Absence of Ethical Management - Literature review Example

CAL – WK 10 saleh alothman Word Count: 2,937 Excluding References. In law a man is guilty when he violates the rights of others. In ethics he is guilty if he only thinks of doing so. Immanuel Kant Introduction Ethics can be defined as the consideration of what is morally right or wrong. It is also about measuring our own characters and actions against what we believe to be moral and ethical. In this module, we considered various thinkers on ethical subjects, each of whom put forward their own ideas as to what is ethical. Our actions are directed by what we believe to be correct or wrong , and this comes from no printed text book , but from the lessons we and others have learned during our lives, learning both from our mistake sand from what works out. Richard Paul and Linda Elder of the Foundation for Critical Thinking defined ethics as “a set of concepts and principles that guide us in determining what behavior helps or harms sentient creatures.”(Elder and Paul 2005). This means that it is our behavior that pushes ethics and morality. Morality is the principles of morality, and ethics is the way these are worked out, but the two words are sometimes interchanged. In this module we looked at a number of facets of ethics, including the personal perspective. All considered were ideas about collaboration and looking at things from a wide, cultural viewpoint, whether within an organization which could be described as a micro-culture , a collaborative perspective and as an overall cultural perspective. This included a micro cultural view as in an organization and also looking at wider society, a macro cultural view. A number of theories were discussed during the module. These varied, but all agreed that it was important that a company be led by ethical ideas:- 1. Failure to create policies which are ethically strong will bring about damage to society, and the environment and will also be economically damaging. The organization’s prospects for the future, as well as its processes and reputation, will be damaged. 2. Taking an ethical slant to decisions will produce a number of benefits when high ethical standards and values are demonstrated clearly. 3. An ethical ethos must be promoted from the highest levels in an organization if it is to be successful. 4. There is a great demand for management information which is of high quality about performance socially, environmentally and ethically, which can help to measure possible impacts in relation to the environment and society. Such information can assist in compiling reports that show the effectiveness of management arrangements within an organization. 5. The strategies of a company must include ethical ideas in their business models and must be a necessary part of any decision making. 6. The leaders within an organization need to show by example their ethical approach, and there should be recognition and reward of such ethical standing. 7. Non-executive directors need to take a custodial role to make sure that executives are creating a business which is sustainable . 8. When faced with problems business leaders must be ready to look at ways of dealing with them which are ethical. This is about more than cost cutting, but about reducing risk for the organization. 9. Business leaders require a broad spectrum of skills as they work as a team when evaluating and quantifying ethical difficulties. 10. Organizational decision making must always involve social, ethical and environmental aspects in order that innovation can take place and be sustained. Absence of Ethical Management Within my own organization there is insufficient ethical value and appropriate conduct codes. Despite this it is aiming to build an excellent reputation as a leading organization in its field. There are a number of complexities in MILITRAN summarized below:- - Clashes in both internal and external environments as to the correct business practices to be adopted. - Struggles for power in the organization between managers and directors. - Clashes about which management styles are to be followed in the organization. This needed to be a balance between conventional management styles and those imposed by the government, but this has never been successfully carried out. - There is discrimination by both the management and the board of directors with regard to stakeholders. They give priority to clients over all other stakeholders, and especially with regard to employees. I identified the main problem as follows:- The organization does not really have a proper code of conduct regarding ethics as part of its ethos. This lack has brought about the following things:- - There is a lack of openness between the everyday management and the board of directors. There have been numerous clashes which has caused stress and even meant the loss of members of the management. -Because ethical actions and morality are not promoted within the company a number of unethical decisions have been made which have in turn caused damage to the reputation of the company. - These difficulties have affected our reputation with clients and millions of possible profit have been lost. My company requires distinctive ethical policies embedded in its strategies as an organization. At present there is a combination of traditional ideas plus operation management styles. The result was unbalanced. Why was this? How can we make sure that the ethical policies applied within my company are really based on what should be expected from an organizational such as this? Theoretical view on Ethical Management- Ethicists Views When considering ethics from a theoretical point of view, I found a number of major aspects of ethics. I think that understanding the basics of ethics in terms of the contribution of several ethicists would assist us in understanding this topic better. Ethics is thought of as a complex subject because its analysis relates to individual views as to what is wrong or correct. When looking at the ideas of the cognitivists, who believe that all education or learning leads to a goal, versus non cognitive ideas, we are considering what we believe to be ethical or non-ethical. This is a personal view which cannot necessarily be applied to everyone if we want them to behave ethically. F.A Hayek (Gick2003) wrote about the cognitive moral development framework (CMD) and helped to clarify the tensions which can exist between a person’s individual morality and the managerial responsibilities he holds which on occasions do conflict. Ontologically ethics is about the value output of properties, but there still needs to be a consideration of all parties involved with regard to ethics, how these have value and how they can guide and stimulate actions. 1.Meta Ethics: So as to learn about the theories of ethical plans and their true worth the objective of meta ethics was to come to an understanding of what is meant by something being right or not. 2.Normative Ethics: This is also referred to as Moral Theory. It depends upon defining moral status and can be related to deciding upon a particular ethical way of acting. Carmelo et al (2008, pg.491) look at ethics from a normative view (Donaldson and Preston, 1995), Organizations are in a position to challenge and balance the interests of all stakeholders looking beyond mere economic value, and allowing managers to act in ethical ways (Jones and Wicks, 1999; Reynolds et al., 2006). 3. Descriptive Ethics, also known as Comparative Ethics, is the study of moral beliefs, and considers ethics by looking at the preferences of a society or culture which can then be related to the study of codes of ethics used by a variety of groups. 4. Applied Ethics: This is about achieving the highest moral results in particular real-life situations. We were concerned with business ethics, also sometimes referred to as refer to as Corporate Ethics. It is about the business conduct of both individuals and larger organizations. The presence of ethics in such situations helps to regulate details of behavior that lie outside government control. Large institutes have emerged which have only a limited relationship and care for the societies in which they operate. Formal ethical regimes have been developed in order to promote values which are non-economical values such as codes of ethics and charters of social responsibility. My particular areas of concern were about understanding where these four approaches would actually fit into our pattern of understanding and where our present situation is positioned ethically The final result is the achieving of a well-structured ethical business approach when looking at all areas which relate to our view and definition of ethics , and also how this can be worked out in what we do. CAL & Literature Views on Ethics, Sustainability and Social Impact. As part of our critic we looked at scholarly theorists and practitioners and tried to understand what challenges, considerations, possible complications, and future achievements with regard to ethical business management. Various suppositions and their potential impact when implemented by management were considered ( Cunliffe 2004). Management responsibilities include having an ethical commitment to a business organization (Badaracco (1992) in order to avoid disagreements, avoiding possible frustration and cynical responses from members. Commonly , with regard to public roles, there can be an absence of morality in relationships which are based upon practical, technical and formal matters.. Holt (2006, pg. 1660). Personal judgements by members of the management team have had an effect upon their decision making( Barnett 2012, pg. 65). The lack of an ethical code within my organization (Langlois and Schlegelmilch (1990) or rather the resulting non-commitment by management towards employees, is done in the absence of any stress upon the necessity of using ethical principles as a way of protecting an organization from harm (Mathews , 1987, Lefebvre and Singh ,1992 and Wood .2000). I believe that what is required is to allow employees to think of ethics an integral part of their commitment to the company. These principles should be promoted as part of the organizations future aims and long term plans with regard to its reputation, continuation and , success ( Svensson & Wood (2008). One of the most influential authors is Verhezen (2010, pg. 187) who considered issues relating to awareness of ethics and how necessary they are for a society. There are however a number weaknesses on this topic since ethical education has never been a part of the company. It was more concerned in the past with command and having control (Verhezen (2010, pg.190) where an absence of transparency in many areas within the company’s culture. Allio (2011, pg. 5).considers ethical management practices to be an important part of any business environment. The capacity to achieve ethical leadership as apposite conduct in interpersonal relationships and individual actions is in a two way communication method which that can add to such areas as areas previously of concern such as reinforcement and decision making ( Stouten et al ,2012 pg. 120). There was always a stress on personal values including courage, justice and temperance ( Riggio, Zhu, Reina, and Maroosis (2010, pg.2) and these have played important roles in making sure that employees are treated respectfully and fairly . This results in positive responses on their part and increases their commitment towards moral and ethical values. As a company we have gradually moved on from a Micro view of management ethics towards a Macro phase which has begun to include responsibilities which satisfy stockholders (Parmer el al 2010). Management and leaders were involved in considering stakeholders as a major factor in business with respect to responsibility and accountability (Parmer el al 2010). The majority of leaders in my organization lack direction about the importance of stakeholders and this resulted in conflict ( Goodpaster,1991, pg. 54) with regard to :- • Understanding the need to connect all stakeholders - customers, suppliers, staff, management , financiers and communities in order to achieve greater interaction. (Parmer et al, 2010). • Clashes connected to ethics and capitalism. The main aim was to increase free enterprise, but there hasn’t been sufficient attention paid to linking this with ethical actions in order to ensure healthy relationships among all concerned. • There are faults in the ways managers actually consider the management role (Parmer et al, 2010) . • Implementing CSR as part of management strategies has made things more complex because CSR and the ethics involved don’t result in added value and there is a lack of responsibility towards stakeholders in general, rather than just clients (Parmer et al 2010, pg.413). Corporate Social Responsibility ( CSR) has become an important ethical concern. Bowen (1953, page 6 ) defined CSR as being ‘‘the obligations of businessmen to pursue policies, to make decisions, or to follow lines of actions which are desirable in terms of the objectives and values of our society’’ Johnson (1971, pg 421) mentions four important things needed for achieving CSR successfully. Such a successful plan would three aspects :- economic, environmental and social aspects. Dhiman S. (2008, pg. 51) described this as ’the triple bottom line’. • Stakeholders approach • Responsibility to society • Maximizing profits • Business Expertise What is TBL? Vanclay F. (2004, pg.267) defined it as s the “framework for measuring and reporting corporate performance against economic, social and environmental parameters.” According to the impact we are anticipating with regard to the environment or society, there will always be a need to generate awareness with high levels of sustainability ranged alongside with the company’s structures , both internally and externally. This reduces failures caused by clashes between these internal and external frameworks .Iacona (2011) stressed corporate power as an important aspect which must be considered in discussions about development which is sustainable. It will bring about a better quality of life when economic, social and environmental aspects are aligned within the company’s internal and external boundaries. , David Vogel ( needs reference and date) had an optimistic view about how significant changes made in corporate behavior would result in huge improvements in social responsibility when considering social and health benefits, adjusting prices and being more aware of environmental issues. Transparency was important to both managers and stakeholders according to relevant literature , especially when there is a great need for honesty with regard to social values and the limitations businesses face when engaging in dialogues about ethics (Pava, 2008 pg. 808). There was always the possibility of linking CSR with organizational strategies ( Porter, M.E. and Kramer, M.R. (2006). This would allow companies to see CSR as an opportunity for competitive advantage and innovation and. (Porter, M.E. and Kramer, M.R. (2006, pg. 82). A healthy society needs successful companies and the reverse is also true (Porter, M.E. and Kramer, M.R. ,2006, pg. 84). Grinde, J. and Khare, A. (2008) looks at TBL:- Viewing the environment, human society and economy as a unified, complex adaptive system poised on the edge of chaos, should create concern about sustainability as mankind continues to increasingly disrupt those systems, pushing them out of equilibrium ever closer to the edge of chaos”.(pg. 120). My own organization is one of many where managers, as described by Waldman, D. A. and Siegel, D. (2008, pg.119) are not directly accountable to their societies, except that they are obliged to conform to its laws and regulations. There are many challenges which face leaders in achieving consistency in performance between financial, environmental and social benefits for all stakeholders both internally and externally (Cortez, M. A. A. (2011 pg 20). Additional thoughts – A perfect scenario During recent months many changes have taken place in our company because of irreconcilable differences between the board of directors and managers. I still believe that there are recommendations which could help to lessen the severity of the situation. Many of the ethical issue raised are debatable. The following factors should be considered - When we speak about sustainability, we are actually asking “Are we going to be around?” There is a need to promote trust and enhance the reputation of the company. - There are pressures being exerted by society which should result in an organization being ethical. - in most cases It is more about reputation and maintaining it, which brings a cost burden. - The overlap between moral imperative and business objectives should be minimised. - Environmental issues should be treated as economic issues. - Reputational risk should be seriously considered within business planning. - Unethical acts due to greed and present compensation structures should be investigated and dealt with. - Organizational values and cultural change are the responsibility of management and the board must make sure it is directed correctly. During the first two years we kept our reputation growing, but after this greed and internal clashes prevailed and affected every area of the company. Issues of morality and ethics became of secondary importance, especially to management, who were primarily concerned with gaining control and power away from the directors. They managed the business according to their own criteria. Conclusion Ethical business is not new. In a report by Competitiveness Report – European Commission 2009) there is a description of organizations who have implemented ethics in their businesses , and how this had a positive impact according to on five elements of competiveness:-. 1. Human resources 2. Financial performance 3. The capacity to innovate Ethical business is not a new concept, but in recent times it has become an important issue globally. There is a possibility of coming up with a win-win situation in which organizations obtain sustainable benefits and TBL. The Competitiveness Report – European Commission ( 2009) 4. Management risk and reputation 5. Clientele At the present time the younger generation seen more aware than their elders were about the effects of global business upon society and the environment. This has led to the intensive promotion of ethical issues. It is to be hoped that such ethics are applied as soundly as the literature on the subject describes. Reference List Allio, R.J. (2011) ‘Reinventing management purpose: The radical and virtuous alternatives’, Strategy and Leadership, 39(4), 4-11. Badaracco, J.L., Jr. (1998) ‘The discipline of building character’, Harvard Business Review, 76 (2), pp.114-124 Badaracco, J.L., Jr. (1992) ‘Business ethics: four spheres of executive responsibility’, California Management Review, 34 (3), pp.64-79 Brown, J. (2006), “Who Really Needs a Compliance Program? Journal of Health Care Compliance — July – August 2006, pg. 51-75 Cennamo, C., Berrone, P. and Gomez-Mejia, L.R. (2009) ‘Does stakeholder management have a dark side?’, Journal of Business Ethics, 89(4), 491-507 ( Accessed 27th January 2013) Cook, M. and Syse, H. ( 2010) “What Should We Mean by ‘Military Ethics’? Journal of Military Ethics, Vol. 9, No. 2, 119_122, Cortez, M. A. A. (2011) ‘Do markets care about social and environmental performance?’, Evidence from the Tokyo Stock Exchange. Journal of International Business Research, 10(2), 15-22. Cunliffe, A.L. (2004) ‘On becoming a critically reflexive practitioner’, Journal of Management Education, 28 (4), pp.407-426. Desrochers, P. (2010) ‘The environmental responsibility of business is to increase its profits (by creating value within the bounds of private property rights)’, Industrial and Corporate Change, 19(1), 161–204. Available from: http://ezproxy.liv.ac.uk/login?url=http://openurl.ac.uk/?title=Industrial and Corporate Change,&volume=19&issue=1&spage=161&date=2010 Dhiman, S. (2008) ‘Products, people, and planet: The triple bottom line sustainability imperative’, Incomplete reference, needs publisher and place Freeman, I. and Hasnaoui, A. (2011) ‘The meaning of corporate social responsibility: The vision of four nations’, Journal of Business Ethics, 100(3), 419-443. Available from: http://ezproxy.liv.ac.uk/login?url=http://openurl.ac.uk/?title=Journal of Business Ethics&volume=100&issue=3&spage=419&date=2011 Galbreath, J. (2009) ‘Building corporate social responsibility into strategy’, European Business Review, 21(2), 109-127. Available from: http://ezproxy.liv.ac.uk/login?url=http://openurl.ac.uk/?title=European Business Review&volume=21&issue=2&spage=109&date=2009ournal of Global Business Issues, 2(2), 51-57. Gick, E. (2003) ‘Cognitive theory and moral behavior: the contribution of F. A. Hayek to business ethics’, Journal of Business Ethics, 45 (1/2), pp.149-165. Goodpaster, K.E. (1991) ‘Business ethics and stakeholder analysis’, Business Ethics Quarterly, 1(1), 53-73. Available from: http://ezproxy.liv.ac.uk/login?url=http://openurl.ac.uk/?title=Business Ethics Quarterly&volume=1&issue=1&spage=53&date=1991, ( Accessed 27th January 2013) Grinde, J. and Khare, A. (2008) ‘The ant, the grasshopper or Schrödinger’s cat: An exploration of concepts of sustainability’, Journal of Environmental Assessment Policy & Management, 10(2), 115-141. Available from: http://ezproxy.liv.ac.uk/login?url=http://openurl.ac.uk/?title=Journal of Environmental Assessment Policy and Management&volume=10&issue=2&spage=115&date=2008 ( accessed 27th January 2013) Hadders, H. (2009) ‘The adaptive quadruple bottom line scorecard: Measuring organizational sustainability performance’, Canadian Sustainability Indicators Network. Available from: http://www.csin-rcid.ca/downloads/csin_conf_henk_hadders.pdf ( accessed 27th January 2013) Holt, R. (2006) ‘Principals and practice: rhetoric and the moral character of managers’, Human Relations, 59 (12), pp.1659-1680 McManus, J. (2011) ‘Revisiting ethics in strategic management’, Corporate Governance, 11(2), 214-223. Available from: http://ezproxy.liv.ac.uk/login?url=http://openurl.ac.uk/?title=Corporate Governance&volume=11&issue=2&spage=214&date=2011 McMaster, H., ‘True to Our Values: Reflections on Military Ethics in Trying Times’, Journal of Military Ethics, Vol. 9, No. 3, 183_194, 2010 Menz, K. (2010) ‘Corporate social responsibility: Is it rewarded by the corporate bond market? A critical note’, Journal of Business Ethics, 96(1), 117-134. Available from: http://ezproxy.liv.ac.uk/login?url=http://openurl.ac.uk/?title=Journal of Business Ethics&volume=96&issue=1&spage=117&date=2010 Stouten, J., van Dijke,M. and De Cremer, D (2012), “Ethical Leadership, An Overview and Future Perspectives”, Journal of Personnel Psychology ; Vol. 11(1):1–6 Wolfendale, J. ,( 2009) ‘Professional Integrity and Disobedience’ The Military Journal of Military Ethics, Vol. 8, No. 2, 127_140, Norman, W. and MacDonald, C. (2004) ‘Getting to the bottom of "Triple Bottom Line"’, Business Ethics Quarterly, 14(2), 243-262. Available from: http://ezproxy.liv.ac.uk/login?url=http://openurl.ac.uk/?title=Business Ethics Quarterly&volume=14&issue=2&spage=243&date=2004 Paul, R. & Elder, L. (2005). The miniature guide to critical thinking: Concepts and tools. Foundation for Critical Thinking. Pava, M.L. (2008) ‘Why corporations should not abandon social responsibility’, Journal of Business Ethics, 83(4), 805–812. Available from http://ezproxy.liv.ac.uk/login?url=http://openurl.ac.uk/?title=Journal of Business Ethics&volume=83&issue=4&spage=805&date=2008 ( accessed 27th January 2013) Parmar, B. L., Freeman, R. E, Harrison, J. S., Wicks, A. C., Purnell, L. and de Colle, S. (2010) ‘Stakeholder theory: The state of the art’, The Academy of Management Annals, 4(1), 403-445. Available from: http://ezproxy.liv.ac.uk/login?url=http://openurl.ac.uk/?title=The Academy of Management Annals&volume=4&issue=1&spage=403&date=2010 ( accessed 27th January 2013) Paul, R. and Elder, L. (2006). The Miniature Guide to Understanding the Foundations of Ethical Reasoning. United States: Foundation for Critical Thinking Free Press. p. np. ISBN 0-944-583-17-2 Porter, M.E. and Kramer, M.R. (2006) ‘Strategy & society: The link between competitive advantage and corporate social responsibility’, Harvard Business Review, 84(12), 78–92. Available from: http://ezproxy.liv.ac.uk/login?url=http://openurl.ac.uk/?title=Harvard Business Review&volume=84&issue=12&spage=78&date=2006 ( Accessed 27th January 2013) Robertson, C. J. and Athanassiou, N. (2009) Exploring business ethics research in the context of international business, Management Research News, 32(12), 1130-1146. Santana, A. (2012). ‘Three elements of stakeholder legitimacy’, Journal of Business Ethics, 105(2), 257–265. Available from: http://ezproxy.liv.ac.uk/login?url=http://openurl.ac.uk/?title=Journal of Business Ethics&volume=105&issue=2&spage=257&date=2012 Small, M.W. (2011) ‘Developing wisdom and moral duty in management’, Journal of Management Development, 30 (9), pp.836-846. Svensson, G. and Wood, G. (2008) International standards of business conduct: Framework and illustration, European Business Review, 20(3), 260-274. Schwab, K. (2008) ‘Global corporate citizenship: Working with governments and civil society’, Foreign Affairs, 87(1), 107-118. Available from: http://ezproxy.liv.ac.uk/login?url=http://openurl.ac.uk/?title=Foreign Affairs&volume=87&issue=1&spage=107&date=2008 Verhezen, P. (2010). ‘Giving voice in a culture of silence: From a culture of compliance to a culture of integrity’, Journal of Business Ethics, 96(2), 187-206. Available from: Vanclay, F. (2004) ‘The triple bottom line and impact assessment: How do TBL, EIA, SIA, SEA and EMS relate to each other?’, Journal of Environmental Assessment Policy and Management, 6(3), 265–288. Available from : http://ezproxy.liv.ac.uk/login?url=http://openurl.ac.uk/?title=Journal of Environmental Assessment Policy and Management&volume=6&issue=3&spage=265&date=2004 Cennamo, C., Berrone, P. and Gomez-Mejia, L.R. (2009) ‘Does stakeholder management have a dark side?’, Journal of Business Ethics, 89(4), 491-507 ( Accessed 27th January 2013) Waldman, D. A. and Siegel, D. (2008) ‘Defining the socially responsible leader’, Leadership Quarterly,19(1), 117-131. Available from: http://sfxhosted.exlibrisgroup.com.ezproxy.liv.ac.uk/lpu?title=leadership+quarterly&volume=19&issue=1&spage=117&date=2008&issn=&eissn= ( accessed 27th January 2013). Wikström, P. (2010) ‘Sustainability and organizational activities – three approaches’, Sustainable Development, 18(2), 99-107. Available from: http://ezproxy.liv.ac.uk/login?url=http://openurl.ac.uk/?title=Sustainable Development&volume=18&issue=2&spage=99&date=2010 Read More