Ethical responsibilities in management
Ethical behavior is considered a necessary characteristic of managers at all levels like general, departmental, product, sales and service managers (Lewis et al., 2007). The decisions made by the directors have an impact on the companies in which they work, the shareholders of these companies, the stakeholders and the wider society as a whole. In addition, the ethical and legal obligations of the position of manager should be applied in order to fulfill all the obligations of the interested parties and to be an example to be imitated by the whole company. The concept of ethics will be explained below.
Τhe behavior of an individual or a group is determined by the ethical principles that constitute ethics as a whole. The word «ethics» comes from the word ethos, which means the character of a person. Essential characteristics of ethics are included in business ethics (Lewis et al., 2007). The different activities of a business such as the way products are produced, the distribution and use of goods depend on business ethics. Stakeholders can have a positive or negative impact on the business through their activities and vice versa.
Any organization or individual, who is interested in the activities of an organization is characterized as a stakeholder (Lewis et al., 2007). Stakeholders can be categorized as either primary or secondary. Stakeholders, who have a formal relationship with the organization and play a key role in its activities are called as primary. Customers, employees, owners and suppliers can be considered as primary stakeholders. Secondary stakeholders are not employed by the company itself. Secondary shareholders are consumers, environmental groups, the American Civil Liberties Union, civil rights groups, the media and special interest groups.
The importance of business ethics in management
Ensuring ethical behavior is the responsibility of the CEO and his subordinates to both primary and secondary stakeholders. One of the main responsibilities of a manager is to apply ethical behavior so as to be considered suitable for this position and to be a role-model of behavior towards other employees (Lewis et al., 2007). Consequently, managers, who apply the code of conduct and ethics of their company manage to build relationships of trust with stakeholders. Finally, if the manager faces a moral ambiguity and is unsure of a particular policy or process, he or she should seek further clarification.
When the interests of stakeholders diverge, then disagreements and moral conflicts arise (Mintz, 2016). An example that clarifies the previous proposition is the situation in which customers expect better quality of a new product and the company’s strategy at the moment is to maximize production volume without aiming to improve the quality of the final product.
Conflict Resolution Process
Balancing the interests of the parties involved is the solution to moral conflicts (Mintz, 2016). In the event that a manager is asked to choose between two employees, which of the two is most appropriate to receive a promotion, he or she should put an ethical dimension in making the final decision, while setting some goals concerning the management itself. One of these goals is to evaluate which of the two employees can work most effectively with stakeholders, i.e. customers and suppliers in particular. A second goal is which of the two employees inspires more respect in the working group, in order to achieve higher performance. A third goal is which of the two employees has the ability to lead his team to the top and set goals that are in line with management goals (Mintz, 2016).
The best way to avoid a moral conflict, for example in the workplace, is to prevent it from happening from the beginning. This implies the establishment of basic ethical standards and values, a code of ethics and an ethical leadership (Mintz, 2016). Conflicts are dealt with clearly by defining the ethical issue that may arise when, for example, the interests of stakeholders are in conflict. But when an act is legal, but does not comply with the rules and the code of ethics of the organization, then a moral issue arises. In addition, a dispute can be addressed by finding alternatives and proposals that satisfy all stakeholders equally using in some cases ethical reasoning to resolve the problem. The treatment of each stakeholder is an obligation of the organization to be fair as well as the evaluation of the costs and benefits of alternatives becomes necessary. Assistance for guidance and support may also be sought by the board of directors. The person or persons before making the final decision of resolving the dispute should consider whether they will gain the respect of others within the organization, whether they will feel proud of their decision and whether they could defend their action if it was published in a newspaper for example (Mintz, 2016).
Just because an act is legal does not mean that it is ethical, because hiding a weak point from a stakeholder, for example, may be legal but not ethical. The situation, in which one considers that an act is lawful and therefore moral, is called ethical legalism (Mintz, 2016).
Lewis, P., Goodman, S., Fandt, P., & Michlitsch, J. (2007). Management: Challenges for Tomorrow’s Leaders (Ed. 5 ed.). Mason, Ohio: Thomson/South-Western. Available at: https://www.universalclass.com/articles/business/your-legal-and-ethical-responsibilities-as-a-manager.htm (Accessed: 15.11.2020)
Mintz S. (2016). Resolving Ethical Conflicts in the Workplace. Available at: https://www.workplaceethicsadvice.com/2016/10/resolving-ethical-conflicts-in-the-workplace.html (Accessed: 15.11.2020)