CH-3

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2023
Chapter Three
Organizational and Managerial Ethics
3.1 Ethical Management
Given prominent ethical scandals in virtually every type of organization, the

importance of an ethical dimension of leadership seems obvious. However, in
order to understand this leadership phenomenon and its relationships with
antecedents and outcomes, we must first know what “it” is. Philosophers
have answered the question “what is ethical leadership” from a normative
perspective, specifying how ethical leaders “ought” to behave (e.g. Ciulla,
2004). By contrast, our social scientific approach to the topic is focused more
on describing ethical leadership as well as identifying its antecedents and
consequences. Observers have long believed that personal traits such as
integrity would be important to perceptions of leadership effectiveness and
research has borne that out
Organizations are becoming increasingly active in pursuing socially

responsible business practices to mitigate a wide range of business risks. At
the basis of corporate evolution, the fundamental driving force for
commercial entities was to essentially be profitable and grow (economic
success). Maintaining happy customers and market growth through quality
products and services was paramount to corporate success. A multitude of
quality management system certifications flourished in the race for
improvement and to demonstrate a credible position.
Business leadership sounds like a simple task to define business leadership

as leading a group of people toward achieving specified goals, but in reality
this definition goes beyond one’s imagination because it is subject to
psychological, cultural, environmental, and circumstantial surroundings.
Hence, Heifetz (1994) assesses leadership on its capability of realistically
coping with situations: they maintain that “…changing the status quo
requires more than changing the authoritative figure. Adaptive work requires
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adjustments, learning, and compromise of many of the dominant,
complacent and beleaguered.
In order for business leaders to effectively manage others, they must first
understand how to manage themselves. Some call it emotional intelligence,
others call it self-awareness, but until individuals are aware of their strengths
and limitations and address their ineffective actions, they are not prepared
to effectively manage individuals, groups or organizations. The essential
prerequisites for addressing performance inadequacies are self-awareness
and self-change because they deliver credibility, the root of organizational
change. Once the foundation has been built, extending the skills to provide
solid leadership to individuals, teams and organizations becomes natural and
fluid.
The understanding of leadership recognizes it as the influence of an

individual, a sub-group or a group of people over others to think, to behave,
to plan, to make decisions, and to execute strategies in a certain manner. In
this respect, Solomon (1996) defines a business leader as one who inspires
and motivates, not just resolves or manages.
Ethical management balances the different responsibilities of modern

business organizations.
Responsibilities:
 Profit: All companies are responsible to make a profit in order to

survive and fulfill their other obligations.
 People: This includes employees, customers, shareholders, and the
community.
 Planet: Sustainability and the preservation of resources is a growing
responsibility for businesses.
 Principles: The ethics that govern the organization will help the
company to act ethically in every area.There are many different
characteristics of ethical management. There are three traits, however,
that people identify with ethical management:
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 Integrity: The manager behaves with integrity and leads by example.
 Transparency: The company and its managers are transparent and do
not hide their actions.
 Utilitarianism: The organization and manager considers the happiness
of the people involved in the organization.
3.2. Subordinate’s Ethical Issues
Behavioral pattern of subordinate’s can be reflected as pro-organization, self

serving and maliciously intended ethics behaviors.
 Pro-Organizational Ethics Behavior [organizationally beneficial]

may be defined as the “organizational person” approach to gain influence
in that these behaviors reflect those that are typically prescribed and/or
sanctioned by organizations for their subordinates. These may be viewed
as behaviors that tend to be directly beneficial to the organization. Pro-
Organizational behaviors include acts such as getting the job done,
behaving in an appropriate manner, developing good working
relationships, and working overtime.
 Self-Serving Ethics Behavior [self-indulgent] may be defined as the
“it’s me first” approach to gain influence in that these behaviors show
self-interest being of paramount importance, and thus being above the
interests of others and the organization. Whether these behaviors help or
harm the organization is subject to interpretation and may be determined
by the situation. Self-Serving behaviors include acts such as blaming
others for mistakes, spreading rumors, and taking credit for others’ work.
 Maliciously Intended Ethics Behavior [destructive] may be defined
as the “burn, pillage, and plunder” approach to gain influence in that they
are intended to directly hurt others and/or the organization, to facilitate
personal gain. These behaviors are the extreme of self-serving behaviors,
and in many industrialized societies these behaviors would also be
considered illegal. Maliciously Intended behaviors include acts such as
making threatening phone calls to co-workers, blackmail, and stealing
corporate documents.
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3.3 Organizational Ethical Basics
When building an ethical business it is important that the roles and

responsibilities of each member of the company are clearly outlined. An
organizational chart will help determine how an ethics program will run.
There will need to be a chain of command overseeing the ethics program.

The Interrelationships of these roles should be established along with the
ethical standards that must be embraced at every level. Remember that
business ethics begin at the top of the organizational chart.
When talking about ethics in organizations, one has to be aware that there
are two ways of approaching the subject--the "individualistic approach" and
what might be called the "communal approach." Each approach incorporates
a different view of moral responsibility and a different view of the kinds of
ethical principles that should be used to resolve ethical problems.
More often than not, discussions about ethics in organizations reflect only
the "individualistic approach" to moral responsibility. According to this
approach, every person in an organization is morally responsible for his or
her own behavior, and any efforts to change that behavior should focus on
the individual.
But there is another way of understanding responsibility, which is reflected in

the "communal approach." Here individuals are viewed not in isolation, but
as members of communities that are partially responsible for the behavior of
their members. So, to understand and change an individual's behavior we
need to understand and try to change the communities to which they belong.
Any adequate understanding of, and effective solutions to, ethical problems
arising in organizations requires that we take both approaches into account.
These two approaches also lead to different ways of evaluating moral
behavior. Once again, most discussions of ethical issues in the workplace
take an individualistic approach. They focus on promoting the good of the
individual: individual rights, such as the right to freedom of expression or the
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right to privacy, are held paramount. The communal approach, on the other
hand, would have us focus on the common good, enjoining us to consider
ways in which actions or policies promote or prohibit social justice or ways in
which they bring harm or benefits to the entire community.
Using the two approaches to dealing with ethical problems in organizations

will often result in a greater understanding of these problems. There are
times, however, when our willingness to consider both the good of the
individual and the good of the community leaves us in a dilemma, and we
are forced to choose between competing moral claims. Affirmative Action
Programs, for example, bring concerns over individual justice into conflict
with concerns over social justice. When women and minorities are given
preferential treatment over white males, individuals are not treated equally,
which is unjust. On the other hand, when we consider what these programs
are trying to accomplish, a more just society, and also acknowledge that
minorities and women continue to be shut out of positions, (especially in top
management), then these programs are, in fact, indispensable for achieving
social justice. Dropping preferential treatment programs might put an end to
the injustice of treating individuals unequally, but to do so would maintain an
unjust society. In this case, many argue that a communal approach, which
stresses the common good, should take moral priority over the good of the
individual.
Ethical organizations don’t just happen. You have to build them. And the
place to begin is by creating an ethical organizational culture. You will have
to make clear to everyone in your organization that moral priorities are as
important as financial priorities. Everyone in the organization will understand
that finances are critical to survival, and so no one is likely to make the case
that ethics should trump every other consideration. But an ethical culture
starts with holding moral values at least as high as financial concerns.
Ethical status of organization is more or less depends on whether the

following attributes exist:
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Characteristics of an ethical organization
 Trust ( trusting and believing in your employees or subordinates, making

them feel worth it and adding to the project and the company, showing
of appreciation i.e. praises and acknowledgement).
 Effective communication upwards and downloads ( able to communicate
the company objectives, mission and vision with all customers, clients
and the stakeholders) .
 Openness: be open with your employees, no hidden agendas.
 Objectivity and fairness: be object in your praises and critics with your
employees. Don't judge, communicate
 Integrity: live up to your values, beliefs in whatever you do
 Transparency: Be fair, just, consistent and objective in anything you do
 Values - live up to your values
 Sharing your wealth: i.e. knowledge and or money (Corporate Social
Responsibility) Empowering others who helped you become who you are
today and or whom you are benefiting from in the business society,
community, etc
3.4 Ethical Safeguards
Ethical safeguards need to be in place to ensure ethical behavior. Safeguards

take away the excuse that employees do not know better. Safeguards do
more than protect the company; they help bring in work. In fact, many
government agencies demand that those they contract with have ethical
safeguards in place.
Examples: Code of Conduct, Employee training, Ethics audits

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[Type the document title]

Organizational and Managerial Ethics

3.1 Ethical Management

Given prominent ethical scandals in virtually every type of organization, the

Organizations are becoming increasingly active in pursuing socially

Business leadership sounds like a simple task to define business leadership

The understanding of leadership recognizes it as the influence of an

Ethical management balances the different responsibilities of modern

 Profit: All companies are responsible to make a profit in order to

3.2. Subordinate’s Ethical Issues

Behavioral pattern of subordinate’s can be reflected as pro-organization, self

 Pro-Organizational Ethics Behavior [organizationally beneficial]

When building an ethical business it is important that the roles and

There will need to be a chain of command overseeing the ethics program.

But there is another way of understanding responsibility, which is reflected in

Using the two approaches to dealing with ethical problems in organizations

Ethical status of organization is more or less depends on whether the

 Trust ( trusting and believing in your employees or subordinates, making

3.4 Ethical Safeguards

Ethical safeguards need to be in place to ensure ethical behavior. Safeguards

Examples: Code of Conduct, Employee training, Ethics audits

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