Running head: ETHICS AND ORGANIZATIONAL CULTURE

Ethics and Organizational Culture in Non-profit Organizations Kyle R. Snyder Walden University

ETHICS AND ORGANIZATIONAL CULTURE Abstract Unethical behavior in a public or non-profit organization can lead to public distrust, misallocation of resources, and corruption at various levels within an organization. The Big Hook Society, between 2007 and 2014, encountered numerous attempts to remedy unethical behavior among its members. Stemming from the senior administrator level through the volunteer network the unethical practices were challenged by members from within the organization. After adopting new standards, ethical guidelines, and utilizing new internal and external control the organization began to crumble as numerous individuals were unwilling to adapt to the new standards. This eventually led to the organization utilizing the ethical decision making process and determining the proper action needed to remedy the ethical and organizational culture issues within the Big Hook Society. Keywords: Big Hook Society, ethical decision making, organizational culture, non-profit administration

ETHICS AND ORGANIZATIONAL CULTURE Note: Due to the connections between the author and the organization being addressed the names and events have been changed to allow for confidentiality.

As a society, it is engrained in certain individuals to provide support for their local community and its citizens in need. This can be done through a variety of means such as nonprofits, food banks, and other organizations that have the purpose of investing their profits back into the community. The United States Government has even allocated a special status for these organizations that allows them to operate tax free. With this special status comes great responsibility in the ethics of those entrusted with the organization and operations of the entity. If the individuals entrusted with this power do not establish and follow a strict ethical code then the organization not only loses the public trust, because its actions are counter to its stated mission, but it eliminates an opportunity for assistance to those who need it the most. The ethical standards, moral code, and culture within these organizations must coincide to ensure the principles of the organization are followed and unethical behavior is not tolerated. History The Big Hook Society (BHS) was founded in 2007 in Columbus, Ohio. Following the unexpected death of an individual who worked extensively in the non-profit sector helping underprivileged children, family and friends developed a strategy to continue his efforts. After organizing and developing a strategy they began working to find ways they could fulfill their vision. Although individually each member who helped found the BHS had a talent, which was valuable to the organization, they had a loose structure of leadership based purely on friendship. When big decisions were needed to be made there was no structure for approval and often rested on the individual who had the most power in the situation. This meant that if money was needed

ETHICS AND ORGANIZATIONAL CULTURE to be spent or donated the finance person simply dispersed the money without question. If an event was going to occur, the stake holders would act independently and sign contracts, acquire donations, and advertise things which typically resulted in even further mishandling of organizational resources. The stake holders would then participate in the event, increase the bid value of auction items, never disperse donated items that they wanted for themselves, and rig raffles to allow them to win (typically through proxy names) the items they desired. In 2013, the disorganization and unethical practices of the BHS resulted in major internal organizational conflict and the eventual demise of the organization. Organizational Culture For a non-profit organization to be successful it must first understand the support structure and establish a culture that allows for trust, transparency, and ethical conduct. Cooper (2012) describes Moral Work as doing the right thing in the routine course of daily work (p. 170). If the organizations culture follows this basic principle it will allow for the creation and following of ethical behavior by all who support it. To obtain the ethical sanctity that any public or non-profit organization needs it must first define roles and responsibilities that provide clear lines of authority for its membership. When lines of authority are defined they must also have a secondary method for providing a check and balance of authority. In numerous public organizations the ability for one individual to have unchecked power provides a prime opportunity for corruption. Reliance on the administrators conscience or subjective moral sense of responsibility will always result in the abuse of power (Cooper, 2012, p. 136). Through the disorganization of the BHS, the organization developed unethical norms and practices which were used more for the advantage of its members than for the cause they were designed to help. Money and resources were often used for personal gain, such as sponsoring a

ETHICS AND ORGANIZATIONAL CULTURE $250 hole at one members company golf tournament, lavish dinner meetings, and dispersing donated items to friends and family as gifts instead of utilizing them for the organizations efforts. The close ties of the members as friends, and their unwillingness to challenge any other member, never allowed the organization to develop a code of ethics which would allow for situations like these to be clarified. Cooper (2012) states that A code of ethics can be a mechanism for clarifying and internalizing values of a professional group (p. 149). Resolution In 2012, certain members within the organization began to notice the unethical behavior and realized it had become a part of the organizations culture. In an effort to remedy this, outside individuals were brought in and appointed to leadership roles to help fix the organization and place it back on the ethical path. These individuals knew that The critical task [was] to design a balance between internal and external controls (Cooper, 2012, p. 158) for the organization. A new charter, code of ethics, and accountability structure was implemented after analyzing the lack of internal and external controls. The new controls were enacted and accepted by all as a positive growth for the organization. Over eight months, the new controls were challenged by members who did not fully understand the restrictions that would be placed on them if they continued the unethical behavior. The possibility of conflict among competing values (Ccooper, 2012, p. 158) was always present and eventually came to fruition during the largest fundraising event of the year. Throughout the event individuals were making deals for their friends and giving away items which were against the policy and ethics that were established. When challenged, members of the leadership team often contradicted each other and allowed things to occur that appeared as a blatant disregard for standards and ethics while using opportunities for personal gain. It also

ETHICS AND ORGANIZATIONAL CULTURE gave the appearance of a fragmentation among the leadership team. Although the event still was successful the potential for profits was far below the anticipated goal for the event. Way Forward As an administrator, the corruption and unethical practices at BHS would present numerous challenges. The organization was corrupted from the senior administrator level to the newest employee. When the flags were finally thrown it was the fortitude of certain senior administrators to challenge the others that led to the eventual change within the organization. Through internal controls (code of ethics and policies) and external controls (accountability documentation and balance of power) the organization saw an immediate turn of events. Through continual adaptation and ethical practices being implemented and exercised from the senior leadership the lower level leaders would have followed. The next step would have been to adapt the practices into a sustainable effort and begin the effort to ensure all individuals know the ethics and norms of the organization. Conclusion Following the largest fundraiser of the year the divided leadership team met separately in their respective groups prior to meeting as a whole. It was decided by the Board of Directors that the unethical behavior of the senior leadership had to change or the organization would disband. A meeting was requested and it became apparent that the unethical activity would continue as a lavish catered meal was purchased for the meeting. At the conclusion of the meeting, the BHS Board of Directors resigned after their ethical concerns were ignored and the desire for change was rebutted with retraction of power to the senior leadership. The BHS, in 2014, disbanded as a non-profit organization and is unable to produce documentation for the dissolution of funds.

ETHICS AND ORGANIZATIONAL CULTURE Through ethical controls and organizational culture any public administrator can empower an organization to grow and develop. The uncomfortable nature of challenging senior leaders can be costly but it is through these efforts that organizations are able to maintain the public trust. Using the ethical decisions making process and developing controls that will allow for sustainability public administrators are afforded the tools and opportunities to serve the greater good while maintaining trust, respect, and accountability within their organization.

ETHICS AND ORGANIZATIONAL CULTURE References Cooper, T. L. (2012). The responsible administrator: An approach to ethics for the administrative role. San Francisco, CA: Jossey-Bass.