Essay on the Managerial and Business Ethics (1930 Words)

Essay on the Managerial and Business Ethics (1930 Words)!

Over the centuries, businessmen have been perceived as ruthless, profit oriented people, whose primary purpose was to make money with little respect for the welfare of the people whom these businesses served.

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This is especially true in underdeveloped countries where big businesses wield tremendous power over government and society. In India and Pakistan, for example, there are millions of people working as “bonded labour”, where workers have absolutely no freedom. They cannot change or leave their jobs.

They are paid minimum and are exploited fully. Because of monopolized industries in some of the developing countries, materials of sub-standard quality are deliberately produced without proper regard to the interests of the community around. The hoarding of grain, cement and other consumer needed commodities and then inflating their prices are well- known tactics of businesses in India.

Even in the developed countries, there have been many questionable business practices that may not stand up to high ethical standards. The way John D. Rockefeller eliminated his competitors in the oil industry has been branded as ruthless and unethical. As recently as 1991, a Wall Street scandal at Salomon Brothers involved illegal transactions in the bond market.

These transactions would certainly be ethically questionable and occurred in the organizational context that stressed making money and controlling information which would put the customer at a disadvantage.

Only recently, and because of many well-publicized and questionable business practices, institutions have placed greater emphasis on developing higher ethical standards for business behaviour.

In the organizational context, the concept of right and wrong, fair and unfair, just and unjust is reflected by the manager’s own ethical standards as well as by organizational policies and the social reactions to such policies. Some such issues of ethical conduct for consideration are raised by Archie B. Carroll. These are:

1. Suppose a firm is advertising for vegetable soup on television. Is it ethical to put small marbles at the bottom of the bowl of soup so that the soup will look thicker?

2. A salesman for an electrical machine is anxious to sell his equipment. Is it ethical for him to offer a bribe to the purchasing agent as an inducement to buy? Suppose that instead of bribe, he gives the money out of his own commission, does it make the transaction ethical?

3. Is it ethical for a production manager to overlook minor contract and safety violations in order to get on with the job?

4. Is it ethical for someone to understate his educational qualifications in order to get a job during hard times for which the candidate would be considered as overqualified?

5. Is it ethical to write personal letters during company time or use company telephone for private use?

6. Is it ethical for a company employee to keep quiet knowing that the company is violating its own rules, simply to keep his job?

7. Is it ethical for an accountant to add expenses in the company income tax returns that were not incurred, knowing that they will get away with it?

In addition to questions about ethics in the business world, some ethically questionable situations have been studied in the academic world. An extensive study conducted by a Task Force on Ethics headed by Professor Mary Ann Von Glinow of University of Southern California and supported by the Organizational Behaviour Division of the Aademy of Management in 1981 has delved into the subject very deeply.

For example, in the area of research and publication, the Task Force has isolated certain behaviours and activities that it believes to be clearly unethical and another area which is ethically ambiguous.

The clearly unethical behaviours include:

1) The use of an idea or a concept by a reviewer of an article rejected by that reviewer.

2) Doctoral advisers listing themselves as coauthors of papers where they had little or no input beyond normal advisory responsibility.

3) Use by an author of a key concept or principle from on unpublished manuscript of a colleague, without prior citation.

4) Simultaneous submission of an article to multiple journals.

5) Falsification or fabrication of data.

6) Attaching one’s name to a paper to which no commensurate contribution was made.

7) Conscious misstatement of facts from previous studies.

8) When acting as an editor or reviewer, attempting to suppress publication of research that refutes one’s pet theory.

9) Plagiarism.

Similarly, some of the ethically ambiguous behaviours include:

1. Suppression of disconfirming data or selective presentation of data.

2. Repeated publishing of marginally different data, perhaps with some overlap.

3. Taking advantage of friendship with editors or relying on reward or coercive power over editors.

4. Assignment of term paper topics to students, corresponding to the outline of a book an individual is writing so as to obtain a literature review done that way.

5. Giving students who collect and analyze data, nothing more than a foot note acknowledgement used in the publication.

6. Using organizational records, with organizational approval and with confidentiality protected but without obtaining the consent of the individual employees.

7. Circulation to colleagues by a reviewer of a submitted manuscript without the author’s approval.

Similarly such behaviours can be isolated for other professionals such as consultants, attorneys, politicians and so on.

A Code of Ethics:

A code of ethics is a formal statement that acts as a guide which describes the general value system, ethical principles and specific ethical rules that people within an organization are expected to follow.

Also known as company “Credo”, it is a declaration of business principles, statement of core values and other written statements involving ethics which commonly address such issues as conflict of interest, privacy of information, gift giving or bribes, political contributions and so on. Most American firms have such ethical codes. For example, Martin Marietta, a major defence contractor in America has the following credo.

a. To our “employees”, we are committed to just management and equality for all, providing a safe and healthy work place and respecting the dignity and privacy due all human beings.

b. To our “customers”, we are committed to produce reliable products and services at a fair price that are delivered on time and within budget.

c. To the “communities” in which we live we are committed to be responsible neighbors, reflecting all aspects of good citizenship.

d. To our “shareholders” we are committed to pursuing sound growth and earning objectives and to exercising prudence in the use of our assets and resources.

e. To our “suppliers” we are committed to fair competition and the sense of responsibility required of a good customer.

An organization’s code of ethics can serve several purposes. First, it creates employee awareness that ethical concerns are to be an integral part of decision making. Second, it demonstrates the commitment and direction in stating its standards and incorporating these standards into daily operations. Thirdly a credo can bring unity of purpose among all employees of the organization.

However, the code of ethics has to go beyond mere words and must be strictly followed and monitored. It is not always easy to translate general statements regarding the code of conduct into specific and clear cut directive of operation.

For example, most life insurance companies forbid there, salesmen to share their commission with their clients as this practice is considered unethical. But the competition, as it is, makes difficult for salespeople to make a sale without giving any financial incentive to clients.

Accordingly, some organizations are finding it exceedingly harder to enforce the application of such ethical policies. The difficulty in specifically defining morality or ethical behaviour makes an acceptable code of ethics highly cumbersome for the organizations.

This creates a dilemma for organizations because clear-cut policies regarding ethical conduct are difficult to establish, especially for those organizations that operate in a number of countries because the code of conduct may vary from country to country.

Organizations usually establish a code of ethics that is consistent with the viewpoints of prevailing society. However, the same code may not be valid in a different society and may change within the same society over a period of time. For example, in the 1900s, the society considered it unethical for a person to purchase merchandise on credit, while these days credit purchases are an integral part of living.

This makes defining and specifying the code of ethics very difficult. Accordingly, if the ethical guidelines are not specific, they could lead to different interpretations, thus defeating the very purpose for which these guidelines are designed. On the other hand, if these guidelines are highly specific, these will not equally apply to all, because of different norms among different cultures and sub­cultures.

An Example of Bribery:

What code of ethics can be written about bribery? Is bribery an unethical act of unfair influence in your favour or is it simply a cost of doing business? Secondly, how do you define bribery? Is it simply a form of “tip” before the service, in order to expedite service or to get a favourite table in a restaurant? What if bribery is a way of life for doing business in some country?

Should you bend the rules in order to conduct business or stick to your established code of ethics against bribery and suffer economic losses? What if bribery is the “only” way to get your goods through the customs at the airports or seaports, which are necessary to operate your business? Is there a “degree” of bribe, so that some degree of bribery is acceptable and another is not? All these questions provide some basis for thinking and analysis regarding the ethical aspects of bribery.

Bribery is defined by Danleyas follows:

“To bribe someone is to offer something of value to another with the intent of inducing an action that is contrary to the positional duties of the office or role of that person.”

This role or position of the other person must have moral backing. However, it should be a role in which accepting the bribe would be established as immoral, as for example, the position of a judge in the judicial system.

Taking bribes is perceived as immoral, especially for the person who takes the bribe. But how could he take the bribe if there was nobody to give this bribe? Does this make the giver of the bribe equally responsible for committing an immoral act? In some cultures and countries, the bribe giver is also punished, either by legal system or by social indignation. But in most societies, the bribe giver is most often let off while the bribe taker is held responsible for moral disobedience. This seems to be unethical in its own way. Secondly, the act of bribery may have different connotations, sometimes opposing to each other, even though with the same concept of end-result.

As an example, take the case of buying a railway ticket in America as compared to India. In America, we generally funnel fees for services through an agency, rather than paying directly to the employee of the railroad, But in India, part of the fee for generating the appropriate.

railway ticket is sometimes paid directly to the ticket agent. Both these routes are meant for the sake of the convenience of the customer, However, in America, if the railway ticket agent had directly accepted these fees, it would be considered bribery and hence immoral.

Accordingly, because of these differences in the concept as well as perception of ethics among different cultures, it becomes very difficult to prescribe a set of rules describing a code of ethics that would be applicable and acceptable universally.