The Relationship between

Ethical Climate and Ethical

Problems within Human
Resource Management

ABSTRACT. The study examines the relationship

between the strength of an organizations ethical
climate and ethical problems involving human
resource management. Data were collected through
a survey of 1078 human resource managers. The
results indicate a statistically significant negative relationship between the strength of an organizations
ethical climate and the seriousness of ethical violations and a statistically significant positive relationship
between an organizations ethical climate and success
in responding to ethical issues. Thus, interventions
that strengthen an organizations ethical climate may
help manage ethical behavior within organizations.

There has been increasing concern about the

prevalence of unethical behaviors within businesses and organizations. Increased media attention has exposed numerous instances of abuses,
scandals, fraud and corruption. This increased
attention directed at unethical behavior has led
to the development of several models of ethical
behavior. Consistent with Lewinian field theory,
most models of the antecedents of ethical
behavior (Dubinsky and Loken, 1989; Ferrell and
Gresham, 1985; Jansen and VonGlinow, 1985;
Trevino, 1986) include both personal (e.g., level
of cognitive moral development) and stiuational
variables (e.g., organizational rewards and punishments).
Theorists generally agree that situational
variables such as organizational climate can affect
ethical behavior of individuals (Deshpande, 1996;
Kelly et al., 1989). Despite consensus regarding
the importance of ethical climate, little empirical
research has been directed to studying the relationship between ethical climate and the occur-

Lynn K. Bartels
Edward Harrick
Kathryn Martell
Donald Strickland

rence of ethical problems within human resource

management. The purpose of the present study
is to address the relationship between the strength
of an organizations ethical climate and ethical
problems within human resource management.
In order to assess this relationship, it is first
necessary to understand ethical climate. There
continues to be confusion regarding the distinction between climate and culture. While some
theorists distinguish between the two concepts
based on type of belief, theoretical foundations,
methodology, etc. (Denison, 1996; Rousseau,
1988), they also emphasize their commonalties.
Others see climate as an element or manifestation of organizational culture (Kelley et al., 1989;
Victor and Cullen, 1988) which is consistent
with our view. That is, we conceptualized ethical
climate as part of the broader concept of culture.
Normative beliefs, a key aspect of ethical climate
as discussed below, can be viewed as a more
observable level of organizational culture (Schein,
1990). Culture is most closely associated with the
deeper levels of beliefs, values and assumptions,
while climate is typically conceptualized as more
observable (Denison, 1996).
Other characteristics of climate are also consistent with our conceptualization of the variable.
Climate researchers have traditionally relied on
quantitative measurement and have viewed
climate as subject to managerial control
(Denison, 1996). Additionally, climate is typically
conceptualized in terms of facets (e.g., climate
for safety, climate for service) (Rousseau, 1988).
The facet of interest in this study is organizational ethics. Jones (1991) defined ethical issues
as present when a persons freely performed

Journal of Business Ethics 17: 799804, 1998.

1998 Kluwer Academic Publishers. Printed in the Netherlands.

800

Lynn K. Bartels et al.

actions have either a positive or negative impact

on others. He emphasized two parts of the
definition: volition and consequences. That is,
the individual dealing with the moral issue must
have a choice. Choices must exist even if the
costs associated with those choices are high. Also,
the choice must have consequences for others.
Examples of ethical issues include not maintaining confidentiality; arrangements with vendors
or consulting agencies leading to personal gain;
and hiring, training or promotion based on
favoritism.
The ethical climate within an organization
may affect how individuals choose to deal with
these ethical issues. Victor and Cullen (1988)
defined ethical climate as a pervasive organizational characteristic that affects how organizational decisions are made. Ethical climate is the
shared perception of what behavior is right
(Cullen et al., 1989). Within an organization,
ethical climate is based on members perceptions
of typical organizational practices and procedures
involving ethics. When an organizational
member is faced with an ethical issue and considers what the organization would want him/her
to do, that consideration is based on the organizations ethical climate. Thus, ethical climate
includes individuals perceptions of organizational
norms regarding ethical behavior.
Two dimensions of ethical climate, strength
and direction, can be examined (Murphy, 1993;
Rousseau, 1988). The direction dimension
involves the content of the norms regarding
ethical behavior and establishes what behaviors
are acceptable or unacceptable. Victor and Cullen
(1987) have focused on the direction dimension
by showing that there are various types of ethical
climates with different definitions of ethical
behavior (e.g., team interest, social responsibility). However, Cullen et al. (1989) acknowledge the strength dimension in one of their
examples where an organizations ethical climate
was fitting, but requires strengthening (p. 61).
The second dimension of ethical climate is
strength which is the extent of control over
behavior exerted by the ethical climate. Strength
involves the pervasiveness of the organizations
norms. In organizations with strong ethical
climates, the norms regarding ethical behavior are

unambiguous and provide clear expectations

regarding ethical behavior throughout the organization. The organization sends clear messages
about what behaviors are expected and the
rewards and punishments within the organization
reinforce those messages. In organizations with
strong ethical climates, behavior is still freely
performed, but the consequences associated with
violating normative expectations will be harsher.
Our measure of ethical climate was designed to
measure the strength of the organizations ethical
climate rather than its content.
Those organizations with strong ethical
climates are likely to clearly communicate the
norms about how to respond to moral issues for
their members. Thus, when faced with an ethical
dilemma, individuals within organizations with
strong ethical climates are likely to choose more
ethical behaviors which result in fewer incidents
of ethical problems within the organization.
Therefore, we hypothesized that human resource
managers working within an organization with
a strong ethical climate will report less serious
ethical problems and more success in dealing
with ethical issues.

Method
Participants
A stratified sampling technique was used to select
6335 human resource managers for inclusion in
our survey from the over 40,000 members of
Society for Human Resource Management
(SHRM). Of the surveys mailed, 29 were
returned to sender as undeliverable, making the
total number of mailed surveys 6306. One
thousand seventy-eight usable questionnaires
were returned, yielding a 17% response rate.
Approximately 55% of the respondents were
male. The largest age group was 4049 years old
(40.4%) and the majority (86.4%) of the respondents had earned a bachelors degree. Most of the
respondents were from the Director/Manager
level (62.1%). Participants primarily came from
large organizations (45.4%) which was defined
as 1000 or more employees.
Demographics for the survey participants were

Ethical Climate
compared with the demographic profile for
SHRM membership. Overall, the characteristics
of our sample matched the characteristics of the
SHRM membership. There were only a few
significant differences. The sample of survey
respondents tended to be slightly older (c2 (3,
n = 1053) = 10.53, p < 0.05) and more senior
(c2 (6, n = 1072) = 14.01, p < 0.05) than general
SHRM membership.

Measures
Ethical Climate Questionnaire. This scale was
designed to measure the strength of organizational norms regarding ethical behavior. Ideally,
it would be preferable to measure both strength
and direction of norms, however practical considerations of the larger study were prohibitive.
Items were written at a general level to describe
the total organization (Schneider and Reichers,
1983). A seven-item scale was developed to tap
the organizational characteristics associated with
ethical conduct (e.g., top management shows a
commitment to ethical business conduct). Three
of the items were positively worded (e.g., criticism of policies and practices is encouraged
around here) and four were negatively worded
(e.g., performance pressures sometimes lead to
unethical conduct around here). For each item,
respondents rated the extent to which the
characteristic described their organizations on a
five-point Likert scale (1 = not at all, 5 = to a
great extent). Scores on this scale were computed
by reverse scoring the negatively worded items
and totaling the responses. The internal consistency reliability for this scale was 0.79.

801

questionnaires which were reviewed by 21 of the

28 focus group members and the SHRM
Research Committee. The final scale consisted
of 37 incidents, events and situations relevant to
HR activities (e.g., using selection instruments
known to be invalid or unreliable, retaliatory
discharge, age discrimination in recruitment and
hiring). Respondents were asked to rate how
serious each problem was in their organization
on a five-point Likert scale (1 = not at all, 5 =
very great). Thus, a 37-item quantitative scale
was administered to the sample of human
resource managers. Overall seriousness scores
were computed by summing the seriousness
ratings across items. The internal consistency reliability for this scale was 0.98. Respondents were
also asked to rate how successful their organization had been in responding effectively to each
problem using a 5-point Likert scale (1 = none,
5 = very much). A successfulness score was
computed by summing the ratings of success
across the 37 items. The internal consistency
reliability for this scale was 0.97.

Procedures
Both measures were developed and administered
as part of a larger study of ethics within Human
Resource Management (Danley et al., 1996).
Surveys were mailed to respondents with directions for completing the questionnaire and
mailing it back to the researchers. Individuals
were assured that their responses would be
confidential.

Results
Ethical Problems Questionnaire. A qualitative
approach was taken to scale development. Four
focus groups with a total of 28 human resource
managers identified ethical problems that involve
human resource management. The focus groups
were asked to generate situations, events and
incidents creating ethical dilemmas for human
resource management. The focus groups were
asked to generate situations, events and incidents
creating ethical dilemmas for human resource
practitioners. These were complied into draft

Based on the mean item scores across items, individuals responding to the survey reported fairly
strong ethical climates within their organizations
(M= 3.61, sd = 0.71). Overall, the respondents
reported few serious ethical problems (M = 2.11,
sd = 1.04) and some success in dealing with
ethical problems (M = 3.62, sd = 1.17) (see
Table I).
To test the hypothesis that human resource
managers working within an organization with

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Lynn K. Bartels et al.

TABLE I
Descriptive Statistics and Intercorrelations (N = 1078)

Measure
1. Climate
2. Seriousness
3. Success

sd

3.61
2.11
3.62

0.71
1.04
1.17

0.32**
0.33 **

0.01

** p < 0.001.

a strong ethical climate would report less serious

ethical problems, a Pearson Product-Moment
correlation was performed. Ethical climate scores
were correlated with the overall seriousness
scores from the Ethical Problems Questionnaire
(r(1076) = 0.32, p < 0.001). This negative correlation indicates that there is an inverse
relationship between ethical climate and the
severity of ethical problems within organizations.
Strong ethical climate is associated with less
serious ethical problems.
Multiple regression analysis was used to
examine the predictors of seriousness of ethical
violations. Two variables were entered into the
prediction model, size of the organization and
ethical climate. Organizational size was entered
into the equation first as a control variable.
Organizational size was positively correlated with
seriousness of ethical problems (r(1076) = 0.15,
p < 0.001), but uncorrelated with the other
predictor, ethical climate (r(1076) = 0.03, ns).
Larger organizations tend to have significantly
more serious ethical problems. The regression
model was statistically significant (F(2, 912) =
57.70, p < 0.001, R2 = 0.11, p < 0.001), indicating that both organizational size and ethical
climate predict the severity of ethical problems
within human resource management.
To examine the relationship between ethical
climate and success in dealing with ethical issues,
a Pearson Product-Moment correlation was
performed. Ethical climate scores were significantly and positively correlated with overall
success scores from the Ethical problems
Questionnaire (r(1076) = 0.33, p < 0.01).
Organizations with stronger ethical climates were
more likely to be successful in dealing with
ethical issues.

A regression analysis was performed to

examine the factors associated with success in
dealing with ethical issues. Seriousness of ethical
problems was used as control variable because
those organizations with more serious ethical
problems may have less success in their attempts
to deal with ethical problems. Both seriousness
of ethical problems and ethical climate were predictive of success in dealing with ethical
problems. The regression model was statistically
significant (F(2, 912) = 67.29, p < 0.001, R2 =
0.13, p < 0.001).

Discussion
Trevino (1986) predicted that ethics will become
increasingly important as service and information
industries become more prevalent. Thus, as we
move toward the year 2000, managers may be
looking for methods of managing ethics within
the workforce. Changing the ethical climate of
the organization may help. Ethical climate may
support norms of ethical behavior that may be
relied on by organizational members when facing
ethical dilemmas.
This study provided support for the relationship between ethical climate and ethical
problems. A strong ethical climate is negatively
related to the seriousness of ethical violations
within an organization. Organizations with clear
ethical norms are likely to have less serious
ethical problems. On the other hand, ethical
climate was positively related to success in dealing
with ethical problems. Organizations with a
strong ethical climate tended to report more
success in handling ethical issues.
Although the percentage of the variance

Ethical Climate
TABLE II
Summary of regression analysis for variables
predicting seriousness of ethical problems
(N = 1078)
Variable
Organizational size
Ethical climate

SE B

3.99
2.28

0.89
0.24

0.14**
0.30**

R2 = 0.11; ** p < 0.001.

TABLE III
Summary of regression analysis for variables
predicting success in dealing with ethical problems
(N = 1078)
Variable
Seriousness of problems
Ethical climate

SE B

0.17
3.28

0.04
0.28

0.15**
0.37**

R2 = 0.13; ** p < 0.001.

accounted for in both seriousness of ethical

problems and success in dealing with ethical
issues could be interpreted as small, it is important to keep in mind the complexity of the
models of ethical behavior (e.g., Trevino, 1986;
Jansen and VonGlinow, 1985; Dubinsky and
Loken, 1989; Ferrell and Gresham, 1985). There
are many factors theorized to predict organizational ethical behavior. Ethical climate is just one
of these proposed variables. Thus, ethical climate
is a significant predictor of ethical behavior in
organizations, but it is just one of several factors
including person variables which influence this
behavior. Nonetheless, this study provides empirical support for ethical climate as a predictor of
organizational ethical behavior.

Strengths and limitations of the study

A large-scale survey of human resource managers
was conducted to determine the strength of the
ethical climate as it relates to the seriousness of
ethical problems and organizational success in
dealing with ethical issues. Trevino (1986) has
identified some of the difficulties inherent in

803

investigating managerial ethical behavior.

Managers are unlikely to allow their ethics to
be directly observed or measured. Nor would it
be acceptable to attempt to manipulate ethical
decision making in the field (p. 601). Because
of these obstacles to studying ethics, she advocated anonymous self-report as a method for
studying managerial ethics. This study employed
such a technique. However, there are obvious
limitations to this methodology including perceptual biases of the respondents and lack of
control over variables.
Another methodological issue that deserves
discussion is the use of human resource managers.
Limiting the sample solely to human resource
managers may reduce the generalizability of the
studys results to other types of managers.
However, previous research and theory report
that human resource management may be supportive of top management in efforts to manage
organizational ethical behavior (Danley et al.,
1996; Martell and Bartels, 1995).

Implications
Ethical climate has an impact on the extent to
which the organization experiences serious
ethical problems. In order to improve the ethical
responses of organizational members, attention
should be focused on changing the organizations
ethical climate through training (Delaney and
Sockell, 1992), codes of ethics (Laczniak and
Inderrieden, 1987), reward systems ( Jansen and
VonGlinow, 1985), etc. Changing the unethical
behavior through ethical climate may have a
significant effect on organizational profitability.
For example, Wimbush and Shepard (1994) cited
industry-based studies estimating that U.S.
businesses lose about $40 billion dollars annually
from nonviolent, unethical behavior. Thus, there
may be incentives for organizations to try to
better manage ethical behavior through ethical
climate.

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Lynn K. Bartels et al.

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Department of Psychology,
Box 1121,
Southern Illinois University at Edwardsville,
Edwardsville, IL 62026-1121,
U.S.A.