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Introduction to managerial ethics


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  • 2. Jayashree Sadri and Sorab SadriMANAGERIAL ETHICSWE WILL EDAL WITH ISSUESCONCERNINGCharacteristics of Ethical Problems .Morality and ethics.AnalysisNormative Philosophy.
  • 3. Jayashree Sadri and Sorab SadriManagerial and Business Ethics Whereas Business Ethics deals with how abusiness entity behaves in relation to the civilsociety in general and its stakeholders inparticular, Managerial Ethics deals with how amanager will react in the face of an ethicaldilemma.
  • 4. Jayashree Sadri and Sorab SadriETHICAL DILEMMA Any action / decision which affects others inways which are beyond their control. Any action wherein there can be more thanone correct interpretation. Any action where values may be at risk.
  • 5. Jayashree Sadri and Sorab SadriResponse to DilemmaTHE MANAGERIAL RESPONSE COULD BE: Consequential: what is in it for me or will it do good to all. Non consequential: some things are right or wrong irrespective of the personae involved or the conditions under which action was taken or when a moral issue is at stake the minority of one is enough.
  • 6. Jayashree Sadri and Sorab SadriCharacteristics of Ethical Problems Extended Consequences. Within the organization Extends to sections of society.Eg. Bribes that change the govt processes.Pollution that affects environmental and public health.Unsafe products that destroy lives.When the judiciary is up for sale.When politics has been criminalized.
  • 7. Jayashree Sadri and Sorab SadriThe Gray Area In Managerial Economics there is no clear cutblack and white segregation as in right or wrongbut a vast gray area with various shades inbetween that depicts reality and is open tointerpretation. Multiple Alternatives present themselves. Not generally dichotomous answers – yes or no. Alternatives need to be considered all the time. No single correct answer or no single bestsolution.
  • 8. Jayashree Sadri and Sorab SadriSome Contradictions Mixed Outcomes. Assumed to be antithetical, directly opposedto financial results and social costs .For example: Pay a bribe and maintain sales volume Make a slightly unsafe product but save on materialand design cost. Social benefits as well financial revenues are alwaysassociated.
  • 9. Jayashree Sadri and Sorab SadriSocial Reality Uncertain Consequences. Not free of risk / doubt. Out comes not known / predictable. Behavior not always predictable. Everything is mutable (in a state of flux)
  • 10. Jayashree Sadri and Sorab SadriIrrational Man Personal Implications. Issues are never impersonal but integral tolives and careers of managers. Performance evaluation related to financialresults. E.g., Delay the installation of pollution controlequipment and Registration of the Company will bealso delayed as planned. Redesign product to reduce material cost even at theprice of lower quality.
  • 11. Jayashree Sadri and Sorab SadriCONTROL SYSTEMS Manager as a part of Control System. Comparison between actual results andplanned objectives. How are the objectives set ? Extrapolation of past results. Correction for present environment. Government regulation. Internationally accepted norms.
  • 12. Jayashree Sadri and Sorab SadriANALYSIS Why do we need analysis ? To achieve a balance between economic andsocial performance. ECONOMIC ANALYSIS. LEGAL ANALYSIS. ETHICAL / PHILOSOPHICAL ANALYSIS.
  • 13. Jayashree Sadri and Sorab SadriEconomic Analysis Relying on impersonal market forces for decisionmaking between economic and social performance. Work force reductions. Plant closure. M &A.Market economy has limited number of resources .Consumers being supplied with highest quality andlowest prices, resources are being most effectivelyand efficiently used.
  • 14. Jayashree Sadri and Sorab SadriLegal Analysis Take a impersonal stand as per the law. Eg. Retrenchment. Plant closure , Wholesaler replacement Underlying belief – In a democracy societyforms its own rules and all its members aretreated justly as possible.
  • 15. Jayashree Sadri and Sorab SadriPhilosophical Analysis Problems have a moral content. Moral standards differ amongst individuals . Because systems of belief – values / priorities,convictions . Beliefs depend upon family background, culturalheritage, religious associations, education etc. Basis is on Normative philosophy. Analyse based on “ Greatest good for greatest nos’
  • 16. Jayashree Sadri and Sorab SadriEHICS AND NORMATIVETHEORY Relates to philosophical analysis. Philosophy – Study of thought and conduct Analysis based on single principle / belief that defineswhat is right , proper or just. Moral reasoning requires understanding ofNormative philosophy. . Normative Philosophy – Study of proper thought andconduct. HOW SHOULD ONE BEHAVE.
  • 17. Jayashree Sadri and Sorab SadriNormative Philosophy Philosophical analysis based on thoughtprocesses. States that a manager should actin accordance with either a single principle ofbehaviour or a single statement of belief . Morality and ETHICS. Morality – Standards of behaviour by whichpeople are judged in relationships to others. Eg. A person in midst of a dessert.
  • 18. Jayashree Sadri and Sorab SadriPhilosophical Positivism Normative philosophers tried to establish a logicalthought process which could decide between right orwrong , good or evil, fair or unfair. But not relevant tomanagerial ethics. All ethical problems are compromises betweeneconomic and social performance, wants and dutiesof an individual. This philosophy helps to some extentto make that compromise. This is what we mean by positivism.
  • 19. Jayashree Sadri and Sorab SadriA General Perception ETHICS. Encompasses a system of beliefs thatsupports a particular view of morality (not necessarilyshared by all).For Example: Smoking in public place. Morality in standards of public behavior. Inter-racial marriages Child labourEthics is thus a system of beliefs. Generallyexpressed in plural. Since people have set ofinterrelated beliefs.
  • 20. Jayashree Sadri and Sorab SadriETHICAL RELATIVISM Are there universal principles for constructing anethical system of belief that is applicable to all thegroups in all cultures at all times ? What we know that moral standards of behavior differbetween groups within a single culture, betweencultures, and between times. Eg. product safetystandards – Mineral water issue. Differences in moral standards and ethical beliefsexist. Perceptions of morally acceptable behaviour fromgeneration to generation.
  • 21. Jayashree Sadri and Sorab SadriETHICAL RELATIVISM Is there any commonality that overrides thedifferences? OR All ethical systems are valid and that a person’schoice is equally valid relative to his upbringing,education, position , culture or country . COMMON THREAD OF ALL ETHICAL SYSTEMS –Members of a group bear some form of resp for thewell being of others in the group.
  • 22. Jayashree Sadri and Sorab SadriCommonality Common Principle that exists across allgroups, cultures and times – Members of groups bear some form ofresponsibility for well being of others . Thiscooperation is necessary for the survival andperpetuation of civil society.
  • 24. Jayashree Sadri and Sorab SadriETHICAL SYSTEMSMankind over its intellectual history ofover 2400 yrs has attempted toestablish ethical systems , major onesare. Eternal Law. Utilitarian Theory. Universalistic Theory. Distributive justice. Personal Liberty.
  • 25. Jayashree Sadri and Sorab SadriETERNAL LAW Ethical Belief . Moral std are given inan eternal law, which isrevealed in Scripture orapparent in nature.Interpreted by religiousleaders, philosophers. Every one to act inaccordance with intre. Problems. Multiple inter.of law. No method to chooseamongst them exceptrationality. Rationality needsabsolute principle orvalue to choose.
  • 26. Jayashree Sadri and Sorab SadriUTILITARIAN THEORY Ethical Belief. Moral std applied tooutcome . Principle is that everyone to act to generategreatest benefit forlargest number. Problems. Immoral acts can bejustified. Benefit – costjustification requiresadditional principle /value.
  • 27. Jayashree Sadri and Sorab SadriUNIVERSALIST THEORY ETHICAL BELIEF Moral std applied to theintent. Principle is that similardecisions are reachedby others in similarcircumstances. Intentions – Duties –Universality . PROBLEMS Immoral acts can bejustified by selfdeceptive / self imppersons. No scale to judge theintent. Interpretation issituation based.
  • 28. Jayashree Sadri and Sorab SadriValues and Principles Universalism and Utilitarianism are based onprinciples . This means that there is atheoretical construct supporting them. Distributive Justice and Personal Libertysystems based on values. This means thatthere is a certain belief determining them.
  • 29. Jayashree Sadri and Sorab SadriDISTRIBUTIVE JUSTICE John Rawls proposes that society is anassociation of individuals who cooperate toadvance the good of all. THERE IS COLLABERATION ANDCONFLICTS. WHY COLLABERATION AND WHYCONFLICTS ?
  • 30. Jayashree Sadri and Sorab SadriRawls Cont’d. Distributive system basis. To each person equally. To each as per need. To each as per contribution. To each as per effort. To each as per competence.
  • 31. Jayashree Sadri and Sorab SadriDistributive Justice Ethical Belief. Moral std based onsingle value – justice Everyone should ensuremore equitable dist ofbenefits, - promote selfrespects-leads to socialco –op. Problems. Interpretation of justice. Equitable dist. Ofbenefits promotessocial co- op ?
  • 32. Jayashree Sadri and Sorab SadriThree Concepts Concepts of absolute equality , absoluteinequality and conditional inequality areimbedded within the larger social reality and itis for the political philosopher to unearththese.
  • 33. Jayashree Sadri and Sorab SadriPERSONAL LIBERTY Proposed by Prof Nozick of Harvard BusinessSchool. Ethical system based on value of liberty. Institution or law that violates individual liberty ,though it may result in increased benefits to othersneeds to be rejected. Society as association of individuals and cooperationbetween individuals necessary for economic gains. Economic gains comes about through exchanges. EXCHANGES MUST BE VOLUNTARY.
  • 34. Jayashree Sadri and Sorab SadriCONT’D. PERSONAL LIBERTY FROM SYSTEM OFEXCHANGES TO ETHICAL SYSTEM. Individuals must be allowed to make informedchoices and these choices are ethical ifextended equally to others.
  • 35. Jayashree Sadri and Sorab SadriPERSONAL LIBERTY Ethical Belief. Moral std based onsingle value – liberty. Act to ensure freedomof choice. Promote marketexchange – leading tosocial productivity. PROBLEM. Can liberty lead tomarket system toexchange and thereonto Social productivity.
  • 36. Jayashree Sadri and Sorab SadriTHE ULTIMATE DILEMMA What should one do ? Balanced use of all ethical systems. Does my decision result in greater benefits thandamages for society not just for the org ? Is the decision self serving or others also would takesimilar decision under similar circumstance. Will our decision increase or decrease willingness ofothers to contribute. Will our decision increase or decrease personalfreedom of others.
  • 37. Jayashree Sadri and Sorab SadriLIBERTY? Liberty is the freedom to do what one wantsas long as it does not impede with what theother does what the other wants. Liberty if unrestrained or ungoverneddegenerates into license. Every Liberty is activated fairly when dutiesand obligations are conjoined with freedomand rights.
  • 38. Jayashree Sadri and Sorab SadriHENCE When we deal with issues concerningManagerial Ethics we need to have a multi-disciplinary view based on positive socialscience. Theories of Sociology, Psychology, PoliticalScience and Economics are often used toexplain positions taken. Bounded Rationality plays a major role inascertaining the preferred option.
  • 39. Jayashree Sadri and Sorab SadriConclusion No single system of belief exists to guidemangers. Are we free to take decisions as we like,especially those that affect others? We have obligations towards others. Difficulty comes in identifying obligations andevaluating alternatives with no single set ofmoral standard. Every manager like every country must makehis/her own history but do so under definiteconditions.
  • 40. Jayashree Sadri and Sorab SadriSOME HOME TRUTHS Theorists who use spirituality extensively toexplain managerial behavior are invariablysoul based thinkers. Theorists who use bounded rationality andpositive philosophy, instead, are invariablymind based thinkers. Those, however, who try to use bothspirituality and rationality tend to be merelytautological and descriptive.