Ethical Issues between Managers and Employees - Essay Example

? Ethical Issues between Managers and Employees Ethical Issues between Managers and Employees Introduction Contemporary business organizations have become more intricate and complex given the factors that influence their operations. Businesses encompass a majority of the world’s human activities due to the levels and responsibilities of diverse personnel needed to perform and achieve the defined goals. Managers and employees, for example, comprise an organization’s stakeholders, and are directly accountable for the production of goods or services that cater to the needs of the clients. The daily interaction, collaboration and interpersonal relationships required from managers and employees create tensions and issues that are considered normally pervading the working environment. Apart from operational concerns, managers and employees are faced with contrasting beliefs, values and preferences that occur because of the diversity in personalities, traits, cultural orientations and demographical factors that form each individual in the organization. These beliefs fall under ethical issues in business, defined as ““the principles and standards that guide behavior in the world of business” (Ferrell, Fraedrich & Ferrell, 2009, 6). In this regard, the current study aims to proffer a review of related literature on the subject of ethical issues between managers and employees. The theoretical framework and impetus for the review came as a result of an interview with a legal researcher for the Saudi – Central Bank, who identified problems which are ethical in nature and existed in their organization, currently affecting job satisfaction and productivity of employees. Ethical Issues in Business Organizations Ethical behavior have been identified to manifest actions that are “morally accepted as "good" and "right" as opposed to "bad" or "wrong" in a particular setting” (Sims, 1992, 506). More importantly, Sims averred that “the effective management of ethical issues requires that organizations ensure that their managers and employees know how to deal with ethical issues in their everyday work lives. Therefore, organizational members must first understand some of the underlying reasons for the occurrence of unethical practices” (Sims, 1992, 507). According to Martires and Fule (2004), the culture of an organization influences the ethical climate that pervades. Organizational culture is a set of symbols, myths, ceremonies that reflect the underlying values and beliefs of the organization or its work force. This statement is supported by Hunt (1991) and Schneider and Rentsch (1991) who emphasized that there are factors that influence diversity in ethical climates of organizations, to wit: “personal self-interest, company profit, operating efficiency, individual friendships, team interests, social responsibility, personal morality, rules and standard procedures, and laws and professional codes” (cited in Sims, 1992, 510). As such, more detailed ethical issues facing human resources in organizations, particularly between managers and employees, are revealed by CiteHR (n.d.) to wit: (1) “discrimination issues include discrimination on the bases of age (ageism), gender, race, religion, disabilities, weight and attractiveness; (2) issues surrounding the representation of employees and the democratization of the workplace: union busting, strike breaking; (3) issues affecting the privacy of the employee: workplace surveillance, drug testing; (4) issues affecting the privacy of the employer: whistle-blowing; (5) issues relating to the fairness of the employment contract and the balance of power between employer and employee: slavery, indentured servitude, employment law; and (6) occupational safety and health” (CiteHR, n.d., par. 1). In the case of the legal researcher for the Saudi – Central Bank, the ethical issue that existed between managers and employees was manifested in the way the manager discriminated against underperforming employees which further undermined their capacities for personal and professional growth. There have been studies that supported the contentions that in performance appraisals and evaluation, biases exist due to various factors: favoritism and politics (Heneman, 2003) and issue of fairness and equity, lack of trust in management, and lack of resources or money for rewards (Eremin, et.al, 2010). On the other hand, supervisors expressed difficulties in handling poor performers as revealed from appraisal reports due to the need to exercise objectivity in identifying performance problems (Daley, 2008). Concurrently, the problem of rating poor performers is discussed in the study conducted by Brown et al. (2010) regarding significant repercussions in terms of future performance of employees’ deemed to be given low ratings as affecting job satisfaction, organizational commitment, and intent to quit (376). Importance of Ethics in Business Business practitioners interact with an array of stakeholders in capacities ranging from managers, employees, customers, suppliers, creditors, directors, stockholders, government agencies, and the community, as a whole. Organizations, therefore, are obliged to abide by a set of rules and standards which guide their actions and decisions in order to protect the interests of stakeholders they serve. Different organizations are governed by distinct code of ethics encompassing principles and values of integrity, objectivity, competence, respect and protection of legal and personal rights, confidentiality, nondiscrimination, promotion of wellness, refusal to participate in illegal and unethical acts, following scientific and ethical research procedures and compliance with state and federal laws, over and above the rules and regulations set in the companies’ policies, procedures and code of discipline. Conforming to ethics in business would assist individuals, particularly managers and employees, as part of the organization, to discern their personal values that affect or influence the performance of their required responsibilities. By learning theoretical ethical concepts and their applications in business, individuals are made aware of the need to recognize relationships between legal and ethical decisions. Business ethics discusses the concepts on leadership and management where managerial responsibilities for the conduct of subordinates need to conform to ethical codes for guidance and compliance. The study of ethics give direction to promote the ethical behavior expected of stakeholders in the business setting. It assists individuals and groups in understanding the ways to cope and address conflicts in the organizations according to ethical theories and moral principles. Firms ultimately realize that abiding by ethical standards; their respective actions would pay off in terms of better financial performance. When employees exhibit higher performance and productivity due to an environment of trust, employees are therefore more loyal contributing to low turnover, and preponderance for higher investor loyalty, among others. Managers, who comply with policies on ethics, nondiscrimination, and cultural diversity, social responsibilities, the concern for the environment and the community, achieve their organizational goals more efficiently with the support from their various stakeholders. According to Calle (2009), the major principles of professional ethics focus on the following: (1) avoiding conflicts of interests; (2) observing confidentiality and privacy; (3) transparency; (4) and full dedication and devotion to one’s responsibilities (pars. 17 – 20). The author acknowledged the element of trust as a crucial foundation for ethics in business, as he averred that “a small breach of ethics is often known only between a few people. But this knowledge can destroy trust between fellow employees, and from there make its way up the ladder, destroying trust between employee and supervisor, and between divisions of companies. When ethical lapses become rampant, employee productivity declines, loyalty follows, soon major breaches such as employee theft begin to appear. Eventually, and worst of all, the most important advantage a firm has, the trust between a firm and its clients, erodes” (par. 4). Likewise, in another research by Pitts and Kamery (2003), the authors emphasized the need to adhere to ethical standards to avoid legal disputes and litigations. The article cited Gellerman (1986) as revealing that from the 500 largest corporations in the United States; more than 67% were found to have committed illegal behavior. The repercussion of this is, of course, costly legal expenses, erosion of trust and image, and the need for greater transparency and vigilance along the levels of organizational hierarchy. As averred, “executives and managers are often held liable for violations that occurred below them even if they did not know about or condone the situation” (Pitts and Kamery, 2003, 1). Strategies for Promoting Ethical Behavior in Organizations Diverse research studies have supported the need to promote ethical behavior in organizations. According to Schermerhorn (1989) and Otten (1986), there are guidelines that would assist management in addressing ethical issues through a seven step process: “(1) recognize and clarify the dilemma; (2) get all the possible facts; (3) list your options--all of them; (4) test each option by asking: "Is it legal? Is it right? Is it beneficial?"; (5) make your decision; (6) double check your decision by asking: "How would I feel if my family found out about this? How would I feel if my decision was printed in the local newspaper?"; and (7) take action” (cited in Sims, 1992, 513). When managers face ethical issues, enough retrospective time must be allowed to sort out the dilemma through a rational approach and determine possible consequences of one’s actions. By obtaining facts and not being led by surge of emotions, anxiety, anger or frustration, rational thinking with the assistance of colleagues could assist in the decision making process. The organizational climate must be designed in such a way that management recognizes the need to align values and preferences of both managers and employees who must work together towards the achievement of organizational goals. Otherwise, the financial condition of the organization would be affected by the ethical issues that pervade relationships between managers and the employees. On the other hand, Piper, Gentile and Parks (1993) recommended four steps to incorporate ethics in every individual’s lives: (1) creation of a mentoring community; (2) encouraging creative thinking; (3) using group dynamics and techniques to sort out complex ethical issues; and (4) cultivating perspectives that incorporate diversity in culture. These steps support the need for an ethical climate pursuant to an organizational culture that is adapted to ethical standards. Conclusion The review of literature through diverse researches on the subject of ethical issues between managers and employees supported the contentions that ethical issues exist in the organizations, primarily due to the diversity in the composition, values and preferences of managers and employees. It has been revealed that the organizational culture impacts the way ethical climate is observed and adhered to. The factors that influence diversity in ethical climates in organizations have been presented; as well as specific examples of ethical issues that exist between managers and employees. More importantly, the review validated the finding that managers who discriminate on underperforming employees tend to create more problems in terms of creating job dissatisfaction that could eventually lead to lesser organizational commitment and higher turnover. The importance of ethics in business discussed the advantages and disadvantages of incorporating ethics in organizations through acknowledging the outcome in terms of financial reward, greater productivity and promoting a good corporate image to the public. If left undetected, ethical issues could cost the organization expensive litigation and a high turnover, low morale and decreased productivity. In this regard, the seven step guide process to address ethical issues, as well as a four step recommendation to incorporate ethics in daily lives, were enumerated to assist management in addressing ethical problems in the organizations. Ethical issues and dilemmas in contemporary business organizations could be resolved through various rational approaches using the guidelines and standards that the organization is supposed to adhere to. When policies, procedures, codes of discipline are strategically designed to incorporate ethics in the organization, managers and employees are expected to comply and adhere to these rules. Appropriate sanctions, as defined in the organization’s code of discipline, should be imposed for violations of policies, especially those that related to ethical issues. As emphasized by Calle (2009): “Ethical behavior starts at the top. Before a company can expect to be viewed as ethical in the business community, ethical behavior within its own walls-to and by employees-is a must, and top management dictates the mood. Ethical behavior by the leaders of an organization will inevitably set the tone for the rest of the company-values will remain consistent. Further, a well-communicated commitment to ethics sends a powerful message that ethical behavior is considered to be a business imperative” (par. 10). Only when managers and employees work together, with strict conformity to ethical standards and codes of conduct, could the organization be deemed successful in their respective fields of endeavor, particularly in achieving their defined mission, vision and organizational goals. Total Word Count: 2004 References Brown, M., Hyatt, D. & Benson, J. (2010). “Consequences of the Performance Appraisal Experience.” Personnel Review, Vol. 39, No. 3, pp. 375 – 396. Calle, J. (2009). Ethics in Business. Retrieved 13 June 2011. < http://www.pro2net.com/x12209.xml> CiteHR. (n.d.). Ethics of human resource management. Retrieved 11 June 2011. < http://www.citehr.com/106391-ethics-human-resource-management.html> Daley, D.M. (2008). “The Burden of Dealing with Poor Performers: Wear and Tear on Supervisory Organizational Engagement.” Review of Public Personnel Administration, Volume 28, Number 1, pp. 44-59. Eremin, D.V., Wolf, J.F. & Woodard, C.A. 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