Dallas Business Consultant Elijah ClarkDallas Business Consultant Elijah Clark
    by Dr. Elijah Clark

In this blog, I evaluate organizational ethics and how they affect businesses dealing with ethical dilemmas. Within this paper, I summarize how American Express leaders failed to influence their subsidiaries with their ethical standards, and I evaluate the results of the unethical behavior. I further analyze American Express’s Chief Executive Operator and how he views the unethical situation, and I provide insight into his previous ethical actions and beliefs.


Research has found that 75% of employees do not desire to work for companies with poor organizational ethics (Chekwa, Ouhirra, Thomas, & Chukwuanu, 2014). In 2003, many businesses began implementing a new position of ethics officer to satisfy work ethics and increase awareness of positive ethics in business (Chekwa, Ouhirra, Thomas, & Chukwuanu, 2014). Leadership is paramount in exhibiting organizational values that generate ethical orientation (Chekwa, Ouhirra, Thomas, & Chukwuanu, 2014). To avoid financial loss and risking reputation, leaders must remain moral and with an ethically principle-governed mindset (Chekwa, Ouhirra, Thomas, & Chukwuanu, 2014).

Organizational Ethics

Organizational ethics is the study and evaluation of decision-making by business leaders according to moral concepts and judgments (Chekwa, Ouhirra, Thomas, & Chukwuanu, 2014). An ethical theory is a system that provides rules that guide individuals in making right or wrong and good or bad decisions (Abrhiem, 2012). Organizational ethics are determined by unethical behavior and ethical transgressions (Chekwa, Ouhirra, Thomas, & Chukwuanu, 2014). An ethical theory provides a foundation for understanding what is considered to be a moral human being (Abrhiem, 2012). Unethical behavior is regarded as an act, which violates accepted moral norms of behavior (Chekwa, Ouhirra, Thomas, & Chukwuanu, 2014).

Many companies have not implemented codes of ethics within their organization. In addition, many employees in companies with codes of ethics are unaware of the policy (Chekwa, Ouhirra, Thomas, & Chukwuanu, 2014). Nonetheless, it is the responsibility of the business leaders to inform and educate their employees about their policies, considering the leaders can be held accountable when ethics are not satisfied (Chekwa, Ouhirra, Thomas, & Chukwuanu, 2014).

Many business professionals believe that ethics are unimportant in the field of business (Chekwa, Ouhirra, Thomas, & Chukwuanu, 2014). They further believe that the only obligation they have to their business is to maximize profits (Chekwa, Ouhirra, Thomas, & Chukwuanu, 2014). By not implementing or satisfying organizational ethics, it could cost businesses financial loss, risk positive reputation, and increase external pressures (Chekwa, Ouhirra, Thomas, & Chukwuanu, 2014).

Ethical Dilemma

In a multi-part federal investigation of an American Express subsidiary in Utah, American Express was found to have violated consumer protection laws from every stage of the customer experience, from marketing to debt collecting (Markus, 2012). American Express is the country’s biggest credit card issuer by purchase volume (Johnson, 2013; Silver-Greenberg, 2012). Several American Express companies violated the protection laws provided for consumers. The order required American Express to change their business practices so that a similar situation could be avoided in the future (Markus, 2012). The illegal activities were discovered during a routine examination of an American Express subsidiary by The Federal Deposit Corporation and the Utah Department of Financial Institutions (Markus, 2012). American Express was found to have violated federal law in billing, debt collection practices, and marketing (Silver-Greenberg, 2012).

In the same year, Consumer Financial Protection Bureau enforced actions against Capital One and Discover Financial over sales tactics (Silver-Greenberg, 2012). American Express, along with Discover and Capital One failed to monitor their third-party vendors (Silver-Greenberg, 2012). The activity had occurred at American Express Centurion Bank along with American Express Travel Related Services Company, Inc. and American Express Bank, FSB (Markus, 2012). The violations included deception, unlawful late fee charges, age discrimination, failure to report consumer disputes to reporting agencies, and misleading consumers about debt collection (Markus, 2012). In 2012, American Express was required to refund $85 million to customers for illegal card practices that took place between 2002 and spring 2012 (Markus, 2012).

Though the act itself was unethical, American Express leaders fully cooperated with authorities and began their own investigation into the matter, and they eventually found and reported more fraud and violations (Markus, 2012; Silver-Greenberg, 2012). American Express agreed to end the illegal practices of their subsidiaries, fully refund approximately 250,000 consumers who were affected, implement new compliance procedures, and pay a civil monetary penalty of $27.5 million (Markus, 2012).

Kenneth Chenault

As the Chief Executive Officer of American Express since 2001 (Margolis, Walsh, & Krehmeyer, 2006), Kenneth Chenault believes that no matter how strong or ethical a company is, they are going to experience some difficulty (Wharton, 2005). He states that leadership is paramount during these difficult times (Wharton, 2005). According to Cuillla (2011), business ethics deteriorate during busy times and improve during low productivity times. Chenault believes that if leaders cannot be ethical in times of crisis, they will lose credibility and followership (Bulygo, 2013; Wharton, 2005). As a leader, ethics determine what is done in decision-making situations (Abrhiem, 2012). Ethical leaders are concerned about justice, fairness, and treating subordinates equally (Abrhiem, 2012). Leaders with an ethical identity are likely to affect the self-concepts, beliefs, and attitudes of their followers (Hartog, & Belschak, 2012).

As a leader, Chenault has demonstrated his ethical standards after the attack of 2001, in which 11 American Express employees died during the tragedy. Chenault’s first concern and order after the attack was to ensure everyone’s safety. Chenault ordered chartered planes and buses to help stranded cardholders get home, and he later donated one million dollars to families of the lost employees (Barton, 2011; Bulygo, 2013; Wharton, 2005). He believes that if leaders are not focused on moral ethics and integrity, they will not be successful (Bulygo, 2013; Wharton, 2005). Chenault explains that in order to create ethics within an organization, it begins with leadership. The best run companies are the ones that encourage employees to raise issues based on their ethics (Bulygo, 2013). Chenault further explains that social responsibility is paramount for corporate ethics visibility (Margolis, Walsh, & Krehmeyer, 2006). He states that corporate social responsibility is a set of values that American Express lives by. It helps in recognizing people who do the right things and rewards them. In addition, it influences a culture of integrity and accountability (Margolis, Walsh, & Krehmeyer, 2006).


Responding to an unethical situation of its subsidiaries, American Express acted ethically by cooperating and coming forward with valuable information that could help the investigation and the consumer fully be refunded. American Express corrected the matter by putting together plans to correct each of the violations, and strengthening its internal compliance processes. By correcting the matter and admitting to its faults, American Express may have maintained their brand reliability and business ethics standards. Had the situation not been resolved, American Express may have tarnished their brand’s reputation, trust, status, and lost customers because of their unethical tactics.

Businesses are often focused on the pursuit of self-interest and it is human nature to not ask questions about why things are going well (Cuillla, 2011). Situations such as the one with American Express place pressure on organizations and leaders to behave ethically at all times. It was the responsibility of American Express to hold their subsidiaries accountable for their lack of ethics (Hartog, & Belschak, 2012).

To resolve unethical situations in the future, ethics officers in organizations should be implemented to align practices of the workplace with ethics and beliefs of the workplace. By aligning the two, it allows people to become accountable to ethical standards (Chekwa, Ouhirra, Thomas, & Chukwuanu, 2014). Additionally, ethics officers can assist employers in developing codes of ethics, and enforcing ethical codes as needed (Chekwa, Ouhirra, Thomas, & Chukwuanu, 2014). Though ethical concerns in organizations continue to create problems for society, individuals, and effect organizational culture, the extent of the effects of ethics in an organizational culture have yet to fully be explored (Chekwa, Ouhirra, Thomas, & Chukwuanu, 2014).



Abrhiem, T. H. (2012). Ethical leadership: Keeping values in business cultures. Business and Management Review, 2(7), 11–19.

Barton, A. (2011, April 4). The Quiet Lion: Kenneth Chenault. Retrieved December 1, 2014, from http://www.tnj.com/career/rose-grows-concrete

Bulygo, Z. (2013, May 24). Business Lessons from American Express CEO Ken Chenault. Retrieved December 1, 2014, from https://blog.kissmetrics.com/lessons-from-ken-chenault/

Chekwa, C., Ouhirra, L., Thomas, E., & Chukwuanu, M. (2014). An examination of the effects of leadership on business ethics: Empirical study. International Journal Of Business & Public Administration11(1), 48-65.

Cuillla, J. B. (2011). Is Business Ethics Getting Better? A Historical Perspective. Business Ethics Quarterly21(2), 335-343.

Hartog, D., & Belschak, F. (2012). Work Engagement and Machiavellianism in the Ethical Leadership Process. Journal Of Business Ethics107(1), 35-47. doi:10.1007/s10551-012-1296-4

Johnson, A. (2013, March 8). AmEx CEO got $28.5 Million in 2012. Retrieved December 1, 2014, from http://online.wsj.com/articles/SB10001424127887324128504578348844016019814

Margolis, J., Walsh, J., & Krehmeyer, D. (2006, January 1). Building the business case for ethics. Retrieved December 1, 2014, from http://www.corporate-ethics.org/pdf/business_case.pdf

Markus, K. (2012, October 1). CFPB Orders American Express to Pay $85 Million Refund to Consumers Harmed by Illegal Credit Card Practices Newsroom Consumer Financial Protection Bureau. Retrieved December 1, 2014, from http://www.consumerfinance.gov/newsroom/cfpb-orders-american-express-to-pay-85-million-refund-to-consumers-harmed-by-illegal-credit-card-practices/

Silver-greenberg, J. (2012, October 1). American Express Says It Will Refund $85 Million. Retrieved December 1, 2014, from http://www.nytimes.com/2012/10/02/business/american-express-to-refund-85-million.html?_r=0

Wharton. (2005, April 20). AmEx’s Ken Chenault Talks about Leadership, Integrity and the Credit Card Business. Retrieved December 1, 2014, from http://knowledge.wharton.upenn.edu/article/amexs-ken-chenault-talks-about-leadership-integrity-and-the-credit-card-business/

Dr. Elijah Clark

Dr. Elijah Clark

Elijah is a business management consultant. He writes about business marketing, development, branding, technology, and how to develop and use marketing strategies and techniques effectively.
Dr. Elijah Clark

Latest posts by Dr. Elijah Clark (see all)

Cite this article:
Dr. Elijah Clark (March 3, 2015). Consequences of Ethical Decision Making [Web log post]. Retrieved from http://elijahclark.com/consequences-ethical-decision-making/