Ethics Management

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3

The Nature of Ethics in Modern Business

LEARNING OUTCOMES
By the end of this topic, you should be able to: 1. 2. 3. 4. Explain some of the ethical problems in management; Elaborate on the five characteristics of ethical problems in management; Explain the three methods for analysing ethical problems in management; and Discuss ethics from the Islamic perspective.



INTRODUCTION

In this topic, we shall examine the various ways through which organisations attempt to strike a balance between economic and social performance when faced with an ethical dilemma.

3.1

ETHICAL PROBLEMS AS MANAGERIAL PROBLEMS

Ethical problems are managerial problems because they represent a conflict between an organisationÊs economic performance and its social performance. There should be a „right‰ or „proper‰ balance between economic performance and social performance. Thus, the managementÊs dilemma is to strike a balance between economic and social performances. Let us examine the factors that enter

TOPIC 3 THE NATURE OF ETHICS IN MODERN BUSINESS



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into that balance and consider various theoretical structures that may be of assistance to management in finding solutions.

3.2

CHARACTERISTICS OF ETHICAL PROBLEMS IN MANAGEMENT

According to Hosmer (1991), there are five characteristics of ethical problems in management as presented in Figure 3.1.

Figure 3.1: Five characteristics of ethical problems in management

Sections 3.2.1- 3.2.5 are taken from the book, „The Ethics of Management‰ by LaRue Tone Hosmer (1991). Let us look at each characteristic in the following sections.

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TOPIC 3 THE NATURE OF ETHICS IN MODERN BUSINESS

3.2.1

Most Ethical Decisions Have Extended Consequences

Do you realise that the results of managerial decisions and actions do not stop with first-level consequences? Rather, they extend throughout the society, and that extension constitutes the essence of the ethical argument. The argument states that the decisions of managers have an impact on those within the organisation and outside the organisation: the society. Since the impact is beyond their control, managers need to seriously consider their decisions. For example: (a) (b) (c) Bribes change governmental processes. Pollution affects environmental health. Unsafe products destroy lives.

There is little disagreement here, most people recognise the extended consequences of managerial actions. Disagreements, if any, usually arise from the existence of multiple alternatives, mixed outcomes, uncertain occurrences and personal implications that complicate the decision-making process leading to those actions. So, let us look at the remaining four characteristics of ethical problems which play a significant role in the management of an organisation.

3.2.2

Most Ethical Decisions Have Multiple Alternatives

It is commonly thought that ethical issues in management are primarily dichotomous, a „yes‰ or a „no‰ choice, with no other alternatives. For example, some would assume that these would be the questions dealt in an organisation: (a) (b) (c) Should a manager pay bribes or not? Should a factory pollute the air or not? Should a company manufacture unsafe products or not?

However, the above questions do not reveal the real situation faced in a business organisation. Although a dichotomous framework presents the ethical issues in sharp contrast, it does not accurately reflect the managerial dilemma. Therefore, multiple alternatives have to be considered in making ethical choices.

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3.2.3

Most Ethical Decisions Have Mixed Outcomes

It is commonly thought that ethical issues in management are largely antithetical, with directly opposed financial returns and social costs. For example: (a) (b) (c) Pay an indirect bribe, but maintain the sales volume of imported goods through prompt delivery. Cause air or water pollution, but...
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