Course Name: Principle of Management

Module 3: Social & Ethical Responsibilities of

Management

Social Responsibilities of Management

To be truly effective, organizations should interact with their external environment. The external
environment can be divided into the general or mega environment and the specific task environment.
Social responsibility refers to the obligation of a business firm to enhance the condition of society along
with its own interests. Business firms are accountable to six major stakeholder groups: shareholders,
employees, customers, creditors and suppliers, society and the government.
Social responsiveness refers to the ability of a firm to implement policies and take part in activities that
would benefit both society and the firm. The following categories are generally considered when
measuring social responsiveness: contributions, fund-raising, volunteerism, recycling, diversity policies,
direct corporate investment, quality of work life, attention to consumers and pollution control. The need
to measure social responsiveness led to the development of social audits. Social audits are of two types -
audits required by the government and voluntary audits.
Although social audits are not legally mandatory, many organizations make social involvement
disclosures in their annual reports. This shows the growing concern among major firms about their social
responsibility. The ethical conduct of an organization depends on the ethical standards of its managers.
Three types of management have been identified, depending on the ethical or moral nature of their
decisions. These are moral, amoral and immoral management. Moral management is in the best interests
of the organization in the long run.
However, most companies follow the principles of amoral management. To conduct business in an ethical
manner, managers should be aware of the factors that affect ethical behavior. Through mechanisms such
as top management commitment, code of ethics, ethics committees, ethics audits, ethics training and
ethics hotlines, managers can inculcate ethical behavior in the employees.

ARGUMENTS FOR SOCIAL RESPONSIBILITY

There are several core ideas about social responsibility of business. Over the period of time, the things
have changed too much giving new thoughts and replacing the classical economic view of profit
maximization in the business. Based on this feature in the present context, arguments for social
responsibility are as follows:
1. Business is a part of society
Business is a part of society. Society is a system and business is one of its subsystems. Every subsystem
of a system functions for the betterment of the whole system and not for its own betterment only. This
version applies to business too. Therefore, business is responsible for the society as a whole and profit
motive of the business cannot have precedence over other motives of the society.
2. Long-term Self-interest of Business
Social responsibility is in the long-term self-interest of the business. Existence of any business is because
of existence of various social organs like financiers, employees, customers, society as a whole, etc., and
not otherwise. Therefore, business should provide satisfaction to all these organs on continuous basis for
its continued existence. By discharging social responsibility, the business may provide this satisfaction.
3. Moral Justification
Social responsibility has moral justification. This moral justification emerges from the fact that if any one
takes something from others, he must give something to them in return. On moral ground, this equation
must be based on equity so that it continues. A business takes various inputs (money, materials, people,
information, etc.) from the society and gives outputs (goods and services) to the society by using various
inputs. System of taking inputs and giving outputs works well only if it fulfills social requirements.
4. Creating Better Public Image
Any business which involves in fulfilling the aspirations of the society creates better image in the public.
Creation of this type of image is a source of satisfaction itself for those who operate business. This also
helps in increasing the business volume, both in terms of taking inputs and giving outputs.
5. Avoidance of Government Regulations
Government aims at maintaining equilibrium in the society on long-term basis. For this purpose, it tries to
ensure that every organ of society meets social requirements. If any organ fails to do so, government has
power to take actions against it. Since business is an organ of the society, government may take actions
against those business organizations which involve in activities not meeting social requirements. In order
to avoid such actions having long-term negative impact, it is preferable to adopt social responsibility.
6. Maintenance of Society
For maintaining society, there are legal provisions but these provisions cannot be comprehensive because
of social changes on continuous basis. Therefore, the business has to be socially responsible in order to
avoid anti-social activities so that society is maintained on continuous basis.

ARGUMENTS AGAINST SOCIAL RESPONSIBILITY

There are various arguments against social responsibility though most of these are based on classical
economics. These arguments are as follows:
1. Contrary to Basic Function of Business
The basic function of a business is to provide a product to its customers at a price which is lower than the
level of satisfaction provided by the use of the product or, at the most, equal to that. If this relationship is
reversed, the product becomes meaningless. Generally, cost of production is a significant factor in
determining the product price. Discharge of social responsibility adds to cost, hence product price which
may reverse the above equation and business may not remain viable in the long term. Because of this
phenomenon, Milton Friedman, a noted economist, has observed,
2. Conflict with Profit Motive
Social responsibility is in conflict with profit motive of business. Undertaking business involves assuming
risk. Earning profit is the reward for this risk. If social responsibility is added as an objective of business,
it reduces profit margin which is against the concept of profit optimization even if not profit
maximization. Thus, social responsibility and profit motive do not proceed in the same direction.
3. Distortion in Resource Allocation
Social responsibility leads to distortion of resource allocation. Resources in an economic system are
allocated on the principle that every resource finds its most optimum utilization. This utilization is best
possible without social responsibility and not with it. Thus, social resources may go in waste if the
concept of social responsibility is added to business operations.
4. Imposition of Business Values
Discharging social responsibility involves lot of influence of the business on the society. Therefore, by
undertaking social responsibility, a business is likely to impose its own values on the society, thereby
replacing the social values with business values. This phenomenon has taken place in many cases. This is
highly undesirable from social point of view.
5. Inefficiency in the System
Social responsibility brings inefficiency in the system. There is no substitute for the power of self-interest
to get people to act. Any replacement of self-interest will, therefore, be fatal to the efficiency of the
system. Social responsibility tends to replace self-interest of business defined in terms of profit motive to
a great extent, thus, making the business as a system inefficient.
6. Operational Problems
There are certain operational problems in implementing social responsibility. Conceptually as well as
operationally, social responsibility is a confusing term. Therefore, managers involved in managing
business affairs are not very clear about what they are expected to do under social responsibility. As a
result, actions ranging from mere showing lip sympathy to undertaking multi-crore concrete programmes
are included in social responsibility.
CONCLUSIONS
The arguments of those who argue that business organizations have nothing to do with social
responsibility except the maximization of shareholders’ wealth are weak on two points.

1. First, they overstate the trend and ultimate magnitude of business’s voluntary assumption of social
responsibility.
2. Second, they want business organizations to do something they cannot do and that is to ignore societal
demands on them.
In fact, no business can survive for long in total disregard to its social concern. Many forces will come in
its way to destroy it. Therefore, even if business is involved in making profit, it is done through the
creation of utility to the social needs. Better these social needs served, better will be the prospect of its
survival and progress. Even in Western countries, where economic activities are comparatively free from
controls, it has been accepted that profit is not the sole criterion for measuring the success of a business
organization.
Usually, people misinterpret the concept of business objective and view the social responsibility as a
focus which detracts from or is counter to the profit making. This is not the case at all. Economic
concerns and social concerns need not be viewed as opposite ends of a continuum as shown in the image
Mistaken view of Social Responsibility. The correct position is according to Realistic view of business
responsibility.
What this figure shows is that although there may be some clearly distinct economic versus social
concerns, there is a rather broad area in which economic and social concerns are consistent with one
another. It is corporate activities that fall into this overlapped area that provide the more realistic view of
social responsibility. Therefore, the issue is not whether business has social responsibility; it has. The
fundamental issue is to identify this responsibility in general and for individual companies in particular.

Social Stakeholders
In business, a stakeholder is any individual, group, or party that has an interest in an organization and the
outcomes of its actions. Common examples of stakeholders include employees, customers, shareholders,
suppliers, communities, and governments. Different stakeholders have different interests,
and companies often face trade-offs in trying to please all of them.
 Type
s of Stakeholders

Types of Stakeholders
This guide will analyze the most common types of stakeholders and look at the unique needs that each of
them typically has. The goal is to put yourself in the shoes of each type of stakeholder and see things from
their point of view.
#1 Customers
Stake: Product/service quality and value
Many would argue that businesses exist to serve their customers. Customers are actually stakeholders of a
business, in that they are impacted by the quality of service/products and their value. For example,
passengers traveling on an airplane literally have their lives in the company’s hands when flying with the
airline.

#2 Employees
Stake: Employment income and safety
Employees have a direct stake in the company in that they earn an income to support themselves, along
with other benefits (both monetary and non-monetary). Depending on the nature of the business,
employees may also have a health and safety interest (for example, in the industries of transportation,
mining, oil and gas, construction, etc.).

#3 Investors
Stake: Financial returns
Investors include both shareholders and debtholders. Shareholders invest capital in the business and
expect to earn a certain rate of return on that invested capital. Investors are commonly concerned with the
concept of shareholder value. Lumped in with this group are all other providers of capital, such
as lenders and potential acquirers. All shareholders are inherently stakeholders, but stakeholders are not
inherently shareholders.

#4 Suppliers and Vendors

Stake: Revenues and safety
Suppliers and vendors sell goods and/or services to a business and rely on it for revenue generation and
on-going income. In many industries, suppliers also have their health and safety on the line, as they may
be directly involved in the company’s operations.

#5 Communities
Stake: Health, safety, economic development
Communities are major stakeholders in large businesses located in them. They are impacted by a wide
range of things, including job creation, economic development, health, and safety. When a big company
enters or exits a small community, there is an immediate and significant impact on employment, incomes,
and spending in the area. With some industries, there is a potential health impact, too, as companies may
alter the environment.

#6 Governments
Stake: Taxes and GDP
Governments can also be considered a major stakeholder in a business, as they collect taxes from the
company (corporate income taxes), as well as from all the people it employs (payroll taxes) and from
other spending the company incurs (sales taxes). Governments benefit from the overall Gross Domestic
Product (GDP) that companies contribute to.

Ranking/Prioritizing Stakeholders
Companies often struggle to prioritize stakeholders and their competing interests. Where stakeholders are
aligned, the process is easy. However, in many cases, they do not have the same interests. For example, if
the company is pressured by shareholders to cut costs, it may lay off employees or reduce their wages,
which presents a difficult tradeoff.
Jack Ma, the CEO of Alibaba, has famously said that, in his company, they rank stakeholders in the
following priority sequence:
 Customers
 Employees
 Investors
Many other CEOs tout shareholder primacy as their number one interest.
Much of the prioritization will be based on the stage a company is in. For example, if it’s a startup or an
early-stage business, then customers and employees are more likely to be the stakeholders considered
foremost. If it’s a mature, publicly-traded company, then shareholders are likely to be front and center.
At the end of the day, it’s up to a company, the CEO, and the board of directors to determine the
appropriate ranking of stakeholders when competing interests arise.

Stakeholder vs Shareholder
This is an important distinction to make. A stakeholder is anyone who has any type of stake in a business,
while a shareholder is someone who owns shares (stock) in a business and thereby has an equity interest.
Social Responsiveness and Social Audit
Elements of Social Responsiveness:
Five important elements of social responsiveness are:

1. Social goals should be planned and incorporated into the overall planning process.

2. Firms should examine the desires of society and assess how other companies are meeting the social
desires.

3. Shareholders being owners of the firm must be informed about the social goals. Social goals should be
disclosed in the annual reports.

4. As managers have knowledge, skill and competence to carry out the social programmes, they must try
different approaches to solve the social problems and implement the best approach in terms of cost-
benefit analysis.

5. Managers should compute the cost of social programmes in terms of financial investments to assess
their viability.

Measurement of Social Responsiveness:

Since social programmes form part of the organisational overall planning process, managers measure the
effectiveness of these programmes to ensure that they are consistent with planned goals. Though it is
difficult to measure the effectiveness of social programmes, a specific management tool for measuring
social responsiveness is social audit.

Social audit is “a systematic study and evaluation of the social, rather than the economic, performance of
an organisation.” It is a formal and thorough analysis of effectiveness of the social performance. Social
audit assesses the impact of organisational activities on society, identifies areas where social values are
promoted and areas where organisations need to promote the social culture.

“Social audit is a way of measuring, understanding, reporting and ultimately improving an organization’s
social and ethical performance.” It helps to reduce gaps between organization’s goals and reality, between
efficiency and effectiveness. It is a technique to understand, measure, verify, report and improve social
performance of the organization.
It is a process for evaluating, reporting and improving organizational performance and behaviour, and
measures its effects on society. Social audit produces a measure of social responsibility of the
organization.

It takes into account internal code of conduct as well as views of all the stakeholders and draws on best
practice factors of total quality management and human resource development. Like internal auditing,
social auditing requires an organization to identify what it seeks to achieve, who are its stakeholders, and
how it wants to measure its performance.

Objectives of Social Audit:

1. It assesses the gaps between needs and resources available for local development.

2. It creates awareness amongst stakeholders about the company’s productive services.

3. It increases efficiency and effectiveness of the corporate development programmes.

4. It assesses corporate policy decisions, in the interest of its stakeholders.

5. It estimates the opportunity cost for stakeholders of not getting access to public services.

Steps involved in social audit:

A social audit involves the following steps:

(a) Framing the social programmes.

(b) Monitoring activities in carrying out these programmes.

(c) Measuring social performance.

(d) Evaluating the performance of socially responsive activities.

(e) Framing strategies to set future goals.

Merits of social audit:

Social audit has the following merits:

(a) Enterprises know the extent to which they have been able to achieve the social goals.
(b) Data on social costs and benefits helps to assess social performance of the enterprise. This helps in
conducting cost-benefit analysis of the social program.

(c) It helps in locating potential areas for carrying out the socially productive programmes.

Though social audit is expensive and time consuming, it is an important tool to measure social
responsibility. It has become part of the companies’ annual reports.

Problems in social audit:

The problems in social audit can be studied under two heads:

I. Problems faced by the social auditor of his own making

II. Problems beyond the control of social auditor

I. Problems faced by the social auditor of his own making:

These problems may arise on account of the following factors:

1. Attitude of the social auditor:

Social welfare programmes are implemented to bring social changes. They are not mere measurement of
inputs and outputs. The social auditor should have positive approach towards these programmes. He
should consider the benefits and costs of the social change.

If he designs a social benefit programme for food and nutrition and rejects it because it does not conform
to specifications of World Health Organization, he may not be able to justify non-achievement of targets
of his programme. The auditor should look beyond the boundaries of the programme and deal with its
implementation process.

II. Problems beyond the control of social auditor:

1. All social welfare programmes are not well designed and do not define the problem at the first level of
symptom-cause relationship.

The causes and symptoms of social problems generally exist at three levels:
(i) Level I:

The symptom may be health problems and the cause may be lack of sanitary facilities.

(ii) Level II:

The cause at the first level becomes the symptom at the second level.

For example, lack of sanitary facilities may be the symptom the cause for which is low income of people.

(iii) Level III:

The cause at the second level becomes the symptom at the third level. The low income (cause) may be
because of poor educational facilities in the area that is subject to scrutiny.

2. They may not target at a variety of related social issues. If social auditor targets at rural health, he
should simultaneously aim to improve rural education, sanitation, drinking water, housing, nutrition,
pollution, agriculture, trade, industry etc. and not just one aspect of rural upliftment.

3. Absence of adequate information for preparing a social welfare programme can create problems for
social audit. If social audit is based on traditional information such as past accounts and reports, it may
not achieve the intended purpose. A good social welfare programme has to be based upon internal
evaluation machinery and latest statistical methodologies.

4. The impact of social programmes cannot be assessed immediately. For example, the effect of
immunization against a disease or education of rural population has a specific gestation period after which
its impact can be assessed.

What Are Managerial Ethics?

Managerial Ethics Definition

Managerial ethics is a basic part of business ethics. It is the set of moral principles or beliefs that affect
the behavior of employees. While most people automatically assume that ethics directly correlates to
laws, this isn't always the case. Doing the right thing for employees and customers and demonstrating
the willingness to go the extra mile also falls under managerial ethics.

When developing managerial ethics policies, everything is considered. Compensation and benefit
packages, community involvement and corporate giving are all components of managerial ethics. The
policies set the minimum standards that business leaders expect from the company down to its people
and community.

Types of Managerial Ethics

Managerial ethics are broken down into two primary types: those that pertain to legal issues and those
that pertain to moral issues. Company leaders have a choice, they can do the bare minimum when it
comes to ethics, or they can set a higher standard in their industry and community.

Legal ethics consider the many rules and regulations for any company. There are human resource issues
such as making sure that people are hired in a fair process, given a safe work environment and fair pay.
Managers and employees are expected to not break laws by harming, harassing or otherwise infringing
on another person's rights. Minimum safety standards must be met, as well as the work standards set
forth by the Occupations and Safety Health Administration (OSHA).

Moral standards of ethics don't necessarily need to align with a company's legal standards. A company
might not be required to offer paternity leave, but the company might believe that it is important to give
fathers their own time with a newborn. -Moral ethics could also be how the company deals with
customer complaints to ensure that people feel good about their experience with the company from the
top down.

Importance of Managerial Ethics

Managerial ethics is important for every company, because people will follow what leaders do. Even if
a company has ethics policies in place, when top leaders ignore these standards, it resonates throughout
the company. This negative permeation doesn't always look the same. It might mean that some
employees might not act ethically, if they are following the actions of leaders. It could also reduce
employee pride and morale.

When employees don't think that their leaders care about doing the right thing, they might feel that their
efforts to do right are not valued. Morale drops, employee turnover increases, human resources costs go
up, and customer loyalty and positive experiences suffer. Companies that follow the highest standards
of leadership ethics generally have high morale and very high levels of productivity and low turnover.

Managerial Ethics Examples

There are many examples to look at when creating your ethics policies and standards. A company that
gives entry-level workers a level of compensation and benefits that are well above the local minimum
wage has morally ethical policies. Giving employees a generous profit-sharing plan based on the
company's performance, demonstrates that leaders care not only about their personal profit but also
about the growth and success of their people.

Policies on legal ethics start with the law, and then develop the protocol to deal with potential issues. A
common example is how a company deals with a sexual harassment claim. It is against the law to
sexually harass someone, but how the company deals with it also says a lot about that company's ethics.
An ethical policy keeps accusations, witness testimony and mitigating factors as confidential as
possible, and then comes to a conclusion based on evidence. Such a policy also calls in legal personnel
and law enforcement when necessary.

Factors affecting managerial ethics

There are five factors that may affect a person's ethical response:

 The first factor that affects managerial ethics is the stage of moral development. The
individual’s moral judgement of what is right and wrong influences ethics

 Individual characteristics are another factor that influence ethical behaviour

 Structural variable through the existence of formal rules and regulations strongly affect
managerial ethics

 The organisation's culture is another factor that influences ethical behaviour

 The intensity of the issue can affect ethical decisions.

Kohlberg’s stages of moral development

Kohlberg identified three levels of moral reasoning: pre-conventional, conventional, and post-
conventional. Each level is associated with increasingly complex stages of moral development.

Level 1: Preconventional

Throughout the preconventional level, a child’s sense of morality is externally controlled. Children
accept and believe the rules of authority figures, such as parents and teachers. A child with pre-
conventional morality has not yet adopted or internalized society’s conventions regarding what is right
or wrong, but instead focuses largely on external consequences that certain actions may bring.
Stage 1: Obedience-and-Punishment Orientation

Stage 1 focuses on the child’s desire to obey rules and avoid being punished. For example, an action is
perceived as morally wrong because the perpetrator is punished; the worse the punishment for the act
is, the more “bad” the act is perceived to be.

Stage 2: Instrumental Orientation

Stage 2 expresses the “what’s in it for me?” position, in which right behavior is defined by whatever the
individual believes to be in their best interest. Stage two reasoning shows a limited interest in the needs
of others, only to the point where it might further the individual’s own interests. As a result, concern for
others is not based on loyalty or intrinsic respect, but rather a “you scratch my back, and I’ll scratch
yours” mentality. An example would be when a child is asked by his parents to do a chore. The child
asks “what’s in it for me?” and the parents offer the child an incentive by giving him an allowance.

Level 2: Conventional

Throughout the conventional level, a child’s sense of morality is tied to personal and societal
relationships. Children continue to accept the rules of authority figures, but this is now due to their
belief that this is necessary to ensure positive relationships and societal order. Adherence to rules and
conventions is somewhat rigid during these stages, and a rule’s appropriateness or fairness is seldom
questioned.

Stage 3: Good Boy, Nice Girl Orientation

In stage 3, children want the approval of others and act in ways to avoid disapproval. Emphasis is
placed on good behavior and people being “nice” to others.

Stage 4: Law-and-Order Orientation

In stage 4, the child blindly accepts rules and convention because of their importance in maintaining a
functioning society. Rules are seen as being the same for everyone, and obeying rules by doing what
one is “supposed” to do is seen as valuable and important. Moral reasoning in stage four is beyond the
need for individual approval exhibited in stage three. If one person violates a law, perhaps everyone
would—thus there is an obligation and a duty to uphold laws and rules. Most active members of society
remain at stage four, where morality is still predominantly dictated by an outside force.

Level 3: Postconventional

Throughout the postconventional level, a person’s sense of morality is defined in terms of more abstract
principles and values. People now believe that some laws are unjust and should be changed or
eliminated. This level is marked by a growing realization that individuals are separate entities from
society and that individuals may disobey rules inconsistent with their own principles. Post-conventional
moralists live by their own ethical principles—principles that typically include such basic human rights
as life, liberty, and justice—and view rules as useful but changeable mechanisms, rather than absolute
dictates that must be obeyed without question. Because post-conventional individuals elevate their own
moral evaluation of a situation over social conventions, their behavior, especially at stage six, can
sometimes be confused with that of those at the pre-conventional level. Some theorists have speculated
that many people may never reach this level of abstract moral reasoning.

Stage 5: Social-Contract Orientation

In stage 5, the world is viewed as holding different opinions, rights, and values. Such perspectives
should be mutually respected as unique to each person or community. Laws are regarded as social
contracts rather than rigid edicts. Those that do not promote the general welfare should be changed
when necessary to meet the greatest good for the greatest number of people. This is achieved through
majority decision and inevitable compromise. Democratic government is theoretically based on stage
five reasoning.

Stage 6: Universal-Ethical-Principal Orientation

In stage 6, moral reasoning is based on abstract reasoning using universal ethical principles. Generally,
the chosen principles are abstract rather than concrete and focus on ideas such as equality, dignity, or
respect. Laws are valid only insofar as they are grounded in justice, and a commitment to justice carries
with it an obligation to disobey unjust laws. People choose the ethical principles they want to follow,
and if they violate those principles, they feel guilty. In this way, the individual acts because it is
morally right to do so (and not because he or she wants to avoid punishment), it is in their best interest,
it is expected, it is legal, or it is previously agreed upon. Although Kohlberg insisted that stage six
exists, he found it difficult to identify individuals who consistently operated at that level.

Critiques of Kohlberg’s Theory

Kohlberg has been criticized for his assertion that women seem to be deficient in their moral reasoning
abilities when compared to men. Carol Gilligan (1982), a research assistant of Kohlberg, criticized her
former mentor’s theory because it was based so narrowly on research using white, upper-class men and
boys. She argued that women are not deficient in their moral reasoning and instead proposed that males
and females’ reason differently: girls and women focus more on staying connected and maintaining
interpersonal relationships.

Kohlberg’s theory has been criticized for emphasizing justice to the exclusion of other values, with the
result that it may not adequately address the arguments of those who value other moral aspects of
actions. Similarly, critics argue that Kohlberg’s stages are culturally biased—that the highest stages in
particular reflect a westernized ideal of justice based on individualistic thought. This is biased against
those that live in non-Western societies that place less emphasis on individualism.

Another criticism of Kohlberg’s theory is that people frequently demonstrate significant inconsistency
in their moral judgements. This often occurs in moral dilemmas involving drinking and driving or
business situations where participants have been shown to reason at a lower developmental stage,
typically using more self-interest driven reasoning (i.e., stage two) than authority and social order
obedience driven reasoning (i.e., stage four). Critics argue that Kohlberg’s theory cannot account for
such inconsistencies.

Ethical Guidelines for Managers

The following guidelines ensure the ethics management program is operated in a meaningful
fashion:

1. Recognize that managing ethics is a process.

Ethics is a matter of values and associated behaviors. Values are discerned through the process of
ongoing reflection. Therefore, ethics programs may seem more process-oriented than most management
practices. Managers tend to be skeptical of process-oriented activities, and instead prefer processes
focused on deliverables with measurements. However, experienced managers realize that the
deliverables of standard management practices (planning, organizing, motivating, controlling) are only
tangible representations of very process-oriented practices. For example, the process of strategic
planning is much more important than the plan produced by the process. The same is true for ethics
management. Ethics programs do produce deliverables, e.g., codes, policies and procedures, budget
items, meeting minutes, authorization forms, newsletters, etc. However, the most important aspect from
an ethics management program is the process of reflection and dialogue that produces these
deliverables.

2. The bottom line of an ethics program is accomplishing preferred behaviors in the workplace.

As with any management practice, the most important outcome is behaviors preferred by the
organization. The best of ethical values and intentions are relatively meaningless unless they generate
fair and just behaviors in the workplace. That’s why practices that generate lists of ethical values, or
codes of ethics, must also generate policies, procedures and training that translate those values to
appropriate behaviors.

3. The best way to handle ethical dilemmas is to avoid their occurrence in the first place.

That’s why practices such as developing codes of ethics and codes of conduct are so important. Their
development sensitizes employees to ethical considerations and minimize the chances of unethical
behavior occurring in the first place.

4. Make ethics decisions in groups, and make decisions public, as appropriate.

This usually produces better quality decisions by including diverse interests and perspectives, and
increases the credibility of the decision process and outcome by reducing suspicion of unfair bias.

5. Integrate ethics management with other management practices.

When developing the values statement during strategic planning, include ethical values preferred in the
workplace. When developing personnel policies, reflect on what ethical values you’d like to be most
prominent in the organization’s culture and then design policies to produce these behaviors.

6. Use cross-functional teams when developing and implementing the ethics management
program.

It’s vital that the organization’s employees feel a sense of participation and ownership in the program if
they are to adhere to its ethical values. Therefore, include employees in developing and operating the
program.

7. Value forgiveness.

This may sound rather religious or preachy to some, but it’s probably the most important component of
any management practice. An ethics management program may at first actually increase the number of
ethical issues to be dealt with because people are more sensitive to their occurrence. Consequently,
there may be more occasions to address people’s unethical behavior. The most important ingredient for
remaining ethical is trying to be ethical. Therefore, help people recognize and address their mistakes
and then support them to continue to try operate ethically.

8. Note that trying to operate ethically and making a few mistakes is better than not trying at all.

Some organizations have become widely known as operating in a highly ethical manner, e.g., Ben and
Jerrys, Johnson and Johnson, Aveda, Hewlett Packard, etc. Unfortunately, it seems that when an
organization achieves this strong public image, it’s placed on a pedestal by some business ethics
writers. All organizations are comprised of people and people are not perfect. However, when a mistake
is made by any of these organizations, the organization has a long way to fall. In our increasingly
critical society, these organizations are accused of being hypocritical and they are soon pilloried by
social critics. Consequently, some leaders may fear sticking their necks out publicly to announce an
ethics management program. This is extremely unfortunate. It’s the trying that counts and brings peace
of mind — not achieving an heroic status in society.