When you see top managers like those formerly at Enron, World com,
Tyco International and Imclone being greedy and using financial manipulations,
lying and group pressure to deceive others, you may conclude that corporate
America has no ethics. Although that is by no
means true, what is true is that managers – at all levels in all areas in
all sizes and in all kinds of organizations – will face ethical issues and
dilemmas. For instance, is it ethical for a sales representative to offer a
bribe to a purchasing agent as an inducement to buy ?
Would it make any
difference if the bribe to a purchasing agent came out of the sales rep’s
commission ? is it ethical for someone to use a company car for private use / How about using personal phone calls ?
how would you handle these situations ? As managers plan, organize lead and
control they must consider ethical dimensions.
What do we mean by ethics ? the term ethics refers to rules and
principles that define right and wrong
conduct. In this section we examine the ethical dimensions of managerial
decisions. In this section we examine the ethical dimensions of managerial
decisions. Many decisions that managers make require them to consider who may
be affected – in terms of the result as well as the process. To better
understand the complicated issues involved in managerial ethics, we will look
at four different views of ethics and the factors that influence a person’s
ethics and offer some suggestions for what organizations can do to improve the
ethical behavior of employees.
FOUR VIEWS OF ETHICS
The four perspectives on ethics include the utilitarian view,
rights view , theory of justice view, and integrative social contracts theory.
The utilitarian view of ethics says that ethical decisions are made solely on
the basis of their outcomes or consequences. Utilitarian theory uses a
quantitative method for making ethical decisions by looking at how to provide
the greatest good for the greatest number. Following the utilitarian view, a
manger might conclude that laying off 20 percent of the workforce in her plant
is justified because it will increase the plant’s profitability improve job security
for the remaining 80 percent and be in the best interests of stockholders.
Utilitarianism encourages efficiency and productivity and is consistent with
the goal of profit maximization, however it can result in biased allocations of
resources, especially when some of those affected by the decision lack
representation or a voice in the decision. Utilitarianism can also result in
the rights of some stake holders being ignored.
Another ethical perspective is the rights view of ethics, which is
concerned with respecting and protecting individual liberties and privileges
such as the rights to privacy, freedom of conscience, free speech, life and
safety and due process. This would include, for example protecting the free
speech rights of employees who report legal violations by their employers. The
positive side of the rights perspective is that is pro efficiency by creating a
work climate that’s more concerned with protecting individuals rights that with getting the job done.
The next view is the theory of justice view of ethics. Under this
approach managers impost and enforce rules fairly and impartially and do so by
following all legal rules and regulations. A manger using the theory of justice
perspective would decide to provide the same rate of pay to individuals who are
similar in their levels of skills, performance or responsibility and not base
that decision on arbitrary differences such as gender, personality race or
personal favorites. Using standards of justice also has pluses and minuses. It
protects the interests of those stakeholders who may be underrepresented or
lack power, but it can encourage a sense of entitlement who may be
underrepresented or lack power, but it can encourage a sense of entitlement
that might make employees reduce risk – taking, innovation and
productivity.
The final ethics perspective the integrative social contracts
theory proposes that ethical decisions be based on existing ethical norms in
industries and communities in order to determine what constitutes right or
wrong. This view of ethics is based on the integration of two “contracts” the
general social contract that allows businesses to operate and defines the
acceptable ground rules and a more specific contract among members of a
community that addresses acceptable ways of behaving. For instance in deciding
what wage to pay workers in a new factory in Ciudad Juarez, Mexico managers
following the integrative social contracts theory would base the decision in
existing wage levels in the community. Although this theory focuses on looking
at existing practices the problem is that some of these practices may be
unethical.
FACTORS THAT AFFECT EMPLOYEE ETHICS:
Whether a person acts ethically or unethically when faced with an
ethical dilemma is the result of complex interactions between the stage of
moral development and several moderating variables including individual
characteristics, the organization’s structural design, the organizations
culture and the intensity of the ethical issue.
STAGES OF MORAL DEVELOPMENT:
Research confirms the existence of three levels of moral
development each composed of two stages. At each successive stage, an
individual’s moral judgement becomes less and less dependent on outside
influences.
The first level is labeled preconventional. At this level a
person’s choice between right or wrong is based on personal consequences
involved, such as physical punishment, reward or exchange of favors. Ethical
reasoning at the conventional level indicates that moral values reside in
maintaining expected standards and living up to the expectations of others. At
the principle level, individuals make a clear effort to define moral principles
apart from the authority of the groups to which they belong or society in
general.
INDIVIDUAL’S CHARACTERISTICS: Every person joins an organization with a relatively entrenched
set of values, Our values – developed at a young age from parents, teachers
friends and others represent basic convictions about what is right or wrong.
Two personality variables also have been found influence an
individuals actions according to his or her beliefs about what is right or
wrong: ego strength and locus of control.
Ego strength is a
personality measure of the strength of a persons convictions. People who score
high on ego strength are likely to resist impulses to act unethically and
instead follow their convictions. That is individuals high in ego strength are
more likely to do what they think is right.
Locus of control is a
personality attribute that reflects the degree to which people believe they
control their own fate. People with an internal locus of control believe that
they control their own destinies; those with an external locus believe that
what happens to them is due to luck or chance. How does this influence a
person’s decision to act ethically or unethically ? Externals are less likely
to take personal responsibility for the consequences of their behavior and are
more likely to rely on external forces. Internals on the other hand are more
likely to take responsibility for consequences and rely on their won internal
standards of right or wrong to guide their behavior.
Structural Variables An
organization’s structural design influences whether employees behave ethically.
Some structures provide strong guidance, whereas others create ambiguity and
uncertainty formal rules and regulations and those that continuously remind
employees of what is ethical are more likely to encourage ethical behavior.
Some organizational performance appraisal systems focus exclusively on outcomes.
Outcomes they may be pressured to do “whatever is necessary” to look good on
the outcomes variables and not be concerned with how they got those results.
Recent research suggests that success may serve to excuse unethical behaviors.
Just think of the impact of this type of thinking. The danger is that if
managers take a more lenient view of unethical behaviors for successful
employees other employees will model their behavior on what they see.
Organizations culture The content
and strength of an organization’s culture also influence ethical behavior. An
organizational culture most likely to encourage high ethical standards is one
that’s high are encouraged to be aggressive and innovative are aware that
unethical practices will be discovered and feel free to openly challenge
expectations they consider to be unrealistic or personally undesirable.
The Boeing company for example has a strong culture that has long
stressed ethical dealings with customers employees, the community and
stockholders . to reinforce the importance of ethical behaviors the company
developed a series of serious and thought provoking posters designed to get
employees to recognize that their individual decisions and actions are
important to the way the organization is viewed.
Issue Intensity Similarly a
manger might think nothing about taking home a few office supplies yet be
highly concerned about the possible embezzlement of company funds. These
examples illustrate the final factor that affects a managers ethical issue
itself. As exhibit 5 – 9 shows six characteristics determine issue intensity:
greatness of harm, consensus of wrong, probability of harm, immediacy of
consequences, proximity to victim(s), and concentration of effect. These six
factors determine how important an ethical issue is to an individual .
According to these guidelines the larger the number of people harmed, the more
agreement that the action is wrong, the greater the likelihood that the action
will cause harm, the more immediately that the consequences of the action will
be felt, the closer the person feels to the victim(s) and the more concentrated
the effect of the action on the victim(s) the greater the issue intensity. When
an ethical issue is important – that is the more intense it is – the more we
should expect employees to behave ethically.
IMPROVING ETHICAL BEHAVIOUR
Managers can do a number of things if they are serious about reducing unethical
behaviors in their organizations. They can seek to hire individuals with high
ethical standards, establish codes of ethics and decision rules, lead by
example, delineate job goals and performance appraisal mechanisms provide
ethics training, conduct social audits and provide support to individuals
facing ethical dilemmas.
EMPLOYEE SELECTION
The selection process should be viewed as an opportunity to learn
about an individual’s level of moral development personal values, ego strength
and locus of control.
CODES OF ETHICS AND DECISION RULES
George David, CEO and chairman of Hartford, Connecticut – based
United Technologies Corporation, believes in the power of a code of ethics. The
company has a detailed 16 page ode of ethics, including 35 standards of
conduct. Employees know the behavioral expectations, especially when it comes
to ethics.
Ambiguity about what is and is not ethical can be problem for
employees. A code of ethics a formal statement of an organizations primary
values and the ethical rules it expects its employees to follow, is a popular
choice for reducing that ambiguity. Nearly 95 percent of Fortune 500 companies
how hve codes of conduct.
A survey of companies codes of ethics found their content tended
to fall into three categories
1.
Be
a dependable organizational citizen.
2.
Don’t
do anything unlawful or improper that will harm the organization and
3.
Be
good to customers exhibit 5 – 11 lists the variables included in each of these
clusters.
CLUSTER 1 BE A DEPENDABLE
ORGAISATIONAL CITIZEN
1.
Comply
with safety, health and security regulation.
2.
Demonstrate
courtesy, respect, honesty and fairness.
3.
Illegal
drugs and alcohol at work are prohibited.
4.
Mange
personal finances well.
5.
Exhibit
good attendance and punctuality.
6.
Follow
directives of supervisors.
7.
Do
not use abusive language.
8.
Dress
in business attire.
9.
Firearms
at work are prohibited.
CLUSTER
2 DO NOT DO ANYTHING UNLWAFUL OR IMPORPER THAT WILL HARM THE ORGANIZATION
1.
Conduct
business in compliance with all laws.
2.
Payments
for unlawful purposes are prohibited.
3.
Bribes
are prohibited.
4.
Avoid
outside activities that impair duties.
5.
Maintain
confidentiality of records.
6.
Comply
with all antitrust and trade regulations.
7.
Comply
with all accounting rules and controls.
8.
Do
not use company property for personal benefit.
9.
Employees
are personally accountable for company funds.
10. Do not propagate false or misleading information.
11. Make decisions without regard for personal gain.
