ETHICS IN MANAGEMENT

1. ETHICS IN MANAGEMENT
DR. JERRY JOHN

2. ETHICS AND ETHICAL BEHAVORIAL
“Character doesn’t stay at home when we go to work”
• What is ethical behavior?
• How can organizations maintain high standards of ethical conduct?

3. WHAT IS ETHICS?
 Derived from Greek word ‘Ethos’
 Refers to:
 Character &
 Sentiments of Society
CONCISE OXFORD DICTIONARY:
Ethics is:
 Relating to morals
 Treating moral questions
 Morally correct
 Honourable

4. ETHICS is the……..
 Rightness & wrongness
 Goodness and badness of human conduct
 About standards and ideals
 About norms and values of certain seriousness
 A standard of behaviour and ideals
 Principle of conduct governing an individual or a profession
 Where a significant number of people do not look at
disdainfully.
 Keeping your promises
 Respecting sentiments of beings.
 Distributing benefits and burdens in a fair and equitable way.
 A diagnostic tool: that establishes/makes:
 Moral standards
 Norms of behaviour
 Judgements on moral behaviours
 Opinions and attitudes about human conduct.

5. DEFINITION OF BUSINESS ETHICS
Business Ethics are:
Normal principles & standards that define right and wrong
behaviours in the world of business.
What is right and wrong is determined by public interest
groups/business organisations.

6. CHARACTERISTICS OF BUSINESS ETHICS
 Deferent with different people
 Ethical decisions
 Not limited to a particular situation
 Affects a wide range of associated situations.
 Ramification widespread
 Involve a trade-off between cost and benefits
 Have dilemmas – exist and persist.
 Every person is individually responsible
 Are voluntary human actions
 Choices, sometimes, are free will
 Sometimes depend upon guided/Govt principles.

7. Ethics and Culture
Excerpt From Universal Declaration of Human Rights
United Nations
• Article 1—All human beings are born free and equal in
dignity and right
• Article 18—Everyone has the right to freedom of thought,
conscience, and religion
• Article 19—Everyone has the right to freedom of opinion
and expression
• Article 23—Everyone has the right to work, to free choice of
employment, to just and favorable conditions of work
• Article 26—Everyone has the right to education

8. NEED FOR BUSINESS ETHICS
 Business operates within the society.
 Business survives on ethical means
 Responsible corporate citizenship and business
 Expectation of public
 Trust of employees.
 Image
 Costs of unethical practices
 Price of best companies
 Overall benefit.

9. Ethics Behavior
• Ethics
– A code of moral standards of conduct for what is
“good” and “right” as opposed to what is “bad” or
“wrong”.
• Ethical Behavior
– That which is “right” or “good” in the context of
governing moral code.
– Ethical behavior is value driven

10. Values
• Values
– Broad beliefs about what is appropriate behavior
• Terminal Values
– Preferences about desired end states
• Instrumental Values
– Preferences regarding the means to desired ends

11. Moral Reasoning
• Moral Reasoning
– Reasons for various ethical practices

12. Ethics and Culture
• Cultural Relativism
– Suggest that there is no one right way to behave;
cultural context determines ethical behavior

13. Ethical Dilemma
Ethical Dilemma
– A situation that, although offering potential
benefits, is unethical.
– One of the most common ethical dilemmas occurs
when a company’s culture conflicts with an
employee’s personal ethics.

14. ORGANIZATIONAL ETHICS
MANAGEMENT TIPS
Checklist for dealing with ethical dilemmas
– Step 1. Recognize the ethical dilemma.
– Step 2. Get the facts.
– Step 3. Identify your options.
– Step 4. Test each option: Is it legal? Is it right? Is it
beneficial?
– Step 5. Decide which option to follow.
– Step 6. Take action.

15. Ethics and Work
The Wall Street Journal reports:
• 36% of workers calling in sick are lying.
• 35% keep quiet about co-worker misconduct.
• 12% of job resumes contain falsehoods.
• Managers are more likely than other workers to
report wrongdoing.
• Managers with 0–3 years experience feel most
pressure to violate personal ethics.

16. Rationalizing Unethical Behavior
Four reasons
 1. “What I’m doing is not really illegal.”
 2. “My behavior is in everyone’s best
interests.”
 3. “Nobody will ever find out what I’ve
done.”
 4. “The organization will protect me.”

17. ETHICS AND ETHICAL BEHAVORIAL
Organizational Ethics
• Personal and contextual factors influence ethical
conduct
• Training in ethical decision making may improve
ethical conduct
• Protection of whistleblowers may encourage ethical
conduct
• Managers acting as positive role models may
motivate others toward ethical conduct
• Formal codes of ethics set standards for ethical
conduct

18. ORGANIZATIONAL ETHICS
Ethics Training
• Ethics Training
– Seeks to help people understand the ethical
aspects of decision making and to incorporate
high ethical standards into their daily behavior.
• Code of Ethics
– A formal statement of values and ethical
standards

19. What Are Unethical Business Practices?
Surveys have identified the following recurring
themes to prominent everyday ethical issues facing
businesses and their stakeholders:
• Managers lying to employees
• Office nepotism and favoritism
• Taking credit for other’s work
• Receiving/offering kickbacks
• Stealing from the company
• Firing an employee for whistle-blowing
• Padding expense accounts
• Divulging confidential information or trade secrets
• Terminating employment without sufficient notice
• Using company property/materials for personal use

20. What Are Unethical Business Practices?
• The most unethical behavior, per one survey, happens
in the following areas:
– Government
– Sales
– Law
– Media
– Finance
– Medicine
– Banking
– Manufacturing

21. Why Does Ethics Matter In Business?
• “Doing the right thing” matters to employers, employees, stakeholders,
and the public.
– For companies, it means saving billions of dollars
each year in lawsuits, settlements, and theft
• Tobacco industry
• Dow Corning
– Costs to businesses include:
• Deterioration of relationships
• Damage to reputation
• Declining employee productivity,creativity, and loyalty
• Ineffective information flow throughout the organization
• Absenteeism

22. Five Myths About Business Ethics
• A myth is “a belief given uncritical acceptance by the
members of a group, especially in support of existing or
traditional practices and institutions.”
– Myth 1: Ethics is a personal, individual affair, not a public
or debatable matter
– Myth 2: Business and ethics do not mix
– Myth 3: Ethics in business is relative
– Myth 4: Good business means good ethics
– Myth 5: Information and computing are amoral

23. ORGANIZATIONAL ETHICS
Whistleblowers
Whistleblowers
– Persons who expose organizational misdeeds in
order to preserve ethical standards and protect
against wasteful, harmful, or illegal acts.
– Many whistleblowers were / are fired for their
actions.
– State and federal laws now offer some protection

24. ORGANIZATIONAL ETHICS
Managers
• Management Behavior
– In order to have a positive impact on ethical
conduct throughout an organization, those at the
top must walk the talk.

25. Decision Criteria for Ethical Reasoning
• The following three criteria can be used in ethical
reasoning:
– Moral reasoning must be logical
– Factual evidence cited to support a person’s
judgment should be accurate, relevant, and
complete
– Ethical standards used should be consistent
• A simple but powerful question can be used throughout
your decision-making process in solving ethical dilemmas:
– What is my motivation for choosing a course of
action?

26. Decision Criteria for Ethical Reasoning
 A major aim of ethical reasoning is to gain a clearer and
sharper logical focus on problems to facilitate acting in
morally responsible ways.
 Two conditions that eliminate a person’s moral
responsibility for causing harm are:
 Ignorance
 Inability
 Mitigating circumstances that excuse or lessen a person’s
moral responsibility include:
 A low level of or lack of seriousness to cause harm
 Uncertainty about knowledge of wrongdoing
 The degree to which a harmful injury was caused or
averted

27. Ethical Relativism:
A Self-Interest Approach
• Ethical relativism holds that no universal standards
or rules can be used to guide or evaluate the
morality of an act.
• This view argues that people set their own moral
standards for judging their actions.
• This is also referred to as naïve relativism.
• The logic of ethical relativism extends to culture.

28. Ethical Relativism:
A Self-Interest Approach
• Benefits include:
– Ability to recognize the distinction between individual and
social values, customs, and moral standards
• Problems include:
– Imply an underlying laziness
– Contradicts everyday experience
– Relativists can become absolutists
• Relativism and stakeholder analysis.

29. Utilitarianism: A Consequentialist
(Results-Based) Approach
• The basic view holds that an action is judged as right,
good, or wrong on the basis of its consequences.
• The moral authority that drives utilitarianism is the
calculated consequences or results of an action,
regardless of other principles that determine the
means or motivations for taking the action.
• Utilitarianism includes other tenets.

30. Utilitarianism: A Consequentialist
(Results-Based) Approach
• Problems with utilitarianism include:
– No agreement exists about the definition of the “good” to be
maximized
– No agreement exists about who decides
– How are the costs and benefits of nonmonetary stakes
measured?
– Does not consider the individual
– Principles of rights and justice are ignored
• Utilitarianism and stakeholder analysis.

31. Universalism: A Deontological (Duty-Based)
Approach
• The major weaknesses of universalism and Kant’s
categorical imperative include:
– Principles are imprecise and lack practical utility
– Hard to resolve conflicts of interest
– Does not allow for prioritizing one’s duties
• Universalism and stakeholder analysis.

32. Rights: An Entitlement-Based
Approach
• Moral rights are based on legal rights and the principle of
duty.
• Rights can override utilitarian principles.
• The limitations of rights include:
– Can be used to disguise and manipulate selfish, unjust
political interests and claims
– Protection of rights can be at the expense of others
– Limits of rights come into question
• Rights and stakeholder analysis.

33. Justice: Procedures, Compensation,
Retribution
• The principle of justice deals with fairness and equality.
• Two recognized principles of fairness that represent the
principle of justice include:
– Equal rights compatible with similar liberties for
others
– Social and economic inequality arrangement
• Four types of justice include:
– Compensatory
– Retributive
– Distributive
– Procedural

34. Justice: Procedures, Compensation,
Retribution
• Problems using the principle of justice include:
– Who decides who is right and who is wrong?
– Who has moral authority to punish?
– Can opportunities and burdens be fairly
distributed?
• Justice, rights, and power are really intertwined.
• Two steps in transforming justice:
– Be aware of your rights and power
– Establish legitimate power for obtaining rights
• Justice and stakeholder analysis.

35. Immoral, Amoral, Or Moral
Management
• Immoral management means intentionally going against
ethical principles of justice and of fair and equitable
treatment of other stakeholders.
• Amoral management happens when others are treated
negligently without concern for the consequences of actions
or policies.
• Moral management places value on equitable, fair, and just
concern of others involved.

36. Four Social
Responsibility Roles
• Figure illustrates four ethical interpretations of the
social roles and modes of decision-making.
• The four social responsibility modes reflect business
roles toward stockholders and stakeholders.

37. Approaches to Social Responsibility

39. Reference
• www.Ethics.com
• WWW.Business Ethics.com
• www.Ethical BehaviourinIndia.com
• WWW.Managementethics.com
• Google Search

40. THANK YOU
Keep
Ethics
in
yourself….