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 selfinterest, 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
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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
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Purpose + vision
Transperancy
Dialogue + listening
Accountability
Choice
Individual + collective
Fairness + dignity
Integrity
Decentralization
Reflection + Evaluation
 Traci Fenton explains the idea of workplace democracy:
 http://www.youtube.com/watch?v=h28n2qPp74w