MANAGERIAL

ETHICS
Archie Veda R Capistrano

 Most of us believe we are ethical but most

have unconscious biases that favor
ourselves and our own group
Managers often:
Hire people who are like them
Think they are immune to conflicts of
interest
Take more credit than they deserve
Blame others when they deserve some
blame themselves

Ethics Defined
Ethics Defined
The rules and principles that define right and wrong conduct.

Four Views of Ethics

The utilitarian view

The rights view
The theory of justice view
The integrative social contracts theory

Managerial Ethics
Utilitarian View
Ethical decisions are made solely on the basis of their outcomes
or consequences such that the greatest good is provided for the
greatest number.
Encourages efficiency and productivity and is consistent with the
goal of profit maximization.

Rights View
Concerned with respecting and protecting individual liberties and
privacy.
Seeks to protect individual rights of conscience, free speech, life and
safety, and due process.

Managerial Ethics
The Theory of Justice
Organizational rules are enforced fairly and impartially and follow
all legal rules and regulations.
Protects the interests of underrepresented stakeholders and the
rights of employee.

Integrative Social Contracts Theory

Ethical decisions should be based on existing ethical norms in
industries and communities in order to determine what
constitutes right and wrong.
Based on integration of the general social contract and the specific
contract between community members.

Factors That Affect Employee

Ethics
Moral Development
A measure of independence from outside influences
Level of Individual Moral Development
Preconventional level
Conventional level
Principled level

Stage of moral development interacts with:

Individual characteristics
The organizations structural design
The organizations culture
The intensity of the ethical issue

MORAL DEVELOPMENT THEORY

A persons values are not formed

during childhood only. According to
Lawrence Kohlberg, there is a sequence
of six identifiable stages in the
development of a persons ability to
deal with moral issues.

1.Level One: Preconventional Stages:

Here right or wrong are interpreted in terms of the pleasant
or painful consequences of actions or in terms of the physical
power of those who set the rules. Stealing is bad because my
mommy will acne me
a. Stage one: Punishment and Obedience Orientation:
The childs reasons for doing the right thing are to avoid
punishment or defer of superior physical power of authorities.
(based on consequences)There is little awareness that others have
needs and desires similar to ones own.
b. Stage two: Instrumental and Relative orientation.
Here, right actions are actions that can serve as instruments
for satisfying the childs own needs or the needs of those for
whom the child cares. The child is now aware that others have
needs and desires similar to his own and begins to defer to them
to get them to do what he wants.

2.Level two: Conventional Stages

Maintaining the expectations of ones own family, peer
group or nation is now seen as valuable in its own right,
regardless of the consequences. The person at this level of
development does not merely conform to expectations but
exhibits loyalty to the group and its norms. it is right my
friends/family think so it is what our law says
a. Stage Three: Interpersonal Concordance orientation:
Right action is conformity to what is generally expected in
ones role as a good son, daughter, brother etc. Doing what is
right is motivated by the need to be seen as a good performer
in ones own eyes and in the eyes of others.
b. Stage four: Law and order orientation:
What is right or wrong here, is now determined by loyalty
to ones own larger nation or surrounding society. Laws are to
be upheld except where they conflict with other fixed social
duties.

3.Level Three: Postconventional, Autonomous or principled stages:

Here, a person no longer simply accepts values and norms of the groups
to which he or she belongs to. Instead, the person now tries to see
situations from a point of view that impartially takes everyones interests
into account. The person questions the laws and values that a society has
adopted and redefines them in terms of self chosen principles that can be
justified in rational terms. If an adult at this stage is asked why something is
wrong, the person will respond in terms of what has been decided through
processes that are fair to everyone or in terms of justice.
a. Stage Five: Social Contract Orientation:
Here, the person becomes aware that people hold a variety of
conflicting personal views and opinions and emphasizes fair ways of
reaching consensus by agreement, contract and due process.
b. Stage Six: Universal Ethical Orientation:
At this final stage, the right action comes to be defined in terms of
moral principles chosen because of their logical comprehensiveness,
universality and consistency. These ethical principles are not concrete, but
abstract general principles dealing with justice, societys welfare, equality of
human rights, respect for the dignity of individual human beings. the
persons reasons for doing what is right are based on a commitment to
these moral principles.

Factors That Affect Employee

Ethics
Moral Development

Research Conclusions:
People proceed through the stages of moral development sequentially.
There is no guarantee of continued moral development.
Most adults are in Stage 4 (good corporate citizen).

Individual Characteristics
Personality Variables
Ego strength
A personality measure of the strength of a persons convictions

Locus of Control
A personality attribute that measures the degree to which people
believe they control their own life.
Internal locus: the belief that you control your destiny.
External locus: the belief that what happens to you is due to luck or
chance.

Structural Variables
Organizational characteristics and mechanisms that guide and
influence individual ethics:
Performance appraisal systems
Reward allocation systems
Behaviors (ethical) of managers
An organizations culture
Intensity of the ethical issue

Good structural design minimizes ambiguity and uncertain and

foster ethical behavior.

Ethics in an International
Context
Ethical standards are not universal.
Social and cultural differences determine acceptable behaviors

Foreign Corrupt Practices Act

Makes it illegal to corrupt a foreign official yet token payments
to officials are permissible when doing so is an accepted practice
in that country.

How Managers Can Improve

Ethical Behavior in An
Organization
1. Hire individuals with high ethical standards.
2. Establish codes of ethics and decision rules.
3. Lead by example.
4. Delineate job goals and performance appraisal mechanisms.
5. Provide ethics training.

6. Conduct social audits.

7. Provide support for individuals facing ethical dilemmas.

Effective Use of a Code of Ethics

Develop a code of ethics as a guide in handling ethical
dilemmas in decision making.
Communicate the code regularly to all employees.
Have all levels of management continually reaffirm the
importance of the ethics code and the organizations
commitment to the code.
Publicly reprimand and consistently discipline those who
break the code.

Conduct of Ethics Training

Training in ethical problem solving can make a difference in
ethical behaviors.
Training in ethics increase employee awareness of ethical
issues in business decisions.
Ethics training clarifies and reinforces the organizations
standards of conduct.
Employees become more confident that they will have the
organizations support when taking unpopular but ethically
correct stances.