WHY GOOD MANAGERS MAKE BAD ETHICAL DECISIONS?By: Vinayak M Nagaonkar
What is “Business Ethics”?Set of beliefs about right and wrong behaviour• Moral code- Set of rules- Establishes boundaries of generally accepted behaviour-Different rules often have contradictions• Morality- Social conventions about right and wrong-Widely shared• Virtues - Habits that incline people to do what is acceptable• Vices - Habits of unacceptable behavior• Value system - Scheme of moral values
Why “Business Ethics”?1. Growing distrust of corporate activity in financial dealings; environmentalprotection; health and safety; and claims about questionable payments2. Emphasis on improving the quality of life - health, leisure time, working conditions,fresh air and water3. Heavy penalties that the corporation and its managers are having to pay whencaught in unethical or illegal behavior4. Growing power of special interest groups to impact corporate activity5. Level of publicity generated by these forces
Why Good Managers Make Bad Ethical Decisions?Ethical &LegalSituational Ethical DilemmasEthical butIllegalUnethicalbut LegalUnethical &Illegal
Why Good Managers Make Bad Ethical Decisions?Factors influencing Unethical Decisions:• Commercial Bribery• Gift-giving and Gift-taking• Insider Information• Other Conflicts Of Interest• Employee moonlighting• Price-fixing in the industry
Determinants of “Ethical/Unethical Decisions”EthicalBehaviourPersonalEthicsDecisionMakingProcessesLeadershipUnrealisticPerformanceGoalsOrganizationCulture
Decision Making “The Ethical Way”Ethical decision-making checklist.• Is my action legal?• Is it right?• Is it beneficial?• How would I feel if my family found out about this?• How would I feel if my decision were printed in the local newspaper?
Decision Making “The Ethical Way”Suggestions for integrating ethical decision making into the firm.• Develop a code of ethics and follow it.• Establish procedures for reporting violations.• Involve employees in identifying ethical issues.• Monitor ethical performance.• Reward ethical behavior.• Publicize ethical efforts.