Experts in human behaviour argue that ethics and values are learned as a natural part of human development, derived from school, religion and other influences. Some authorities say that ethics is the innate notion of right and wrong and cannot be taught to an adult. This means that an individual has to have been shaped as honest and upstanding (or devious and venal) long before he or she sets foot in the corporate sector. Perhaps as a result of this belief, the corporate that form an integral part of a country’s economy try to avoid dealing with the value based issues that they are confronted with on a day to day basis, unless forced to do so. Over time these practices become precedents and the fundamental value of dealing with ethics upfront loses its importance. After all, we have done it before and it has worked, so why not now?’ is the general attitude. To the individual manager, value based conflicts tend to be largely personal, seldom corporate in nature or intensity. It turns corporate only when the espoused value is real and happening in the company. In performing these value based roles, managers are often trained to see its application on a commercial basis. Problems arise when the decisionmaker is unable to cope with commercial conflicts as differentiated from personal conflicts.
Part of being a good manager is being aware of the normal dimensions of one’s role in the network and in the organisation. Managers can unwittingly engage in a wide range of role- related acts that are ethically questionable. A larger question before us is whether managers see this dissonance between what is perceived as unethical, and what is being practiced. For instance, a survey of HBR subscribers in 1981 revealed that the biggest issue is not defining sexual harassment but recognizing it when it occurs. Similarly, it was not until 1990 that the US government enacted the Americans with Disabilities Act that restricts employers from using medical tests to reveal a physical or mental impairment, except under special circumstances. Peter Drucker argues that business professionals are no different from other professionals, and should abide by the principle of nonmale-ficence. This involves studying the impact of acts on the good of the individual, the firm, the business community, and society as a whole. Crossing horizons of definitiveness is real in any pursuit of a meaningful debate on ethics. In fact it is essential for reaching a sense of conclusion, if possible. While it does not concentrate on the obligations of a person as a private individual and a citizen, these creep into the socio-economic system which governs business.
Laura Nash deals with twelve issues of ethics, addressing the basic question: “Is my business decision also an ethical decision?” Nash provides a framework that demonstrates the importance of critical thinking in business ethics where the goal is a corporate practice that does not foster unnecessary social harm. She emphasizes that her programme works in a concrete setting; that it is not utopian, philosophical abstraction. A person accepts certain special obligations when he/she becomes a part of the world of commerce. These obligations necessitate a reciprocal behavioral pattern in sync with individual values and beliefs viewed concurrently with those of the firm. Ethical congruence is the alignment of an organization’s stated values, the decisions of its leaders, the behaviors that are encouraged by its systems and the values of its employees. The leader’s responsibility is to give employees guidance as to what values employees are expected to demonstrate, in what priority and how absolute those priorities are.
Before a business can reach ethical congruence it must be clear on what it truly values. There must be a clear definition and articulation of values, beliefs, core philosophies, norms and ideals that the organisation chooses to follow, to practice in good times and bad, and to stand by under any circumstance. Once stated, agreed upon and articulated, this core operational and exceptional philosophy has to be tested for compatibility and acceptability with business vision, mission, core strategy and tactics, short and long term goals and objectives and expected behavioral outcomes.
It would be appropriate to comment here on the necessity for managerial courage. Donald F VanEynde defines it as “the willingness to do what is right in the face of risk”. Risk here means a real or perceived danger to oneself, one’s reputation or one’s career; and includes such actions as confronting the status quo, embracing change in the face of resistance and opposing a popular but unhealthy idea. It means doing what is right, arid what needs to be done. The determining factors are the values and the power and position that the incumbent has, to do what he believes in. Ethics calls upon our courage to act upon what we believe in, and our willingness to sacrifice for the cause.
Managerial responsibilities and roles in the commercial field outline a broad range of activities, goals and standards created to sustain the performance of a business organisation. In performing roles not congruent with the traditional organisational practices, managers could engender ethical dissonance. There are primarily five role acts, (which may overlap), involved in ethical decision making in a commercial environment.
Self-enhanced ethical dilemma role acts are any acts that involve direct gains for the actor at the expense of the firm; they are managerial only in the sense that they take place in organisations and frequently involve those who happen, by title, to be called managers. Ethically questionable acts of this type, such as expense account cheating, insider trading, nexus with brokers and middlemen, embezzlement, receiving kickbacks from vendors, short changing petty cash accounts, transferring company information for a price, using/selling patents, formulations, new product development information and stealing supplies, are committed against the firm and in the self-interest of the individual. They are essentially unethical practices not in consonance with the purpose of the firm.
The Indian financial services industry scam of the early I 990s, that unearthed the active involvement of individuals misusing their authority limits and conniving with brokers, is an example. Financiers have a fiduciary responsibility to be honest and to protect their clients’ assets. At the corporate level there are several examples of inter corporate espionage. Just when Palm electronic organizer of 3Com, a runaway hit, was making huge headway, Microsoft decided to call handheld devices based on its Windows CE operating system Palm PCs. 3Com sued, claiming it owned the Palm name.
Myopic mania occurs in large and small role situations and is common among practicing managers. The behaviour is seldom random, is typically repetitive, has strong overtones of dominance and makes use of control and power. Role failure acts are directly related to managerial roles, and can be acts of commission or omission, such as superficial performance appraisals, not providing a fair and honorable feedback to employees on their performance and using leadership roles to enhance power through critical control over people.
Managers with myopic mania may hire and fire employees to show contempt towards process and system; they may not confront expense account cheating; may appease blackmailing employees to win personal favours against the company’s interest; and may palm off a poor performer on to another department. At a heightened level of corruption they may systematically cheat the organisation intellectually Typically, such a manager would, at regular intervals, convey his desire to leave the current assignment for better carrier opportunity and seek a monetary/career favour in return for his loyalty. He would demonstrate his unhappiness at the current state of organisational performance and would show deep anguish over managerial inaction on unresolved problems. These managers have unrealistic selfperceptions and are often schizophrenic. Gullible top management is often taken in by their seemingly logical, rational approach. Deception is key to their unethical practice. These acts involve direct personal advantage (not necessarily financial gain) at the expense of the firm. A culture that fosters high performance driven job insecurity could make employees more susceptible to this ethical encounter.
The case of a large Indian business house that had to forcibly retire some of its top management and their consequent outburst to the media on the company could well mean this type of an ethical act.
Power is the potential to influence others for good or evil, to be a blessing or a scourge. Power pervades every aspect of life. Principle centered power, based on honour extended bilaterally, leads to influence that lasts over extended periods of time and can even outlive the person from whom it omanates.
In contrast, distortion, while appearing straight in its actions and motives, involves the use of power and authority, through goals. It also involves conduct that creates direct advantages for the firm in the short run while indirectly providing gains to the individual actors. This in turn displaces direct costs onto selected stakeholders outside and inside the organisation in the long run.
Power usage is evident in actions involving ethics. In some instances the stated positioning of the corporation makes it easy for elimination or avoidance of distortion. In other cases, the actions of a superior or a person with authority invariably appear right to the younger managers, who may actually believe that the decision was right and beneficial to the company. According to Jay Rohrlich, a psychiatrist, “Susceptible people will be seduced by that kind of magical power. Money is a magical commodity, in the sense that it does transform reality.” Rohrlich also talks about a personality style that combines risk taking with. a grandiose sense of personal power. Such behaviour eventually leads to an organisational freeze status, given low visibility between what is right and what is not.
Bribery, price fixing and manipulation of supplies are some examples of managerial role distortion that benefit organisations in the short run. Cross holding patterns of shareholding are another example of this ethical issue. While capital is obtained for a stated purpose and cash flow generated, the surplus is often used up to lend to a sister company, often a losing proposition. In all such cases, it is necessary to attribute ethical ownership directly to the decision-maker.
What is “managerial distortion” according to the author?
- use of power and authority to create advantage for the firm as well as individuals in the short run while disguising costs
- distorting the meaning of certain unethical practices so that they appear ethical
- relying on distorted models of behaviour to deal with unethical behaviour
- conveying wrong instructions to subordinates as the senior managers misuse their power and authority