Rebounding from Corruption: Perceptions of Ethics Program Effectiveness in a Public Sector Organization Kathie L. Pelletier Michelle C. Bligh ABSTRACT. We examine the perceived importance of three organizational preconditions (awareness of formal ethics codes, decision-making techniques, and availability of resources) theorized to be critical for ethics program effectiveness. In addition, we examine the importance of ethical leadership and congruence between formal ethics codes and informal ethical norms in influencing employee perceptions. Participants (n=418) from a large southern California government agency completed a survey on the perceived effectiveness of the organization’s ethics pro- gram. Results suggest that employee perceptions of organizational preconditions, ethical leadership and informal ethical norms were related to perceptions of ethics program effectiveness. Based on these findings, organizations should evaluate the presence (or absence) of essential preconditions and take steps to ensure that leaders model espoused organizational values to foster perceptions of effective ethics programs. KEY WORDS: decision making, ethics, leadership, preconditions, program effectiveness Examples in the organizational world over the last two decades illustrate the detrimental impact of unethical decision making, including insider trading scandals on Wall Street (Werhane, 1989) and the Salomon Brothers scandal in 1991 (Sims and Brinkmann, 2002). Other examples of unethical organizational practices include fraudulent billing for Medicaid services, the moral failings of the United States’ tobacco industry (Schwarz, 2001), Enron’s scheme to illegally manipulate prices in California’s energy market, and the subsequent shredding of evidential documents by the consult- ing firm of Arthur Andersen (Cohan, 2002). In many of these cases, leadership philosophies were blamed for their adverse effect on organizational culture, which in turn had ethical implications for customers and employees within those organi- zations. These unfortunate outcomes may be a result of the ways organizations and their employees per- ceive the importance and function of ethical deci- sion-making processes. If the organization does not live up to its code of ethics (if such a code exists), or encourage employees to seek guidance during ethical deliberations, employees might feel that the organization puts ethics on the ‘‘back burner.’’ Coupled with other organizational and societal factors, such as the emphasis on employee quality of life, severe consequences for unethical behaviors, negative political ramifications, and unfavorable media attention, it is clear that organizations need to devote increased attention to ethical issues. In addition, there is growing evidence that unethical decisions often undermine the financial perfor- mance of organizations (Clark and Leonard, 1998). Kathie L. Pelletier is a doctoral student in the School of Behavioral and Organizational Sciences at Claremont Graduate University, 123 East Eighth Street, Claremont, CA 91711; e-mail: kathie.pelletier@cgu.edu. Her research interests include organizational ethics, ethical leadership, and women’s issues in the workplace. Michelle C. Bligh is an assistant professor of Organizational Behavior in the School of Behavioral and Organizational Sciences at Claremont Graduate University, 123 East Eighth Street, Claremont, CA 91711; e-mail: michelle. bligh@cgu.edu. Her research interests include charismatic leadership, political and executive leadership, and organiza- tional culture. Journal of Business Ethics (2006) 67:359–374 Ó Springer 2006 DOI 10.1007/s10551-006-9027-3