Rebounding from Corruption: Perceptions of Ethics ... - CiteSeerX

Journal of Business Ethics (2006) DOI 10.1007/s10551-006-9027-3

Rebounding from Corruption: Perceptions of Ethics Program Effectiveness in a Public Sector Organization

ABSTRACT. We examine the perceived importance of three organizational preconditions (awareness of formal ethics codes, decision-making techniques, and availability of resources) theorized to be critical for ethics program effectiveness. In addition, we examine the importance of ethical leadership and congruence between formal ethics codes and informal ethical norms in influencing employee perceptions. Participants (n=418) from a large southern California government agency completed a survey on the perceived effectiveness of the organization’s ethics program. Results suggest that employee perceptions of organizational preconditions, ethical leadership and informal ethical norms were related to perceptions of ethics program effectiveness. Based on these findings, organizations should evaluate the presence (or absence) of essential preconditions and take steps to ensure that leaders model espoused organizational values to foster perceptions of effective ethics programs. KEY WORDS: decision making, ethics, leadership, preconditions, program effectiveness

Kathie L. Pelletier is a doctoral student in the School of Behavioral and Organizational Sciences at Claremont Graduate University, 123 East Eighth Street, Claremont, CA 91711; e-mail: [email protected]. Her research interests include organizational ethics, ethical leadership, and women’s issues in the workplace. Michelle C. Bligh is an assistant professor of Organizational Behavior in the School of Behavioral and Organizational Sciences at Claremont Graduate University, 123 East Eighth Street, Claremont, CA 91711; e-mail: michelle. [email protected]. Her research interests include charismatic leadership, political and executive leadership, and organizational culture.

Ó Springer 2006

Kathie L. Pelletier Michelle C. Bligh

Examples in the organizational world over the last two decades illustrate the detrimental impact of unethical decision making, including insider trading scandals on Wall Street (Werhane, 1989) and the Salomon Brothers scandal in 1991 (Sims and Brinkmann, 2002). Other examples of unethical organizational practices include fraudulent billing for Medicaid services, the moral failings of the United States’ tobacco industry (Schwarz, 2001), Enron’s scheme to illegally manipulate prices in California’s energy market, and the subsequent shredding of evidential documents by the consulting firm of Arthur Andersen (Cohan, 2002). In many of these cases, leadership philosophies were blamed for their adverse effect on organizational culture, which in turn had ethical implications for customers and employees within those organizations. These unfortunate outcomes may be a result of the ways organizations and their employees perceive the importance and function of ethical decision-making processes. If the organization does not live up to its code of ethics (if such a code exists), or encourage employees to seek guidance during ethical deliberations, employees might feel that the organization puts ethics on the ‘‘back burner.’’ Coupled with other organizational and societal factors, such as the emphasis on employee quality of life, severe consequences for unethical behaviors, negative political ramifications, and unfavorable media attention, it is clear that organizations need to devote increased attention to ethical issues. In addition, there is growing evidence that unethical decisions often undermine the financial performance of organizations (Clark and Leonard, 1998).

Kathie L. Pelletier and Michelle C. Bligh Now, more than ever, organizations and their members need guidance in creating mechanisms for instilling ethical dialogue and decision making that serve the best interests of their customers and stakeholders. For many organizations, the primary mechanism is the development of a formal ethics program, yet there is a dearth of research on what comprises these programs and what makes them effective. The study of ethics can be defined as ‘‘the discipline relating to right and wrong, moral duty and obligation, moral principles and values, and moral character’’ (Beck, 2002, p. 13). Ethics has also been defined as the rules or principles that define right or wrong conduct (Bartels, 1967). These principles are primarily developed from one’s cognitive moral development (Blasi, 1980; Kohlberg, 1969), value base, or moral philosophies (Cavanagh et al., 1981). Thus, ethical decision making is the process whereby individuals use their moral base to determine whether a certain situation or issue is right or wrong. The purpose of the current study is to examine perceptions of some of the organizational and managerial conditions that may facilitate or hinder ethical decision making, and the implications these findings may have for developing effective ethical programs in the future.

aimed at stimulating morally responsible behavior, what factors should the organization take into account? Researchers have suggested several factors that are within the organization’s control, including the development and communication of formal ethical codes, training in ethical decision making, and the establishment of congruency between stated policy and actual behaviors. Based on these factors, we focused our literature search on models that have direct bearing on the development of an effective ethics program. We will briefly discuss three theoretical models that take as their focus perceptions of ethics program effectiveness before turning to an in-depth discussion of each of the organizational factors in McDonald and Nijhof’s (1999) model. We chose to test McDonald and Nijhof’s (1999) model because it incorporates key variables often included in ethical decisionmaking models, such as importance of ethics codes, decision-making processes, resources, and organizational norms (see Ferrell and Gresham, 1985; Hunt and Vitell, 1986; Trevino and Youngblood, 1990). In addition, their theoretical model presents a number of organizational preconditions for stimulating morally responsible behavior that may have practical implications for the design of ethics programs.

Understanding ethical practices in organizations

Ethical decision-making models

According to the results of a 2002 national survey of 200 cities in the United States, 81.5% of cities with populations over 250,000 have incorporated ethics training, with over two thirds of the cities adopting a code of ethics (West and Berman, 2004). Further, in the 2003 National Business Ethics Survey, 82% of respondents perceived that top management modeled ethical behavior and talked about the importance of ethical decision making (Clark, 2003). The rising interest in ethics among practitioners and academicians has stimulated a growing number of models and empirical studies of ethical decision making in organizational settings (e.g., Bartels, 1967; Ferrell and Gresham, 1985; Hunt and Vitell, 1986; McDonald and Nijhof, 1999; Trevino and Youngblood, 1990). These models attempt to address a critical question: when implementing a program

Ferrell and Gresham (1985) developed a contingency framework for understanding ethical decision making based on three principal antecedents. The first antecedent of ethical decision making considers individual factors (values, beliefs, knowledge, attitudes, and intentions) that an employee brings to the situation. The second takes into account significant others in the organizational setting, and the third antecedent concerns opportunities for ethical/ unethical action. Opportunities for ethical action may result from a favorable set of conditions that facilitate ethical decision making (i.e., establishment of professional codes and corporate policies) or when there are opportunities to receive feedback for the decision (i.e., reward/penalty systems). However, opportunities for unethical action (i.e., lack of ethical expectations, corporate policies not enforced) are also important. Ferrell and Gresham

Ethics Program Effectiveness (1985) found that merely having the opportunity to act unethically actually influenced behavior, and individual factors interacted with organizational factors to influence ethical or unethical decision making. Based on this model, developing a formal ethics program, establishing professional codes and policies, providing ethics training, and establishing appropriate support systems should all be organizational concerns. Hunt and Vitell (1986) prescribed a detailed model that examined the evaluation process in ethical decision making. These researchers identified that intentions, consequences, deontological norms, alternatives and situational constraints may predict or explain certain ethical behaviors. Their model addresses the situation where an individual is presented with an ethical dilemma, and the perception of various possible alternatives. Once the individual perceives the set of alternatives, the researchers suggest that two kinds of evaluations will take place – a deontological evaluation and a teleological evaluation. Deontological evaluation consists of evaluating the inherent rightness or wrongness of the behaviors implied by each alternative; teleological evaluation consists of four constructs ranging from perceived consequences of each alternative for various stakeholder groups, desirability or undesirability of each consequence, probability that each consequence will affect each stakeholder group, and the importance of each stakeholder group. The heart of this model postulates that an individual’s ethical judgments are a function of the person’s deontological and teleological evaluations. Based on Hunt’s and Vitell’s (1986) model, an organization that is seeking to improve ethical decision making should ensure that suitable decision-making processes exist. Those processes should provide mechanisms for involving employees in the decision-making process. Further, decision makers should be exposed to training on deontological evaluation and should be aware of available alternatives to assist them in their decision-making processes. McDonald and Nijhof’s (1999) model expands the conditions beyond those postulated by Ferrell and Gresham and Hunt and Vitell necessary for ethics program effectiveness. McDonald and Nijhof posit that for stimulating morally responsible behavior (the primary objective of an ethics program), three

organizational conditions must be present: awareness of formal organizational goals and corresponding informal norms, suitable decision making procedures and corresponding informal norms, and sufficient distribution of resources. Like Ferrell and Gresham (1985), they also argue that employees must have the necessary skills and personal intentions for ethical behavior prior to gaining employment in the organization. The first factor in this model, awareness of formal goals and corresponding informal norms, necessitates that the organization has a formal ethics code defined in written ethics policies, corporate codes of conduct, ethics handbooks, and/or any written communication that provides ethical guidelines. Further, McDonald and Nijhof (1999) suggest that for these formally stated goals to be effective, informal norms and values must be in place that support and reinforce formal ethical policies. The second factor in the model is defined as the level of official agreement on suitable decisionmaking processes. Since organizations have internal decision structures, it is important to examine the influence of that structure on the degree to which employees can assume responsibility for making decisions when moral issues arise. If employees do not have authority to participate in the decisionmaking process, it becomes difficult for them to live up to certain responsibilities. As with ethics code awareness, procedures for decision making also have an informal component. According to McDonald and Nijhof (1999, p. 136), ‘‘Just as the organizational norms have a formal and informal side, the same is true for the procedures for decision making.’’ For example, informal procedures for decision making are the degree to which discussion about morality is encouraged during the evaluation stage of the decision-making process. Discussion must be legitimized for the employee to feel congruence between informal and formal codes. The last organizational factor in this model concerns the availability of resources. Specifically, are there resources present to facilitate decision makers to act in a responsible way? McDonald and Nijhof (1999) break down resources into four categories: information, finances, existing equipment and time. Decision makers must be able to make informed decisions through access to key information, which may be obtained by

Kathie L. Pelletier and Michelle C. Bligh contacting an ethics ombudsperson or through an ethics hotline. Further, the organization must be in a position, financially, to be able to lose a contract if it is ethical to do so, and to procure necessary ethics training tools. Finally, the decision makers must have the time to seek information to evaluate the appropriateness of their potential decision. We have chosen to focus our study on the organizational level conditions presented in these models, as these factors are critical in influencing ethical decisions and can be the foundation for the development of effective ethics programs. Although the individual factors discussed in previous models (e.g., moral intention and personal values) may also be crucial in determining ethical decision making, they tend to be formed prior to the employee’s entry into the organization. Consequently, they were not examined in this study. Ethics and leadership In addition to the factors outlined above, leadership may play a critical role in fostering an effective ethics program. Schein (1985) notes that top managers attempt to communicate organizational values to employees to shape their behavior. The ethical orientation of the leader, in terms of specific behaviors and traits, is a key factor in promoting ethical behavior in an organization (Posner and Schmidt, 1992). Previous research also suggests that training employees on ethics policies and enhancing decision-making skills is particularly effective when the leader acts as a role model and coach who models, supports, and reinforces good ethical behavior (Baumhart, 1961; Posner and Schmidt, 1984; Schein, 1985; Sims, 1998). These earlier findings suggest that in addition to the preconditions theorized in McDonald and Nijhof’s (1999) model, perceptions of ethical leadership may be another precursor to effective ethics programs. In companies where senior managers and supervisors demonstrate ethical leadership, employees are less likely to observe unethical conduct and are more likely to seek advice when faced with ethical dilemmas (Trevino et al., 1999). When an organization is seeking to re-establish social legitimacy as a result of ethical misconduct, the role

of leadership is crucial for enhancing an ethical culture. Particularly in the public sector, any instance of ethical misconduct is likely to result in negative publicity and loss of public and employee trust. Consequently, it is important for public agencies, as well as private sector organizations, to recruit ethical individuals in key leadership positions to foster an ethical culture. The organization examined in this study was involved in a corruption scandal that implicated top elected and non-elected officials, with litigation spanning three years. To begin re-establishing social legitimacy, the organization implemented an ethics program that has been in place for approximately eighteen months. At the time of data collection, the ethics resource office was in the initial stages of developing an ethics training program for its leaders. To develop a curriculum for the training series, employee perceptions of the conditions for an effective ethics program and ethical leadership were sought. It is important to emphasize that this study measures employee perceptions of ethics program components, program effectiveness, and all model variables; thus, our focus throughout the paper is on how employees perceive relevant components of ethical programs, and cannot be interpreted as factual accounts of actual (objective) variables and outcomes. Nonetheless, employee perceptions can provide critical insights into attitudes toward ethical program components and their effectiveness, and these perceptions are likely to be important correlates of more objective program outcomes. Given this context, the current study has three primary purposes: (1) to empirically test the theoretical model proposed by McDonald and Nijhof (1999) to determine if the three organization level preconditions are important in predicting perceptions of ethics program success in an organization that is currently striving to re-establish public trust; (2) to examine the degree of congruence between formal organizational codes and informal norms, and determine whether this level of congruence is related to perceptions of overall ethics program effectiveness; and (3) to extend McDonald and Nijhof’s model by incorporating perceptions of ethical leadership as an additional precondition for ethics program effectiveness.

Ethics Program Effectiveness Formal ethics codes A formal ethics code can usually be found within the company’s mission statement, the employee handbook, ethics statements and brochures, or other formal written media (Korsgaard et al., 2002; McDonald and Nijhof, 1999). There is a substantial amount of literature focused on the issue of corporate codes of ethics; however, little research has been devoted to examining whether ethics codes are effective in improving ethical decision-making behavior, and the research that has been conducted has produced mixed findings (Clark and Leonard, 1998; Ford et al., 1982; Schwarz, 2001; Stevens, 1999). Ford et al.’s (1982) empirical study reported minimal effects of corporate codes of conduct on employees’ behavior. More than a decade later, Clark and Leonard (1998) found that codes of ethics were not influential in determining a person’s ethical decisionmaking behavior. Although these two studies concluded that corporate codes of ethics were not effective in influencing a person’s ethical decision-making behavior, several studies contradict these findings. Hegarty and Sims (1979) evaluated unethical decision behavior under different policy and organizational environment conditions, and found that ethics policies significantly reduced unethical behavior. In addition, a more recent study found that employees asked ethics officers numerous questions about a recently developed code and directly modified their behavior after having evaluated the ethical code (Schwarz, 2001).

Ethics codes and corresponding informal norms As stated above, a code of ethics is a formally written policy statement that describes an organization’s primary values and the ethical rules it expects its employees to follow. Informal codes or norms, on the other hand, are the values, attitudes, and behaviors that employees perceive, and may be either consistent or inconsistent with formal codes. Informal norms, therefore, influence the degree to which employees perceive that compliance to the ethics codes or policies is supported and rewarded by upper management. With regard to decision-making processes, informal norms encourage deliberation about ethical issues and legitimize discussion about ethical concerns.

We suggest that one of the primary reasons for mixed findings regarding formal ethics codes may lie in the congruence (or lack thereof) between formal and informal ethics codes. As a result, a number of important research questions have yet to be addressed. For example, do organizational members act more ethically simply because a formal code of ethics has been established? What roles do organizational norms play in shaping employee and managerial moral viewpoints and subsequent responses to ethical dilemmas? Further, to what degree are informal codes in alignment with what is written? The congruence of formal and informal codes of ethics thus merits further examination in determining the perceived effectiveness of ethics interventions (Ashkanasy et al., 2000; Baumhart, 1961; Korsgaard et al., 2002; Stevens, 1999). Many organizations formulate and communicate ethical codes in an attempt to influence norms and values (Victor and Cullen, 1988). However, in addition to formal codes, McDonald and Nijhof (1999) also recommend considering informal norms, especially organizational support for responsible behavior through the informal ‘‘reward system.’’ Organizational decision makers have multiple relationships, and if these other individuals do not support and acknowledge ethical behavior, despite official organizational norms, it becomes more difficult for employees to evaluate and act upon their own beliefs of what is viewed as moral behavior. In some cases, organizational norms that delineate the ‘‘right’’ thing to do might conflict with written policies. For example, if organizational norms specify that it is unacceptable to accept a bribe or kickback from a contractor, but the employee witnesses such an action, he or she may experience dissonance between what is stated and what is actually being done. In effect, the written policy will have no credence with the employee because management is implicitly reinforcing another message, one that is not congruent with written policy. Based on the more recent ethics code research, we offer the following hypotheses: H1a: There will be a positive relationship between awareness of formal organizational ethics codes and perceptions of ethics program effectiveness.

Kathie L. Pelletier and Michelle C. Bligh H1b: Perceptions of informal ethical norms will strengthen the relationship between ethics code awareness and perceptions of ethics program effectiveness.

Decision-making processes The second organizational factor in McDonald and Nijhof’s (1999) model refers to suitable decisionmaking processes that increase the likelihood of making ethical decisions. According to French (1984), every organization has an internal decision structure that is comprised of two elements. The organizational or responsibility flowchart delineates levels within the corporate power structure and the corporate-decision recognition rules that are normally described in ethics policy clarify the authority employees have when confronting ethical dilemmas. The internal decision structure has an influence on the extent to which employees can bear moral responsibilities. Similar to French’s (1984) internal decision structure, these processes delineate levels within the decision-making structure and describe the degree of involvement employees should have in the decision-making process. Perceptions of suitable ethical decision-making processes are defined as employees’ beliefs that (1) the organization trains individuals to evaluate alternatives (identify the risks and consequences of the decision), (2) management encourages the use of evaluation techniques when making ethical decisions, (3) management encourages dialogue for discussing and resolving ethical dilemmas, and (4) employees understand the expectations with regard to their level of authority in the decision-making process.

Decision-making processes and informal norms An ethics program should be designed around a formal decision-making process whereby employees are encouraged to participate in ethical deliberations (Hunt and Vitell, 1986). Just as organizational norms have a formal and informal component, so does the decision-making process. Employees should perceive the ethics program as providing resources to guide them in ethical deliberations, as well as accommodating and legitimizing discussion of potential ethical issues.

There are a few studies that have examined the importance of informal norms on ethical behavior and decision making. Ashkanasy et al. (2000) predicted that group and organizational level values would be related to the quality of ethical decision making and tolerance of unethical behavior. In this study, ethical behavior endorsement increased with level in the organizational hierarchy, implying managers lead the way as role models in ethical behavior. Since use of a formal code of ethics was determined by perceptions of others’ use of the code, this study suggests that senior managers play a pivotal role in reinforcing informal norms by disseminating messages of such codes and supporting decision-making processes that stimulate ethical dialogue and promote ethical inquiry. Nwachukwu and Vitell (1997) examined the extent to which organizational culture influences ethical judgments. They found no significant differences in ethical evaluations of advertisements of harmful products in organizations with formal codes of ethics and those in organizations without formal ethics codes. One surprising result from the study was that in organizations that strictly enforced their codes of ethics, employees perceived advertisements on harmful products to be more unethical than those in organizations without formal ethics codes. Hence, the degree of enforcement of ethics policies may be important in influencing ethical judgments. Merely stating company expectations may not be sufficient in influencing employee attitudes and values. Second, it is possible that ethical judgments were moderated by organizational norms regarding ethics. In organizations with formal codes of ethics, it may be the assumption of practitioners that ‘‘someone else’’ (e.g., top management) is mandating specific ethical considerations, and in organizations without formal codes of ethics, individuals may believe that they have to take responsibility for their own decisions. Based on these arguments, the following hypotheses are presented: H2a: There will be a positive relationship between perceptions of ethical decision-making processes and perceptions of ethics program effectiveness. H2b: Perceptions of informal ethical norms will strengthen the relationship between perceptions of suitable decision-making processes and perceptions of ethics program effectiveness.

Ethics Program Effectiveness Availability of organizational resources The previous discussion highlights the body of research that examines the value of ethics codes and decision-making processes, and the importance of congruency between formal and informal norms and processes. These concepts are important and imperative for an ethics program to be successful in educating employees about how to make decisions that are ethical. In addition to these factors, it may be beneficial to examine why decision makers choose alternatives that are questionable. In a recent study, researchers considered both organizational and personal consequences as factors that influenced decision makers to act more or less ethically; specifically, the potential consequences of a decision included enhancement of organizational profit versus enhancement of personal economic well being (Hoffman et al., 1998). The findings suggested that individuals tend to act less ethically when the personal consequences included risking personal economic well being (e.g., the loss of one’s job, loss of pay, demotion) than when the consequences of the decision disadvantaged the profitability of the organization. Similarly, unethical decision making was more prevalent when the participant perceived the organization as relying on the decision in order to survive. Other factors, such as time pressures and organizational financial stability, might exist and may substantially affect the decision-making process. For example, a report on workers, managers, and executives in multiple industries revealed that workers often attributed ethical violations to workplace pressures. These pressures were defined as long hours, sales quotas, job insecurity, balancing work and family, and personal debt (Ethics Officer Association, 1999). These findings correspond to the third organizational level condition in McDonald and Nijhof ’s (1999) model, availability of resources. As defined in their model, this organizational condition is comprised of three facets: the extent to which the organization provides information to all levels of employees regarding the handling of ethical dilemmas (information), the extent to which the employees perceive they have the time to evaluate alternative options (time), and the extent to which the employee perceives the organization to have

sufficient financial resources (money) to choose the most responsible alternative. Based on these factors, we posit the following: H3: There will be a positive relationship between availability of resources (information, time and money) and perceptions of ethics program effectiveness.

Beyond ethical codes, decision making, and resources: the necessity for ethical leadership The old adage ‘‘actions speak louder than words’’ has significance in recent research on ethics. In today’s era of mass media, instances of corruption have been highly publicized, with an emphasis on the negative effects of the unethical behavior on the organization’s employees; consequently, organizations are increasingly realizing that their leaders need to be more sensitive to their moral obligations to stockholders and employees. According to Kanungo and Mendonca (1996), an organization’s survival over the long term is dependent on ethical leadership. Moreover, to the extent the organization’s top leaders model espoused values, employees and stakeholders perceive leaders to be ethical. It is largely accepted that an important function of organizational leadership is to articulate ethical expectations and to establish the norms that govern employee behavior (Bennis and Nannus, 1985). In many organizations, the code of conduct or an ethics code serves as the medium for communicating those expectations with leader values and behaviors serving as the foundation for organizational norms. Schein (1985) asserts that top managers attempt to communicate their organizational values to employees to shape behavior, lead the agency, and develop an ethical organizational culture. The ethically oriented organization is one that has the capacity to reflect on values in the decision-making process and establish how leaders can use these observations in managing the organization (Hood, 2003). According to Kanungo and Mendonca (1996), factors of ethical leadership in creating an ethical orientation include the leader’s use of a participative leadership style, whereby leaders attempt to influence subordinates through empowerment rather than control. They are sincerely motivated by

Kathie L. Pelletier and Michelle C. Bligh a consideration for others and they lead subordinates toward objectives that are in the interest of the entire organization, its members, and the outside community. In addition to communicating organizational values, leaders are also responsible for the organization’s moral climate that reflects the moral development of both leaders and followers. Further, leaders can facilitate the moral development of followers through the implementation of morally appropriate influence strategies and tactics guided by moral intent (Mendonca, 2001). In many organizations, it is the ethics program that provides the strategies and resources (e.g., ethics policy development, leadership training, ethical dilemma evaluation training) that leaders draw upon to aid in that moral facilitation. The existence of ethics codes, decision-making processes and organizational resources are certainly important factors to consider when developing an ethics program; however, we believe ethical leadership is also necessary to complement these factors when seeking to establish an ethical organizational culture. Previous studies have shown that leaders can have a positive or negative effect on subordinate decision making, depending on whether the leader is perceived as ethical and trustworthy or unethical and untrustworthy (Jones and Kavanagh, 1996; Korsgaard et al., 2002; Schwarz, 2001). Jones and Kavanagh (1996) found that subordinates reported higher unethical behavior intentions when their supervisors were perceived as engaging in unethical behavior than when supervisors were perceived as not engaging in unethical behavior, showing that the role of leadership is significant in influencing moral intentions. According to McDonald and Nijhof (1999), ethics programs are likely to be perceived as effective when leaders encourage ethical dialogue, create an environment of trust and provide organizational resources to ensure that ethical decisions are made. With this in mind, we assert that ethical leadership is another important factor that affects employee perceptions of ethics program effectiveness: H4: There will be a positive relationship between perceptions of ethical leadership and perceptions of ethics program effectiveness.

Method Participants A total of 1000 employees in a southern California government agency were randomly selected to participate in the survey process. Out of 925 valid surveys delivered, a total of 418 responded at a response rate of 45.2%. This response rate compares quite favorably to average response rates of 20–30% reported in recent studies (Griffis et al., 2003; Hayes and Kearney, 2001). Of the respondents, 62.2% were female. The mean age of participants was 45 years (sd = 10.10). The length of time employed by the agency ranged from less than one month to 40 years (mean = 9.5 years, sd = 8.5).

Measures A 37-item Perceptions of Ethical Climate questionnaire was embedded in a larger survey administered by the researcher and the agency. Seven items were taken from the Ethics Environment Questionnaire (McDaniel, 1997) and were revised for the purpose of this study. The Perceptions of Ethical Climate assessment consisted of eight scales and was developed by the authors to measure perceptions of ethics program effectiveness (a full list of the items created for this study is provided in Appendix A). All items were presented on a seven-point Likert scale (1 = strongly disagree, 7 = strongly agree) with higher values representing higher levels of agreement. Cronbach’s (1951) coefficient alpha (a), an index of the internal consistency of scale items and a useful estimate of reliability, was calculated on each scale. To measure perceptions regarding organizational level conditions of the model, the Ethics Code Awareness Scale included six items (a ¼ :82), and the Perceptions of Ethical Decision Making Processes Scale contained two items (a ¼ :55). The Perceptions of Ethical Resources Scale was composed of three subscales. The first subscale measured availability of time and included three items (a ¼ :65). The second subscale measured perceptions of sufficient organizational financial resources (a ¼ :90) and contained four items, and the third

Ethics Program Effectiveness subscale measured ethical information provided by the organization and contained three items (a ¼ :83). Perceptions of Informal Ethical Norms were measured using a 5-item scale (a ¼ :82). The scales measuring Perceptions of Ethics Program Effectiveness and Ethical Leadership contained four items (a ¼ :79) and 10 items (a ¼ :90), respectively. The measurement scales were piloted with 30 employees in the professional, administrative, and exempt bargaining units. In total, 15 managers provided qualitative comment on item clarity.

Procedure The questionnaire was distributed to a participant list generated by the payroll department using a random seed algorithm. There were two methods of distribution: paper and pencil and web-based. Participants who did not have access to the agency’s intranet received a paper copy of the survey via interoffice mail and were instructed to mail the survey back to the researcher via confidential interoffice mail. As there were two modes of survey administration, ttests were conducted to determine if there were significant differences between modes of survey administration on the dependent or predictor variables. A significant difference was found between modes of administration on one subscale, decision-

making procedures. Participants who completed the survey online perceived the organization to have suitable decision-making processes more often than those who completed the paper and pencil version. To control for this difference, method of survey administration was entered in the first step of the model.

Results Variable means, standard deviations and intercorrelations are displayed in Table I. We performed hierarchical regression to control for the effects of demographic differences while assessing the main effects of the organizational preconditions and ethical leadership on ethics program effectiveness. Following Cohen et al. (2003), predictors were centered before they were entered into each regression equation. Although perceptions of informal ethical norms and ethical leadership were highly correlated, they did not meet the criteria for multicollinearity (Tabachnick and Fidell, 2001). Ethics code awareness, decision-making processes, availability of resources (information, time and money), and ethical leadership were regressed against perceptions of ethics program effectiveness. For analysis, a five-step hierarchical regression was performed. Demographic variables and method of survey

TABLE I Variable means, standard deviations, and intercorrelations Variable 1. 2. 3. 4. 5. 5. 7. 8. 9. 10. 11. 12.

Gender Age Years of employment Method Awareness Dec. making Info Time Money Informal Ethical leadership Ethics program effectiveness

M

sd

1

45.00 10.10 ).15** 9.45 8.46 ).06 .19** 28.80 7.23 .05 10.39 2.65 .08 12.04 3.50 .01 14.43 3.64 ).06 14.18 5.50 ).05 18.60 6.35 ).10* 43.28 12.64 ).08 16.25 3.93 .06

2

3

4

5

6

7

.36** ).01 .01 .01 .03 .09* .01 .09* .07 .14**

.09* ).08 ).08 ).09* .01 ).11* ).07 ).09* ).05

.04 .12* .07 .11* ).02 ).04 .03 ).11*

.68** .56** .26** .51** .56** .60** .45**

.50** .29** .42** .50** .63** .42**

.30** .49** .50** .53** .56**

8

9

10

11

.33** .43** .77** .43** .74** .84** .26** .66** .65** .63**

Note: *p