Ethics in Management: An analysis
Southern Economist,Volume 45,(11)2006
The core of good management is set of three virtues viz. Ethical Values, Morale and Credibility.
Ethics, as an important aspect in management is gaining attention of business organisations. In the era of fierce competition, business organisations are using all tactics in their arsenal, whether fair or foul to combat competition faced by them. The sole objective is to woo customers who are the human aspect of commercial transaction. It is the customer who is treated as profit and all rest is treated as cost.
The main yardstick for evaluating performance of a business enterprise is profit, its market share, market penetration and market value of its share/stock. Earning profit is not bad, adopting unfair means is bad. Business organisations in general abuse all methods for earning profit .We treat every thing, even human values as secondary when opportunity to earn profit knocks at the door. We even over look how human beings are treated in the organisation, and they are exploited. How body shopping is done. We treat human being as an economic activity. A person becomes uneconomic when he fails to give results. He is looked down and labeled as non-performer. All these and other malice in the organisation are due to the absence of ethical values.
What is Ethics:
Ethics is a branch of philosophy. It is a normative science because it is concerned with the norms of human conduct. It relates to principles or standards of human conduct that governs the behavior of individuals and groups. In fact ethics is a process of rational thinking for deciding what values to hold and when to hold them. It requires continuous realignment of values and reasoning patterns in accordance with ethical principles.
Ethics is the science of morals or code. These are moral principles that govern a person or group’s behaviour. It is knowing what is right or wrong, and then doing the right thing. It includes the fundamental ground rules by which we live our lives. Right is right even if nobody does it and wrong is wrong even if every one does it.
Ethics has two things. First, it refers to well based standards of right and wrong that prescribe what humans ought to do, usually in terms of rights, obligations, benefits to society, fairness, or specific virtues .It also deals with virtues of honesty, compassion, and loyalty.
Secondly, it refers to the study and development of one's ethical standards. It is continuous study of our own moral beliefs and moral conduct, for ensuring that the organisation has standards that are reasonable and solid.
What is Moral:
Moral relates to righteousness or unscrupulousness of human character. It is concerned with or adhering to the code of interpersonal behaviour that is considered right or acceptable in a particular society. It is holding or manifesting of high principles for proper conduct. Moral is the standard behaviour or beliefs that are considered good and acceptable. Moral talks about practicing virtue and discipline. It teaches us goodness. It teaches us that what is good must be good for all. A person is good when he has moral. He is moral when his actions conform to and embody a good will i.e. when his will is good. There has to be active goodness. A passive goodness is good for nothing.
What is Business Ethics:
Business ethics is now being considered a part of management discipline. A business organisation deals with product/service and has relationship with stakeholders. It is knowing what is right or wrong in the workplace and doing what is right. Ethics in the workplace sensitizes leaders and staff in knowing how they should act. Ethics in the workplace can be managed through use of codes of ethics, codes of conduct, roles of ethicists and ethics committees, policies and procedures, procedures to resolve ethical dilemmas, ethics, training, etc.
What is corporate obligation:
The obligation of a corporate has been well enumerated by Swami Ranganathanda in his book “ Eternal Values for a Changing Society” (Volume –IV page 366). According to him “ A Corporation’s obligation are two fold - Internal and External. Internal – to the corporation for continuance and development: to its employees, for their human dignity, development of skills, promotion and security; and to its investors and shareholders, for a reasonable return on their investment. External -- to the state, by way of taxes due; and the consumer, for supply of quality goods at a reasonable price, and to the community at large, by suitable welfare measures”’.
The question about ethics in the economy arises because economic decisions and activities in general are related to other people, which directly or indirectly affect them. Therefore, it is necessary to have moral economic behaviour. It would thus be observed that social responsibility of a corporate is to operate business with higher ethical standards, to adhere to statutory provisions and obligations and to meet public expectations.
What is Duty and responsibility:
Duty and responsibility are two phases of the same coin, which can not be separated from each other. Where there is duty, there is responsibility. Duty without responsibility is unconceivable. These are the commitments in a broader prospective to family, society, nation and institution in which a person is associated. These are the desired behaviour pattern from an individual of common prudence. Desired behaviour pattern is the germination of ethical values.
Duty and responsibility are relationship and position oriented. For example –Parents duty towards children is to take best care of them, educate them, and make them law abiding citizens. Whereas, the duty of children towards parents is to respect them and obey them, have strong character, become educated and earn name for family and nation.
The duty of police is to protect society from evil, arrest crime and create a free, fair, fearless society. Whereas, the duty of the members of society is to be law abiding and provide all support to curb the menace of non law - abiders.
The duty of an employer is to have dignity of labour to give proper and just compensation for the labour put in by them, create conducive working environment, take care of their promotional and elevational needs, have fair and transparent dealings and impartial attitude. Have humanistic values in the organization. On the other hand, employees, duty is to be loyal, to work with dedication, devotion and give their best.
Duty is not duty unless it is consciously done for the sake of duty. To do right is the moral duty. If duty is done for the sake of some ulterior object, though the act may not be illegal but certainly it may not be moral.
Southern Economist,Volume 45,(11)2006
The core of good management is set of three virtues viz. Ethical Values, Morale and Credibility.
Ethics, as an important aspect in management is gaining attention of business organisations. In the era of fierce competition, business organisations are using all tactics in their arsenal, whether fair or foul to combat competition faced by them. The sole objective is to woo customers who are the human aspect of commercial transaction. It is the customer who is treated as profit and all rest is treated as cost.
The main yardstick for evaluating performance of a business enterprise is profit, its market share, market penetration and market value of its share/stock. Earning profit is not bad, adopting unfair means is bad. Business organisations in general abuse all methods for earning profit .We treat every thing, even human values as secondary when opportunity to earn profit knocks at the door. We even over look how human beings are treated in the organisation, and they are exploited. How body shopping is done. We treat human being as an economic activity. A person becomes uneconomic when he fails to give results. He is looked down and labeled as non-performer. All these and other malice in the organisation are due to the absence of ethical values.
What is Ethics:
Ethics is a branch of philosophy. It is a normative science because it is concerned with the norms of human conduct. It relates to principles or standards of human conduct that governs the behavior of individuals and groups. In fact ethics is a process of rational thinking for deciding what values to hold and when to hold them. It requires continuous realignment of values and reasoning patterns in accordance with ethical principles.
Ethics is the science of morals or code. These are moral principles that govern a person or group’s behaviour. It is knowing what is right or wrong, and then doing the right thing. It includes the fundamental ground rules by which we live our lives. Right is right even if nobody does it and wrong is wrong even if every one does it.
Ethics has two things. First, it refers to well based standards of right and wrong that prescribe what humans ought to do, usually in terms of rights, obligations, benefits to society, fairness, or specific virtues .It also deals with virtues of honesty, compassion, and loyalty.
Secondly, it refers to the study and development of one's ethical standards. It is continuous study of our own moral beliefs and moral conduct, for ensuring that the organisation has standards that are reasonable and solid.
What is Moral:
Moral relates to righteousness or unscrupulousness of human character. It is concerned with or adhering to the code of interpersonal behaviour that is considered right or acceptable in a particular society. It is holding or manifesting of high principles for proper conduct. Moral is the standard behaviour or beliefs that are considered good and acceptable. Moral talks about practicing virtue and discipline. It teaches us goodness. It teaches us that what is good must be good for all. A person is good when he has moral. He is moral when his actions conform to and embody a good will i.e. when his will is good. There has to be active goodness. A passive goodness is good for nothing.
What is Business Ethics:
Business ethics is now being considered a part of management discipline. A business organisation deals with product/service and has relationship with stakeholders. It is knowing what is right or wrong in the workplace and doing what is right. Ethics in the workplace sensitizes leaders and staff in knowing how they should act. Ethics in the workplace can be managed through use of codes of ethics, codes of conduct, roles of ethicists and ethics committees, policies and procedures, procedures to resolve ethical dilemmas, ethics, training, etc.
What is corporate obligation:
The obligation of a corporate has been well enumerated by Swami Ranganathanda in his book “ Eternal Values for a Changing Society” (Volume –IV page 366). According to him “ A Corporation’s obligation are two fold - Internal and External. Internal – to the corporation for continuance and development: to its employees, for their human dignity, development of skills, promotion and security; and to its investors and shareholders, for a reasonable return on their investment. External -- to the state, by way of taxes due; and the consumer, for supply of quality goods at a reasonable price, and to the community at large, by suitable welfare measures”’.
The question about ethics in the economy arises because economic decisions and activities in general are related to other people, which directly or indirectly affect them. Therefore, it is necessary to have moral economic behaviour. It would thus be observed that social responsibility of a corporate is to operate business with higher ethical standards, to adhere to statutory provisions and obligations and to meet public expectations.
What is Duty and responsibility:
Duty and responsibility are two phases of the same coin, which can not be separated from each other. Where there is duty, there is responsibility. Duty without responsibility is unconceivable. These are the commitments in a broader prospective to family, society, nation and institution in which a person is associated. These are the desired behaviour pattern from an individual of common prudence. Desired behaviour pattern is the germination of ethical values.
Duty and responsibility are relationship and position oriented. For example –Parents duty towards children is to take best care of them, educate them, and make them law abiding citizens. Whereas, the duty of children towards parents is to respect them and obey them, have strong character, become educated and earn name for family and nation.
The duty of police is to protect society from evil, arrest crime and create a free, fair, fearless society. Whereas, the duty of the members of society is to be law abiding and provide all support to curb the menace of non law - abiders.
The duty of an employer is to have dignity of labour to give proper and just compensation for the labour put in by them, create conducive working environment, take care of their promotional and elevational needs, have fair and transparent dealings and impartial attitude. Have humanistic values in the organization. On the other hand, employees, duty is to be loyal, to work with dedication, devotion and give their best.
Duty is not duty unless it is consciously done for the sake of duty. To do right is the moral duty. If duty is done for the sake of some ulterior object, though the act may not be illegal but certainly it may not be moral.
What is Accountability :
A man is morally responsible for what he has done or has neglected to do and has left undone. A man has to subject himself to his moral tribunal, a court of his conscience. The moral tribunal has a right over him to call him before it with reference to all or any of his deed. A man is responsible to his conscience. He has to answer why he did one thing rather than another thing. Why two sets of rules and regulations were practiced. Abiding by the judgement passed by moral tribunal i.e.his conscience is a step towards correct direction. To do right for the sake of right is moral judgement.
Why Ethics in Organisation :
Organisation is a platform where people interact with others both from within and outside. Following ethical values has an impact not only on the culture of the institution but also on its reputation, standing, and motivation of workforce. Poor ethics can be extremely damaging to organizational performance. Non following of ethical values creates crisis of credibility.
An institution is exposed to risks from within and outside. The internal risks are more dangerous than the external. Internal risks arise mainly from the workforce and it makes the organisation hollow. It is like canker to rose. If the management is just and fair in its dealings with the staff, does not subscribe to the policy of favouring a chosen few, have common measuring rod for all, the chances of risk arising from within are minimal. Transparency is the asset for the management.
If an organisation wants to grow and to attain heights, it has to have sound ethical footings,:it has to be fair and transparent. It has to adopt fair practice code and follow the principles of good business and human conduct. Ethical sense is the fundamental bond of unity and progress. Therefore, people in position will have to be moral before they can be wise. If organisation expects discipline and loyalty from the workforce, it has to be transparent, has to have well defined code of conduct for one and all and without exception. There should not be deviation from what is preached and what is practiced. Otherwise there will be adverse impact on the behaviour pattern of employees. Nurturing ethical values at work place has important role on the productivity. Corporate governance is adherence of ethical values. It deals with corporate fairness, transparency and accountability and conducting the affairs ethically.
As example is better than precept, the following real life factual incidences will speak a lot about failure of ethics in human relation policies and the necessity of ethical values in organisation.
Incidence-1
In a promotion exercise, the Chief Executive Officer (CEO) who was heading the interview panel advised one of the candidates that as per the policy the interviewee can not be promoted as he had hardly two years left for attaining the age of superannuation. The candidate was with the institution for over twenty-five years and was one of the star performers. Whereas, in the immediate preceding promotion exercises conducted six months ago and succeeding promotion exercises conducted six months thereafter, the same CEO promoted candidates who had even less than six months for retirement.
Analysing this episode from ethical point of view the questions that arises are:
· Whether the reason for denying promotion was correct?
· Was it ethical to promote candidates who had less than six months to retire?
· Does this not cast aspersions on the credibility of the management?
Incidence-2
The Chief Executive Officer (CEO) was one of the members of the interview panel constituted for promotion exercise. During the course of interview he showed his unhappiness about the performance of the subsidiary of the organisation headed by the candidate. The candidate could prove with facts and figures that the performance of the subsidiary had improved many folds during his tenure of two years compared to the performance of the past eighteen years and the stagnant institution had become vibrant and was turning around. The candidate talked with facts and figures.
While the other panel members were impressed with the progress made by the candidate, the CEO refused, for his own reasons, to acknowledge the progress and continued to harp that he was not satisfied with the progress and performance, and subsequently denied him the promotion. Interestingly the immediate predecessor of the subsidiary whose performance was totally lack luster was promoted.
Analysing this episode from ethical point of view the question that arises are:
· Whether the approach of CEO was morally correct and ethical?
· Whether his decision was just and fair?
Incidence-3
In another case the CEO of an organisation denied promotion to a candidate as he had some time back undergone a heart surgery and felt that he may not be able to do justice to his work totally ignoring in the process that he (i.e. the CEO) himself had undergone a heart surgery two months ago and was able to attend to his work!
Analysing this episode from ethical point of view the questions that arises are:
· Whether the approach of CEO was correct?
· Whether it was ethical on his part to deny promotion on health ground when he himself was in a similar situation?
The incidences mentioned above relate to the people within the organisation. Had the CEOs in the three incidences mentioned above put themselves before the moral tribunal i.e. conscience they would have found it difficult to take decision that they did. These incidences indicate crisis of credibility in management and absence of ethics.
Ethics reflects the quality of leadership in the organisation, a critical variable in human behaviour. While one explicitly or implicitly profess to adhere to rules, making exception in favour of a person is injustice to other.
Executives who follow ethical values are supposed to have scientific frame of mind as ethics lead them to logical reasoning. Therefore they take decisions which are based on facts and figures and are unbiased by personal feelings.
As mentioned earlier, organisations also interact with outsiders i.e. customers, government agencies and others. Ethical values persued with outsiders has an impact on the reputation of the institution. Business organisations have realised that loosing reputation is worst than loosing money. An organisation not following ethics in business has quick mortality. What is promised to a customer must be adhered to whether it is quality of product or service.
Conclusion :
Absence of ethical behavior affects operational performance .It has impact on group dynamics and on productivity. Poor ethics blinds the organisation to the realities of declining environment and makes it vulnerable to setbacks. Good ethics on the other hand have positive effect on organisational activities and on results. Productivity improves. Group dynamics and communication improves, and risk is reduced.
Ethical values find manifestation in the context of interaction between human beings in organisation and society. It is inseparable from social context. The inherent message behind ethics is the message of interdependence, the message of mutual service. If one wants to achieve his own welfare, he must strive to ensure the welfare of other human beings also.
“Love thy neighbour as thy self ”is what says Jesus Christ.This is the central theme of ethics and morality. Jesus did not talk in a narrow sense. He spoke in broader terms i.e. to be loyal to the group, and to the society through service. He hinted that humanity has intrinsic value. That one should not do to others, what we would not like others to do us. This is the crux of ethics.
Performing one’s duties, keeping the conscience to the fore is the primary thing. Ethical awareness is the key that can solve any issue however complicated it may be. Before we take a decision or do an act, a basic question is to be asked to self- Is it correct? Am I just? Am I not favouring one at the cost of other?
An act can not be said to be ethical if it is not approved by society at large. Right understanding and proper solution depends on true knowledge of ethics.
Organizations practicing ethical values not only prevent unhealthy behavior but also inspire superior reasoning and performance. It is only through human nature, and ethics, that we can inspire greater levels of innovation, teamwork, and process breakthroughs that result in sustainable competitive advantages.
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