Science and Education – United Kingdom
ethical behaviour and complies with requirements, employees receive it as a positive signal.
Top managers should thus be meticulous in whatever they do as they could mislead or direct
an organization's good behaviour [4]. That leadership influences ethical and compliant
behaviour in an organization is supported by empirical evidence, according to Stanford
psychologist Albert Bandura. Bandura's work that majored in observational psychology
revealed that people learn through observing others, imitating them, and modelling their
behaviour. This way, there are four stages of learning; attention, retention, reproduction, and
motivation, "From observing others, one forms an idea of how new behaviours are performed,
and on later occasions, this coded information serves as a guide for action," argues Bandura [1].
Using the evidence herein presented by Bandura and Borry, it is beginning to become clear that
the bad apples argued by Klotz do not crop up in isolation [8]. When a major ethical or legal
breach occurs in an organization, it implies a rotten corporate culture at large within the entire
organization. Therefore, when evaluating organizational behaviour from an ethical and
compliance point of view, it would be essential to assess the effect that the corporate culture
and leadership have on employee behaviour.
Nature of Ethical Codes and Requirements
A code of conduct is a document that outlines expected behaviour and sanctions for failure to
comply with such at an organization. Ethical principles of conduct are as old as human
civilization. Often, they have been replete in religious organizations or civic bodies. As such, the
Mosaic decalogue has been the basis of Judaism, Christianity, and Islam as far as ethical
behaviour is concerned. Ancient Greece also had the Athenian Code of conduct stating what was
permissible and what was not. Moral codes have often been confused with legal principles.
However, this should not be the case; an individual faces no sanctions for violating an ethical
code. However, their obedience to it is of significance. However, there are punishments for not
adhering to legal codes of conduct.
In the work environment where employees suffice, laws govern employees' ethical codes of
conduct. Codes of conduct often fall into three levels: business ethics, professional codes of
conduct, or individual employees' codes of conduct [13]. Since the employees themselves
devise codes of conduct, they will hardly be complicated in such a way that an individual finds
them hard to follow. We are then left with professional and business codes of conduct to analyse
how this affects compliance and ethical practice.
Codes of conduct in the organizational context do not intend to change "bad people" into "good"
people. Instead, they seek to encourage good people to stick to good behaviour. Therefore,
codes should encourage good behaviour amongst people who are already perceived as good as
the perceived bad ones will never heed them. Concerning this, In the words of James Madison,
"If men were angels, no government would be necessary. If angels were to govern men, neither
external nor internal controls on government would be necessary"[5]. From Madison's words,
when designing codes of conduct, organizations should not craft them so as though they
intended to change the deemed to be bad people because they would achieve little. Instead, they
should target the perceived to be good people. According to Gilman, 80% of people in an
organization are good, while only 20% are wrong [5].
To ensure that codes of conduct impact most by encouraging the desired behaviour, they must
be explicit and clear to all people. Otherwise, their complication will make people doubt them