Today’s consumers have strong demands, and many show a clear unwillingness to go along with ethically dubious practices deemed acceptable in years past. This poses significant challenges in several industries, but also an exciting opportunity: the chance to do real good through the power of ethical management.
The growing prioritization of business ethics is readily apparent based on insights from a 2023 survey conducted by Harris Poll on behalf of the American Institute of CPAs (AICPA) and The Chartered Institute of Management Accountants (CIMA). In this study, 70 percent of those referred to as “future talent” explained that “business ethics is more important now than five years ago.”
A number of aspiring leaders recognize the value of managerial ethics but struggle to define this or determine how it will actually play into day-to-day operations or decision-making initiatives. Further research will be needed to uncover and understand these opportunities, but we will reveal a few priorities in this guide to ethics and management. Plus, we will demonstrate the role of a master’s in management in preparing for ethical leadership.
The Importance of Ethics in Management
Implementing managerial ethics begins with highlighting the why of ethical management. This explanation can be divided into a few main categories, consisting of extrinsic and intrinsic motivation.
- Extrinsic. Factors such as productivity and risk management deserve consideration, but a growing body of research indicates that these areas can see dramatic long-term improvements under ethical frameworks.
- Intrinsic. Regardless of what, exactly, drives profits, advocates for management ethics believe that this approach should be pursued simply because it is morally just. Personal values such as empathy and integrity may also drive ethical management.
The Foundation of Ethical Management
While ethical management practices have existed and have been heavily utilized throughout history, this effort took a clear step up with the emergence of concepts such as corporate social responsibility (CSR) during the 20th century. This draws on classic ethical concepts, including influential theories from Ancient Greece and the Enlightenment period.
Ethical Theories and Principles
Ethical management is underscored by several classic philosophical theories, which describe what it means to make ethical judgments and how these can be built into everyday problem-solving efforts. Essentials worth examining include:
1. Utilitarianism
Utilitarianism calls for the amplification of utility (often defined in the context of well-being) for as many people as possible while also preventing harm on a wide scale. The ultimate goal? “The greatest amount of good for the greatest number of people.”
This is known as a consequentialist theory, as it emphasizes outcomes of various actions (ethical or otherwise), rather than the inherent morality of those actions. It is strongly linked to economist John Stuart Mill, who, in the essay Utilitarianism, advocated for the “greatest happiness principle” to guide both moral judgments and overarching public policies.
2. Deontological Ethics (Duty-Based Ethics)
When reflecting on ‘right’ and ‘wrong,’ we tend to focus on the consequences of various actions or behaviors, rather than considering the underlying moral implications of these concerns. With Deontological ethics, consequences are not a factor. Behaviors are deemed right or wrong based on intrinsic qualities.
Immanuel Kant is the most recognizable force behind Deontological ethics. His principle of categorical imperative suggests that all people must follow certain laws or rules, regardless of extenuating circumstances.
3. Virtue Ethics
Virtue ethics sharply contrasts the outcome-based nature of utilitarianism and duty-based ethics, in which actions tend to attract the bulk of the attention. With virtue ethics, the focus shifts to the character of the individuals responsible for key actions.
This unique ethical framework highlights complex concepts such as eudaimonia (referencing a fulfilled and meaningful way of life) and phronesis (a version of prudence in which people make sound moral judgments within the context of various situations).
4. Ethics of Care
Ethics of care draws attention to empathy in decision-making. This moral theory highlights relationships between friends, family members, and entire communities. These relationships prompt moral obligations, and, as such, ethical decision-making should draw heavily on social connections. Care ethics also highlights the need for social justice, recognizing that systemic concerns can impact relationships and communities.
5. Rights-Based Ethics
Closely aligned with Deontological theories, rights-based ethics highlight inherent rights of individuals, along with the obligations that stem from these rights. According to rights-based ethics, certain rights should always be respected, no matter how the consequences of various rights-based actions play out. Proponents advocate for absolutism, arguing that there are no situations in which it would be acceptable to deny fundamental rights.
6. Justice Theory
Designed to promote equitable treatment, justice theory takes many forms and may encompass the previously described duty-based ethics. Meanwhile, distributive justice reveals the importance of distributing goods and resources fairly throughout society. Rights-based justice also falls within this classification, suggesting that the basis for justice should center around individual freedoms.
7. Ethical Relativism
Ethical relativism is unique among the philosophies and theories highlighted above, as this philosophy claims that there is no one ‘right’ set of principles by which all humans can realistically abide. Rather, different people or societies are tasked with defining what is right or wrong. Similarly, cultural relativism suggests that no moral truths can be applied on a universal basis.
Ethical Leadership and Corporate Responsibility
The theories cited above can form a strong basis for ethical leadership. However, just as these theories vary, so can ethical leadership as it relates to the modern corporate environment. Concerns worth addressing are highlighted in detail below:
Characteristics of Ethical Leaders
It can be difficult to define ethical leadership. As the ethical frameworks and theories highlighted above indicate, there are some contrasting views of ethics and moral behavior. In general, the leaders most widely defined as ethics emphasize the moral good as they make decisions on behalf of their organizations and to benefit the community at large. Commonly cited characteristics include:
- Empathy
- Transparency
- Courage
- Accountability
Impact on Corporate Social Responsibility (CSR)
Corporate social responsibility (CSR) encourages organizations to consider the impact of their initiatives, beyond the sheer goal of driving profits. This encompasses a myriad of community or environmental concerns that irresponsible business initiatives may impact. Ethical theories can provide a strong framework to guide CSR efforts.
For instance, utilitarianism reveals the need for corporations to do the best for the most people. Virtue ethics suggests that modern leaders must possess the critical characteristics described above. As explained by deontological ethics, corporations have a moral duty to show respect for employees and consumers alike as they make ethical judgments.
5 Ethical Considerations in Management
Today’s complex business landscape encompasses a wide range of ethical concerns. Many have existed for millennia, but others have become more of a priority in recent years. All must be strongly considered when managing teams, and especially when forming a strategic approach to decision-making.
1. Integrity and Honesty
Transparency forms the foundation of trusting relationships between leaders and team members, and between businesses and consumers. Leaders who demonstrate integrity rely on a strong moral compass while showing a clear commitment to honesty in all their actions.
This begins with transparency. This means letting team members know about current concerns and taking responsibility for mistakes. Leaders should be proactive about sharing important information, but also sensitive in how they uncover essential details.
2. Fairness and Justice
By consistently following morally sound policies and procedures, leaders can show fairness and justice in their dealings with employees and with other stakeholders. Equal opportunity is also a must, especially as it relates to hiring, career advancement, and performance review integrity. Ethical leaders must work actively to address any biases they may hold while also making a point of intervening when they observe injustice in the workforce.
3. Respect for Individuals
Today’s employees may require guidance and structure, but they also want to be treated with respect. This means delegating tasks but also trusting that employees are up to the job and can handle responsibilities without being micromanaged. This respect for individuals also calls for the creation of an inclusive environment, in which all feel valued and empowered.
4. Responsibility and Accountability
We have touched on the need for leaders to own up to their mistakes and to address their own biases, but this is just one aspect of accountability in the context of modern management. This also calls for the active pursuit of constructive feedback. Employees should have ample opportunities to share their perspectives, especially as they relate to leadership styles and initiatives.
5. Sustainability and Environmental Stewardship
Environmental stewardship should be framed as a core business value and built into missions, visions, and policies. It is also crucial for ethical managers to lead by example and demonstrate that they incorporate sustainable practices into their daily routines. On a wider scale, this should be viewed as an ongoing process that calls for careful monitoring, innovation, and public advocacy.
Strategies for Identifying, Analyzing, and Resolving Ethical Dilemmas
- Identification. Today’s leaders must be mindful of emerging ethical concerns and willing to put more effort into finding and addressing these. This begins with open and honest communication.
- Analysis. The ethical frameworks highlighted above can play a valuable role in determining the scope of current dilemmas and how they might be resolved. Consider integrating data-driven practices to further assist in the analysis of ethical concerns.
- Resolution. As resolutions are developed and implemented, leaders need to be mindful of current policies, legislative guidelines, and feedback from various stakeholders. Ideally, ethical decisions will align with professional standards and organizational objectives.
- Documentation and Reflection. Decision-making processes must be carefully and thoroughly documented. Personal reflection can help leaders learn from these initiatives and apply key findings to future ethical decision-making efforts.
Top 10 Ethical Dilemmas in the Workplace
Ethical dilemmas abound in the modern workplace and, with so many concerns at stake, it can be easy for leaders to feel stifled. Ethically minded leaders must acknowledge that there will never be a “perfect” solution, but that they can still make ethical choices based on key frameworks while addressing these top 10 ethical dilemmas in the workplace:
1. Conflicts of Interest
Even the most harmonious workplaces will inevitably experience significant conflicts of interest. To note, efforts to be eco-conscious can prove complicated, especially when leaders have business interests involving sustainable ventures. Other conflicts of interest may center around diversity, equity, and inclusion initiatives as sometimes, the seemingly best-trained pool of talent will not abide by DEI principles.
2. Use of Company Resources
From time theft to expense accounts and especially intellectual properties, there are ethical conundrums to be navigated within the modern workforce. Furthermore, a number of policies may promote unequal access to these resources. Clear policies and procedures can help, as can leading by example.
3. Information Privacy and Confidentiality
In today’s data-driven environment, leaders often struggle to weigh the desire for personalized services against concerns surrounding consumer privacy. These issues are increasingly underscored by regulatory frameworks such as GDPR (General Data Protection Regulation) and CCPA (California Consumer Privacy Act).
4. Hiring and Firing Practices
Ethics in hiring are increasingly difficult to navigate, especially in the context of DEI and skill gaps or labor shortages. At minimum, merit-based recruitment and selection processes must be implemented, with managers aware of unconscious biases as they screen candidates. Fair and objective criteria are also needed for performance evaluations and for promoting dignity in termination, when necessary.
5. Gifts and Bribes
Concepts such as quid pro quo have been prominent in the corporate world for far too long. Many policies are in place to avoid these practices, and yet, several organizations explore gray areas and ethically dubious initiatives. Strict guidelines must be established surrounding bribery and ethical conduct. If these policies are not followed, transparency and accountability are essential.
6. Fairness and Equality
Several of the aforementioned principles of ethics play heavily into efforts to promote fairness and equality in the modern workforce. Unfortunately, there are still huge disparities in hiring and pay. Key opportunities worth exploring, such as inclusive decision-making processes, DEI training, and objective performance evaluations, to name a few. Also crucial to consider is a culture of open communication to reveal when initiatives are not fair or equal.
7. Whistleblowing
Employees should feel empowered to reveal misconduct and to seek solutions. Unfortunately, many fear that they will be let go or that they will face other harsh consequences. Whistleblowing policies should protect these employees while ensuring that they have access to reporting channels. All whistleblower reports must be taken seriously and investigated promptly.
8. Intellectual Property and Confidentiality
When properly safeguarded, intellectual property promotes innovation and creativity. Some organizations rely on non-disclosure agreements (NDAs), but these must be deemed legally enforceable. Beyond this, clear guidelines must reveal how IPs will be safeguarded. Access controls may be required to ensure that confidential information is only available when required by certain employees.
9. Employee Monitoring
Employee monitoring solutions can help leaders provide better guidance in an era of remote work, but the implications surrounding privacy and work-life balance can be concerning. Legal compliance is a must, along with transparency so that employees know when and how they are monitored on the job. Surveillance efforts should never undermine employee autonomy or dignity.
10. Sustainability and Environmental Responsibility
Many organizations struggle to balance priorities such as sustainability and profitability. Unfortunately, practices that promise to drive profits often present clear ecological conundrums. Ethical issues may also involve resource allocation and the inherent complexity of the modern supply chain.
How UTC Integrates Ethics Into Management Education
Are you intrigued by the ethical concerns cited above? If you are committed to do your part, you could be a great candidate for Master of Science in Management (MSM). This program provides a strong foundation through core courses but also integrates ethical concepts into electives and experiential learning. Learn more about our ethics-based approach to management education, or take the next step and apply today.
