The Influence of Background on CEO Ethics: Organization & Management

This essay examines the ethics of Chief Executive Officers (CEOs) in the context of organizational management, arguing that a CEO's background, particularly the economic climate during their formative years, significantly influences their ethical decision-making. The authors propose that CEOs who grew up during prosperous economic periods are more prone to engaging in unethical practices, such as backdating, compared to those who experienced economic hardship. The essay explores how organizational culture, especially in large companies, can contribute to ethical misconduct, and it emphasizes the importance of ethical training and programs for managers. Furthermore, it discusses the impact of ethical failures, using examples like Enron and WorldCom, and highlights the role of the management board in selecting and guiding CEOs. The essay also references studies supporting the link between company performance, size, and the likelihood of unethical practices such as backdating, ultimately emphasizing the need for ethical leadership and practices to ensure long-term organizational success and to avoid potential legal and reputational damage.

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Organization and Management: Ethics of the CEOs
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1. The authors are proposing that the ethics of CEOs depends on their background,
specifically on the time when they are growing to become a business professional. The
young age plays significant role in their career decisions. The economic state of that time
influences their future career as well. For example the CEOs who grew during
depression, become extra careful about their professional and personal finances The
CEOs who entered their adulthood during economic boom tend to be more confident and
they take riskier financial decisions. The authors are suggesting that their prosperous time
often lead them to engage in ethical misconducts (Bianchi & Mohliver, 2017). CEOs see
opportunity to expand their business more and increase unethical practice to achieve that
as the havoc profit helps them to hide those practices. Like the practice of backdating was
hugely applied by many CEOs during the early twenty first century (Cragg, 2015). By
investigating the selected CEOs’ educational history and the time when they are getting
their degrees the authors came to a conclusion. They found out that the CEOs of better
economic time tend to practice backdating more than the CEOs who received academic
degrees during worse economic times.
2. The essay is based on only one specific investigation; rest of the discussion is based on
the authors’ assumption. Also a specific duration of time represents a specific group of
CEOs, not all CEOs can be represented by that. The paper mainly focuses on the CEOs
and the economic history of the United States, so CEOs from other countries are difficult
to judge on the basis of these findings. The authors mentioned that they initiated the study
based on the ‘previous findings’. However the previous findings are neither discussed in
detail or with proper data or sources nor are they supported by established facts. So it will
be difficult for the readers to analyze the study neutrally and logically. The similar

ORGANIZATION AND MANAGEMENT
method the authors applied when they are critiquing the CEOs practice of backdating.
They followed a procedures developed by some scholars, which scholars or what the
procedure that is never disclosed. Also backdating is just one of the many unethical
practices by the CEOs in the organizational culture.
3. The authors adopted a mixed research method while constructing the report. The
maximum part of the paper is based on qualitative research where they collected
information for various sources and developed few theories. Based on the qualitative
research they developed their quantitative research. The data analysis is in descriptive
form. They conducted a survey on 2012 CEOs for 10 year regarding their practice of
backdating (Bianchi & Mohliver, 2017). They analyzed the data they collected in the
survey and came to a conclusion.
4. Following are the main findings of the article:
1. The prosperity and wealth of a specific time has immense effect of people’s lives.
They play significantly in the young phase of the business professionals.
2. Each period of time with its own economic characteristic has different effect on the
young business professional aspirants who will become future CEOs.
3. The national and security condition during the economic downtimes shape the
business professional to be extra careful about their finance Chand & Tung, 2014).
4. The people who grew during great economic period tend to adapt and apply risky
financial methods.
5. The economic history of The United States demonstrates a patter where the negative
impact on the business professional of a positive time is evident.

ORGANIZATION AND MANAGEMENT
6. The young adults who grew during prosperous economic period tend to practice
unethical conducts more than the people from worse economic period.
7. The CEOs who completed their graduation during 60s to 80s practice the unethical
practices like ‘backdating’ more than the CEOs from other time.
8. The CEOs who graduated during recession fail to handle large organizations and
profit more.
5. Organizational culture includes the employee activity and management actions. Often it
has been experienced that large companies engage in more ethical wrong practice. As the
article suggests it can be investigated whether the CEOs of such companies grew in the
time of that country’s economic prosperity. High chance is that it will be found their
formative years were during the economic boom (Bianchi & Mohliver, 2017). However it
is not just the influence of time that encourages them to engage in wrong practice, the
individual characteristics and ethical judgment also matter (Wang & Calvano, 2015). The
effect of upbringing in a particular time does not just turn them into people with wrong
ethics; the society they live in also has significant contribution in it. In western society
the dominant practice does not focus on values, beliefs and ethics much which reflect in
their actions. The organizations only focus on profit making which ignores the ethical
values. The organizational culture should not encourage the employee or the management
to participate in ethical misconducts just to ensure temporary profit, as it might damage
the company’s reputation and economy in long run.
6. a) Management engages in many unethical practices to gain maximum profit. The economic
time of their young age should not influence the future professionals to adapt ethical
misconducts. Their education should be designed and implemented in such way it will train them

ORGANIZATION AND MANAGEMENT
to always practice ethics. The practice of backdating causes harm for the CEO and for the
organization. The twenty first century has experienced many organizational scandals mainly
caused by management leadership’s ethical misconducts. The backdating may result in lawsuits
and criminal offences for the management. The ideas that the prosperity during the formative
years of the CEOs can be experienced in real life economic disasters of certain organizations.
b) In case of selecting or choosing a CEO for a company, the management board must consider
the educational background or working experience of the candidates. The ideas proposed by
authors can be helpful the management’s decision making process. If the organization is a large
organization that focuses on a sustainable profit, the ideas should be considered. For a small
company the CEOs with background of surviving recession or worse economic time should be
preferred. The backdating can result in temporary financial profit but can cause harm for the
organization in the longer run.
c) The CEOs take the most significant role in maintaining the law, keeping the industry standards
and always practice ethical conducts (Gitman, Juchau & Flanagan, 2015). The managers should
initiate ethical practices among themselves. The managers must develop an ethical program and
implement the program effectively in their business practice. The activity of the managers must
be evaluated at a regular interval. They might face temptation for easy profit or a moral dilemma,
in such situations, it the managers must not forget the ethical learning the achieved during the
training. The gap between effective leadership and ethical practice must be removed (Eisenbeiss,
van Knippenberg & Fahrbach, 2015). The importance on ethical studies will enhance the
organizational culture (Swanson & Frederick, 2016). Ethical practice will bring psychological
and practical change in the mindsets of the CEOs. The improved work culture will result in more
company profitability.

ORGANIZATION AND MANAGEMENT
7)
Bazerman and Sezer discussed how ethics plays significant role in the CEOs decision making
process. The CEOs takes managerial decision, manages profiling, handles project risks and the
whole of the company activities. The ethical misconducts caused a number of business failure in
the first part of the twenty first century. The Enron and WorldCom controversies are examples of
ethical failure in business (Bazerman & Sezer, 2016). The incidents match with the authors’ idea
as the responsible people associated in the mal practice were graduated during 60s, 70s or 80s.
The company should encourage the CEOs to be more honest. On the other hand The CEOs take
responsibility to make the company implement ethical practices in every situation. They will also
initiate ethical practices among the employees.
Veld and Wu discussed that from 1996 to 2002 13.6% of the CEOs practiced backdating. If the
management board lead by the CEO is smaller in size they tend to be more efficient. The
profitability, company age and company size play the main drivers for CEOs to adapt
backdating. If the company has experienced lower finance performance in the previous year, the
chance of backdating is higher. This detail empirical study supports the idea of backdating in the
article in discussion.
8)
a) In ethical practice leaders and managers are responsible for other members’ ethical behavior
along with their own (Bazerman & Sezer, 2016).

ORGANIZATION AND MANAGEMENT
b) “Firms often argue that option backdating is essential to restore incentives and to retain
talented executives.” (Veld & Wu, 2014).

ORGANIZATION AND MANAGEMENT
Reference
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making. Organizational Behavior and Human Decision Processes, 136, 95-105.
Bianchi, E., & Mohliver, A. (2017). CEOs Who Began Their Careers During Booms Tend to Be
Less Ethical. Harvard Business Review. Retrieved 22 August 2017, from
https://hbr.org/2017/05/ceos-who-began-their-careers-during-booms-tend-to-be-less-
ethical
Chand, M., & Tung, R. L. (2014). The aging of the world's population and its effects on global
business. The Academy of Management Perspectives, 28(4), 409-429.
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Analyzing the relationship between CEO ethical leadership and firm
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Gitman, L. J., Juchau, R., & Flanagan, J. (2015). Principles of managerial finance. Pearson
Higher Education AU.

ORGANIZATION AND MANAGEMENT
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