MAN 20005

LECTURE 4Power and ethics

in the world of Manager

Updated 3.10

History of Labour activism

• industrial revolution of the 19th century – capitalism• blatant exploitation of the urban poor – a society of class

struggles : freeman and slave, patrician and plebeian, lord and serf.

• a period where business owners, religious spokesmen and philanthropists seek to improve work conditions ie : hours, pay and conditions.

• Karl Marx – promotes socialisms • Subsequently, manufacturers built workers’ housing and

set up savings clubs and healthcare societies

• Political change – Labour Party

• Labour parties, socialist and left-wing liberals have been more inclined to target the general improvement of the lot of employed people, the implementation of a welfare state and the gradual change of legislation.

• By the end 20th century – UK government institute budget and fiscal pressures on the health service

• Pressure on corporation that are reluctant to spend profit reserves on worker health

• Today, most EU countries have install dense network of rules and legislation including health and safety, minimum wage levels etc to make working conditions today much safer, cleaner and healthier than those in the average factory of the industrial revolution.

• Imposes different set of ethical dilemma and burden on modern managers

• Kantian Theory – Manager’s ethical duty to treat employees not only as a means, but also the end – employees as “stakeholder”

• Firms have fundamental duty to allow stakeholder some degree of influence within the corporation

• Allow employees to play a role in (1) finance ; and (2) operation

Financial participation• allowing employees to have a say might allow them to feel more

willing to work proactively for the company and its pursuit of financial targets.

• E.g. employee share options as a means of motivating and enlisting support

Operational participation• Delegation – make employees responsibility for a wider range of

jobs, not to perceive their work as predetermined, small area bounded by conventions but as whatever the firm needs on that day to succeed. Volvo and Porchsce have incoporated this into their production process allowing employees to work in self-starting teams rather than on production lines.

• Information – employees can provide feed back on crucial management decisions. They might contribute new ideas to overcome gaps that was previously been ignored or misunderstood by more senior operational management. Important when making major strategic goals and processes, ie mergers, product launches, diversification into new markets etc.

Survey – Managers are given 15 examples of serious ethical breaches in the organizations they worked with. In all cases, the managers chose to do nothing. Is this because of loyalty to the organization?

• A number of interviewees reported that when they saw or experienced ethical wrongs at work (ie :harassment, bullying or employment discrimination) they resigned as a matter of principle, to maintain their personal integrity.

• But they did not whistleblow internally or externally.

WHISTLEBLOWING

Whistle blowing process

a) Report the facts to your immediate superior

a) If the superior fails to act effectively, the concerned employee should take the matter to more senior managers, exhausting all available internal channels in the process.

c) Documentary evidence should be in the possession of the prospective whistleblower that can be presented to external audiences.

c) The whistleblower must be acting in good faith, without malice or vindictiveness.

Disadvantages of emphasizing employee’s participation

1. Does not consider the consequences of allowing too many employees participation

2. Over simplicity – actual implementation might be complicated.

3. Over optimistic – are managers/employees always rational? What is people does behave irrationally?

4. Assumes power to set moral rules resides with the manager only – one way authority.

Manager’s Individual Dilemma

Managers faces ethical dilemma, ie :

• Fair wages

• Sexual harassment

• Use of company assets for personal use

What is expected from a Manager ? • Highest levels of honesty and integrity, both inside and outside

working hours• Confidentiality• Devoting their best efforts to the business of the firm

traditional principle that Managers only responsible for shareholders

Friedman’s argument – profits are the most important goal of the company

Why Be Ethical? Why Bother? Who Cares?

The motivation to be ethical :

a) Media focus

b) Industries / rivals scrutiny

c) Executives & individual reputation

d) Employee attraction and commitment.

Manager’s Ethical Responsibilities

• Toward consumer – to produce goods and provide services needed by the society at a price that benefits the business while at the same time satisfy its obligation to investors

• Toward employees – fair compensation to ensure loyalty, productivity and discipline

(a) Economic Responsibilities.

Manager’s Ethical Responsibilities

(b) Legal Responsibilities• Lead the company to obey law of the country where

they carried out their business• Educate employees

(c) Philanthropic Responsibilities• Contribute donations to ie : orphanage

Financial Participation• Allowing employees to have a say in the company will

allow them to feel more willing to work proactively for the company

• Eg : employees share options

Operational Participation• Delegating operational work to employees (ie: wider

range of jobs) makes employees feel more attached to the company

• Encourage willingness to provide feedback to the management

(d) Ethical Responsibilities

END