Management Ethics

Regardless of whether your goal is to increasing productivity to maximizing profit or simply achieving a surplus, conflict will arise between the management role you fulfill and your moral standards. This conflict leads to tension within and between managers.

Here are a few examples where a manager can experience conflict between his management role and his moral standards:

  1. In a competitive industry, there will be an upper ceiling on the price that can be charged for products. Customers will otherwise go to the next supplier. Where a business has a monopoly, they may increase the price to a level where it is unfair to the customer.
  2. Is it fair if you have information about a transaction that causes you to make a huge profit with little effort, at the expense of the counter party who do not have the same information? 

What complicates the issue of management ethics is that it is not only enterprise goals that can conflict with a manager’s moral standards.  Each of us also have our own personal goals. These goals can also make unacceptable practices tempting.

It is not just the business or the manager’s values ​​and norms that are important here, but also the general values ​​and norms of the community in which the organization operates.

In the community environment, things like exploitation and prejudice are not acceptable practices.  It is your duty as manager to ensure that your strive for maximum profit does not overshadow your ethical responsibility.

An organisation that makes itself guilty of unethical business practices will not stay long. The organisation will get a bad name and customers will avoid it.  The organisation may also become the subject of a police or other investigation.  A manager must ensure the long term profitability of an organisation by acting with integrity and treating all parties fairly.

Managers must not only be fair to their clients.   They must also act in the best interest of employees, shareholders, suppliers, competitors, the government and the community as a whole (Kroon 1990; p.109 et seq.)

Here are some examples where organisations do not act in the interest of these parties:

  1. In the past there were discrimination based on race and gender, which caused specific groups to earn less for the same work or excluded certain groups from lucrative position in the organisation.  Today we are still keeping the inequality in place by basing the offer to a prospective employee on his previous payslip.  Surely the offer must be based on the requirements of the job in combination with the expertise of the applicant.  You are still going to expect the same from him/her, so why pay less just because you can.
  2. Is it fair if directors of a company do not pay dividends to shareholders, but they spend a lot of money on treats for themselves, or declare unreasonable big bonuses even though they are not reaching targets?
  3. Is it justified to insist on a big discount, if you know the supplier is in financial trouble and needs you to pay your bill quickly so that it can improve its cash flow?
  4. Is it fair to spread lies about competitors to try and increase your own company’s market share?
  5. Some companies bribe government officials to get tenders.
  6. Companies also sometimes lie about their earnings to get out of their tax obligations.
  7. We have seen companies causing an enormous amount of damage to the environment or even cause illness and disabilities because of pulution

There are many more examples where management act unethically.  In many cases management’s unethical behavior causes enormous damage to the company’s brand

References

Hannes Kruger, Management training manual.  Written for the Meat Board, Chapter 1




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