ETHICS IN CORPORATE MANAGEMENT

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By Dr. Kellen Kiambati PhD. HRM(K) CBPO(A)

It is apparent that in their normal operations, all organisations whether profit or not-for-profit are engaged in some economic activity requiring interactions with the community.

These interactions involve getting inputs in the form of resources from the environment to produce goods and services using internal business processes and avail the final products with the customer and consumers who come from outside the business boundaries. In such business transactions, it is expected that organisations act in an ethical manner in their interactions with different stakeholders. Business ethics entails the study of the ethical dimensions of organizational economic activity on the systematic, organizational and intra-organizational levels. Business ethics focuses on what is good and right in a particular economic activity, where an organization engages in a moral analysis and assessment of such economic activities and practices.

In a general sense, ethics is the code of moral principles and values that govern the behaviour of a person or group with respect to what is right or wrong. Although this definition appears relatively straight forward, it overlooks the issue that often morals are intensely personal and situational. However, morals reflect an individual’s values and beliefs and ethical decisions are rarely clear-cut because they may involve conflicting morals. The use of principles or standards that are universal, for example the law, enables people to clearly understand the parameters of acceptable behaviour that it applies to all people equally.

Inconsistent

The ethics used in everyday life are often ad hoc and have no consistent framework. They are based on individual judgements. Even though they are seen as important by the individual, no thorough analysis is conducted. The principles are based on personal judgements affected by personal experience and are often inconsistent. However, for an examination of ethics in a more considered way, it is necessary to identify the various perspectives that have shaped the way we understand and recognise ethical issues particularly in the business context. Managers often find themselves in situations of ethical dilemma.

An ethical dilemma is a situation which arises where it is difficult to distinguish right from wrong.All alternative choices or behaviours have potentially negative ethical consequences.

Benefits of business ethics

The various benefits of managing ethics in a business are as follows:

Business ethics helps in improving society by establishing government agencies, unions, laws and regulations in the society.

  • Business ethics helps an organization maintain ethical values during times of crisis. Business ethics programmes guide leaders about the right or wrong ways of dealing with complex dilemmas and how they should act during that time.
  • Business ethics helps employees behave according to the ethical values that are preferred by the top management of an organization. An organization discovers many differences between the values that reflect in the actions of the employees and the values preferred. Employees experience a relationship that is strong between the values of the organization and their values. Ethical values induce teamwork and increase the efficiency of the employees.
  • Ethics supports employee growth. When an employee pays attention to ethics, it induces confidence in the employee to deal with reality and face both good and bad circumstances. It is evident that the more an employee is emotionally healthy, the more ethical he or she is.
  • Ethics have become legal instruments. These days, there are several lawsuits regarding personnel matters and the influence of the services of the organization on the investors and customers. Major ethical principles that are applied in the organization are the laws that are made by the government. A greater attention on ethical issues on the part of the government ensures high ethical procedures and policies in the workplace. An employee, for example, is subject to breach of contract on non-compliance of the terms and conditions of the contract.
  • Business ethics helps to avoid criminal acts of ‘omission’ and in lowering the fines. Ethics helps in ascertaining the violation of ethical issues and in rectifying the violation that is committed by the organization. The guidelines set by an organization about ethical values help to lower fines.

An organization, for example, that has knowingly violated a contract is considered to have committed a criminal act and it is subject to penalty.

  • Business ethics helps to identify and manage the values associated with quality management, strategic management and diversity management. For managing these values, ethical programmes record the values, develop policies and procedures and then provide training to the employees on these policies and procedures. These ethical programmes manage certain values of quality management, such as reliability, performance, measurement and feedback. Similarly, they also manage various strategic values, such as reducing cost and increasing market share.
  • Business ethics helps in building a strong and positive public image of an organization.

Ethical values enable an organization to increase its goodwill in the market. Those organizations that value their customers have a positive influence in the market. Ethical values are the milestones that enable the establishing of a successful and socially responsible business.

  • Business ethics strengthens organizational culture. Ethical values improve relationships between an organization and its customers. They also strengthen the organization by ensuring consistency in the standard and quality of the product.
  • Business ethics makes sure that the right activities are performed in an organization.

Principles of business ethics

Ethical values, translated into active language establishing standards or rules describing the kind of behaviour an ethical person should (or should not) engage in, are ethical principles. The following list of principles incorporates the characteristics and values that most people associate with ethical behaviour.

  1. Honesty: Ethical officers are honest and truthful in all their dealings and they do not deliberately mislead or deceive others by misrepresentations, overstatements, partial truths, selective omissions, or any other means.
  2. Integrity: Ethical officers demonstrate personal integrity and the courage of their convictions by doing what they think is right even when there is great pressure to do otherwise; they are principled, honourable and upright. They will fight for their beliefs. They will also not sacrifice principle for expediency, be hypocritical, or unscrupulous.
  3. Keeping promises and trustworthiness: Ethical officers are worthy of trust. They

are candid and forthcoming in supplying relevant information and correcting misapprehensions of fact, and they make every reasonable effort to fulfill the letter and spirit of their promises and commitments. They do not interpret agreements in an unreasonably technical or legalistic manner in order to rationalize non-compliance or create justifications for escaping their commitments.

  1. Loyalty: Ethical officers are worthy of trust, demonstrate fidelity and loyalty to persons and institutions by friendship in adversity, support and devotion to duty.

They do not use or disclose information learned in confidence for personal advantage. They safeguard the ability to make independent professional judgments by scrupulously avoiding undue influences and conflicts of interest. They are loyal to their companies and colleagues and if they decide to accept other employment, they provide reasonable notice, respect the proprietary information of their former employer, and refuse to engage in any activities that take undue advantage of their previous positions.

  1. Fairness: Ethical officers are fair and just in all dealings.They do not exercise power arbitrarily, and do not use overreaching nor indecent means to gain or maintain any advantage nor take undue advantage of another’s mistakes or difficulties.

Fair persons manifest a commitment to justice, the equal treatment of individuals, tolerance for and acceptance of diversity. They are open-minded, willing to admit they are wrong and, where appropriate, change their positions and beliefs.

  1. Concern for others: Ethical officers are caring, compassionate, benevolent and kind. They like the golden rule, help those in need, and seek to accomplish their business objectives in a manner that causes the least harm and the greatest positive good.
  2. Respect for others: Ethical executives demonstrate respect for the human dignity, autonomy, privacy, rights and interests of all those who have a stake in their decisions.

They are courteous and treat all people with equal respect and dignity regardless of sex, race or national origin.

  1. Law abiding: Ethical officers abide by laws, rules and regulations relating to their business activities.
  2. Commitment to excellence: Ethical officers pursue excellence in performing their duties, are well informed and prepared, and constantly endeavour to increase their proficiency in all areas of responsibility.
  3. Leadership: Ethical officers are conscious of the responsibilities and opportunities of their position of leadership and seek to be positive ethical role models by their own conduct and by helping to create an environment in which principled reasoning and ethical decision making are highly prized.
  4. Reputation and morale: Ethical officers seek to protect and build the organization’s good reputation and the morale of its employees by engaging in no conduct that might undermine respect and by taking whatever actions are necessary to correct or prevent inappropriate conduct of others.
  5. Accountability: – Ethical officers acknowledge and accept personal accountability for the ethical quality of their decisions and omissions to themselves, their colleagues, their organizations, and their communities.

The following are some of the values that have been emphasized in corporations over the years:

  1. Openness
  2. Integrity

iii. Accountability ( accountable leadership)

  1. Democratic values in respect of the sharing of power, representation and participation.
  2. Efficiency and effectiveness [hence leadership for results]
  3. Probity and integrity [hence leadership that is honest, faithful and diligent]

vii. Fairness; The sense of right and wrong, what is fair and just, work ethics, technology and continuing corporate social

viii. Responsibility [hence leadership that is capable, responsible, representative and conscious of its obligations]

  1. Transparent and open leadership with accurate and timely disclosure of information relating to all economic and other activities of the corporation.
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