Reidenbach and Robin have identified five stages of moral development with every higher stage bringing an organization closer to more ethical business practices and sacrificing profitability. At the highest stage a company is driven by business processes that are moral rather than profitable. Reidenbach and Robin’s model is based on Lawrence Kohlberg’s notion of personal moral development.
American psychologist Kohlberg opined that moral psychology of humans developed through three levels, with each level having two stages. A person for complete moral development needs to go through these six stages. They start from a stage and gradually move upwards. However, some individuals cannot move to higher stages as they get stuck at lower levels. The three levels described by Kohlberg are: i) pre-conventional level; ii) conventional level; iii) post-conventional level
Delving Deeper into the Model
Pre-conventional level – Pre-conventional level of moral development is found in infants. In stage 1 an infant is motivated entirely externally in form of fear of punishment. In the next stage or stage 2, a child gets inspired by rewards such as chocolate or toys.
Conventional level – In this level an infant grows up and matures as a school goer. In stage 3, a child wishes to be a ‘nice girl’ or ‘good boy’ and takes approvals of tasks from parents, teachers and elders. As a child grows up, he or she approaches stage 4, where following of social customs and abiding by law and order seems right. At this stage a person moves beyond satisfying egoistic needs to recognizing and respecting others’ concerns. According to Kohlberg most adults do not morally develop beyond this stage.
Post-conventional level – This is an autonomous level of morality. In this level, moral values are not just abided by because they guide a society but because these rules are considered to be right and worth adhering to. This is stage 5, where morality is like a contract to keep a society together. Stage 5 sets the groundwork for stage 6 where morality is taken for granted and totally justified. Morality is not merely seen as an idea of mutual advantage but as a part of everyday life.
Reidenbach and Robin based their corporate behavior morality exactly according to Kohlberg’s observations. This author duo argued that organizations show specific behavior that reflects their actual moral development. According to this behavior exhibited a company’s stage of moral development could be adjudged. In creation of a moral standard, the work culture of an organization is crucial. It has been observed that culture of an organization is the determining factor of its morality and also helps in its shaping.
Defining work culture involves analyzing of several terms that are closely associated with organizational behavior and also behavior of its individual members. As an organization is made up of several people its collective behavior is an amalgamation of behaviors exhibited or professed by these individuals. Their individual beliefs, moral values, and attitude towards colleagues all help in carving a work culture and hence moral basis of a company. On analysis it was found that principal sources of corporate values and beliefs are:
- Individual members, particularly those at the top;
- Reinforcing impact of the company’s success in achieving objectives and solving problems.
The second source stems from the type of job a company does and the rewards that follow. Selection of company objective is vital in establishing its morality. A company’s objective could be profit maximization, while for another company it could be welfare for all its employees. Obviously the company with employee welfare as its principal objective would be at a morally higher level compared to the one with profit maximization as goal.
However, Reidenbach and Robin lay emphasis on behavior of top management members as determinant of the level of morality of the concerned organization. It is a known fact that the character and behavior of leaders and mangers has a commanding influence on other members of an organization. Like the moral development of an individual, a company also follows a developmental path. This path could start from any stage but ultimately ends in a totally ethical organization. Ideally there are five stages of moral growth for an organization:
- Amoral organization
- Legalistic organization
- Responsive organization
- Emergent ethical organization
- Ethical organization
Each of these stages has its own set of characteristics.
For an amoral organization the primary objective is making profits at every opportunity. There is no concern for ethics except when caught on the wrong foot. The concern for such an organization is to survive. Single person setups or unorganized companies belong to this category. These organizations do not survive long.
This is the second logical step towards gaining in morality as a company. The organization gets a legal identity and abides by existing laws and regulations. Its focus is still on profit making though is a legal way. The stress here is on sticking to law rather than on morality of an action or procedure. In this case the legality of business and its processes is its morality.
After an organization reaches its ‘legalistic’ stage it aims for the next higher stage of a ‘responsive’ establishment. Though profit making still remains the primary objective, the management attempts at maintaining a balance between profit making and performing right duties. It starts showing interest in societal demands which are more reactive in nature. Mentality is still not proactive, which is a parameter for an ethical organization.
Emerging Ethical Organization
This is the fourth stage in the moral development of an organizational setup. The company starts setting up a greater balance between profit generation and ethical practices. The management begins giving importance to moral values and ethical practices. Conducting business ethically becomes a concern for the organization which also reflects in its work culture.
The Ethical Organization
This is the ultimate level a company could reach morally. In this level the concerned company sets up a perfect balance between ethical business practices and profit making. In this stage doing ‘right’ is given precedence over profit making. Leadership is principle driven with strong stress on ethical practices.
These different stages in moral development of a company represent corporate maturity under a capable leader. A distinct change in values, attitudes, and corporate culture is observable once an organization transforms into an ethical body.