Managerial Ethics and Social Responsibilities

Managerial Ethics

The term ‘ethics’ refers to value-oriented decisions and behaviour. The word ethics comes from the Greek root, ethros, meaning character, giving beliefs, standards, or deals that pervade a group, a community or an individual. Today ethics is the study of moral behaviour—the study of how the standards of moral conduct among the individuals are established and expressed behaviourally. Terms such as business ethics, corporate ethics, medical ethics, or legal ethics are used to indicate the particular area of application. But to have meaning, the ethics involved in each area must still refer to the value-oriented decisions and behaviour of individuals. Ethics refer to a set of moral principles, which should pay a very significant role in guiding the conduct of managers and employees in the operation of any enterprise. Ethics is concerned with what is right and what is wrong is human behaviour. It is normative and prescriptive, not neutral. It addresses the question of what ought to be. Ethics refer both to the body of moral principles governing a particular society or group and to the personal normal precepts of an individual.

Some people subscribe to a utilitarian reference in determining what is wrong and what is right. They hold that a proposed course of action should be judged from the standpoint of greatest good for the greatest number of people. From this point of view, there are few absolute standards and each issue must be judged by studying its impact upon all affected parties.

Relationship Between Managerial Ethics and Social Responsibilities

The term ‘social responsibility’ conveys the moral conduct that relates to such broad issues as environmental pollution, discrimination, poverty, unemployment and inflation. Accordingly, an organization whose practices contribute to inflation, unemployment, increased poverty and like would be viewed as socially irresponsible—as not fulfilling its responsibility to society. An automobile manufacturer who produces cars with faulty brakes, a pharmaceutical house that makes false claims about its cold remedies, or a food company house TV ads promote substandard food items are socially irresponsible.

Some people feel that social responsibility is linked to organisation and ethics to individuals, but this is not a useful distinction. In the final analyses, decisions are made by people and therefore, individual managers at some level must assume responsibility for every corporate decision. The executive who lies about a competitor’s product, the manufacturer who markets a highly inflammable article of clothing, the industrialist who dumps pollutants into a stream-all behaves in an ethically irresponsible way. The most responsible way to distinguish business ethics from social responsibility is in terms of a decision’s implications for society as a whole. Within this frame of reference, business ethics are concerned with microethics (relating to daily operating decisions with limited social impact), social responsibility is concerned with macroethics relating to decision with broad implications for a large segment of society.

However this distinction is not even followed in practice. The term ‘ethics’ is used to convey both ‘microethics’ and ‘macroethics’.

PriceWaterhouseCoopers is considered to be one of the most renowned global professional services firm in the world. With 161,000 employees located in 154 countries, the company’s “core values of excellence, teamwork and leadership (have) help us to achieve this growth.” (PwC) They not only focus on meeting their clients’ needs but they apply on their employees’ careers with the same intensity. The company has been able to extend their services because they excel in what they do and they “take the time to listen, question and understand the competitive and regulatory environment” for each of their clients. PwC not only created an ethical code of conduct but they also grasped the concept of corporate social responsibility, which states “as a leader in both the conceptual and practical aspects of corporate responsibility, we are happy to note that CR (corporate responsibility) has now reached the point of maturity – both for society and business. We have always believed that the best business solutions grown out of collaborative relationships with clients. Today, the same principle applies with corporate responsibility, stakeholder engagement and sustainability.” (PwC)