Ethical Management

IMMORAL MANAGEMENT What is immoral management? When management’s motives are selfish and it cares only or principally about its own or its company’s gains. If management’s activity is actively opposed to what is regarded as ethical, this suggests that management understands right from wrong and yet chooses to do wrong. Its motives are deemed greedy or selfish. Management’s goals are profitability and organizational success at virtually any price. Management does not care about others’ claims to be treated fairly or justly.

Operating Strategy The operating strategy of immoral management is focused on exploiting opportunities for corporate or personal gain. The main question in this kind of management is “Can we make money with this action, decision, or behavior, regardless of what it takes?” Implicit in this question is that nothing else matters, at least not very much.

Sourses of immoral management Egoism Egoism is often through as the anti-thesis of ethical business Our instinct for survival combined with the everyday objective of being happy would suggest that the pursuit of self-interest is a natural way to organise our lives. Each person ought to do whatever maximises their own self- interest, regardless of how this affects others.

Egoism cont we are all egoists in the sense that all our actions are really motivated by a concern for our own long-term best interest rather than any real feeling for the interests of others. we might act to our short-term disadvantage but only in our long-term best interest. It is even argued that we are deceiving ourselves if we think we are acting in any other way!

‘Invisible hand’ egoism ‘Invisible hand’ egoism is a pragmatic view developed in Adam Smith’s The Wealth of Nations (1776). The argument is that if all entrepreneurs act freely in their own interest then society as a whole benefits. Market forces channels self-interest in the economy so that egoism becomes beneficial for everyone.

Paradox in business world Some business ethicists argue that there is a paradox in the business world. Some of these scholars are Marxist and some others are virtue ethicists. Capitalist economy is based on a certain assumption about human beings. This assumption is that human beings are inherently self-interested or egoist. It is this inherent feature of human beings that leads to profit in business world.

Paradox in business world cont Self-interested individuals are regulated by an invisible hand and this leads to profit which is good for society However, self-interest and egoism is also the sourse of unethical behavour. This means that business in capitalis economies leads to unethical behaviour. Because capitalism is motivated by egoism… How can we move beyond this paradox???

Integrity Strategy Self-governance in accordance with a set guiding principles The task of ethics management is to define and give life to an organization’s guiding values to create an environment that supports ethically environment To instill a sense of shared accountability among employees

Integrity Strategy cont The integrity strategy is characterized by a conception of ethics as the driving force of an organization. Ethical values shape management’s search for opportunities, the design of organizational systems, and the decision-making process. Ethical values in the integrity strategy provide a common frame of reference and serve to unify different functions, lines of business, and employee groups.

Integrity Strategy cont Common features of an integrity strategy: Guiding values and commitments make sense and are clearly communicated. Company leaders are personally committed, credible, and willing to take action on the values they espouse. Espoused values are integrated into the normal channels of management decision making. The organization’s systems and structures support and reinforce its values. All managers have the skills, knowledge, and competencies to make ethically sound decisions on a daily basis.

Ethics programs Ethics programs are typically organizational units that have been assigned the responsibility for ethics initiatives in the organization. According to national surveys conducted, ethics programs typically include the following features: written standards of conduct, ethics training, mechanisms to seek ethics advice or information, methods for reporting misconduct anonymously, disciplinary measures for employees who violate ethical standards, and the inclusion of ethical conduct in the evaluation of employee performance.

Setting Realistic Objectives Top management must establish sales and profit goals that are realistic—goals that can be achieved with current business practices. Under the pressure of unrealistic goals, otherwise responsible subordinates will often take the attitude that “anything goes” in order to comply with the chief executive’s target.

Ethical Decision-Making Processes Many decisions management faces turn out to have ethical implications or consequences. identify the action, decision, or behavior that is being considered and then to articulate all dimensions of the proposed course of action. the individual is asked to subject the course of action to what we call an ethics screen. An ethics screen consists of several select standards against which the proposed course of action is to be compared. The idea is that unethical actions will be “screened out” and that ethical actions will be “screened in.”

Corporate Transparency One of the most recent trends toward the improvement of ethics programs is that of transparency. Corporate transparency refers to a quality, characteristic, or state in which activities, processes, practices, and decisions that take place in companies become open or visible to the outside world. According to Pagano and Pagano, a transparent management approach— “what you see is what you get” code of conduct—will increase your company’s credibility in the marketplace, build loyalty, and help you gain the trust and confidence of those with whom you work.

Workplace Democracy Recently it is believed that more democratic workplaces leads to more ethical businesses. The main idea of the workplace democracy is that the business organizations become more inclusive in their decision making. Current model of business creates a workplace based on fear. This due to the command and control models. Employees have a voice in the democratic workplace. Democratic workplaces have 10 principles in their design

10 principles of democratic workplace Purpose + vision Transperancy Dialogue + listening Accountability Choice Individual + collective Fairness + dignity Integrity Decentralization Reflection + Evaluation Traci Fenton explains the idea of workplace democracy: