ETHICS OF MANAGEMENT

ETHICS OF MANAGEMENT
(MANAGERIAL ETHICS)

The term “ethics” is generally used to refer to the rules or principles that define right or wrong conduct. It can be also defined as “the discipline dealing with what is good and bad and with moral duty and obligation”.

“Business ethics is concerned with truth and justice and has a variety of aspects such as the expectations of society, fair competition, advertising, public relations, social responsibilities, consumer autonomy and corporate behavior in the home country as well as abroad.” CD Walton & LRT Hosmer

Types of Managerial Ethics
(By Archie B Carroll)










Moral management: Moral management strives to follow ethical principles and doctrines. Moral managers strive to succeed without violating ethical standards. They seek to succeed while remaining within the bounds of fairness and justice. Such manager under take activities, which ensure that though they engage in legal and ethical behavior, they continue to make a profit. Moral managers always seek to determine wither their action, decisions or behavior are fair to themselves as well as to all the parties involve. In the long run management approach in likely to be the best interest of the organization.


Amoral management: This approach is broadly categorized into two types – intentional and unintentional. Amoral managers pursue profitability as only goal and pay little attention to the impact ob behavior on any of their social stakeholders. They do not interference in their employees’ activities, unless their behavior leads to government interference. The central guiding principles of amoral management is “within the letters of the law, will this action, decision, or behavior help us to make money?”

Immoral Management: It not only ignores ethical concerns, it also actively opposes ethical behavior. Organizations with immoral management are characterized by: -

(a) Total concern for company profit only.
(b) Stress on profits and company success at any cost. Lack of empathy - managers are hardly bothered about other’s desire to be treated fairly.
(c) Laws are regarded as hurdles to be removed or eliminated.
(d) Strong inclination to minimized expenditure.

The basis principles governing: “can be make money with this action, decision or behavior” Thus in immoral management, ethical consideration are immaterial,

Factors that Influence/Affecting Ethical & Unethical Behavior:















Individual Characteristics: No two individuals behave in same manner. They have different and personality variables. Values refer to the basic convictions held by an individual regarding right or wrong. Thus, the personal values managers in organization are quite different values to large extent, determined a person ethical and unethical behavior.

Two such personality variables are ego strength and locus of control. Ego strength refers to the strength of the person’s conviction. People with higher ego strength tend to do what they think is right. Managers with high ego strength are more consistent in their moral judgment and moral action then those with low ego strength. Locus of control, indicate the degree to which people believe that they are the masters of their own fate. Based on a persons locus of control, He can be categorized either as an externals or internal. External believe that what ever happens then in life is due to luck or chance. Internals believe that they control their own destiny. Managers with the internal locus of control are more likely to take responsibility for the consequences of their behavior than managers with an external locus of control.

Structural Variables: Organization structures that create ambiguity and failed to provide clear guidance to managers are most likely to encourage unethical behavior. Some organizations focus only on results, and not on means for achieving them. When people are evaluated only on the basis of their output, they may be compelled to do what ever is necessary to achieve good results. The structural designs of different Organization differ in the amount of time, competition, cost and pressures faced by employees. The greater the pressure on managers, the more likely they are to compromise their ethical standards.

Organization’s Culture: The strength of Organization’s culture has also a great impact on the ethical standards of its employees. An Organization culture that is characterize by a high risk tolerance, of its control and conflict tolerance inmost likely to foster high ethical standards,. Such a work culture encourages managers to be aggressive and innovative and to openly challenge expectations, which they consider to be unrealistic or personally undesirable. Thus, a strong an ethical Organizational culture would exert a positive influence on managers’ ethical behavior.

Issue Intensity: The most important factor that affects a manager’s ethical behavior is the intensity of the ethical issue itself. A manager may consider a certain issue ethical or unethical, depending upon certain factors. These factors are greatness of harm, consensus of wrong, probability of harm, immediacy of consequences, proximity to victims and concentration of effect. The intensity of the ethical issue is great when:
· The number of people harmed is large.
· Everyone agrees that the action is wrong.
· There are greater chances of the act causing harm
· The consequences of the action may be felt immediately.
· The person feels close to the victims.
· The action has serious impact on the victims.


Ethical Guidelines for Manager: To ensure that their decisions and action are ethical managers should strive to follow the guidelines listed below:-

Obeying the law: Managers must ensure that laws are not broken to achieve Organizational objective.

Tell the Truth: In order to build and maintain long-term relationships with reliant stakeholders, it is essential to state the facts clearly and honestly.

Uphold human dignity: People should be treated with respect irrespective of their race, ethnic group, religion, sex or creed. .

Adhere to the golden rule: the Golden Rule, “Do unto others as you would have others do unto you.”

Primum non-nocere (above all, do no harm): Some writers regard this principle as the most important ethical consideration. When pursuing profits, Organizations should ensure hat they do not harm society.

Allow room for participation: This principle advocates the participation of stakeholders in the functioning of an Organization. It emphasizes the significance of knowing the needs of stakeholders, rather than deciding what is best for them.

Always act when you have responsibility: Managers should utilize their capacity and resources to take appropriate action when there is need for it.


Mechanisms for ethical Management: There is no specific method for making employees behave in an ethical manner. However there are a number of mechanisms that help managers create an ethical climate. These include:

Top Management Commitment: Through commitment and dedication to work, top-level managers can act as role models for their Organization. Their behavior can influence the ethical behavior of subordinates.

Code of ethics: A code is a statement of policies, principles or rules that guide behavior. A code of ethics is a formal document that states and Organization’s primary values and the ethical rules.

Ethics committee: An ethics committee establishes policies regarding ethical conduct and resolves major ethical dilemmas faced by the employees of an organization in the course of their work. Establishing a Code of Ethics is not enough; the ethics committee also has to make ethical behavior a part of the organizational culture.

Ethics committee perform the following functions:

(i) Organizing regular meetings to discuss ethical issues.
(ii) Communicating the code to all members of the organization.
(iii) Identifying possible violation of the code.
(iv) Enforcing the code.
(v) Rewarding ethical behavior and punishing the violators.
(vi) Reviewing and updating the Code of Ethics.
(vii) Reporting the activities of the committee to the BoD.

Ethics Audits: It involves the systematic assessment of the adherence of employees to the ethical policies of the organization. They aid in better understanding of the policies and also identify the deviations in conduct that require corrective action.

Ethics Training: The purpose of this training is to encourage ethical behavior. It enables managers to align ethical employee behavior with major organizational goals.

Ethics Hot Line: This is a special telephone line that enables employees to bypass the proper channel for reporting their ethical dilemmas and problems. An executive who investigates the matter and helps resolve the problems of the concerned employee usually handles this line. Such a facility allows the problem to be handled internally and reduces the chances of employees become whistle-blowers.