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Managerial Ethics

By Kamyar Shah

Republish: EasyPublish™
Published: 27Jan2008
Word count: 547
Viewed: 1232 time(s)

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Managerial ethics illustrate a rather sensitive issue. The recent business history has proven ethics as a rather challenging objective of larger organizations. The following topics / views may illustrate fundamental issues in the current debate. The current competing views include "Maximize Profit" and "society's welfare" .

Maximizing profits illustrate the greatest commitment to shareholder and stakeholders. In this particular theory, the managerial staff is only committed to maximize the bottom-line in terms of profit: a mean to an end in order to achieve the highest possible profits. Society's welfare illustrates a common goods approach.

In this particular approach managerial staff attempts to achieve a balance between the bottom-line and social welfare of the society and employees. It is of great interest to explore the theoretical aspects of managerial issues and compare them to real practices.

The two above name theories assume that managerial issues are constrained and objective; stakeholders vs. society. On the other hand, the reality proves a rather multi dimensional reality; stakeholders vs. society vs. culture vs. religion vs. politics vs. diversity vs. personality vs. globalization vs. many other unpredictable factors. Further, both of theories appear to be better suited for larger organizations: small businesses encounter more immediate issues such as revenue and cash flow rather than managerial ethics.

Most small businesses ran by savvy business people are less concerned about ethics. Out of extensive experience in consulting small businesses, I can confidentially stat that I have never met a small business owner that was not willing to take unethical actions in order to maximize profits. Given the fact that this is not a scientific statement, it is important to view this statement in terms of personal experiences, which conflicts with the academic management practices.

Moreover, there is more to the issue of ethics. Given the fact that both competing theories consider some sort of managerial responsibility to some one or some group, illustrates a major weakness of both theories. Both theories fail to point to the necessity of "perception". It is hypocritical to expect only one segment of a society i.e. businesses to create value or consider societal consequences.

Thus, most business simply attempt to create a perception of societal responsibilities rather than genuine concerns In terms of creating profits, it is important to understand that in practical terms, it is difficult to create social awareness or consider social issues without being able to prove their value to the business shareholder or stakeholder. Thus, any managers' first priority should be profits, Once the objective of achieving the highest possible profits have been achieved, an organization can effort to pursue alternate goals of societal concerns and improvement.Some people may argue that societal benefits / concerns may have a direct influence on the bottom line of any given business.

However, it is important to point to the fact that it is extremely difficult to quantify the direct impact of societal charity work on corporate profits. It is merely possible to use anecdotal and qualitative data in order to assign arbitrary real value to such social actions.

Ultimately, it is important to consider the main goal of any given company i.e. profits. It is further important to allow for businesses to pursue and achieve their goals before they can be expected to become beneficial corporate citizens.

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