Rapidly changing world is also altering business environment. In order to stay competitive, managers are to get a new look at what they are doing and what goals they are targeting. Current processes of globalization and integration embracing the world markets result in new conditions of making businesses. In particular, the roles of key figures within the particular infrastructures are shifted. Therefore, it is urgently needed to revise what was earlier known about the role of a leader and probably to change the priorities according to the demands of information era.
One of the tricky factors of corporation success is a human factor. Both employers and employees are human beings. No matter how hard the top management tries to perform like heartless machines, they still have to interact with people who have their human peculiarities and problems. Social interaction inevitably leads to specific difficulties of moral kind. Ethical and moral issues pursue managers in their every day operations, and a lot of decisions they make are directly or indirectly chained with ethical choices.
At the moment there is no such branch of management theory as management ethics. However, there is much to learn from business ethics in general. The aspect of manager’s ethic norms is still understudied, but the need for research is already widely realized. Scholar research is gradually covering the issue and provides certain data for further assessment.
Discussion: Business Ethics
As the capitalist world grew, the need for corporate ethics appeared. As Woodd (110) notes, ethics implicitly regulates areas and details of behavior that lie beyond governmental control. The term ‘business ethics’ became widespread only at the end of 1970s. However, the norms it incorporates have been regarded long before. By the end of the Cold War the problems of business ethics grabbed the attention of scholars, media and businessmen. In 1980 the Society for Business Ethics was founded, and in 1982 the first monographs in the field were published (Weiss 20).
It goes without saying that business ethical norms are different in different historical periods and in different cultures. A thorough analysis of business ethics has been conducted by the economist Milton Friedman. According to Friedman (44), the responsibility of corporate executives is to “make as much money as possible while conforming to their basic rules of the society, both those embodied in law and those embodied in ethical custom.”
Today, corporate ethics (or business ethics) is understood as a branch of professional ethics embracing ethical principles and problems as well as moral norms applied in business environment. Any aspect of business conduct, either at the individual or organizational level, can be examined by business ethics. Being a form of applied ethics, it includes both normative and descriptive dimensions. Both dimensions contribute to profit-maximizing behavior with non-economic concerns by means of ethics codes and social responsibility charters. Among the rights and duties regulated by corporate ethics are interactions between employers and employees as well as suppliers. The fiduciary responsibility to the shareholders is also among business ethics issues. Related issues are also corporate governance, political contributions, hostile take-overs, corporate manslaughter, industrial espionage, and so on.
Manager’s Role Model
Being a manager means to take responsibility for all the processes that take place throughout the corporation. This responsibility is not taken once for a while; instead, a manager needs to make decisions every day, meanwhile understanding that each decision can influence the way the corporation will perform next day, next year or next decade. “Management job is all about making decisions meant to move the organization forward,” Schneider et al. (836) assume. Managers are commonly viewed within the role model, according to which they provide guidance for the other members of organization. Instead of telling what to do they are expected to show how to run the organization by their own example. This example is followed through continuous communication between the manager and other organizational members. Employees are likely to learn and make conclusions while watching their employers “passing out important details pertaining to operations of the organization” (Smith 21). As a result, many challenges face managers on that way because no absolute objectivity can be found in human society. It goes without saying that it is almost impossible to make decisions that would be 100% right or 100% wrong. What is more, very often managers cannot rely on their own intuition or logic only. Sometimes the decision-making processes are restricted by organizational politics or current market situation. In fact, there is a great deal of factors a manager has to take to account to be close to a right decision. A good manager is the one who is able to track, assess and process as many important factors as possible. However, there is also a chance for unexpected circumstances to intrude, so one should be at least always ready to take responsibility for a wrong decision.
Question of Virtue
Morality is first of all a philosophical category. Apart from religion, it is usually viewed as the natural outcome of personal interaction between people. In order to survive in the society, people had to work out certain rules of living together. Some of the rules were fixed legally; others stayed unwritten, but passed from generation to generation and from culture to culture. Morality is viewed as a question of virtue, Anand and Rosen (98) remark. Personal relations between people result in a system of norms inside the conscience of each person. They receive certain idea of what is right and what is wrong. The same process takes place in any organization; i.e. the employees form a system of what is right and what is wrong in organizational management. Managers of all organizations have to deal with various multilevel ethical issues. Moral and ethical issues they face include racism, gender discrimination, prejudice and bias in personal interaction, methods of promotion and punishing etc. As Cetina and Preda (99) note, these moral and ethical issues usually arise in different stages of management job.
For example, an employer has to choose between two candidates for a job. One of them is a qualified woman; another one is a disabled man with a bit larger experience. The job includes moving files from one office to another. The distance between the two offices is more than two blocks. It goes without saying that the second candidate has a great disadvantage for physical activity. But the task of an employer is to provide equal opportunities when no physical fitness requirement was indicated. The choice of an employer is affected by legal issues, because both candidates belong to minority groups and are protected by affirmative action. Nevertheless, one of the candidates is to be alienated and refused a job. Weighing up all the circumstances, a good manager would probably choose a woman, as the disabled candidate is likely to be less effective in carrying out the job offered. In this way, managers are often obliged to make an effort to make a choice under the pressure of ethical and moral dilemma.
New Scholarly Activity: Reasons for Ethical Behavior
Jim Clifton, the chairman and CEO at Gallup, has conducted a comprehensive research on how manager’s ethics impacts the effectiveness of employees’ performance. It is stated that either consciously or unconsciously people tend to make conclusions about their workplace based on what their managers do. “If I think my boss treats me ethically and honestly, that is what I think of the company,” Clifton (7) states. Ethical behavior of managers is one of the key factors that drive engagement at the workplace. In Clifton’s research, responsible and ethic governance is associated with the cost savings and tripled productivity of employees.
Further, useful data is received from the 2011 National Business Ethics Survey (NBES) released by the Ethics Resource Center. According to the Survey, senior executives and supervisors are the two main drivers of ethical culture at the workplace. 56 percent of the respondents consider their supervisor to be the most important source of confidence, while 26 percent deliver this role to higher management. At the same time, employees reveal decreasing confidence in the ethical behavior of their leaders. The critical decrease of tolerance in corporate America has been called “looming ethics downturn”. “Far fewer employees believe their direct supervisors act as ethical leaders: one-third of employees (34 percent) say their managers do not display ethical behavior, up from 24 percent in 2009 and the highest percentage ever,” Clifton (7) reports.
Herein, if managers expect their business strategy to work without their personal commitment to ethical conduct, they should be ready to fail. The successful leaders are suggested to communicate their readiness to make right choices between right and wrong in order to provide their business integrity.
Ethically Responsible Management
Studying the issue of morality of business, Machan (23) states: “Wide access to information and more business opportunities than in the past makes ethics a need in modern business world.” It is widely believed that social issues are inevitably associated with ethically responsible management. As Murphey and Laczniak (39) discover, most of workers are eager to see that any action their manager is involved in is verified by ethic norms. Each ethically correct action is a precondition of public opinion which contributes to the reputation of ethically right management. Making a profit is hardly impossible without proper ethics.
“Management ethics is the ethical treatment of employees, stockholders, owners, and the public by a company,” Woodd (110) defines. It means that the managers care about their reputation inside and outside the company. They are respectful to their business environment; they are attentive to the needs of their consumers and clients, respect their partners and provide their employees with the best conditions they are able to provide. Management ethics makes up the atmosphere inside the corporation; therefore, ethical behavior is an essential part of healthy management in general. Long-term career success is impossible without ethics integrated into the business discourse.
While a person spends more than eight hours a day at work, it is quite natural that the atmosphere plays a great role for an employee. Ethic behavior is sometimes better motivation than salary bonuses, vacations and other tangible encouragement. A manager with responsible attitude to ethic norms is a good example for the employees and provokes a sense of pride. In addition, “from the point of view of external customer, ethical behavior improves the public image of the company and adds to the overall development of ethical behavior in the society” (Anand and Rosen 97).
Recent research has demonstrated that management ethics is becoming an integral part of a successful business strategy. Employees, customers, suppliers and partners expect manager’s devotion to moral norms. It is crucially important for a manager to be ethically correct while making everyday choices because of several reasons. First of all, ethical behavior is likely to improve the overall atmosphere at the workplace. Secondly, ethical attitude is a good motivation for the employees who view their managers as the most important source of confidence and commitment. Besides, ethical behavior of manager’s becomes a source of pride for everyone who works at the company. Additionally, the public image is also improved in the view of external customer and that is a great contribution to the ethical development of the society on the whole. All points considered, the role of proper education for managers grows. The foremost thing to instill is manager’s awareness and ability to recognize that ethical behavior is as necessary as professional knowledge and skills.
Anand, V. and Rosen, C. C. “The Ethics of Organizational Secrets.” Journal of Management Inquiry 17.2 (2008): 97.
Cetina, K. K. and Preda, A. The sociology of financial markets. New York, NY: Oxford University Press, 2005.
Clifton, J. “The War for Good Jobs.” Gallup Business Journal. 9 (2011): 7.
Friedman, M. “Milton Friedman responds – an interview with Friedman.” Business and Society 84.5 (1984): 44-45.
Machan, T. R. The Morality of Business: A Profession for Human Wealthcare. Boston: Springer, 2007.
Smith, J. Normative Theory and Business Ethics. Plymouth: Rowman & Littlefield, 2009.
Murphey, P. E. and Laczniak, G. R. “An ethical basis for relationship marketing: a virtue ethics perspective.” European Journal of Marketing 41 (2007): 37-57.
Schneider, B., Hanges, P., Smith, D., and Salvaggio, A. “Which Comes First: Employee Attitudes or Organizational Financial and Market Performance?” Journal of Applied Psychology 88 (2003): 836-51.
Weiss, J. W. Business Ethics: A stakeholder and issues management approach with cases. 5th ed. Mason, OH: South-Western Cengage Learning, 2009. Print.
Woodd, M. “Human resource specialists – guardians of ethical conduct?” Journal of European Industrial Training 21.3 (1997): 110.