The Importance of Ethical Management Essay

The Importance of Ethical Management Managing an organization is not an easy task. Along the road, managers may encounter various issues and therefore have to make difficult decisions while trying to stay a trusted organization. In many managerial situations, maintaining proper ethics in an organization can be considered complicated, yet it is essential not only to avoid legal violations, but also to maintain a reputable business and working environment. I plan to discuss the various hurdles and options that managers may face while leading an ethical company in the business world.

In order for managers to succeed and make it in an organization, they must follow the four rules of ethics: the utilitarian rule, the moral rights rule, the justice rule and the practical rule. The utilitarian rule consists of “an ethical decision that produces the greatest good for the greater number of people” (Jones & George, 2007, P. 99). When making an important decision, managers should always take into great consideration how the outcome of such decision will affect the rest of the stakeholders.

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Being that the stakeholders of any company are considered more important to the business than its employees, many times it is necessary to make difficult yet necessary decisions that might not fully benefit employees. For example, many stakeholders tend to hesitate when doing business with a company in which its employees have a labor union. This is due to the high risk created by the demands and power which this gives the union and the employees who are a part of it which in some instances could potentially harm the company as a whole.

Managers may be torn between keeping the labor union and its members and pleasing the stakeholders of the company. For the most part, the decision made places the stakeholders as a priority being that without them, the entire company would not be existent. The moral rule is “an ethical decision that best maintains and protects the fundamental or inaliable rights and privileges of the people affected by it” (Jones & George, 2007, P. 100). Managers should always use this rule when handling stakeholders due to the importance of morally protecting their rights.

The dilemma caused by some issues in management is which side to accommodate. Being that ethics are mostly personal and moral choices made by the managers of a company, proper decision making will be impacted by the circumstances and the choice which can be considered the most adequate. The justice rule is one of ethical decision making regulations which can guide managers into deciding in a way which fair to all of those affected. Maintaining a balance between being a just manager and making the decision to benefit the organization can be quite complicated yet highly necessary when attempting to be an ethical leader.

It may be tempting to cater to employees and stakeholders’ whose personality the manager likes best, yet it would not be considered fair or ethical. Finally the practical rule is when “a manager has no reluctance about communicating to people outside the company because the typical person in a society would think it is acceptable” (Jones & George, 2007, P. 101). When encountered with an ethical dilemma, the decision made by a manager should be one that can be recognized as acceptable and common to the rest of society because if not, then perhaps such decision is not in fact ethical or appropriate for the company.

In many occasions, managers face the dilemma of handling products that can be harmful to consumer health. A company that produces cleaning supplies with harsh chemicals is legally obliged to display visible labels and warnings to advise consumers of the potential dangers that the misuse or accidental ingestion of such product can produce. Yet some companies have unethically attempted to hide how their products may or have damaged both costumers and employees alike. An example of unethical managerial decision-making can be the case of Philip Morris USA.

The United States Government sued the company due to various claims some which included the manipulation of nicotine levels in order to maintain smokers addicted to cigarettes, evidence of marketing strategies to target youth into smoking, as well as deleting e-mail records which were previously ordered not to be disposed. Selling a product that has been medically proven to harm and even kill its consumers can be looked as wrong within itself, yet hiding and intensifying these effects in order to increase sales is beyond unethical.

When selling a product to the public, the company should have the moral and legal obligation of being honest of its overall effects. W. R. Grace was another company trialed for accusations of knowingly harming employees and residents of the town of Libby, Montana by contaminating it with the asbestos in their vermiculite mine. After the three month trial against W. R. Grace, the company’s managers were acquitted due to no probable evidence of a criminal contamination. Although they were being accused of covering up their knowledge of the health damage that the mine was creating, instead the urors felt that the e-mails simply “showed the internal workings of a company grappling in good will over how to make the mine safer” (Johnson, 2009). Being that this company was not proven to hide the fact that the asbestos was harming the miners along with the town of Libby, it essentially led to their acquittal. Although many of the people affected by the W. R. Grace mine still believe that this company did not act ethically, legally the were proven innocent of such charges. Diversity in the workplace has become a very common aspect of every company today. With this come the many issues faced when managing minorities in an organization.

Socially and legally, discriminating current and potential employees is unacceptable. Workers of different races, ages, genders, religions, sexual orientation, ethnicities and disabilities should be treated equally. Managers who give all of their employees a fair treatment are greatly rewarded due to the fact that diversity “is an important organizational resource that can help an organizations gain a competitive advantage” (Jones & George, 2007, P. 109). Many laws have been created to assure the equal employment opportunities for people who are considered to be diverse.

Acts like Equal Pay Act, Americans with Disabilities Act, Civil Rights Act, and Affirmative Action are some of the various laws that are enforced in today’s society. As are some of the various laws that are enforced in today’s society. As a manager, it is crucial to obey the laws at all time and at the same time to take full advantage of the overall benefits that it holds to do so. Ethically, these decisions with employees’ should be a moral choice, but unfortunately they need to be made into civil laws to guarantee that they will always be followed.

Managing diversity does not stop with the employees of a company; its consumers should also be respected and treated the same. For example, if a person who is a minority is treated unfairly and insulted in a store because of their race, this is quite unethical. To prevent incidents like these involving customers, managers must educate their employees thoroughly on the ethical treatment of customers and fellow employees alike. Hundreds of companies have faces lawsuits due to the inadequate handling of issues involving diverse customers that could have been avoided with proper training on how to deal with certain issues.

Business ethics are mostly an outcome of management’s personal and moral beliefs being translated into the workplace, yet there are also laws that were created to ensure that certain situations of fraud are strongly reprimanded. Ethical laws help further guide organizations to making the right choices that would best fit their stakeholders, employees and consumers. Enron was once considered a company with an outstanding future ahead of itself. Yet after numerous fraudulent and unethical choices, it became the perfect example of what an unethical company behaves like.

After altering balance sheets which were then wrongfully legitimized by the accounting firm Arthur Andersen, Enron managers proceeded to conceal billions of dollars which they owed. Eventually however, Enron’s actions were discovered; many of its executives were indicted and sent to prison. Being that the firm Arthur Andersen played a major part of the fraud, it was investigated and sued which essentially led to more American business being investigated therefore revealing other scandalous business practices and greatly affecting the stock market.

After the Enron fraud was discovered, new accounting regulations were put into place to prevent fraudulent audits like the ones made at Enron to occur once again. Another fraud case that made headlines was that of business mogul/ television personality Martha Stewart. Ms. Stewart was accused of selling her stock options right before the company took a downturn which was not know before then to the rest of the interested parties except for some of her close acquaintances. Ms. Stewart was charged with insider trading and was sentenced to five months in prison due to these allegations.

Many still believe that Martha Stewarts’ actions should no be truly considered ethically wrong yet others say that this case is an example of the issues that happen within companies that essentially harm “the little guys”. Whether or not Ms. Stewart was simply made to be an example in her trial, the fact is that it could be also used as a lesson to other stockholders who may encounter a similar situation. Sexual harassment is a very serious issue that employees in a company might face.

It is up to management to avoid, protect and educate all of their employees about sexual harassment and what it may entail. Some people may be ignorant of what could be considered offensive so it falls into the hands of management to clear up any doubts and to react immediately to any accusations made about employees feeling harassed in the workplace. The controversial incident between former Governor of Baltimore William Donald Schaeffer and his young female assistant in the presence of over 100 people at a public meeting can be used as an example. Mr.

Schaeffer’s assistant brought Mr. Schaeffer some tea and as she walked away, he asked her to return to him and “walk again” while continuing to ogle her inappropriately. When confronted about his behavior at this event Mr. Schaeffer simply stated that there was nothing wrong with him looking a pretty girl. While this may be true, Mr. Schaffer seemed to be oblivious that what he did to his assistant can be considered quite humiliating due to him placing her in a submissive position then used as a source of his public sexual entertainment without her consent.

Managers may run into many instances like these where employees are clueless to the extent of insult that their actions may be creating for others. With the proper management and training, companies can avoid these situations as much as possible. In conclusion, complying with the ethical rules of management is the great responsibility of every company. By being an ethical organization, businesses allow themselves to not only be accepted legally, but it also enables managers the major benefits of running a company which is considered trustworthy on a social scale.

By making the effort to behave in a fair and moral manor, companies will set an example to the rest of the business world which can only have a positive result overall that is truly needed in today’s society. Reference: Berenbeim, R. E. (2002, February). The Enron Ethics Breakdown. Retrieved November 20, 2009 from http://www. infoedge. com/samples/CB-EA15free. pdf Ethics Scoreboard. (2006, February 26). The Ethics of Sexual Harassment. Retrieved November 20, 2009 from http://www. ethicsscoreboard. com/list/schaefer. html Jones, G. R. , & George, J. M. (2007).

Essentials of contemporary management (2nd ed. ). Boston: McGraw-Hill. Johnson, K. (2009, May 8). Chemical Company Is Acquitted in Asbestos Case. Retrieved November 20, 2009 from http://www. nytimes. com/2009/05/09/us/09grace. html Machan, T. R. (2004, March 18,). Martha Stewart’s ‘Crime’. Retrieved November 20, 2009 from http://www. lewrockwell. com/machan/machan47. html The United States Department of Justice. (2004, July 21). United States of America vs. Philip Morris USA, Inc. Retrieved November 20, 2009 from http://www. justice. gov/civil/cases/tobacco2/ORDER%20&%20MEMO%20600. pdf


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