Management Ethics

Contemporary Contexts

Stewart R. Clegg, Carl Rhodes

• Publisher: Routledge
• Year: 2012
• Print ISBN: 9780415393355
• eBook ISBN: 9781136012860
• Topic: Business
• Subtopic: Business General
• Index: Business

Ethics has become big business but have businesses become ethical? This is a central question for today's managers.

Managing ethics is critical in an era characterized by unprecedented corporate power and a myriad of competing ethical traditions. Giving new insights into the understanding of ethics for today's organization practice and managerial behaviour, this timely volume, edited by well-respected industry authorities, provides an overview and critique of ethics as they relate to contemporary challenges and issues (such as globalization, sustainability, consumerism, neo-liberalism, corporate collapses, leadership and corporate regulation).

This book, an essential read for postgraduate students of business and ethics, is organized around the core question: What are the ethics of organizing in today's institutional environment and what does this mean for the practice of management and the organization of business? In response to this, the contributors examine ethics as it is deeply embedded in the everyday practice of management.

Interdisciplinary contributions from the fields of sociology, philosophy, management, organization studies and public administration provide unique perspectives, while case studies and real-life examples illustrate the challenges and dilemmas faced in practice. Each chapter has a brief overview and editor's introduction which skilfully summarizes key points and draws connections between the chapters.

Chapter 1

Introduction

Questioning the ethics of management practice

Stewart R. Clegg and Carl Rhodes

In days gone by, managers might have imagined that their job was just to manage without attracting adverse attention from the principals in whose interests – as shareholders – they managed. Today, the notion of managing as agents acting on behalf only of principals located elsewhere is increasingly hard to sustain. Even if the principals do not appreciate it, there are a great many others who take a specific interest in the organization's activities: communities, citizens, and customers not to mention employees and innumerable civil society associations and organizations who see keeping a watching eye on corporate affairs as a part of their brief. Indeed, business events in recent years have clearly highlighted that the ethicality of management and organizations is something that is of significant and broad social concern. Large scale corporate collapses, the increased awareness of dishonest business dealings – such as rogue trading, insider trading, as well as ongoing issues of corruption and worker exploitation on a global scale – attract significant attention in the business world, in political arenas, and in society more generally.

In a global arena which is increasingly fragmented and in which myriad ethical traditions constantly come into contact with one another, sometimes violently so, and in which organizations of business and government are the major intermediaries between cultures, peoples, and states, simple solutions to what have been made complex ethical problems are nowhere to be found. Moreover, the notion of ethical issues having ‘solutions’ seems problematic as the ethical vicissitudes in which organizations find themselves seem increasingly complex and unpredictable. In such contexts the practice of management is imbued with a responsibility for moral choice that can be taken up in many ways. Increasingly, moral dilemmas admitting with no easy resolution confront managers and organizations whose ethical awareness is accelerating with the tenor of the times.

Some still pretend that a code of practice or a commitment to established moral principles might serve as a sufficient, if not necessary, cover for everyday practices that might not always correspond with the spirit of the rules contained therein. Located within the ambiguity and unpredictability of practical situations, however, such pretensions offer only a thin veil of comfort. When moral issues are pressing, problematic, and particular, ethics can no longer be regarded as the domain of universalizing principles designed to appease anxiety. How managers of organizations confront moral responsibilities amidst the importance and ambiguity of the conditions in which they find themselves is a central existential question. Through the various ways in which the managers of an organization answer the calling implicit in this existential question the moral character of an organization emerges: it is in the way that the organization deals with such complexity and the way that it takes responsibility for the actions conducted on its behalf that the sense of character and vocation of the managers charged with its management is revealed.

The twentieth century was the era of the dominance of the organization, and the organization man (Whyte 1960) but in the twenty-first century that dominance is increasingly eroded. The problems have changed, and whereas the organization man of old may have been seen as a rather grey character, today's business person is often seen as too ‘colourful’ by far. What makes ethical action more confusing for today's managers is that the success of the neo-liberal project has dizavowed many of the moral and ethical bases from which mercantile activity once drew sustenance. When Weber (1976) saw the success of the Protestant ethic in creating the preconditions for an economic culture of rampant capitalism he foresaw that the very thing that made it rich – an untrammelled, competitive acquisitive impulse – would be the very thing that would destroy its ethical foundations. While some CEOs might still act as if they manage ‘with God on their side’ (Dylan 1963), for most captains of industry there is little mileage in speaking of a deity as a stakeholder in their annual reports. God may be on their side but the shareholders want to know what his value-proposition is in terms of the bottom line.

If CEOs want to speak from the high moral ground and pass judgement on the ethical conduct of others, from a metaphorical mountain of moral clarity and certainty, they had better not do so in such a way that has an adverse effect on market indicators. For others who make no such claims, God's enlistment by the ranks of religious fundamentalism in the production of a morally charged project for individual acquisitiveness and competitiveness might seem a paradoxical basis for an ethical project. Recourse to a belief in some transcendent entity may have once enabled western managers to invoke the commandments of ancient and established religions, however mediaeval or modern they may be, but in an increasingly globalized and postmodern world, characterized by a multiplicity of fundamentally irreconcilable beliefs, we need to examine ethics in all their complexity, multiplicity and perspectivality, rather than reduce them to quasi-religious nostrums for the faithful.

In a globalized economy where cultures and rationalities are both multiple and diffuse, the warm glow of ethical certainty founded in religious beliefs is little more than a security blanket for those who seek the comforting certainty of authoritative pronouncements on right and wrong. Too many others confront one by holding implacably opposed ethical commitments. Yet others may hold that any such commitments have no place in the hardheaded world of business. Today, ethics have to engage a world beset by contradictions. Thus, the purpose of this book is to develop and elucidate some insight into ethics and organizations as they relate to organization and managerial practice in a way that acknowledges the complexity and ambiguity characterizing ethically charged organizational contexts.

The contributions that constitute the book offer a scholarly discussion and critique of ethics as they relate to key contemporary challenges and issues for organizations – these include globalization, sustainability, consumerism, neo-liberalism, corporate collapses, leadership, and corporate regulation. Underlying each of the chapters is the basic premise that ethical conduct is not comprised of a set of rules, codes or judgements that are externally imposed but is constituted by practices that are deeply embedded and daily enacted in everyday management activities. In God some may trust but we still have to place our faith in the service of real men and women.

The collective project of the book is to investigate how managerial practice is – or is not – informed by ethical considerations and to enquire what the implications of this are for business and society. On the whole we do not attempt to make judgement about organizational ethicality from singular political positions; we prefer to try and tease out the ethical complexities of organizational life so that its dilemmas might be better understood, and perhaps even better ‘managed’.

The book is organized around a core question: What are the ethics of organizing in today's institutional environment and what do they mean for the practice of management and the organization of work and business? In responding to this question, the different contributors have examined ethics as located in the practice and discourse of management, constituted in and through actions and exercises where people and organizations make choices. In taking this approach we join a growing yet still underdeveloped interest in the challenge of studying and understanding ethics as they play out in real business settings in order to question and critique the way that ethical discourse is – and is not – located within managerial responsibility. The book will thus be concerned with how management practice and organizational action is socially constructed as ‘ethical’ or ‘unethical’ or as not related to ethics at all.

Ethics are not just as something ‘added-on’ to other organizational activities (Stark 1993; Jackson 2000); one does not do business first and add ethics, rather as milk to a coffee, something that lightens the darkness. On the contrary, ethics are embedded in the practices of business people, managers and employees, and in the discourses that inform that practice. In terms of practice, ethics can be considered in relation to individual actions and conduct, where people make choices rather than merely follow rules (Ibarra 2002), and where those choices are realized through organizational norms, policies and expectations. Such ethics are played out in practical settings and are manifest in the way that everyday activities are socially constructed as ‘ethical’ or ‘unethical’ (Parker 1998), or as not related to ethics at all.

In recent years the study of business ethics has been particularly critical of the assumption that organizations can collapse ethics into systems of rules, codes or administrative procedures (e.g. Parker 2002; Desmond 1998; Munro 1998; Letiche 1998; Roberts 2003). Such thinking radically questions the condition where ‘the means-end rationalization that ends in the practice now known as business ethics […] seems to be destroying the very possibility of ethics itself ’ (Parker 1998: 289). The implications of this, at the very least, are that business ethics cannot be equated with codes or laws (Letiche 1998); ethics are best considered in terms of the way that organizations present themselves to their members and stakeholders as sites for ethical difficulties, dilemmas, and deliberations (Roberts 2003). Indeed, as ten Bos (1997) has argued, the ethical predicament faced by people in organizations concerns the way that they bring morality to bear on their interaction with organizational requirements; rather than being a matter of the nature of the rules and norms it is more likely to concern how people interact with these rules in constituting their own – and others’ – conduct.

To understand an ethics of organizations and management that is not restricted to pre-ordained ethical structures we believe it important to consider ethics in the context of those contemporary challenges that contextualize action rather than appeal to abstract or universalizing moral principles or arguments. Indeed, it is in this ‘postmodern condition’ that the ethical consequences of organizing are magnified both in scale and scope and the possibility of a universalizing meta-ethics applicable to all organizations, all societies, and all cultures, at all times, is diminished to such an extent that it is both untenable and undesirable.

We follow Zygmunt Bauman, in asserting that the context in which organizations face ethical situations is one where there are ‘many agencies, and many ethical standards, whose presence casts the individual in a condition of moral uncertainty from which there is no completely satisfactory, foolproof exit […] the modern individual [is] bombarded by conflicting moral demands, options and cravings, with responsibility for actions landing back on her shoulders’ (Bauman 1992: 31). The manager as such an individual is faced with situations of moral choice that can be taken up in many ways. This responsibility of individual action is, however, always confronted by the ‘undecidability’ (Derrida 1995) of the future without recourse to an all-encompassing moral ‘meta-narrative’ (Lyotard 1979). An ethics of freedom in which (managerial) subjectivity is constituted through ethical action (Foucault 1997), and where the character of that action determines an organization's ethics, seems to be increasingly unavoidable.

Ethically aware managers and organizations inhabit ‘moral mazes’ (Jackall 1988) where individuals are confronted with a plethora of maps through the maze, each vying for attention, none of which is able to provide monologically reliable guides to the territories that they purport to represent. When universalising moral principles are seen to be located within the ambiguity and unpredictability of practical situations, they seem designed to appease anxiety rather more than steer action and lose their attractiveness, even as ethical issues become more pressing. The issue, as we see it, is how organizations confront moral responsibility in ambiguous conditions. Indeed, one might say that the moral character of an organization emerges in the way that it deals with such complexity and the orientation adopted to those actions that are taken on its behalf by those who ‘speak’ for it in some way.

In suggesting such an approach to organizational ethics we recognize that older instincts are not extinguished. The modern desire to formulate rule systems to guarantee morality is still alive and well in organizations. Indeed, 78 per cent of the US top 1000 companies have a code of conduct (Nijhof et al. 2003). Such tendencies, although rarely assumed to guarantee that great ethical behaviour will result, still rank high as a practical ‘solution’ to ethical dilemmas. But do they work as their progenitors claim? We think not. In the context of an ethical moral maze, codes of conduct framed by corporate legislation and enhanced corporate governance increase the probability of organizational hypocrisy (Brunsson 1989) as words and deeds fail to align. If we were to look to the disciplinary foundations laid by Max Weber for the study of organizations as an enquiry into rational legality, it is hardly surprising that this should be the case, any more than it is surprising that Weber, with his legal training, should have laid these foundations. We have known for some time that formal rationality is no guarantee of substantive rationality.

As a premise for the investigations in this book, we suggest that pre-determined, prescriptive, and normative sets of rules or codes that should govern everyday actions and decisions are, at best, insufficient to provide organizations with an ethical framework in which to operate. At worst, such approaches might lead to what Bauman (1992) calls ‘adiaphorization’ – the carving out of certain practices as morally indifferent. Where a code is a substitute for ethical reasoning, ethics might just fail to be seriously considered. Such an adiaphorization can also be seen in the apparent ‘moral muteness’ of those businesses that locate managerial responsibility purely in terms of shareholder value and interests (Johnson and Smith 1999).

When rule makers, informed in whatever way by moral thought, formulate ethical systems into codes as ‘moral intentions and acts [which] could only be the fruit of social engineering’ (Bauman 1992: 64) they are often attempting coercion – foreclosing opposition through framing one best way. Such notions of ethics come dangerously close to being conflated with practices of domination. This is a conception of morality that, as Bauman argues, is based on mistrust of the autonomous moral subject; while distrusting the ethicality of the real human subjects the organization will make them accountable in terms of principles endorsed by an authority that purports to be able to speak for ‘everybody’. Such moral principles make morality something procedurally measurable by observing how closely rules were followed such that ‘[t]he search that starts from the disbelief in the self ’s moral capacity ends up in the denial of the self ’s right to moral judgement’ (Bauman 1992: 69). In following Bauman, we thus wish to propose a view of business ethics that places moral judgements, the moral impulse, and individual responsibility, as central to and constitutive of business practice – especially when such an ethics is located in a context of power, complexity and uncertainty. It is in this sense that now, perhaps more than ever, ethics have become both more critically important and radically difficult than in the past.

Given our focus on ethics in relation to individual responsibility, it could be suggested that recent tendencies in management, informed by neo-liberalism and post-bureaucratization, might be taken as a move towards an engagement with ethical concerns. The essence is that organizational subjects should be constituted and framed by organization relations that make them responsible. The ethics present in such moves seem to hold true to an older liberal tradition where, organizationally, ‘everybody is an entrepreneur and the pursuit of economic self-interest has come to characterize not only business enterprise but management as well’ (Hendry 2001: 210). In some senses, such a ‘post-bureaucratization’ has seen a retreat – although not escape – from the advocacy of rule-governed organizational behaviour. However, this does not necessarily spell out a re-engagement with ethics on the part of organizations. Indeed, where managers are supposed to be enterprising subjects, ethics can appear less organizationally relevant (du Gay 2000).

Entrepreneurs are not noted for their ethicality: indeed, in certain circles, the appellation ‘entrepreneurial’ is almost an insult, suggesting behaviour that is dangerously fly-by-night. The removal – at least partially – of rules – including those purporting to be ethical – does not necessarily free up the space of an organization such that there is an outpouring of moral reasoning by responsible subjects. On the contrary, there is often confusion as the regulated world recedes. In contemporary conditions, where ethics cannot be understood adequately either as code of conduct or moralistic imperative, the flexible nature of organizations poses pressing ethical issues, which managers may or may not choose to take up in the course of practice. There is no guarantee that they will and for those who were once schooled in bureaucratic ethics, becoming the new responsible and enterprising subjects demanded by contemporary management discourses can often be plain confusing, challenging, and contested (Stokes and Clegg 2002). Such issues are crucial when, as Bauman puts it, in the past, ‘the organization's answer to [the] autonomy of moral behaviour [has been] the heteronomy of instrumental and procedural rationalities … actors are challenged to justify their conduct by reason as defined either by the approved goal or by the rules of behaviour’ (Bauman 1992: 124).

Bauman claims that all social organization consists of ‘neutralizing the disruptive and deregulating impact of moral impulse’ (Bauman 1992: 125) and renders social action susceptible to moral adiaphorization. Hence ‘most activities regulated by organizations are subject to adiaphorization: one performs duty not bearing moral responsibility for it’ (Bauman in Cantell and Pederson 1993). Thus, that which constitutes organizational action may actually adiaphorize social action – it is herein, we suggest, that the ethical challenge for contemporary organizations can be situated. Without recourse to absolute, universal or foundational ethics, the moral imperative of managerial practice is a core issue facing businesses – one where a consideration of ethics poses significant, uncertain, complex and ambivalent challenges for practice. It is the character of such challenges that our book will seek to elucidate.

Background and outline

This book brings together an interdisciplinary team of renowned scholars. Rather than being written by business ethics ‘experts’ the varied backgrounds and interests of the authors enables an engagement that does not repeat well worn tracks of thought; herein, ethics will be reconsidered in a way that is both broad yet focused. The result is an examination of ethics and organization that enables them to be understood from a variety of perspectives as well as creating a scholarly dialogue that will advance their study. The book includes perspectives from the fields of sociology, philosophy, management, organization studies, public administration, sociolegal studies, and education. The focus has been on contributions that are at the forefront of theory in the social sciences, and which engage directly with case studies and illustrative examples drawn from practice.

The book emerged directly from a research project entitled ‘What is to be done about management ethics?’ directed by the editors. The project was funded through the Academy of Social Sciences Australia (ASSA) and the Aust...

Table of contents

• Cover Page
• Half Title Page
• Title Page
• Copyright Page
• Contents
• List of Contributors
• Foreword
• Acknowledgements
• 1 Introduction Questioning the ethics of management practice
• Part I Global issues for management ethics
• 2 The ethics of business communities
• 3 The ethics of globalization
• 4 The ethics of corporate social responsibility
• 5 The ethics of corporate legal personality
• Part II anagement ethics in organizations
• 6 Management ethics and public management
• 7 Management ethics, accountability and responsibility
• 8 Management ethics and organizational networks
• 9 Management ethics and consumers
• 10 Conclusions Possible ethics and ethical possibilities
• References
• Index