Managerial Ethics and Decision Making

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In the framework of this course we have acquired knowledge pertaining to professional decision making dynamics that can be qualified as core principles of adequate decision making that can contribute a lot to sustainability of the company.

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A leader and a manager of any organization should be a person who is efficient in his/her professional sphere and possesses skills and personal traits of character necessary for effective management. A leader should be capable of demonstrating and utilizing independent thinking and, as common sense suggests, be ready to rely on his/her feeling of rightness of his/her decision. However, “being right” is not the only option to choose for effective decision making. The guidance by a “being right” principle is typical of autocratic or authoritarian leadership style that has proved to be old-fashioned and insufficient nowadays.

Contemporary business and society should be considered allies and partners, this is the idea driven from the course. This is the exact reason why “being right” is an insufficient basis for decision making of a leader or a manger. Authoritarian style of a leader should be replaced by a harmonious mixture of facilitative and consultative styles of leadership while delegative style may be of great use as well. Besides, “being eight” may often contradict ethical decision making depending on the nature of “rightness” that is guiding the leader (manager).

Relying on this principle, it is possible to state that “being right” should be constantly questioned by a leader (manager),“ossification” of the leadership techniques is inadmissible. A leader should avoid making authoritarian decisions; the subordinates should be involved into the process of decision making to the greatest possible extent. Besides, a leader should search for possible alternatives of any decision making use of ethical framework of decision making, basing his/her decisions on the principles of common good and virtue ethics besides his rightness.

There is a flexible border between the way people perceive the world, that is their mental model and the world itself with significant influence of the first one on the latter. A leader or a manger should understand that mental models and paradigms are strictly individual matters and different people possess mental models that lay in the basis of their decision making. Application of this principle in relation to all people involved in the activity of a company or a department headed and controlled by a manger or a leader can be beneficial for multidimensional optimization of management of the company or a department.

Since a leader possesses his/her own mental model and paradigm, it is necessary to learn to analyze them and to improve the mental model so that a leader could move in the direction of transformational leadership that is now recognized as an affective type of leadership (Bass & Avolio, 1993, Burns, 1978). This realization of the mental model possessed by a leader and its improvement will help both leaders and their followers to reach higher levels of motivation and morality (Burns, 1978).

In fact, if a leader analyzes the mental models of the subordinates, it will be possible for him/her to enhance their motivation thus increasing productivity of the working process and creating healthy working environment for the subordinates. Besides, if a leader chooses facilitative and consultative styles of leadership, the diversity of mental models involved in decision making may become helpful for the choice of the right decision as the leader will get data produced by several mental models in addition to his/her own one. The ability to assess and synthesize information provided by different mental models can make a leader efficient.

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Differences of mental models and paradigms presuppose urgent necessity of the utilization of open dialogue and availability of the ideas concerning management process to the subordinates and vice versa. Business should become more ethically and socially oriented, this is the key idea of the course. Open dialogue and sharing of ideas should become the integral part of decision making.

It is possible to introduce these two techniques into the managerial process by means of direct interaction between the leader (manager) and the follower (subordinates). Regular meetings should be conducted where direct communication by means of discussion and suggestion will be held. The psychological barrier between the manager and the subordinate should be eliminated so that the successful interaction of mental models could become possible. If a leader chooses to directly inform his/her followers about the plans, objectives, and possible obstacles waiting for the team, an open dialogue may become a source of alternative decisions.

Nowadays the key to success of a business should be the adherence of its executives and managers to the main principles of business ethics and social orientation of a business that should become the core of its innovative model. Traditionally, the primary aim of any profit-making organization has been profit making and this position is seemingly logical but, unfortunately, one-sided. In contemporary society, the focus of a company on profit making instead of the way how profit is made is knowingly disadvantageous. Sustainable value of the company is possible only in case if material success and profitability along with the interests of consumers and all other people who are related to the activity of the company are given equal importance.

In the first place, if a company prioritizes its own profit instead of the way the profit is received, the process may become incompatible with the interests of the social groups that have relation to the company. Numerous social groups are involved in the activity of the company.

They are, for instance, the consumers and social and governmental organizations that control the products manufactured by a company. In case, if a company gives preference to the profit, it may ignore safety standards, quality of the production manufactured. First, this is sure to result in low quality of the products and in this case the company is risking losing its clients or consumers. What is more, low quality of the products may bring such grave consequences as the loss of the license and serious fines from organizations that control the quality of production.

Besides, current situation in the world with keen interest of the community in protection of environment and disapproval of the policies of the organizations that damage the nature, prioritizing profit making instead of community oriented activities may be harmful for the company. All in all, this neglect of the interests of society for the sake of profit is sure to result in decrease of profit. What is more, such neglect of the interests of society will spoil the reputation of the company and attraction of new clients or restoration of the former respect may be painful and time taking.

In the second place, if a company prioritizes its profit instead of the way the profit is received, it may contradict the ethical principles of human resource management. Every organization regardless its specialization has a multidimensional structure and an individual employee is always in the basis of every company. Consequently, success of the organization depends on the individual success of the employees to a great extent. In case, if the company gives preference to profit, it may result in exploitation of the employees and considerable emotional and physical pressure they will experience.

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Overloading of the employees may have such negative consequence as decrease of motivation for work that will result in their passive and ineffective participation and inadequate performance of their duties. Along with the internal problems, such discontent of the employees may cause external problems, such as lawsuits for breach of human resource management ethics, etc. Evidently, such prioritizing of profit is sure to cause loss of respect and decrease of profit.

In the third place, an organization that gives preference to profit instead of the process of making profit that follows the principles of business ethics, risks committing itself to short-term goals while business should be oriented by long-term goals as well. Emphasis on the profit making and neglect of long-term goals may bring such results as technical and technological obsoleteness. The laws of contemporary high-tech society presuppose constant technical advancement and improvement; the company that does not make investments into its technologically-developed future is sure to lose the market.

What is more, adherence to short-term goals as presented by profit making may cause breach of professional relationship with suppliers and business partners. If their interests are sacrificed for the sake of the company’s profit, it may cause loss of business partners that will damage the company’s functioning.

Monitoring Employees

The opinions on such issue as monitoring employees in their own time and employees’ rights to privacy are driven by three distinct factors, which are employers’ interests, privacy and ethics. In that regard, I hold the perspective that employers have the right to monitor employees in their own personal time as long as employees exercise their right to personal rights in the work place and using organizational means. Accordingly, the basis for such perspective can be explained through the aforementioned three factors, underlying the issue of monitoring employees.

One of the most important factors rationalizing the right to monitor employees is the protection of the employers’ interests. In that regard, it can be stated that the potential harm that can be inflected on the company can be performed during the employees’ personal time in the workplace. The latter is not only concerned with confidential information, but also with such aspects as a harassment email that was sent during the employees’ personal time. The latter might lead to huge losses paid in compensations. In that regard, employer has the right to protect his/her interests, which can be violated in employees’ time.

Another factor can be seen in the issue of privacy. Accordingly, it can be stated that privacy cannot be achieved in the workplace. In that regard, most companies make clarify the boundaries of such privacy through policies that warn the employees of that govern their use of their time in the workplace. The workplace does not provide the level of privacy for the employees that require protection, and thus, no violation of privacy should be expected if such an employee decided to use the workplace for personal purposes.

In terms of ethics, the issue might complicated as monitoring personal correspondences might be unethical, specifically considering that the employer might have the ability to use such information in the future. Thus, such monitoring puts ethical obligations on the employer as well as on employees. However, the number of the employees who misused their personal time, damaging their employer, put the ethical responsibility on the employee. At the same time the notification of employees that they are being monitored is sufficient to eliminate such ethical responsibility from the employer.

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Positive Paradigm Characteristics

In case a new paradigm of business and management emerge, there are many positive characteristics that are likely to accompany such paradigm. Assuming that the new paradigm is concerned with bringing sustainable values to groups of interests, other than the shareholders, the emerging positive characteristics might include the following:

  • Corporate social responsibility
  • Social and environmental development
  • The focus on ethics

In light of the corporate scandals in the latest decade, the importance of corporate responsibility cannot be overstated. In that regard, should a new business paradigm emerge, corporate social responsibility can be seen a positive factor benefitting the business and society. With corporation being socially responsible, such factor not only will bring the benefits to the business, but also the society. On the one hand such responsibility can be seen as a competitive advantage, which at the same time provides corporate governance the tools necessary to operate transparently.

With a focus on the society and the environment, in which the business operates, the competition between companies in such a competitive advantage will eventually lead to the development of the society in a faster pace, preserving the environment as well. The latter might be positively reflected on the companies’ performance as well, where such development might lead to efficient use of natural resources, which will reduce the companies’ expenditures, and aid them in planning their strategy in the future.

The ethics are gaining a significant importance in the world of business and thus, it is no doubt that such significance will transcend to the new paradigm in business. Such characteristics will are likely to emerge naturally, when people and their environment will be prioritized in business. In the case of business, such characteristic might lead to a creation of an organizational culture of trust, which being reflected on the employees’ motivation, will lead to an increase in the company’s performance.

In terms of society, such characteristic will be reflected on the ethical dimension of the company’s goals and objectives. In that sense, no longer there will be a distinction of ethical consideration in the business context, where the values promoted in the workplace will be promoted in the society as well and vice versa.

Considering the fast pace of changes, it can be assumed that a shift in paradigm is likely to occur in the next 20 years. Relating the latter to the field of business, such statement might not be so definite. Considering the shift in paradigm which already occurred from profit-only perspective toward making a value for every party involved, including the society, the environment, etc, the next shift is unlikely to change such perspective. Thus, the perspective on the likelihood of a major paradigm shift in the next 20 years is attached to extending the significance of either elements of the value-sustainability set, rather than replacing one of the existent elements.

In that regard, the drivers toward a paradigm shift can be identified through predicting what element would have added importance. Analyzing the recent trends in business, it can be assumed that the new paradigm will be concerned with extending the role of sustainability within the goals of the business. Thus, it can be stated that the three factors that are most likely to drive toward such paradigm shift can be seen as follows:

  • The direct influence of the companies’ sustainability decisions on profits and losses.
  • The role of stakeholders.
  • Policies and legislations.

The aforementioned factors are highly interlinked and can be explained through the assumption that the current trends in business will continue into the future. The influence of sustainability decisions on profits and losses emphasizes the fact that any paradigm in business will always be tied to profits. Such model is unlikely to change. Increasing the wealth of the shareholder will remain among the goals of the business, although such focus might lessen.

Thus, the factor of direct influence of sustainability can be seen through the statement that the higher the correlation between a sustainability decision, a sustainability initiative, or skipping both on the companies’ financial performance, the higher the probability of a positive paradigm shift. The examples of companies that make their sustainability initiative as their marketing tools, which are consequently reflected in their performance are a step in such direction.

The role of stakeholders can be seen through an increase in the interconnections between them. In that regard, the more a particular stakeholder is influenced by the decision of other stakeholders, the more likely that a positive shift in paradigm will occur. Accordingly, the stakeholders’ influence can be seen through its belonging to the group of intangibles driving over 70% of a company’s market capitalization (Laszlo, 2008, p. 120). The ethical dimension within such relationship can be seen as an essential element.

The role of policies as a factor is also important and accordingly interconnected with other factors. In that regard, policies can be seen as the latest stage of the shift to occur, in which sustainability issues and ethical concerns are shaped into a formal framework. Although it is doubtful that particular sustainability value-creating processes will turn into policies, e.g. the involvement with the community, perhaps due to difficulty to standardize such process. Nevertheless, many sustainability initiatives, specifically on environmental issues, are materializing in the form of policies. Thus, it can be stated that policies are likely to be a factor driving such paradigm shift.

With several factors driving the shift, there are also factors that might contribute to hindering the movement toward such shift. These factors might be listed as follows:

  • Globalization – such factor is linked to several elements such as cultural differences and different legal and legislative forces in different countries. In that regard, different sustainability performances in different parts of the world might hinder the process of change. Accordingly, different economic conditions can be contributed to the progress of shifting the paradigm in business.
  • Standardization – sustainability concepts can be considered as largely abstract concepts, in a sense that for every company the shift toward considering the interests of different groups might be perceived differently. In that regard, the lack of standardization can be seen as a hindering factor in moving toward a positive paradigm shift.
  • Force majeure situations and financial pressures – such factors can hinder the paradigm shift, specifically if crisis periods are to be long-lasting. In that regard, the competitiveness of particular businesses might imply that profits and gaining competitive and compensating losses might have higher priorities than sustainability initiatives.

References

Bass, B.M. & Avolio, B.J. (1993). Transformational Leadership: A Response to Critiques. Binghamton: Centre for Leadership Studies.

Burns, J.M. (1978). Leadership. New York; Harper and Row.

Laszlo, C. (2008). Sustainable value : how the world’s leading companies are doing well by doing good. Stanford, Calif.: Stanford Business Books.

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