Importance of Business Ethics in Personal and Managerial Effectiveness

This article discusses the importance of business ethics in personal and managerial effectiveness. It covers the significance of ethical code of conduct and its benefits for organisations. It also talks about various ethical dilemmas and their solutions. The article includes a literature review, discussion and analysis, and recommendations. The subject is business ethics and the course code is not mentioned. The article is relevant for students studying business management or ethics in any college or university.

PERSONAL AND MANAGERIAL
EFFECTIVENESS

Personal and managerial effectiveness: 1
Executive summary
Ethics is becoming irremovable and integral part of business. It has become moral obligation
for businesses to fulfil its social responsibilities. No business can win the market without
following appropriate and reliable code of conduct. An ethical code of conduct is the sum of
moral principles that guide the organisational behaviour to make its actions ethically and
legally right. Organisations started establishing ethical committee within it, so that they can
entrench the rules as a part of training to the employees. By following ethics, an organisation
can get long-term benefit such as credit standing, cost reduction, high goodwill and improved
customer satisfaction.

Personal and managerial effectiveness: 2
Contents
Executive summary...............................................................................................................................1
Introduction...........................................................................................................................................6
Literature review...................................................................................................................................6
Discussion and analysis.......................................................................................................................10
Conclusion...........................................................................................................................................13
Recommendations...............................................................................................................................14
References...........................................................................................................................................14
Bibliography........................................................................................................................................16

Personal and managerial effectiveness: 3
Introduction
The importance of business ethics cannot be undermined in today`s world. Business ethics
plays equal important role as sustainable profits do for an organisation. Competition in
corporate world made ethics a major factor in calculating the success of any organisation.
The individual, employee, or society depends on organisation to get benefit from ethics.
Ethics tries to make distinct approaches to classify wrong and right. The importance of ethics
plays an important role in maintaining sustainable profits in a business. Organisation
regulated by morals and ethics are profitable in long run and attains sustainable success.
It becomes important to resolve ethical dilemma occurring due to dynamic environment in
both inside and outside the organisation. Therefore, organisations can focus on smooth
working. Ethical behaviour is a self-regulating behaviour that affects both personal as well as
organisational behaviour. Ethical leadership affects the organisational culture as leader leaves
imprint marks for employees. This organisational culture affects the working of employees
(Morrison, Wilmshurst, and Shimeld, 2018).
There is no golden rule to solve the identified ethical issue. A manager has to evaluate
number of alternatives to solve the problem. Finally, the manager evaluates the alternatives in
the light of dynamic external environment and resolves the ethical problem with most
appropriate alternative.
Literature review
According to Trevino, and Nelson, (2016), ethics is a set of moral rules based on what is
morally good or bad. Business ethics are the moral principles that guide the behaviour of the
organisation that how a business should act. Business actions in an ethical manner mean
differentiating the action as either wrong or right. Ethics provides a set of moral principle and
code of conduct as guidelines to operate a business properly.

Personal and managerial effectiveness: 4
According to Spencer, (2017), competition among the organisations no more focuses on
earning more and risky profits. Business ethics has changed the criteria of competition. An
organisation who follows ethics and accomplishes its corporate social activities wins support
from government as well society. Operating every activity of business in an ethical manner
has become a moral obligation. There are situations in which the government forces the
company to achieve higher ethical standards because the company or the industry is among
the top profit earners (Carey 2018).
According to Williams, Agle, and Gates, (2018), some business practises are legal but not
ethical. For example- charging $5000 for a medicine, which costs only $500, is legal but not
ethical. Especially when high prices of medicine prevents the people to buy. It is important
for a business to make fair dealing and win long-term credibility through trust. Unethical
practises may question that how business treats its customers and employees. For example- A
business that underpays the customers and accumulate huge profits may force the public to
make a wrong perception about the company. In the above example, the customers are not
treated very well. Most relevant theory is right ethical theory in this regard. Today`s
customers demand to be fairly treated because as per Right Approach, the customer has its
respect and dignity.
According to Hill, (2017), company`s image is built by customer trust and loyalty because the
customer believes that company can rely on the behaviour so that long term interest of the
customers is satisfied. To achieve credibility, which can give economic value to both product
as well as company`s image. The degree of credibility depends on how far the activities of
the business are profitable to the public. By following ethical standards and code of conduct,
business can focus on creating long-term value in the eyes of employees, investors, and
customers. Long-term growth focuses on long-term ethical vision to benefit various
stakeholders. Long-term profitability with low returns is more acceptable than short-term

Personal and managerial effectiveness: 5
profitability with risky returns. For example- Goldman sacks, an investment banker wants
maximum returns without focusing on current performance. Long-term ethical decisions have
positive impact on the society and government. It assists the organisation to maintain low
regulation cost, high sales, high goodwill, and satisfied work force (Bell, and Hindmoor,
2018).
The prevailing necessity to fulfil ethical responsibility has awakened the customers.
Consumers have become more active about quality of goods that company offer. Social
media is an instrument through which unethical scandals of the organisation spreads like a
wildfire and reaches customers quickly spoiling the reputation of the organisation. An
organisation incurs huge cost to resolve unethical cases in the court. It becomes very difficult
for the organisation to retain its reputation and image.
However, high standards of ethical practises need efficient decision-making skills. The
company may starts using expert insights and training methods to involve the ideas of
employees, so that employees feel empowered and motivated benefiting the organisation by
achieving goals. However, it is not at all necessary that applying ethical standards in an
organisation will always lead to happiness among the employees. The common good
approach theory focuses on achieving overall benefit rather than considering happiness and
respecting the employee choices (Schwartz, 2016). Whereas utilitarian theory focuses on
decisions which virtually guarantees happiness among all.
From large company to small-scale organisations, there is a less possibility of non-occurring
of ethical issues among the employees. There is huge number of employees working in an
organisation. Every person has different perception, which sometimes creates clashes among
the employees.
Various ethical dilemmas which occurs due to management issues are-

Personal and managerial effectiveness: 6
Employees Behaviour and legal issues- When the supervisor discriminates the employees
based on gender, complexion, and religion. Moreover, conflicts occurs when people with
different perception meets. These rivalries create jealousy among the employees. There is a
legal state of affairs for the unethical behaviour of supervisor (Agnihotri et al., 2012).
Organisation needs to be aware of anti-discrimination rules. A business must not receive any
compliant from customer or employee for breaking disabilities act. Harassing behaviour of
co-workers is another diplomatic situation faced by manager.
Employee working conditions- Employees have the right to remain safe and secure even
during the working hours. Chemical exposures in industries create respiration problems.
Taking credit for other`s work- Employees work in a team when there is huge project. The
project is divided into various tasks and the task is allotted to a team. The task may need
innovation ideas. Not every employee in a team contributes equally to the idea formulation.
Nevertheless, whole team is rewarded when the idea is successful.
To solve the above unethical acts, manager has to undertake various steps-
These management ethical dilemmas test manager`s ability that how efficiently manager deal
with challenges.
Identifying the ethical problem- Initially, a manager has to focus on identifying the prevailing
ethical issue. One wrong deed by an employee affects both internal as well as external
stakeholders. The manager should be competent enough to understand the urgency of the
situation and make decision accordingly. Therefore, the decision does not harm any
employee.
Identify an alternative course of action and discuss the situation with the subordinates- The
solution to every problem can be in more than one way. However, ethics clearly defines the
difference between good and bad. Every alternative course of action focuses on the situation

Personal and managerial effectiveness: 7
and the outcome. Accepting any solution depends on what is the nature of situation and how
relevant is the solution to the problem given.
Selecting the best alternative-, Theory of utilitarian focuses on the effect of decision made by
the manager. The decisions related to problem should not harm any employee directly or
indirectly. The manager can use different approaches such as debate moral choices,
integrating ethical decision with strategic management balance sheet approach. In Balance
sheet approach, the manager evaluates the pros and cons of the decision (Muda et al., 2018b).
Manager should establish ethical committee- Manager should appoint a retire employee to
guide the new comers and freshers. This committee will assist the fresh employees to cope up
with the ethical standards followed in the organisation. Providing appropriate ethical training
to the employees reduces the occurrence of ethical issues. Experimental learning is an
effective way to delegate training to employees. Example- role-play training may involve
scenarios related to misappropriation of company funds, improper organisation`s compliance.
Set expectations- Develop a policy based on the company`s philosophy, mission statement
and code of conduct. The rules in the code of conduct must be incorporated in performance
management programs (Webley, 2011). It will help employees to hold the responsibility to
maximise the efforts so that, they can achieve rewards. Employees remain motivated when
rewards recognition emphasis on ethical performance.
Discussion and analysis
Ethical violations such as discrimination, poor working conditions, and corruption are not at
all acceptable on the workplace. Here are some examples of corporate that suffered due to
non-fulfilment of ethical requirements. Corporate scandals are-
Corruption allocates opportunities in such a way that is unfair. Corruption is a broad range of
Government Issue. Corruption has been increasing since last three years (George, 2010). For

Personal and managerial effectiveness: 8
example- FIFA corruption scandal, where leaders received bribes to give broadcasting rights
to country who have not applied initially. Reportedly, FIFA president Sepp Blatter was
involved in the scandal. The marketing executives paid more than $150 million as a bribe to
favour broadcasting rights. Various federal association took investigation steps for the FIFA
scandal to find out the culprits (BBC, 2015).
Corruption ruins the company`s image. Corruption leads to diminishing business growth
when the public trust is at risk. Corruption can take many forms such as bribery, extortion,
graft, and embezzlement. If corruption exists in business, professional misuse the resources
for personal gain that spoils business credibility and profit. For example- Teva
Pharmaceutical Industries that is owned by Russian subsidiary, Teva agreed to pay more than
$519 million as fine and penalty to settle civil and criminal charges because it bribed foreign
government officers in Mexico, Ukraine, and Russia (Gassmann et al., 2018). Finally, Teva
has completely modified its governance program on each level. Teva also terminated
complex business relationships with third party. It dismissed some employees that were the
part of bribery (Gassmann et al., 2018).
Environment Business Ethics- Environmental ethics focuses on the responsibility to prevent
and protect the environment especially in which it works. The existing awareness of
exploitation of environment of the society forces the organisation to conduct its activities
environment friendly (Traer, 2018). Companies operating all over the world can make
strategies to protect the environment and natural resources that they use to generate profit.
For example- Volkswagen designed and installed software “defeat devices” in about 600000
vehicles all over the world by which vehicles started causing emissions, violating EPA
policies (Environment protection agency). The VW discussed its reorganizational plan in
which CEO stated that deficiencies in processes have supported misconduct by the
individuals and employees (Muda et al., 2018a). As a result, CEO Martin Winterkorn

Personal and managerial effectiveness: 9
resigned and several managers were terminated. The fine and penalty of $20 billion was
imposed for breaking Clean Air Act (CAA) (Cruden et al., 2018).
Misconduct in the work place can take place through various actions. Some of the common
actions may be sexual harassment, discriminatory practises based on age, gender, and race.
Unethical actions range from corporate theft to sexual harassment (Karandikar et al., 2018).
For example- Although Uber has achieved great success but now CEO of Uber, Travis
Kalanick revolted that to remain on this position has become difficult. Uber ignored corporate
governance blindly to achieve growth and valuation and insulted ethical norms by hiding in
the name of innovation. After the CEO`s resignation, various practises reviewed as sexual
harassment, disobedience of government regulations, corporate theft lawsuit, and a toxic
corporate led some executives to leave the organisation (Bell, and Hindmoor, 2018).
Organisation should strive to maintain discrimination free environment where employees can
feel safe and secure while working. Any trusted employee can file a complaint about sexual
harassment. The ethical implication of sexual harassment questions whether it is acceptable
or unacceptable in the workplace (Wisse et al., 2018).
Ethical theory that is acceptable for cross-cultural environment is the foundation of decision-
making. Each theory emphasizes different points. The following two theories are-
Deontology- This theory emphasize on people`s obligation to fulfil duties of decision
making. This theory states that a person will follow his obligation towards another individual
or society because fulfilling and upholding the ethical correct act is the duty of the individual.
Every theory has its own pros and cons. Deontology has many positive attributes, but it also
has some negative side (Yu, 2015). Negative side of the theory states that there are some
illogical bases for deciding duties of an individual. For example- if a person is running late

Personal and managerial effectiveness: 10
for the meeting, he has to drive car fast. How far is speeding car favourable to uphold the
traffic rules (Muda et al., 2018)?
Utilitarianism- This ethical theory applies to every cross-cultural environment. The theory
states that every decision maker should focus on moral benefit to everyone. Any decision
should not harm anyone in and around the organisation. The selected decision should give
greatest benefit to the maximum people. Under utilitarian, a person has to perform the act,
which benefits most people, regardless of self-interest and personal gain. Both act and rule
can have disadvantages (Wisse et al., 2018). Meanwhile, experts can use their experience to
predict the outcome. However, business has to face various uncertainties. No one can certain
his/her prediction that the decisions made are accurate. Uncertainty can lead to unexpected
outcomes. The decision made for accomplishing great good for all may appear to be unethical
as time passes. Utilitarian decision-making concentrates on achieving maximum good.
However, measuring gain in terms of money, material gain, intangible gain such as goodwill
and happiness is very difficult (Breslin, 2018).
Some of the ethical issues occur due to difference in cultural environment. The reason of
occurrence may be caused due to difference in culture, difference in laws and rules of
conduct.
One problem in dealing with differences in culture represents values and pattern of feeling
and acting in a known group. While other nations have modern infrastructure, developed
infrastructure. This modern culture represents how people interact with each other. The
objective of identifying nation`s value can be achieved by studying the every dimension of
culture. For example- some cultures totally prohibit giving gift. However, in societies like
china greeting elder people with small present or gift is a symbol of respect. The gift may

Personal and managerial effectiveness: 11
remain with the giver if the receiver does not feel comfortable. It is a situation where basic
etiquettes differ.
Conclusion
In today’s era, fulfilling ethical requirements has become obligation for the business. Ethical
practises help the organisation to create long-term credit standing in the corporate world.
Manager should create confidence in its stakeholders. The trending competition in the
corporate world focuses on long-term ethical actions. Some organisations have their
establishments all over the world and they hold a huge team for accomplishing different
projects. It is obvious that there can be a difference in perception of different people. A
conflict in interest is a story of every other organisation. Various ethical theories define the
way to operate successfully in cross-cultural environment. Utilitarian decision maker focuses
on good for all. Every organisation should follow this theory.
Recommendations
Some of the problem associated with ethical violation are corruption, bribes, theft, and sexual
harassment. These problems ruin the image and reputation of the company. Moreover, ethical
issues is a dilemma or conflict between two different possible perceptions. Fundamental
issues such as conducting the business affairs with dishonesty and spreading distrust among
customer`s through false serving of products. Diversity issues such as employing and
preferring a particular gender in a workforce. Many organisation faces compliance and
governance issues related to environmental laws, civil rights laws, and monetary reporting
statues. For example- To accomplish American compliance, an Aluminium Company should

Personal and managerial effectiveness: 12
ensure that no company would neither ask employee to break any law nor go against
company Morales.
To solve the problems, an organisation should implement strict rules and regulation to
accomplish its ethics. However, focusing only on ethics will not allow the organisation to
meet its daily goals and then sustainable profits. An organisation can establish a particular
ethics committee, which regulates the training of new employees. A retired employee can be
appointed, so ethical manager will reflect reports of ethical requirements, which the
organisation needs to fulfil. For resolving employee related problems, organisation should
give equal opportunity to participate in operational missions without discriminating on the
bases of race, gender, and nationalism.
References
Agnihotri, J., Rapp, A., Kothandaraman, P., and Singh, R. K. (2012) An emotion-based
model of salesperson ethical behaviors. Journal of Business Ethics, 109(2), pp. 243–257
BBC. (2015) Fifa corruption crisis: Key questions answered. [online] Available at:
http://www.bbc.com/news/world-europe-32897066 [Accessed 14/07/18]

Personal and managerial effectiveness: 13
Bell, S. and Hindmoor, A. (2018) Are the major global banks now safer? Structural
continuities and change in banking and finance since the 2008 crisis. Review of International
Political Economy, 25(1), pp.1-27
Breslin, C. (2018) The Advantages of Being Ethical. [online] Available at:
https://yourbusiness.azcentral.com/advantages-being-ethical-17579.html [Accessed 01/07/18]
Capell, B., Tzafrir, S. S., Enosh, G. and Dolan, S. L. (2018) Explaining sexual minorities’
disclosure: The role of trust embedded in organizational practices. Organization
Studies, 39(7), pp. 947-973
Carey, J. (2018) Moral Obligation in Business Law. [online] Available at:
http://smallbusiness.chron.com/moral-obligation-business-law-78910.html [Accessed
01/07/18]
Gassmann, O., Schuhmacher, A., Zedtwitz, M., and Reepmeyer, G. (2018) Leading
Pharmaceutical Innovation: How to Win the Life Science Race. New York: Springer
George, R. T. (2010) Business ethics. New York: Prentice Hall
Hill, A. (2017) Just business: Christian ethics for the marketplace. US: InterVarsity Press
Karandikar, S., Kapoor, H., Fernandes, S., and Jonason, P. K. (2018) Predicting moral
decision-making with dark personalities and moral values. New York: Elsevier
Morrison, L., Wilmshurst, T., and Shimeld, S. (2018) Environmental Reporting Through an
Ethical Looking Glass. Journal of Business Ethics, 150(4), pp. 903-918
Muda, R., Niszczota, P., Białek, M., and Conway, P. (2018a) Dieselgate: How the
Investigation, Prosecution, and Settlement of Volkswagen's Emissions Cheating Scandal
Illustrates the Need for Robust Environmental Enforcement. 36, p. 118

Personal and managerial effectiveness: 14
Muda, R., Niszczota, P., Białek, M., and Conway, P. (2018b) Reading dilemmas in a foreign
language reduces both deontological and utilitarian response tendencies. Journal of
Experimental Psychology: Learning, Memory, and Cognition, 44(2), p. 321.
Schwartz, M. S. (2016) Ethical decision-making theory: An integrated approach. Journal of
Business Ethics, 139(4), pp. 755-776
Spencer, H. (2017) The data of ethics. US: Routledge
Traer, R. (2018) Doing environmental ethics. UK: Routledge
Trevino, L. K. and Nelson, K. A., (2016) Managing business ethics: Straight talk about how
to do it right. UK: John Wiley & Sons
Webley, S. (2011) Corporate ethics policies and programmes: UK and Continental Europe
survey 2010. London: Institute of Business Ethics
Williams, R. N., Agle, B. R., and Gates, D. (2018) Teaching business ethics: current practice
and future directions. UK: Routledge
Wisse, B., van Eijbergen, R., Rietzschel, E. F. and Scheibe, S. (2018) Catering to the needs of
an aging workforce: The role of employee age in the relationship between corporate social
responsibility and employee satisfaction. Journal of Business Ethics, pp. 1-14
Yu, Y. M. (2015) Comparative analysis of Jones and Kelley’s ethical decision-making
models. Journal of Business Ethics, 130(1), pp. 573–583

Personal and managerial effectiveness: 15
Bibliography
Agnihotri, J., Rapp, A., Kothandaraman, P., and Singh, R. K. (2012) An emotion-based
model of salesperson ethical behaviors. Journal of Business Ethics, 109(2), pp. 243–257
BBC. (2015) Fifa corruption crisis: Key questions answered. [online] Available at:
http://www.bbc.com/news/world-europe-32897066 [Accessed 14/07/18]
Bell, S. and Hindmoor, A. (2018) Are the major global banks now safer? Structural
continuities and change in banking and finance since the 2008 crisis. Review of International
Political Economy, 25(1), pp.1-27
Breslin, C. (2018) The Advantages of Being Ethical. [online] Available at:
https://yourbusiness.azcentral.com/advantages-being-ethical-17579.html [Accessed 01/07/18]
Capell, B., Tzafrir, S. S., Enosh, G. and Dolan, S. L. (2018) Explaining sexual minorities’
disclosure: The role of trust embedded in organizational practices. Organization
Studies, 39(7), pp. 947-973
Carey, J. (2018) Moral Obligation in Business Law. [online] Available at:
http://smallbusiness.chron.com/moral-obligation-business-law-78910.html [Accessed
01/07/18]
Gassmann, O., Schuhmacher, A., Zedtwitz, M., and Reepmeyer, G. (2018) Leading
Pharmaceutical Innovation: How to Win the Life Science Race. New York: Springer
George, R. T. (2010) Business ethics. New York: Prentice Hall

Personal and managerial effectiveness: 16
Harriss, D.J., MacSween, A., and Atkinson, G. (2017) Standards for ethics in sport and
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Hill, A. (2017) Just business: Christian ethics for the marketplace. US: InterVarsity Press
Karandikar, S., Kapoor, H., Fernandes, S., and Jonason, P. K. (2018) Predicting moral
decision-making with dark personalities and moral values. New York: Elsevier
Morrison, L., Wilmshurst, T., and Shimeld, S. (2018) Environmental Reporting Through an
Ethical Looking Glass. Journal of Business Ethics, 150(4), pp. 903-918
Muda, R., Niszczota, P., Białek, M., and Conway, P. (2018a) Dieselgate: How the
Investigation, Prosecution, and Settlement of Volkswagen's Emissions Cheating Scandal
Illustrates the Need for Robust Environmental Enforcement. 36, p. 118
Muda, R., Niszczota, P., Białek, M., and Conway, P. (2018b) Reading dilemmas in a foreign
language reduces both deontological and utilitarian response tendencies. Journal of
Experimental Psychology: Learning, Memory, and Cognition, 44(2), p. 321.
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Traer, R. (2018) Doing environmental ethics. UK: Routledge

Personal and managerial effectiveness: 17
Trevino, L. K. and Nelson, K. A., (2016) Managing business ethics: Straight talk about how
to do it right. UK: John Wiley & Sons
Webley, S. (2011) Corporate ethics policies and programmes: UK and Continental Europe
survey 2010. London: Institute of Business Ethics
Williams, R. N., Agle, B. R., and Gates, D. (2018) Teaching business ethics: current practice
and future directions. UK: Routledge
Wisse, B., van Eijbergen, R., Rietzschel, E. F. and Scheibe, S. (2018) Catering to the needs of
an aging workforce: The role of employee age in the relationship between corporate social
responsibility and employee satisfaction. Journal of Business Ethics, pp. 1-14
Yu, Y. M. (2015) Comparative analysis of Jones and Kelley’s ethical decision-making
models. Journal of Business Ethics, 130(1), pp. 573–583