Management Practice 2

Business Ethics

Management Practice – Level 2 2Future Managers

OR

• After completing this module, you will be able to:– Reflect on your own values and belief values and

systems and how they influence behaviour– Discuss how an individual’s ethics impact on the

people around him– Explain how an individual can behave ethically in a

business environment– Demonstrate techniques for dealing with situations

where your own ethics and values conflict with work practice

Business Ethics

Management Practice – Level 2 3Future Managers

• How would you define business ethics?

• Are ethics universal?

• Can we speak of generally accepted norms and values?

Business Ethics

Management Practice – Level 2 4Future Managers

1. Values

2. Beliefs

3. Ethics

1. Explain with examples, the concepts of values, belief systems and ethics

Management Practice – Level 2 5Future Managers

• What are values?– Values are basic beliefs that a certain way of

doing things is preferable to another

– Value systems refer to an individual’s arrangement of values in order of priority

– Individual’s values are fairly stable

– Management should realise that employees have different values

1.1 Values

Management Practice – Level 2 6Future Managers

• What is a belief system?– Your belief system refers to what you believe is

right or wrong

– Every worker should have a belief system

– Can you think of examples, where management might ask employees to go against their belief system?

– What should they do in these circumstances?

1.2 Belief Systems

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• Now that you know what a value and belief is, make a list of your own values and beliefs as an individual

• Divide into groups and combine the values and beliefs of the individual members in the group

Activity 4.1: Values and Beliefs

Management Practice – Level 2 8Future Managers

• Ethics are “The code of principles and values based on morals that directs the behaviour of an individual or group in terms of what is right or wrong”

• Ethics is also:– The study of people’s rights and duties– The moral rules that people apply in making

decisions– The nature of relationship among people

1.3 Ethics

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Is it possible to have rights without duties? ?

• Code of ethics– Sets standards as to what is good and bad

behaviour in decision-making

1.3 Ethics

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• Formulate your own code of ethics

• Make a personal evaluation of your ethical climate

• Confront ethical conflicts head on

2. Guidelines for ethical behaviour

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• Ethical language

• Common morality

• Morality of care

3. The tools of ethics

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• Values

• Rights and duties

• Moral rules

• Human relationships

3.1 Ethical language

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• The principles of common morality are:– keeping promises

– not intending harm

– mutual aid

– respect for persons

– respect for property

3.2 Common morality

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• What is the morality of care?– Includes the right to justice

– Includes the right to be nurtured

– To resolve conflicts, we must look at the relationship between the people who are disagreeing

3.3 The morality of care

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• What are some of the issues that confront businesses with regard to their consumers?– the placing of tobacco, cigarette, and alcohol

advertisements– advertisements aimed at children– the use of sex-oriented advertisements in the

media– keeping quiet about defects in products when

selling them– increased interest rates without prior notice

4. Areas of social responsibility and business ethics

Management Practice – Level 2 16Future Managers

• Likewise, what are some of the ethical issues between businesses and their suppliers?– Where the supplier is in a strong position

relative to a client, the supplier can enforce “unreasonably” high prices or order quantities,

– When customers are in a strong position they can force suppliers to accept “unreasonably” low prices for their products or raw materials

4. Areas of social responsibility and business ethics

Management Practice – Level 2 17Future Managers

• Think of some methods to improve ethical behaviour– selection of staff– codes of ethics– decision-making rules– top management’s leadership– professional goals– ethics training– comprehensive performance appraisal and reward

systems– independent social audits– formal protective mechanism

5. Methods to improve ethical behaviour

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• Hire individuals with ethical standards

• Interview, checks and references can be used to eliminate unethical people

5.1 Selection of staff

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• Ethical codes are the statements of primary values of an organisation and the ethical rules it expects employees to follow

5.2 Codes of ethics

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• The following points should be taken into account when compiling a code:– Vague generalisations about ethical conduct are meaningless– Management should also ensure that employees adhere to the

code of conduct at all times– Individuals or employees should be held accountable for

their behaviour.– Compliance with the code of conduct should be one of the

conditions of service– When individuals or employees are remunerated according

to the profitability of the business or the percentage commission on sales, there is a tendency to ignore ethical questions

– Individuals or employees may be unsure of what represents ethical behaviour

5.2 Codes of Ethics

Management Practice – Level 2 21Future Managers

• Advantages of a code of ethics– Clarifies the thoughts of individuals and that of

management on what constitutes unethical behaviour.– Helps employees or anyone else to think about issues

before being faced with the actual situation.– Gives any individual or employee a basis for refusing to

agree to unethical action.– Defines the limits of what constitutes acceptable or

unacceptable behaviour.– Provides a means of communicating the managerial

view about ethical behaviour.– Is useful in the induction process and in terms of

training of individuals or employees.

5.2 Code of Ethics

Management Practice – Level 2 22Future Managers

• Disadvantages of a code of ethics– A detailed list of guidelines cannot cover all

possibilities– It is often too generalised to be of specific value– It is rarely prioritised, yet choices between

different ethical actions do occur.– Producing a formal code is virtual irrelevance

ethnics are ultimately a matter of individual choices and depend on employees truly believing in the codes, not simply reading them

5.2 Code of Ethics

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• What questions can you ask, that help you decide whether an action is ethical?– Is the problem accurately defined?– How would you define the problem if you stood on the other side of the

fence?– How did the situation occur in the first place?– To whom do you give your loyalty as a person and as a member of the

organisation?– What is your intention in making this decision?– How does this intention compare with the probable results?– Who could your decision or action injure?– Can you discuss the decision with the affected person or party before you

make the decision?– Could you disclose your decision or action to your colleagues, to other

employees or even to your immediate boss without any misgivings?– In what conditions would you allow exceptions of your action if

understood or if misunderstood?

5.3 Decision making rules

Management Practice – Level 2 24Future Managers

How would you feel if your action appeared on the front page of the

newspaper?

Management Practice – Level 2 25Future Managers

• Effective leadership is key to promoting ethical behaviour

5.4 Leadership

Management Practice – Level 2 26Future Managers

• “Explicit goals can create ethical problems if they make unrealistic demands on employees. Under the stress of unrealistic goals, otherwise ethical employees will often take the attitude that ‘anything goes’. On the other hand, when goals are clear and realistic, they reduce ambiguity for employees and motivate rather than punish. ” (Robbins, 1991)

5.5 Professional goals

Management Practice – Level 2 27Future Managers

• How do people justify unethical behaviour?– the belief that the activity is not “really” illegal or

immoral

– the belief that the activity is in the individual’s or the organisation’s best interests

– the belief that the activity is “safe”, because it will never be found out or publicised

– the belief that, because the activity helps the company, the company will condone (or approve) it and even protect the person who engages in it

5.6 Ethics training

Management Practice – Level 2 28Future Managers

• The following training techniques have been shown to be helpful in corporate ethics training programmes:– question-and-answer sessions to define people’s views

and challenge their reasoning– open discussion groups– the expression of a full range of ethical views– the use of an employee’s personal examples to show

conflict and ethical dilemmas– trainer’s assurance that case study used does not always

present the most difficult choices, but represents a range of problems

5.6 Ethics training

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• Performance may override personal ethical standards

• Performance standards should integrate ethical behaviour

5.7 Comprehensive performance appraisal and reward systems

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• The social audit is a report looking on activities such as environmental protection, workplace safety or community involvement.

5.8 Independent Social Audits

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• Mechanisms can include:– An ethics committee 

– When individuals face a dilemma, they may consult an ethical advisor.

–  “Whistle-blowing”, which refers to instances when an employee reports the transgressions of a colleague

5.9 Formal protective mechanism

Management Practice – Level 2 32Future Managers

• Can you– Reflect on your own values and belief values and

systems and how they influence behaviour.– Discuss how an individual’s ethics impact on the

people around him.– Explain how an individual can behave ethically in a

business environment.– Demonstrate techniques for dealing with situations

where your own ethics and values conflict with work practice

• If you can, congratulations, you are ready to move onto the next module

Recap

Management Practice – Level 2 33Future Managers