When carrying out their duties and responsibilities managers may often find themselves confronted with an “ethical dilemma”, which a situation in the manager must decide whether to take a certain course of action that helps another person or group and which is the “right thing to do” even if the action is not in the manager’s own self-interest. In order for the manager to act effectively and appropriately in those instances, he or she needs to have a fundamental understanding of ethics and how ethical principles apply to managers and their organizations.
According to Kelly and Williams, ethics are the inner-guiding moral principles, values, and beliefs that individuals and groups use to analyze or interpret a situation and then decide what is right and the appropriate way to behave. The concept of ethics can be viewed at several levels:
- Individual ethics are personal standards and values that determine how people view their responsibilities to other people and groups and how they should act in situations where their own self-interest is at stake
- Occupational ethics are standards that govern how members of a particular profession, trade or craft should conduct themselves when performing their work-related activities
- Organizational ethics are the guiding principles through which an organization and its managers view their duties and responsibilities to the organization’s stakeholders (e.g., owners, managers, employees, suppliers and distributors, customers and the surrounding community)
- Societal ethics are standards that govern how the members of a society deal with one another in matters that involve issues such as fairness, justice, poverty and individual rights
Van Auken argued that ethical managers demonstrated certain characteristics including:
- Looking out for the interests of others, including customers, employees and minority members of society
- Valuing employees as people as well as workers and giving respect to their family responsibilities, community involvement and religious beliefs
- Not deceiving people and simply telling them what they want to hear rather than the truth
- Not playing psychological games with others, such as blame-shifting, practicing one-upmanship or playing favorites
- Valuing people over pragmatism and recognizing that how things are achieved is just as important as what is achieved.
- Focusing on the ultimate objective or mission (the “ends”) more than rules and regulations (the “means”)
- A commitment to ideals beyond self, such as honesty, fair play, and quality work
Van Auken went on to recommend that managers understand and adhere to several guiding ethical principles when engaging in supervisory behavior:
- The “mission” principle: Stick to the basic mission of the organization (e.g., service, quality, value to the customer) as the day-to-day guide to supervisory behavior and decision making
- The “consistency” principle: Demand the same fair and objective standards from every employee.
- The “constituency” principle: Consider the needs and rights of as many organizational stakeholders as possible in decision making
- The “proactive” principle: Seek to exceed minimum expectations or rules when taking action and strive to find ways to deliver as much as possible to others
- The “holism” principle: Remember to keep the “big picture” in mind at all times and recognize the importance of the personal side of employees in addition to their professional activities, the service side of business along with the profit side and the needs of the minority as well as the majority
Kelly and Williams also offered ethical rules and principles that managers could use to analyze the impact of their decisions on organizational stakeholders:
- The “utilitarian” rule: An ethical decision is one that produces the greatest good for the greatest number of people, which means that managers should compare alternative courses of action based on the benefits and costs of each alternative for different organizational stakeholders
- The “moral rights” rule: An ethical decision is the one that best maintains and protects the fundamental rights and privileges of the people affected by it, which means managers must take into account the effective of each alternative decision on the rights of each affected stakeholder group.
- The “justice” rule: An ethical decision is one that distributes both the benefits and the harms among the organizational stakeholders in a fair, equitable or impartial manner
- The “practical” rule: An ethical decision is one that a manager would have no hesitation communicating to others both inside and outside of the organization because they would find it to be reasonable and acceptable (i.e., consistent with values, norms and standards typically acknowledged and applied within the organization)
Legal and ethical principles are not necessarily the same; however, laws generally reflect the ethical norms at a particular time. Ethical principles are also subject to change over time as societies evolve. Kelly and Williams noted that there are no absolute or indisputable ethical rules or principals, but it has been suggested the following core values arguably transcend political, religious, class and ethnic differences: trustworthiness (i.e., honesty and following through on promises made); respect (i.e., showing consideration for others and treating them as you would like to be treated); responsibility (i.e., perseverance, self-discipline and personal accountability); fairness (i.e., providing equal opportunities and being open-minded); caring (i.e., kindness and compassion); and citizenship (i.e., cooperation and willingness to contribute to the broader community).
Effective managers understand the beliefs and behaviors of ethical individuals and attempt to practice them as they engaged in their managerial roles and activities. Trevino et al. suggested that this means managing with integrity and honesty, inspiring trust from subordinates, treating people the right way and playing fairly and striving for a high level of moral development. In addition, managers must do what they can to create and maintain an ethical organization that is based on ethical leadership (i.e., leader communications regarding ethics and values, role modeling, rewards for ethical behavior and swift and sure discipline for unethical behavior) and structures and systems that support and reinforce ethical behavior (i.e., organizational culture, code of ethics, ethics committee and chief ethics office, ethics training and procedures for anonymous reporting of ethical concerns (“whistleblowing”)).
Sources: M. Kelly and C. Williams, “Business Ethics and Social Responsibility”, in M. Kelly and C. Williams, BUSN: Introduction to Business, Business Ethics and Social Responsibility (Independence, KY: Cengage Learning, 2015); P. Van Auken, http://business.baylor.edu/Phil_VanAuken/EthiclSupvr.html; Josephson Institute’s 2009 Report Card on the Ethics of American Youth Summary (“Universal Ethical Standards”); and L. Trevin, L. Harman and M. Brown, “Moral Person and Moral Manager”, California Management Review, 42(4) (Summer 2000), 128.