Ethics Analysis (Hosmer Model)

Manager's Decision Checklist

 
1.                 What are the best economic alternatives?
2.                 What are the legal alternatives?
 3.                 Does a given decision result in greater benefits than damages for society as
a whole, not just for our organization as part of that society?
4.                 Is the decision self-serving, or would we be willing to have everyone else
take the same action when faced with the same circumstances?
 5.                 We understand the need for social cooperation; will our decision increase
or decrease the willingness of others to contribute?
 6.                 We recognize the importance of personal freedom; will our decision
increase or decrease the libery of others to act?
 7.                 Lastly, we know that the universe is large and infinite, while we are small
and our lives are short; is our personal improvement that important, measured
against the immensity of that other scale?
 
The Nature of Ethics in Management
 
"Right" and "proper" and "fair" are ethical terms. They express a judgment
about our behavior towards other people that is felt to be just. We believe that there
are right and wrong ways to behave towards others, proper and improper actions,
fair and unfair decisions. These beliefs are our moral standards of behavior. They
reflect our sense of obligation to other people, our sense that it is better to help
rather than to harm other people.
 
Moral problems are truly managerial dilemmas. They represent a conflict between
an organization's economic performance (measured by revenues, costs and profits)
and its social performance (stated in terms of obligations to persons both within
and outside the organization).
Characteristics of Moral Problems in Management
1.                 Most ethical decisions have extended consequences.
2.                 Most ethical decisions have multiple alternatives.
3.                 Most ethical decisions have mixed outcomes.
4.                 Most ethical decisions have uncertain consequences.
5.                 Most ethical decisions have personal implications.
 

 
What is an Ethical Dilemma?
An ethical dilemma (ethical paradox or moral dilemma) is a problem in
the decision-making process between two possible options, neither of which is
absolutely acceptable from an ethical perspective. Although we face many
ethical and moral problems in our lives, most of them come with relatively
straightforward solutions.

On the other hand, ethical dilemmas are extremely complicated challenges

that cannot be easily solved. Therefore, the ability to find the optimal solution
in such situations is critical to everyone.

Every person may encounter an ethical dilemma in almost every aspect of their
life, including personal, social, and professional.

How to Solve an Ethical Dilemma?

The biggest challenge of an ethical dilemma is that it does not offer an

obvious solution that would comply with ethics al norms. Throughout the
history of humanity, people have faced such dilemmas, and philosophers
aimed and worked to find solutions to them.
The following approaches to solve an ethical dilemma were deduced:

 Refute the paradox (dilemma): The situation must be carefully

analyzed. In some cases, the existence of the dilemma can be logically
refuted.
 Value theory approach: Choose the alternative that offers the greater
good or the lesser evil.
 Find alternative solutions: In some cases, the problem can be
reconsidered, and new alternative solutions may arise.

Examples

Some examples of ethical dilemma include:

 Taking credit for others’ work

 Offering a client a worse product for your own profit
 Utilizing inside knowledge for your own profit

Ethical Dilemmas in Business

Ethical dilemmas are especially significant in professional life, as they

frequently occur in the workplace. Some companies and professional
organizations (e.g., CFA) adhere to their own codes of conduct and ethical
standards. Violation of the standards may lead to disciplinary sanctions.

Almost every aspect of business can become a possible ground for ethical
dilemmas. It may include relationships with co-workers, management, clients,
and business partners.

People’s inability to determine the optimal solution to such dilemmas in a

professional setting may result in serious consequences for businesses and
organizations. The situation may be common in companies that value results
the most.
In order to solve ethical problems, companies and organizations should
develop strict ethical standards for their employees. Every company must
demonstrate its concerns regarding the ethical norms within the organization.
In addition, companies may provide ethical training for their employees.

Ethical practice
Ethical practice is the application of ethical values in organisational behaviour. It applies
in all aspects of organisational conduct, including corporate governance, employment
practices, sales techniques, stakeholder relations, accounting practices, and issues of
product and corporate responsibility. It’s about the discretionary decisions that
organisations and the people who work for them make, and transparency with all
stakeholders about those decisions. Are colleagues treated with dignity and respect?
Are customers treated fairly? Does the organisation acknowledge its responsibilities to
wider society?

Importance
Organisations should ‘do the right thing’ because it is the right thing to do. The
Institute of Business Ethics' research supports this view, and demonstrates the
benefits to organisations when they take their ethical values seriously:

 An open culture improves morale.

 Good relations with customers lead to an enhanced reputation.
 Ethical companies outperform their peers financially in the long term.

Reputations are based not only on an organisation’s delivery of its products and
services, but on how it values its relationships with its staff and stakeholders,
and how it establishes responsibility and accountability towards them.
Demonstrable ethical practice is not only an effective insurance policy, mitigating
risk; it gives organisations competitive advantage. An organisation's success
depends on trustful relationships with employees, customers, suppliers and the
community.

Serious risks can occur when an organisation’s culture is at odds with its stated
ethical values. The ‘say/do gap’ – where leaders say one thing but do another – is
harmful to their credibility and leaves workers cynical and disengaged. As a
result, the organisation is susceptible to ethical lapses and damage to its
reputation. Leaders should be clear on what the organisation’s ethical values,
demonstrate them day-to-day, and set expectations that employees reflect these
values in their own behaviours. In our Purposeful leadership report, we
investigate what business ethics means for leaders at various levels of the
organisational hierarchy, and the extent to which these leaders can help
organisations articulate and embed ethical values. Listen to a round-table
discussion in our podcast Ethics: a leadership imperative.

Establishing ethical culture

The term ‘ethical culture’ is about how ethical values are brought to life in the
day-to-day running of the organisation. Aa company may have ‘excellence’ as a
value, but how is excellence defined in that organisation? How is it achieved? Is it
with integrity, or is it at the expense, for example, of child labour or poor working
conditions?

An organisation's ethical climate also matters. It's about the social norms and
values that outline what ‘the right behaviour’ is and how ethics should guide
behaviour. Ethical climate is influenced by policies and practices, meaning
businesses need to pay attention to management practices and how they shape
the ethical environment. Find out more about organisational culture and climate.

To operate ethically, an organisation needs an ethics programme to support and

bring its values to life. This may be a formal or informal programme depending on
the size of the organisation, but it should include a code of ethics as the key
element. If values are a compass to guide behaviour at work, then a code of
ethics is the map that helps people navigate ethical dilemmas in the workplace.
When done well, a code articulates expected behaviours and brings the
organisation’s values to life – and isn’t seen just as a compliance-driven initiative.
To understand expectations and ensure they are achievable, staff need guidance
from their leaders. And once a code of ethics is launched, organisations
shouldn’t stop ethics activities as valuable insights can be fed back from staff,
customers and stakeholders.

The corporation had four guiding ethical standards in place of rules:

1. Strive to be fair with all associates, vendors, clients.

2. Assist and urge all stakeholders to develop their ability, skills, and
responsibility.
3. Make and keep commitments.
4. Consult others in the decision-making process.

A study on the management of ethics conducted by Barry Posner & Warren

Schmidt highlights the following:
  A managers’ primary goal is to make their organisations
effective. Boosting profits and the interests of stakeholders were not
their core priorities.
 Attending clients was seen as necessary.
 The quality most highly valued by managers at all levels was integrity.
 The pressure to stick to organisational expectations are seen to be high.
 In helping their mates cope with ethical dilemmas, spouses are
essential.
 In ethical confusions, most managers seek the counsel of others.

Principles of Business Ethics that is Applicable for

Managers Across All Levels
1. Honesty
Managers, when given the responsibility of leading a team, need to be truthful
and honest in their dealings. They are expected to provide correct statements
and guide the team in the right direction.

2. Integrity
Managers who are ethical usually demonstrate high levels of personal integrity. 
They tend to follow their convictions and do what they feel is right even when
they are tempted to do otherwise. Managers who have high personal integrity are
upright, honorable, and principled.

3. Loyalty
The role of ethics in management is immense. And this can be gauged from the
fact that ethical managers are loyal and never disclose any information they have
gained from confidence for their personal advantage. These managers usually
demonstrate fidelity and remain worthy of trust. They also remain loyal to their
colleagues and companies, all through their contractual period.

4. Fairness
Managers who are fair do not exercise their power arbitrarily. They treat all
individuals with fairness and have high tolerance levels. These managers are
generally open-minded and admit if they are wrong and change their beliefs and
positions when required.

5. Respect
Ethical managers tend to exhibit various qualities including autonomy, human
dignity, and interest in all those who have contributed to the success of the
company, rights, and privacy. These managers tend to be courteous and treat all
employees with equal dignity and respect, irrespective of their national origin,
race, or sex.
 How environmental considerations influence business activity

Any business activity will have an impact upon the environment, either through the natural
resources that it uses or the waste products that it produces.

A business can carry out a green audit in order to measure the environmental impact of its
activities. For example, this may involve measuring its carbon footprint. The four main
environmental issues that are most likely to influence the activities of a business are climate
change, pollution, sustainability and waste reduction.

Climate change
Climate change refers to long-term changes to weather patterns. Scientists believe that business
activity contributes to this global warming through the burning of fossil fuels and the cutting
down of trees.

Pollution
Pollution commonly refers to the contamination of air or water with harmful chemicals. Air
pollution can cause a number of health-related issues, and animals and plants that live in seas and
rivers are affected by water pollution. Business activity may also cause disturbance through noise
pollution.

Sustainability
Working in a sustainable way means that business activity does not use up or destroy natural
resources. To achieve this, a business may use renewable energy, recycle materials such as paper
and ink cartridges, or use devices that save energy and water.

Waste reduction
Traditionally, waste has either been incinerated or sent to landfill sites. However, these are not
environmentally friendly ways of dealing with waste.

Instead, businesses can reduce the amount of waste that they produce, which reduces costs and
means that there is less waste to dispose of. Many businesses also look for ways in which waste
materials can be reused.

The advantages of being environmentally friendly

Being environmentally friendly can bring a number of benefits. For example:

 Subsidies and grants – The government offers money to businesses willing to invest in

environmentally friendly production methods. This can help to reduce costs.
 Lower costs – Changes to business activities that lower a business’ impact on the environment can
often also lower the business’ costs. For example, retailer Marks and Spencer has introduced driver
performance software in its delivery vehicles that has reduced the consumption of fuel by 2.3 litres
per hour.
 Increased sales – Concerned customers who are very aware of environmental issues are more likely
to buy from businesses that act in an environmentally friendly way.

The disadvantages of being environmentally friendly

For a business, there may also be disadvantages to being environmentally friendly. For example:

 Increased costs – Producing goods in an environmentally friendly way can often mean spending more
money initially, as it can require research and investment in new production methods.
 Time consuming – Becoming environmentally friendly can take up a lot of time, particularly in large
businesses.
 Potential for inaccurate claims – A business that wants to use claims about its environmental efforts
must make sure those claims are accurate. Inaccurate claims can cause significant damage to the
reputation of a business.