Management Ethics

Placing Ethics at the Core of Good Management

D. Melé

• Publisher: Palgrave Macmillan
• Year: 2011
• Print ISBN: 9781349319473, 9780230246300
• eBook ISBN: 9780230361560
• Topic: Business
• Subtopic: Business Ethics
• Index: Business

The recent financial crisis has awakened a renewed sensibility to ethics in business and management, and an increasing interest in a better understanding of how ethics and economics are intertwined. Managers and executives must understand not just the moral value of ethical behaviour, but also how this can strengthen and benefit the organization.

CHAPTER 1

WHY GOOD MANAGEMENT REQUIRES ETHICS

Management in industry at the present time has the blood of a new youth coursing through its veins. It is full of a new vigour and a new enthusiasm. Its practice is being overhauled, both from the scientific and from the ethical points of view.¹

OLIVER SHELDON (1894–1951), Chief Executive Officer and a writer on management in the 1920s

The author of these words was the CEO of Rowntree’s, a family business based in York, UK, whose activity was centered on confectionery.² In Sheldon’s time, Rowntree’s was a growing company. He successfully restructured it and adopted a more functional style and professional culture.

Along with his managerial activity, Sheldon wrote a book entitled The Philosophy of Management, which is a small gem of early management thought. Contrary to other influential thinkers of his age, he held that good management was much more than technique. It also encompassed concern for people and ethics.

In Sheldon’s view, good management should provide decent working conditions and should consult with employees and involve them in decision-making in the workplace. He thought that industry existed for more than the profit of shareholders. Service to the community was the primary motive and fundamental basis of industry.³

Management has been defined in a very simple but comprehensive way as “the art of getting things done through people”. According to Peter F. Drucker, “management is the specific and distinguishing organ of any and all organizations”.⁴

Understanding management in its broadest sense, it can be said that this activity has been exercised since ancient times.⁵ However, modern management thought began in the late 19th century. The manager’s task is to promote effective and efficient cooperation in order to achieve common goals in organizations. However, this is not all. Management is a human, not mechanical activity. It is carried out both by people and for people – conscious and free beings – and this involves ethics.

One very simple and intuitive approach to ethics is to consider the service or damage to those people who receive the effects of a human action. Another way is to pay attention to what is generally considered personal moral qualities. Integrity, trustworthiness, courage, sense of service, and their antonyms, are examples of these. Although ethics is actually much more complex than this simple outline, this introduction may be sufficient for the purpose of this chapter. We will try to explain ethics more extensively in the next chapter.

Here we will firstly discuss how ethics, in a positive or negative sense, are intrinsic to management. For this purpose, we will begin by analyzing the dynamism of the manager’s action, including the effects on both the agent (manager) and the recipients of the action, and its subsequent consequences. We will argue that ethics are embedded in management in three different ways: (1) through managerial decisions, (2) through the ideas and values (ethos) which drive the practice of management and (3) through the manager’s moral character. We will then consider the favorable consequences that ethics has in management, and finally we will discuss why good management requires ethics.

THE MANAGER’S ACTION AND ITS DYNAMISM

In order to understand why ethics is an essential part of good management, it is necessary to consider the manager’s action and its dynamism, that is, the effects of such action and the subsequent consequences for future actions. At this point it is important to escape from the narrow view of managerial action focused exclusively on efficiency and economic results and to consider the whole picture of the manager’s action, including its effects and the response of those who in one way or another are recipients of that action (Figure 1.1).

As with any human action, the manager’s action has effects which are both external and internal for the agent (the manager, in our particular study).

External effects

A manager’s decision and subsequent action bring about three different types of external effect:

FIGURE 1.1 Dynamism of the manager’s action

Material or business results, achieved in pursuance of a certain aim associated with the action. These results can be measured in economic terms by considering the sales income and expenses in developing, producing and selling a product and, consequently, its profitability. The number of sales, the purchasing of the product by different groups of people, and the market share are other possible measures related to business results. In more general terms, material results express the effectiveness of achieving a goal and efficiency in the use of resources.

People impact. Satisfying people’s needs and desires comes before business results. The latter are a consequence of offering what people want. A first impact on people is satisfaction or dissatisfaction with the product and how it is sold. Buyers will also acquire learning through the purchase process (treatment received, reliability of the salesperson, accuracy of the information provided, and so on). The people impact may even be wider than this. Let us consider, for instance, the case of an educational product with innovative software. Apart from satisfaction caused, the product will probably have a certain impact on the student learning process. In addition, some people may get a job promoting and selling this product. The whole picture of a manager’s action considers that the immediate external effects can bring about further effects or consequences. Thus, the introduction of this product may have consequences for the educational climate, or may spur a journalist to write an article for or against, or may spark a certain reaction from consumer associations if the supposed educational purpose is doubted.

Environmental impact. The manufacturing of the product can generate waste and pollution. In the case considered, packaging of the educational software, and the product itself, especially its disposal, may also have certain impacts on the natural environment.

Internal effects

Taking a decision and performing an action also brings about internal effects for the agent, and these effects can generate learning which will influence future actions. Three internal effects can be distinguished:

Psychological and physical effects. Actions can have both emotional and physical effects, expressed in terms of satisfaction or dissatisfaction, anger, joy, anguish, fatigue, nervous tension and so on. These effects will be remembered by the agent and create certain attitudes which will influence his or her subsequent actions. Taking into account his or her emotional experience, the manager will foresee if a certain action would cause satisfaction or other psychological or physical effects, and this can be motivation to perform or not perform similar actions in the future. With the previous example, the manager who introduced the educational software product may have experienced difficulties in promoting it, but also satisfaction from the positive response of customers and from the results achieved.

Operational learning. Agents learn by acting and this learning may be applied in subsequent similar actions. The learning includes acquiring practical experience and technical skills, a greater ease in performing similar actions and in interacting with people like those the agent has already dealt with. The manager can learn how to sell the product, which arguments are more convincing, how to judge the proclivities and tastes of the buyer and so on. Operational learning, therefore, increases managerial skills acquired by acting.

Moral learning. The agent has a greater or lesser awareness of how an action serves or damages people and this causes a certain impact on the agent, encouraging a certain disposition to act in the same way in future actions. Being aware that the product is sold with fairness, without deception or fraud and makes a positive contribution to education generates a good moral conscience and a disposition to similar good behavior in the future. Justice, honesty and a sense of responsibility are some stable dispositions (moral habits) that can be acquired by acting. Courage and self-mastery exercised through the action also bring about the corresponding dispositions in the agent, shaping his or her moral quality. These dispositions will be present in future actions.

Dynamism of the action effects

Both external and internal effects have an influence on the agent. External effects have repercussions on the agent, firstly from business results. They provide rewards in different ways, including money, prestige, power and so on. In contrast, these effects may also be negative. The impact on people and the environment has repercussions for the agent, too. People receive the action impact and learn whether or not it is favorable to their interests. They also perceive the moral quality of the action and evaluate the integrity and honesty of the agent. As a consequence, they respond to the agent in favorable or unfavorable terms, praising or recommending the product, being predisposed to buy other products of the same brand and so on, or the contrary. Environmental impact can also be evident, either directly or through people for or against a managerial action. In summary, the reactions of people and, to some extent, that of the environment, provide conditions, favorable or otherwise, for future managerial actions.

Internal effects, as noted, have an influence on managerial attitudes, skills and in the development of the moral quality of the manager. Internal effects are cumulative and in each situation the manager – like any other human being – is endowed with the internal effects of his or her previous actions. Managers have skills and experience acquired through their actions and certain moral habits, good or bad, also acquired through their deliberate and free actions. Thus, there are managers with great integrity and others with less. In a certain sense, each manager is a result of his or her biography, being made up of a great number of deliberate and free actions.

ETHICS IN THE MANAGER’S DECISIONS

We can find ethics as an intrinsic element of the manager’s decisions, and consequent actions, by considering that (1) managers, in being rational and free agents, have the capacity to experience responsibility and bear it, and (2) human actions involve morality, since they affect people and the environment for good or bad.

Responsibility inherent in any deliberate and free decision

Moral responsibility is a key concept in ethics, and a generally shared experience. This means being answerable for one’s own decisions regarding good or bad. We may well agree that “most people, most of the time, take, or want to take, responsibility for the effects of their decision and the corresponding actions on others”.⁶ Ethics presupposes the capacity to make decisions and to act in one way or another or even to refrain from a certain course of action.

The manager’s actions are, first of all, human actions, carried out with deliberation and freedom. Like any human adult with sound mental health, managers are capable of reflecting on their actions, on the situation in which they find themselves and the foreseeable consequences of such actions. They form intentions about how they will act and, what is more, they experience that their actions are their own, that is, they proceed from their own freedom; and consequently they are aware that they should answer for what they have decided and done. Being the author of his or her own actions, the manager bears the responsibility inherent in any human action.

Societies, too, from very ancient times have held that people – including managers – are responsible for their actions, although such responsibility can be attenuated or fully excused by certain cognitive, psychological or social factors. This is the basis on which people deserve praise or blame for what they do and the justification for penal codes.

There are vast studies on legal responsibility, including that of managers, which develop the idea that managers bear certain responsibilities in accordance with the law. But beyond legal responsibility derived from legal duties, managers bear moral responsibility for their actions derived from the above-mentioned human capability of reflecting on one’s own actions and their consequences, and being aware of how these affect people. In some cases, legal d...

Table of contents

• Cover
• Title
• Copyright
• Contents
• Preface
• Chapter 1: Why Good Management Requires Ethics
• Chapter 2: Basic Ethics for Good Management
• Chapter 3: Ethics in Managerial Decision-making
• Chapter 4: Centrality of the Person in Management
• Chapter 5: Managing Corporate Responsibility and Sustainability
• Chapter 6: Moral Competencies of the Manager
• Notes and References
• Author Index
• Subject Index