why do good managers make bad ethical decisions

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Why good managers make bad ethical choices?

Chapter 1


Incorporating values and ethics into Business decisions have become increasingly important. Business schools are ensuring that students graduate with a knowledge of ethical principles and the critical thinking skills necessary to analyze and make sound ethical decisions.

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Chapter 2

Business Ethics

Society generally feels that there are certain values that should be set as the minimum ethical behavior. To meet the minimum ethical standards, a business must be honest, obey the law, and not directly infringe on the rights that our society holds as inalienable human rights. Some of the Ethical issues involve compensation of employees, job security for employees, hiring practices, waste management issues, pollution, and conflicts of interest.

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Chapter 3

Morality & Profitability

Morality means Moral Discipline Concerned with principles of right and wrong or conforming to standards of behavior & character aligned with the principles of right and wrong Profitability - generally is the making of gain in business activity for the benefit of the owners of the business

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Chapter 3.1

Role of morality & profitability

We are in the business of preserving & improving human life. All of our actions must be measured by our success in achieving this goal MERCK & COMPANY Putting profits after people & products was magical at Ford Don Petersen, Former CEO, Ford, 1994 Sequence of three Ps People, products and profits in this order Don Petersen, CEO, Ford.

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Chapter 4

Ethical Profitability

The balance between profits and ethics is term as Ethical Profitability. Example: Enron Fallout Many investors are paying closer attention to a company's ethics, as well as their profits. These investors realize that a corporate focus on profits alonewith little regard to ethical standards, conduct and enforcement may result in short-term revenue gain, but long-term profitability may be limited. In cases like Enron, long-term viability is limited too.

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Chapter 5

5 Key areas of ethical profitability

Ethical Profitability Well-balanced companies not only consistently reward owners, investors and employees with profitable performance; they also genuinely focus on these five key areas:1. Leadership by example:

To manage well is to lead employees effectively, ethically and without arrogance. Company owners, executives and managers must set the highest examples of attitude and conduct for their employees. 2. Company-wide ethical awareness: Employee when not at work, practice personal ethics in areas such as caring for others, being kind and honest, and not harming others. Do these same people, when they arrive at work, maintain their personal guidelines? In-the-office ethical behavior includes demonstrating trustworthiness to managers and coworkers, respecting privacy and avoiding conflicts of interest. Ethics knows no time clock.3. Strong management of revenue generation and reporting :

Corporate temptation to stretch ethical behavior in revenue generation and reporting is universal. To overcome these temptations, revenuerelated managers must establish and maintain a firm stance on ethical marketing, advertising, selling and reporting. This requires regular dissemination and enforcement of codes of conduct.

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4. High level of internal trust: The level of trust within a company should reflect the level of trust the company solicits from customers. If customers are encouraged to put their complete trust in the product or service, then company teams must do the same with each other. An increase in trust is a reduction in risk and uncertainty, which in turn will keep the revenue generation process flowing smoothly.5. Formal and active compliance program:

An organizational ethics doctrine does have legal benefits. Properly written, published and disseminated ethical codes will reduce corporate risk if an employee creates a criminal or civil problem because of poor ethical behavior. The true test of ethical profitability is whether or not the company is a positive example to its employees, to its customers and even to other companies. Such companies practice the truest form of leadership-by-example. They reach for a higher bar

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Chapter Seven

Business Ethics

Business ethics defined as written and unwritten codes of principles and values that govern decisions and actions within a company. Business ethics can be used to describe the actions of individuals within an organization, as well as the organization as a whole. The organizations culture sets standards for determining the difference between good and bad decision making and behavior.

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Chapter Eight

Importance of Ethical Business Decisions

Co. who wishes to thrive long-term must adopt sound ethical decision-making practices. Co. who behaves in a socially responsible manner is much more likely to enjoy ultimate success than those whose actions are motivated solely by profits.

Co. knowing the difference between right and wrong and choosing what is right is the foundation for ethical decision making. Doing the right thing often leads to the greatest financial, social, and personal rewards in the long run. Factors Impacting Business Ethics Corporate culture Existence and application of a written code of ethics Formal and informal policies and rules Norms for acceptable behavior Financial reward system System for recognizing accomplishment Company attitude toward employees How employees are selected for promotions Hiring practices Applications of legal behavior Degree to which professionalism is emphasized The companys decision making processes Behaviors and attitudes of the organizations leaders

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Chapter Nine

10 Qualities for Good Managers

1. To choose a field thoughtfully

2. To be a good mediocre3. To create productive environment

4. To define success 5. To be a good communicator 6. To transfer the skills 7. To build morale 8. To solve the challenges 9. To be sound mind 10.To be a risk taker & solve r at times

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Chapter Ten

Why do managers make unethical decisions?


1. Personal Ethics Generally accepted principles of right and wrong governing the conduct of individuals: Our personal ethical code exerts a profound influence on the way we behave as businesspeople The first step to establishing a strong sense of business ethics is for a society to emphasize strong personal ethics

Expatriate managers may experience more than the usual degree of pressure to violate their personal ethics 2. Decision-Making Processes Several studies of unethical behavior in business have concluded that businesspeople sometimes do not realize they are behaving unethically primarily because they simple fail to ask. . Is this decision or action ethical?

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Why good managers make bad ethical choices? Often the result of applying straight-forward business calculus to a decision without considering important ethical issues 3. Leadership

4. Organization Culture The climate in some businesses does not encourage people to think through the ethical consequences of business decisions Result of an organizational culture that deemphasizes business ethics, reducing all decisions to be purely economic Corporate culture refers to any set of values, norms, rituals, formal rules, and physical artifacts that exists in a company.

5. Unrealistic Performance Expectations Pressure from the parent company to meet unrealistic goals that can only be attained by cutting corners or acting in an unethical manner This often results in managers will violating their own personal ethics and engages in unethical behavior An organizational culture with values that reinforce ethical behavior is an essential ethical component

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Chapter Eleven

Co-existence of Morality & Profitability Ideology

Companies having an ideal blend of Morality & Profitability are visionary companies with strong ideology (ideals) Ideology set of basic precepts or beliefs or values that are subscribed to Core Ideology exists in these companies not just as words but as a vital shaping force Combining both Genius of the AND ideology AND profits These companies do pursue profits or long term shareholder wealth but they also pursue meaningful ideals of serving humanity. Managerial Teasers1. You are in-charge of cash expenses Your supervisor comes and

asks you for a cheque of Rs. 3000 towards expenses he incurred entertaining a client last night. At lunch your supervisors girlfriend stops by to pick him up for lunch and you overhear her telling the receptionist what a great time she had at dinner with your supervisor the


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