A Role of Ethics and Social Responsibilities in Management.
Ethics can be defined as a process of evaluating actions according to
moral principal of values(A.Alhemoud). Throughout the centuries people were
trying to choose between profit and moral. Perhaps, some of them obtain both,
but every time it could have roused ethical issues. Those issues concern
fairness, justice, rightness or wrongness; as a result it can only be resolved
according to ethical standards.
Setting the ethical standards for the way of doing business in
corporation is primarily task of management. Corporations have to maintain the
same standards as an individual person and, in addition, corporations, as
organizational units, have their own social responsibilities toward customers,
employees and society. However, any business should keep it's original purpose
of functioning - making profit. Balancing the traditional standards of
profitability and burden of social responsibilities is not an easy task. In
recent years it has been a trend of setting standards of corporate ethics
according to high degree of morale.
To be able to keep the ethical standards management must follow the law.
However, there are some complications in enforcing it. The law affects and is
affected by social forces and prevailing ethical standards. "Although the law
can codify societies ethical ____________________________________________________
____________________ Alhemoud, Ali " Management Ethics is Smart Business."
values, ethical decision making transcends the law in that 1) the law deals with
actions not with thoughts, and therefore it does not (and cannot) codify all
ethical requirements; and 2) an individual or a group may perceive a given law
as immoral, not as a guide to ethical behavior." ( A. Alhemoud). How, then, a
company can ensure that its code of ethics is both followed and enforced ? " .
..Defense firm such as General Dynamics and TRW, and an information company, Dun
& Broadstreet, have appointed internal ethics officers or ombudsmen. Whether
employees have faith in these safeguards against corporate retaliation is hard
to tell, though it is one step forward (The Economist August 19 1995)
The ethical codes of corporations that that get so important nowadays
also did not come into being at once. They emerged from individual ethical
standards and corporate consciousness. Moreover, the public demand for
prosecution of any violations of corporate, professional and business ethics has
been increased. Finally, mass media made possible for society reveal secrets
that were kept from public before. So, the business conduct regulations were
created to "draft guidelines for ethical conduct, develop a process for
monitoring business practices and recommend ways to correct questionable
activities." (J.Byrne) All these measures were taken to balance various social
responsibilities with the high degree of moral and sense of attainment.
Unfortunately, cooperation of unethical behavior of a manager with a
journalist may lead to an undesirable results. "Early in December 1995 , Smart
Money's editor-at-large James J. Cramer wrote an article for his monthly column;
Unconventional Wisdom, __________________________________________________________
______________ Alhemoud, Ali "Management Ethics is Smart Business."
Recommending four $2 to $6 "oprahn" stocks. Trading records show that at the
at the peak, Cramer's firm had paper profits of more than $2 million on the
stocks. The gain occurred because he had adopted at least three of the "oprhan"
sometimes before writing the article. Cramers article said that he was buying
one of the stock but did not disclose that"(F.Lalli). Clearly, neither the
management nor the editors had in any way cared of conducting the ethical
behavior and as the result the innocent investors were hurt.
On the other hand, being ethical can be clever marketing strategy.
Increasingly, consumers are swayed by "non-commercial" factors, such as whether
the product harms the environment . "Firms such as Ben & Jerry's, an ice cream
maker and Body Shop international, a cosmetics retailer, have enforced their
brands by publicizing their ethical standards...Calmins Engine , a maker of
diesel engines , made the product greener while lobbing for stricter pollution
laws. Dp Pont, a leading producer of ozone damaging CFCs, became an early member
of anti-CFCs lobby partly because it knew it was well ahead of its rivals in
developing alternative."( The Economist December 23 1996)
But ethical self promotion can backfire. As in the case of Body Shop
company that was publicly enforced to rephrase a statement that its product were
not tasted on animals (Some other companies did that in the past). This accident
made many consumers to question Body Shop ethical standards.
Another interesting issue in corporate management is social
responsibilities. Social ________________________________________________________
________________ Frank Lalli "A Question of professional ethics"
responsibilities can be defined as set of obligations an organization has to
protect and enhance the society in which it functions.(Ricky W. Griffin.
"Management"). There are a few main components of social responsibilities.
Any business has responsibilities to its customers. The paramount duty
in this respect is to provide customers with quality and safe products.
Unfortunately, not all businesses follow this rule. The example of such
deception is tobacco industry, which delibelatry manipulated with the level of
nicotine in cigarettes. Despite of declaration of managers, scrutinize research
made it clear that industry tried to maintain the addictive level of nicotine.
The purpose of it was far from humanistic - addicted smokers kept buying
cigarettes, making the industry prosperous and profitable. There has been a
number of other different customers' abuses such as sale of fruits with
overdosed chemicals, breast implants for women and etc.
Though, the responsibilities to its customers is crucial point of
management, the way managers treat employees is another parameter of evaluation
of companies ethical well- being. Unfortunately, the most concern of managers
is theirs own job rather than theirs employees.
Another problem is equal employment opportunities for everyone. Although
a lot was done to destroy the system that kept women and minorities away from
the top management positions, many corporations still rely on white men's
stereotypes and prejudice. Women are considered just as accessories for men and
are not treated equally.
In fact, firms attitude toward employees often determines the way
employees feel about company. As a rule, corporate code of ethics contains the
pattern of behavior, an employer expect from employee.
Another responsibilities of the companies' management is to stockholders.
This usually rises a so called "agent problem" (Dyckman, Intermediate
Accounting). Managers are in control of the property stockholders. However, the
interests of these two groups may not be the same. As manager is looking for
more power and prestige, they can tend to less profitable operations. Also
corporate officials may vote for high salaries and bonuses for themselves,
decreasing the dividends of stockholders by that.
There is no particular solution for all of these issues. There is only
hope that ethical standards and social responsibilities would guide every
manager throughout his/her career. "Professional conduct should be governed by a
code of ethics that reflects positively on the practitioner and managerial
profession. Simply stated, nothing should prevent a manager from maintaining
high ethical standards and social responsibility in the quest for high
performance and quality."