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Ethics
Ethics are standards of conduct and moral judgment used by the people.
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Managerial Ethics
Managerial ethics are the standers behaviors that guide individual managers in
their work. Ethics can affect managerial work in any number of ways. There are
three areas that specially concern by managers.
The three basic areas of concern for managerial ethics are the relationships of
the firm to the employee, the employee to the firm, and the firm to other
economic agents. Managers need to approach each set of relationships from an
ethical and moral perspective.
Managers should attempt to apply judgment to the decisions they make. For
example, this useful framework for guideline ethical decision making suggests
that managers apply a set of criteria based on utility, rights, justice, and caring
when assessing decision options. The resulting analysis allows a manager to
make a clear assessment of whether or not a decision or policy is ethical.
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Principles of Management; Course Code: MGT-111
Both ethical and legal guidelines suggest that hiring and firing decisions should
be based on solely on an individual’s ability to perform the job. A manager who
discriminates against African-Americans in hiring is exhibiting both unethical
and illegal behavior. But consider the case of a manager who does not
discriminate in general, but occasionally hires a close friend or relative when
other applicants might be just as qualified. Although these hiring decisions may
not be illegal, they may be objectionable on ethical grounds.
Wages and working conditions, although tightly regulated, are also areas for
potential argument. For example, a manager playing an employee less than he
deserves, simply because the employee cannot afford quit.
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Principles of Management; Course Code: MGT-111
• Conflict of interest
• Secrecy and
confidentiality
• Honesty
Organization
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Employees
• Hiring and firing
• Wages and working
conditions
• Privacy and respect
Economic Agents
• Customers
• Competitors
• Stockholders
• Suppliers
• Dealers
• Unions
Figure No: 1
There are numerous issues that how employees treat the organization, especially
in regard to conflict of interest secrecy and confidentiality. A conflict of interest
occurs when a decision potentially the individual to the possible determent of
the organization. To guard against such practice, most companies have policies
that forbid buyers from accepting gifts from suppliers. Exposing company
secrets is also clearly unethical. Employees who work for business in highly
competitive industries electronics, software, and apparel for example- might be
tempted to sell information about company plans to competitors. A third area of
concern is honesty in general. Relatively common problems in this area include
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Principles of Management; Course Code: MGT-111
Another disturbing trend is that more workers are calling sick simply to get
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extra time off. I n one recent survey, for instance between 2001 and 2002 the
number workers who reported taking more time off for personal needs increased
by 21 percent.
Managerial ethics also come into play in the relationship between the firm and
its employee with other economic agents. As listed previously in Figure 1.1, the
primary agents of interest include customers, competitors, suppliers, dealers,
and unions. The behavior between the organization and these agents that may be
subject to ethical ambiguity include advertising and promotions, financial
disclosures, purchasing, Shipping, solicitation, bargaining, negotiator and other
business relationships.
Stage 1:
Beginning:
Follow rules to avoid punishment. Acts in own interest and obedience for
one’s own sake.
Stage 2:
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Principles of Management; Course Code: MGT-111
Establishing:
Person lives up to expectation of others. Fulfills duties and obligations of
social system, and lives within guidelines of the law.
Stage 3: 2009
Post Establishing:
Individual follows self-chosen principles of what is justice and right is
also aware the others have different values and seeks solution to ethical
dilemmas.
Action of peer manager and top managers, as well as the organization’s culture,
all contribute to the ethical context of the organization. The starting point in
understanding the ethical context of management is, of course, the individuals
own ethical standards. Some people, for example, would risk personal
embarrassment or lose their job before they would do something unethical.
Other people are much more easily swayed by the unethical behavior they see
around them and other situational factors, and they may even be willing commit
major crimes to further their own career or for financial gain. Organizational
practices may strongly influence the ethical standers of employees. Some
organizations openly permit unethical business practices as long as they are in
the firm’s best interests.
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Principles of Management; Course Code: MGT-111
No No on one, Yes on
two, or
on all all
three
criteria criteria criteria
N Ye
o s
Figure No: 2
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Principles of Management; Course Code: MGT-111
Ethical Leadership: The basic premise behind ethical leadership is that leaders
serve as role models for others; their action is subject to scrutiny. If a senior
executive exercise questionable judgment, this sends a signal to others that such
action are acceptable. This leadership is expected to help set the tone for the rest
of the organization and to help establish both norms and a culture that reinforce
the importance of ethical behavior.
A final set of issues that has emerged in recent times involves information
technology. Among the specific questions in this area are individual rights to
privacy and the potential abuse if information technology by the individuals.
Indeed, online privacy becomes an issue as companies sort out the ethical and
management issues.
Furthermore, companies can offer Web surfers the opportunities to review and
correct information that has collected, especially medical and financial data.
Social Responsibility
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Principles of Management; Course Code: MGT-111
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Principles of Management; Course Code: MGT-111
Figure no: 3
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Principles of Management; Course Code: MGT-111
Some people argue that wedening the interpretation of social responsibility will
undermine the country economy by detracting from the basic mission of
business, to earn profits for owners. Another objection to deeping the social
responsibility of businesses points out tat corporations wield enormous power
and that their activity in social proframs gives them even more power. Still
another argument against soaial responsibility focues on the potential for
conflicts of interest.
As we have seen, some people advocate a large social role for organizations and
others argue that the role is already too large. O rganizations adopt a wide range
of positions on social resposibility.
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Principles of Management; Course Code: MGT-111
but solicitors have too convince the organization that the programs are
worthy of its support.
• Proacative stance: The highest degree of social responsibility that a firm
can exhibit is the proactive stance. Firms adopt this approach take to heart
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the arguments in favour of social respomsibility. They view themselves as
citizens in a society and proactively seek opportunities to contribute.
Degree of social
Obstructionist Defensive Accomodative Procative
Stance stance stance stance
Responsibility
Lowest Highest
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Principles of Management; Course Code: MGT-111
organizations through its tax codes. In fact, the government can influence
hoe organizations spend their social responsibility taka by providing greater
or lesser tax incentives.
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Figure No: 4
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Principles of Management; Course Code: MGT-111
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Principles of Management; Course Code: MGT-111
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Any organization that is serious about social responsibility must ensure that its
efforts are producing the desired benefits. More formally, an organization may
sometimes actually evaluate the effectiveness of its social responsibility efforts.
Additionally, some organizations occasionally conduct corporate social audits.
A corporate social audit is a formal and thorough analysis of the effectiveness
of a firm’s social performance. The audit is usually conducted by a task force of
high-level managers from within the firm.