WHY GOOD MANAGERS MAKE BAD ETHICAL DECISIONS?

By: Vinayak M Nagaonkar

What is “Business Ethics”?

Set of beliefs about right and wrong behaviour

• Moral code- Set of rules - Establishes boundaries of generally accepted behaviour

- Different rules often have contradictions

• Morality- Social conventions about right and wrong

- Widely shared

• Virtues - Habits that incline people to do what is acceptable• Vices - Habits of unacceptable behavior• Value system - Scheme of moral values

Why “Business Ethics”?

1. Growing distrust of corporate activity in financial dealings; environmental protection; health and safety; and claims about questionable payments

2. Emphasis on improving the quality of life - health, leisure time, working conditions, fresh air and water

3. Heavy penalties that the corporation and its managers are having to pay when caught in unethical or illegal behavior

4. Growing power of special interest groups to impact corporate activity

5. Level of publicity generated by these forces

Why Good Managers Make Bad Ethical Decisions?

Ethical & Legal

Situational Ethical Dilemmas

Ethical but Illegal

Unethical but Legal

Unethical & Illegal

Why Good Managers Make Bad Ethical Decisions?

Factors influencing Unethical Decisions:

• Commercial Bribery

• Gift-giving and Gift-taking • Insider Information

• Other Conflicts Of Interest

• Employee moonlighting

• Price-fixing in the industry

Determinants of “Ethical/Unethical Decisions”

Ethical Behaviour

Personal Ethics

Decision Making Processes

LeadershipUnrealistic Performance Goals

Organization Culture

Decision Making “The Ethical Way”

Decision Making “The Ethical Way”

Ethical decision-making checklist.

• Is my action legal?

• Is it right?

• Is it beneficial?

• How would I feel if my family found out about this?

• How would I feel if my decision were printed in the local newspaper?

Decision Making “The Ethical Way”

Suggestions for integrating ethical decision making into the firm.

• Develop a code of ethics and follow it.

• Establish procedures for reporting violations.

• Involve employees in identifying ethical issues.

• Monitor ethical performance.

• Reward ethical behavior.

• Publicize ethical efforts.

Thank You!!