Ethical Issues in Management Performance evaluations are important to ensuring all employees are performing as expected, and if not the manager is providing proper feedback. Managers may encounter moral and ethical issues in the process of performance evaluations, and must do his or her best to evaluate fairly each employee. Ethically responsible management practices and social issues can be directly tied to performance evaluations, and managers may even come across legal issues surrounding an evaluation.
Employees usually receive two types of performance evaluations, an annual written evaluation and ongoing informal evaluations (Trevino & Nelson, 2007). Managers must engage in the performance evaluation process to evaluate each employee fairly. According to Axline (1996), “Managers and nonsupervisory employees alike cite concern about “politics and lack of fair treatment, honesty, and truthfulness” in connection with the performance review” (para 1). Treating any one employee with preferential treatment is unethical and all evaluations should be done with the same standards in mind.
Managers also face the unpleasant task of delivering negative feedback to employees. As much as managers may dread this task, it must be done for the employee to make any progress and grow in his or her position. Withholding this information is unethical because it is uncomfortable to deliver, or for any other reason. Moral issues managers face in the process of performance evaluations include the handling of possible negative evaluation of a friend, or encountering the mishandling of previous evaluations of an employee. Some managers do become friends with his or her employees, or an existing friend may become an employee.
In the case that a manager must give an evaluation of an employee who is also a friend and the results are not positive, it may put the manager in the position of a moral dilemma. The manager is faces the decision to falsify the evaluation to benefit the friend, or to do the right thing and evaluate the friend with the same standards as the rest of his or her employees. Trevino & Nelson (2007) describe a situation in which an employee has been falsely receiving adequate ratings in his evaluation so the previous manager could avoid providing negative feedback.
This behavior continued with several managers, and it is in the hands of his new manager who faces the moral dilemma to either continue the pattern or stop the cycle and provide the employee with the proper feedback. Managers must demonstrate ethically responsible management practices. Among these practices are acting with honesty and integrity, encouraging and empowering employees to take initiative, providing clear goals and direction, and helping employees to understand how they affect financial performance, among many others (Trevino & Nelson, 2007).
These practices directly influence performance evaluations. Keeping the goal of evaluations in mind, these ethical practices ensure that the evaluations will not only be effective but also will drive the employee toward bettering his or her performance going forward. Shareholders present a social issue linked to performance evaluations. Shareholders are affected by the decisions that a company makes and how it invests in its employees. Performance evaluations are time taken away from the job at hand to evaluate performance and thus cost the company productive time.
For these evaluations to be worthwhile, the company must ensure that it knows exactly what it is looking for from its employees and how to communicate that to each effectively (Caruth & Humphreys, 2008). Effective evaluations will satisfy shareholder interest in the time invested in performance evaluations. In the credit card world several standards and federal regulations apply in the process of extending and managing credit lines. Part of the performance evaluation process for a manager is to listen to conversations that a credit analyst has with customers and provide feedback accordingly.
In the instance that any regulation violation occurs, it is on the manager to deal with the situation and take necessary action. Violations of federal regulations can result in fines for the bank and termination of employment for the analyst. Minor violations such as the neglect to read an appropriate disclosure are small infractions and would require a manager to take action against the analyst, most likely corrective action and if the behavior continues would lead to termination. A major violation would be a violation of the Fair Lending Act that states the bank cannot discriminate for any reason including age, race, color, religion, etc.
If a manager were to come across such a situation in a listening it would raise not only ethical but also legal issues. This would be grounds for immediate termination and the bank may have to deal with a lawsuit if the customer were to bring the issue to court under the Fair Lending Act. It would be the manager’s duty to reevaluate the situation and make the correct decision for the right reasons. Many factors may be taken into account when extending credit such as depth of credit profile, FICO score, debt to income ratio, internal and external delinquency, revolving debt, etc. but any outside factor related to who the applicant is may not and is grounds for legal action on behalf of the applicant. Performance evaluations are a key tool in effectively managing employees, and if instituted properly can increase productivity and employee job satisfaction. Managers must keep in mind many factors when evaluating his or her employees and always be sure to be fair and consistent in evaluations. Ethical, moral, and legal issues may arise in the evaluation process and managers must know how to handle appropriately each issue to move forward with and grow existing employee relationships.