Abstract

Ethical behaviour is a very important concept. The aim of the research was to examine the impacts of ethical behaviour on the performance of service firms. For the study, ethical behaviour was sub divided into honesty, fairness customer’s service while performance was sub-divided into operational and financial performance.

The objectives of these studies were to find out if employees are aware that ethical conducts have an influence on performance, to know the effects of ethical behaviour on customer satisfaction, and to check employee’s devotion towards ethical conduct as a factor of organization performance. Using questionnaires primary data was obtained from 35 respondents ranging from employees and management.

Descriptive and regression analysis were used to analyze using statistical package for social science version 20, and the results should that ethical behaviour has an effect on performance and it is therefore recommended that The business practitioners should therefore use all the factors and variables associated with the organizational performance to perform timely analysis on the effects of these variables.

The ethical issues have proved to be a great concern because of their immense influence on organizational performance. Thus, the management should advocate and insist on effective ethical attributes from all members of staff.

The behavioural aspect in every organization is very vital ineffective running of all departments of the organization, therefore excellent leadership qualities are very appropriate to enhance vigilant overseeing of all the departments of the organization.

CHAPTER ONE

INTRODUCTION

1.1 Background to the Study

According to Business Dictionary, ethical behaviour refers to acting in ways consistent with what society and individuals typically think are good values. Ethical behaviour turns to be good for business and involves demonstrating respect for key moral principles that include honesty, fairness, equality, dignity, diversity, and individual rights.

Steinberg (1994) argued that ethics in the world of organisation’s business involve “ordinary decency” which encompasses such areas as integrity, honesty, and fairness. Behaving in an ethical manner is seen as part of the social responsibility of individuals in any organization so as to ensure its stability and survival (Adenubi, 2000).

Ethical behaviour is characterized by honesty, fairness and equity in interpersonal, professional, and academic relationships and in research and scholarly activities. Ethical behaviour respects the dignity, diversity, and rights of individuals and groups of people. This definition is not a denial of the existence of other ethical duties with respect to practice, professional service delivery, and research.

Growth is something for which most companies, large or small strive. Small firms want to get big and big firms want to get bigger. Most firms desire growth in order to prosper not just to survive.

Different organisations have different ways of judging their growth as the exits several parameters a company can use to measure its growth. The most meaningful indicator is one that shows progress with respect to organization stated goals.

The ultimate goal of most companies is profit, so net profit, revenue, and other financial data are often utilized as bottom-line indicators of growth.

There are several ways in which organization achieves growth; Joint ventures, licensing, sell off old winners, new markets, new product development, outside financing.

Geetu (2003) reveals that organization cannot ignore ethics. In the absence of ethical behaviour, there would be vices like gender bias, sexual harassment, Poor Working Conditions, discriminatory employment policies.

Peters and Waterman (1982) as cited by Lok (1999) Said it has been observed that more than 85 percent of organizations have developed and distributed organizational codes of conduct so as to significantly affect the ethical conducts of their respective employees.

Suggestions show that the existence of a formal code of ethics will generally ensure the highest standards of behaviour and inhibit unethical conduct amongst organizational members (Rossy2011).  However, experience shows that these formal codes are often undermined by the adherence to informal codes known as norms which are characterized mainly by isolation and solidarity, Chye (2004).

The increased pressure from stakeholders such as consumers, investors, and the community for organizations to behave ethically and in a socially responsible way can no longer be ignored. It is against this background that this study is being conducted to help organizations understand ethical behaviours and it is significant in enhancing organizational growth.

1.2 Statement of Problem

There are some service firms that have existed for a very long time but are not experiencing growth. Some have instead experienced a dramatic decline while others have witnessed a standstill. Unethical behavior accounts for why most firms are not growing.

Kleinhempel (2009) argued that Unethical behavior causes massive costs to organization.  Several studies have shown that organization with illegal records have not only been forced to pay for investigations and fines but have also suffered significant stock price decline and report, on average, lower profitability rates than their law-abiding counterparts.  In fact, many have experienced sharp sales drops, higher equity costs, and severe damage to their reputation among customers and other stakeholders.

Ethical values like honesty, fairness, equality, dignity, diversity are lacking in most service firms hence, both employees and employers cannot effectively and efficiently perform their duties. When this happens firms cannot experience growth.

Late coming, poor customer services, sexual harassment, tax evasion, gender discrimination are some of the vices common in most service firms today. These ills cannot permit the growth of a company honesty, fairness, equality, dignity, diversity, and individual rights.

For instance workers in some service firms like credit unions, banks tend to practice corruption, customers feeling cheated and a result, the clients run away from such firms or organization leading to the decline in the profit margin of the company. This work comes as a tool to assist service firms to improve their ethical behaviours so that they can be experiencing growth.

1.3 Objectives

1.3.1 General Objective

The main objective of the study is to find out if ethical behavior affects performance in a service firm

1.3.2 Specific Objectives

1. To find out if employees are aware that ethical conducts have an influence on performance
2. To know the effects of ethical behaviour on customers satisfaction
3. To check employee’s devotion towards ethical conduct as a factor of organization performance

1.4 Research Questions

1. To find out if employees are aware of the ethical behaviours
2. What are the effects of ethical behaviour on customer satisfaction?
3. To what extent are employees devoted towards ethical conduct as a factor of organization performance?

1.5 Research Hypothesis

HI: Ethical behavior has a positive effect on organizational performance in the service industry

Ho: Ethical behavior does not have a positive effect on organizational performance in the service industry