Management Ethics

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MANAGEMENT ETHICS

Submitted By:
Nitish Garg
PGDM I- B
84

Ethics is bedrock of every business firm. CEOs and a few at the top are undoubtedly the guardians of values of the firm. But collective human behavior defines the organizational culture. The culture determines the sustainability of the success of the firm and value creation to the society at large. Root cause of the failure of the organization is its sick culture rather than sick financial statements. Sick culture is the obvious result of the poor ethics in governance. Now, what basically is Morality, Ethics and Ethical theory? Morality is concerned with the norms, values and beliefs embedded in social processes or behavior which results into actions. These define 'right' and 'wrong' for an individual and community. ''Ethics'' from a Greek word ''ethos'' which refers to character and individual behavior. Ethics is concerned with the study of morality and the application of reason to clarify specific rules and principles that determine right and wrong for a given situation. These rules and principles are called ''ethical theories''. ''Business ethics'' is no longer considered an oxymoron. The academic field of business ethics, has matured, business ethics find a place in B-School curriculum. The business community sees ethics and ethical demands as part of all its activities and as important for it to manage and to internalize. However, people are discontent generally about the visible decay in ‘ethical value' in business spreading its cancerous roots into every parts of the society. Unethical business decisions hurt many people including employees, customers and members of the general population as well as the business itself. Companies that are managed by persons who do not choose to do what is right are often the companies that do not survive for the long term. Organizations committed to long term success recognize the need to create a culture where ethical behaviors are encouraged and rewarded. This is the ultimate key to survival and growth in the future. A research report (2006) by CFO Asia prepared titled ''Corporate Governance'' stated that, It is harder to establish a connection between codified ethics and practical actions than to track compliance on governance or accounting systems. But ethics can be reasonably seen as an intangible, yet powerful, catalyst and supporter of compliance. Put another way, it is not possible to legislate for ethical behavior. For true ethical governance, the person in the business world involved in any action has to imbibe himself in a commitment i.e. a strong conviction that social good is more important than individual good. It has to come from ‘within’. Whether it is awareness or knowledge, it should create true transformation for the ethical behavior to happen as a natural instinct. Act of bribery done with no possible evidence of being caught is considered conforming to compliance of rules but can it be conforming to ethical governance? Ethics in letter and spirit alone is sustainable. In ensuring ethical governance, an organization has to put in place effective system to address starring commercial realities, challenging administrative processes and difficult technical niceties. This would essentially require, among other things, a well-designed and structured training mechanism which is different from all types of corporate or industrial training. Nevertheless, the problem with rule based ethics is that the rules do not cover all possible situations. Conflicting rules may exist. It is difficult to transform general rules into situations. These aspects strongly reaffirm the need for the individual transformation 'from within' and the resultant 'organizational culture'. This alone will ensure a foundation for 'value based' decisions and behavior. Moral values relate to what is believed to be good and of primary importance to human civilization. They are often articulated as ideals. Moral values influence...
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