ETHICAL AND UNETHICAL ISSUES IN MANAGEMENT

ETHICAL AND UNETHICAL 

ISSUES IN

MANAGEMENT

(HR, FINANCE, MARKETING)

(Ethics in every field of Business)

What is Business ethics?

Business ethics is the study of appropriate business policies and practices regarding potentially controversial subjects including corporate governance, insider trading, bribery, discrimination, corporate social responsibility, and fiduciary responsibilities. 

Ethical issues: A problem or situation that requires a person or organization to choose between alternatives that must be evaluated as right (ethical).

Unethical issues: Unethical behaviour is an action that falls outside of what is considered morally right or proper for a person, a profession or an industry. Individuals can behave unethically, as can businesses, professionals and politicians.

Ethical and Unethical issues in HR management.

Human resource management (HRM or HR) is the strategic approach to the effective management of people in a company or organization such that they help their business gain a competitive advantage. It is designed to maximize employee performance in the service of an employer's strategic objectives. Human resource management is primarily concerned with the management of people within organizations, focusing on policies and systems. HR departments are responsible for overseeing employee-benefits design, employee recruitment, training and development, performance appraisal, and reward management, such as managing pay and benefit systems.

Ethical issues

•  Privacy:

The private life of an employee which is not affecting his professional life should be free from intrusive and unwarranted actions.

• Performance Appraisal:

Ethics should be the basis of performance evaluation. Highly ethical performance appraisal demands that there should be an honest assessment of the performance and steps should be taken to improve the effectiveness of employees. 

•  Cash and Incentive Plans:

Cash and incentive plans include issues like basic salaries, annual increments or incentives, executive perquisites and long term incentive plans.

•  Safety and Health:

Industrial work is often hazardous to the safety and health of the employees. Legislations have been created making it mandatory on the organisations and managers to compensate the victims of occupational hazards.

Unethical issues

•  Abusive behaviour:

Too many workplaces are filled with managers and supervisors who use their position and power to mistreat or disrespect others. Unfortunately, unless the situation you're in involves race, gender or ethnic origin, there is often no legal protection against abusive behaviour in the workplace. 

•  Employee theft

Employee fraud is also on the uptick, whether its check tampering, not recording sales to skim, or manipulating expense reimbursements. 

•  Lying to employees

The fastest way to lose the trust of your employees is to lie to them, yet employers do it all the time.

•  Misusing company time

Whether it is covering for someone who shows up late or altering a timesheet, misusing company time tops the list. This category includes knowing that one of your co-workers is conducting personal business on company time.

Example of Unethical code of conduct

Susan, an HR director, is approached by Dave, a sales manager. Dave is hiring for a position on his team, and he asks Susan to screen out any resumes with "foreign-sounding" names. Susan explains that it is illegal and unethical to do this.

Dave becomes angry and leaves. Later that day, Dave's boss, Andy, approaches Susan and explains that Dave will quit his position if Susan refuses to comply. Andy asks Susan to go along with Dave's request, noting that Dave is a "good producer" for the company.

Susan refuses and tells Andy that she plans to escalate this situation. Eventually, both the CEO and the board of directors get involved. Both Andy and Dave are let go by the company.

Ethical and Unethical issues in Financial Management

Financial Management means planning, organizing, directing and controlling the financial activities such as procurement and utilization of funds of the enterprise. It means applying general management principles to the financial resources of the enterprise.

Ethical issues

• Act with honesty and integrity.

• Avoid conflicts of interest in professional relationships. Also, avoid the appearance of such conflicts.

• Provide people with accurate, objective, understandable information. Disclose all relevant information, positive and negative, so that your listeners have an accurate picture.

• Comply with all rules and regulations governing your position and your company.

• Act with good faith and independent judgment. Don't allow self-interest or other factors to sway your recommendations.

• Never share confidential information or use it for personal gain.

Unethical issues

• The borrowers may be given misleading information.
• The financing may be done illegally.
• There may be discriminatory financial conditions.
• Employees may abuse financial trust.
• The financial advisers may be incompetent.
• The financial agents may indulge in professional misconduct.
• The workers may succumb to temptations in financial occupations.

Ethical and Unethical issues of Marketing Management

Marketing management is the analysis, planning, implementation and control of programmes designed to bring about desired exchanges with target markets to achieve organisational objectives.

It relies heavily on designing the organisations offering in terms of the target markets needs and desires and using effective pricing, communication and distribution to inform, motivate and service the market.

Ethical issues 

• Moral idealism is a moral philosophy that no matter what the outcome, individual rights must always be protected. This philosophy can be found in the ethical practice of informing consumers of safety hazards in a product or service, or recalling a defective product no matter the cost, so long as consumers are protected.
• Utilitarianism is based on the overall outcome and evaluates the costs and benefits of ethical behaviour. It is when happiness in the greatest amount of people are considered the greater good.

Unethical issues

• Making false or deceptive comparisons about a rival product. Competition tends to be fierce when rivals resort to side-by-side comparisons. And consumers may find such a technique helpful, as long as the information is accurate and truthful.

• Inciting fear or applying unnecessary pressure. “Limited time offers” are notorious for the latter, which is fine if a deadline really exists and the tone doesn't sound threatening.

• Exploiting emotions or a news event. Such instances pop up every once in awhile, then make a quick exit when consumers complain about feeling manipulated. 

Example of an ethical code of conduct 

TOMS isn’t just engaged in corporate philanthropy to make a quick buck; it’s a core part of the company’s values and brand.

TOMS footwear business has donated more than 60 million pairs of shoes to children in need all over the world. As if that weren’t enough, TOMS eyewear division has given more than 400,000 pairs of glasses to visually impaired people who lack access to ophthalmological care.

The company has further diversified its operations to include clean water initiatives through its coffee business, and its line of bags has helped support projects to expand access to birthing kits to expectant mothers in developing nations as well as training for birth attendants. To date, TOMS has helped more than 25,000 women safely deliver their babies.

How Does TOMS Use Ethical Marketing?

TOMS puts its social and environmental philanthropy on full display in virtually every aspect of its branding. This not only lets potential customers know the kind of company they’re dealing with right off the bat but also reinforces TOMS’ brand values consistently across all channels.

Take a look at TOMS’ homepage. Right underneath the carousel, the company tells you that, for every product you purchase, TOMS will help someone in need:

TOMS’ mission is so central to the company’s branding, it’s given the almost equal emphasis on its website as the products it sells. In fact, it’s almost impossible to navigate through TOMS’ site without seeing further examples of how TOMS helps people around the world.