Introduction
The request for ethical management in business is rising, yet the supply appears low. The rising groups of leaders are only equipped to navigate instead of providing guidance. The aspect of navigation describes how people naturally adapt and react to interconnections in the world whereas guidance refers to the way individuals build endeavors and forge sustainable paths of value in a morally dependent world. Ethical managers distinguish their activities by doing what is unpopular, unprofitable, and or inconvenient to realize long-term value and health. They see the globe as interconnected and formulate multidisciplinary approaches that address complex issues that crop up daily. This essay deduces ways that leaders can solve ethical dilemmas in the workplace using concrete illustrations. The paper extends solutions to moral problems in terms of long-term value, instituting the appropriate relationships with workers, and creating suitable conditions with the suppliers, stakeholders, and customers.
Background Information
The term ethical leadership is a form of management that is directed by understanding and respecting the moral values, beliefs, rights, and dignities of others. It is related to aspects such as fairness, trust, charisma, consideration, and honesty. Leaders should recognize the essence of ethical behavior and values. They are required to exhibit them in their managerial actions and styles. The lack of trust is a primary concern for many businesses. Dr. Duane Tway describes trust as a construct because it emanates from three components: intentions, competence, and trustworthiness. Business ethics follows the same pattern. If a firm’s management has a code of values and moral expectations and they fail to live up to them, they become a joke to the rest of the globe (Avey et.al, 2012).
The leaders who portray ethical behavior at the workplace powerfully implicate the actions of other employees. Ethics is mostly concerned with the types of morals and values the society or individual finds appropriate or desirable. It is also attributed with the virtuousness of a person and their motives. Ethical development should influence the choices of the managers. Leadership in entrepreneurial morals entails a wide spectrum of concepts and areas. A manager can enhance the credibility and reputation of the industry by placing more emphasis on ethical ideas, boundaries, behaviors, and decisions (Neubert et.al, 2013).
The typical response to a moral dilemma in an organization is a clarion awareness that people should practice more ethical leadership yet there a few individuals who understand the meaning of the phrase. Most executives believe that proper management is a matter of leaders possessing a good character or what is termed as virtual ethics. Without denying the usefulness of a good character, ethical leadership is far more complicated than the simple outline. Over the past three decades, the perspectives of executives concerning various problems their companies face and how they result in great changes have generated touchstones in the development of ethical leadership (O’Toole and Mayer, 2013).
According to Yidong and Xinxin (2012), moral managers embody values, vision, and purpose of the firm and its constituents within the comprehension of ethical ideals. They connect the aims of the organization with those of external stakeholders and internal employees. The leaders work to establish a two-way conversation where they develop the understanding of various values and opinions. The ethical managers must be open to ideas generated by other individuals to institute a conducive environment in the firm. In today’s turbulent surroundings, values and ethics are present in various management levels as long as the leaders devote their energy and time towards establishing the procedure for value creation. The interpretation of morality in an organization depends on several factors. They include rules, values, profession, culture, and situations. None of the ideologies are perfect. However, the last two tend to raise glaring problems because not all value and rule systems reflect what is good. Even though the law is a composition of rules, acting legally does not mean that it is ethical. Some actions that are not illegal such as treating people like disposable artifacts or using them emotionally are not moral. Also, ethical foundations can be different in various cultures, an idea based on the theory of ethical relativism.
Ethical Issues
Many leaders think of morality as a query of individual scruples or a confidential matter that takes place between a person and his or her conscience. The executives do not hesitate to point out any wrongdoings in an isolated occurrence blaming it as the work of rogue worker. The thought that the management could have a hand in the misdeed never passes in the leader’s mind since he or she believes that the executive is an embodiment of ethics. The management should understand that everything they do has something to do with morality, and they have the duty to uphold the concept. Leaders can indulge in various ethical issues in the organization. This essay will just point out three relevant and prominent moral problems that occur in the workplace (Flucker, 2009).
The first challenge arises due to agency issues. The executives are given the mandate to control and run all the operations on behalf of stakeholders. Some of their actions may interfere with the best interests of the shareholders who include the owners of the company, the public, or the employees. When the managers pursue activities that do not conform to the wishes of these parties, a problem arises in the agency relationship. The most common ethical issue that emanates from the agency theory occurs when the leaders do not provide the correct representations of the firm’s performance or make use of the enterprise’s property and resources for their pleasure (Xu et.al, 2014).
A manager can award himself or herself with a hefty bonus or paycheck even though he or she has not done much to improve the financial outcomes for the organizations. Such a move interferes with the wealth maximization interests of the shareholders, the salaries of laborers, and the social responsibility of the business towards the public. Also, the leader can manipulate the accounts of the firm to avoid paying fines or taxes so that he or she can pocket all the extra money. Such as move will affect the operations of the company since there are illegal and are bound to be revealed sooner or later. The manipulation of finances is a pervasive and common practice amongst most of the multinational companies since they strive to obtain more profits regardless of the avenues that they use (Avey et.al, 2012).
The human behavior is often the reason for the displacement of ethical considerations in an agency theory or relationship by utilizing the privileged position to obtain private gains. The ethical issue plays out because it is highly unlikely that the shareholders will realize any deviation or the effect of the manipulation of the company’s accounts due to the poor skill set or the unwillingness to engage in a comprehensive and detailed discussion with the leaders. The manipulation also occurs due to the poor management by the executive leading to the drainage of the enterprise’s resources; hence, the leader opts to cover his tracks by changing the financial reports to show the stakeholders that the business is doing fine (Marsh, 2012).
According to Yidong and Xinxin (2012), there are various methods that the managers utilize to conceal the poor returns of the company. An example is a fraud in the timing difference also known as cut-off fraud. The activity involves two basic strategies: recording liabilities late and the revenues earlier. Another ethical issue that arises from the workplace is nepotism or favoritism. The manager can find himself or herself inclined to like some employees more than others due to different reasons such as good performance, accountability, appearance, etc. A leader is required to express neutrality in his operations whereby he should not proclaim or show that he prefers a particular worker compared to another since it breaks down the morale of those who are not adored. Favoritism is usually expressed when awarding contracts, honoring, or hiring people. Another related concept is patronage that happens in public administration jobs where the individual favors those that voted for him or her.
The third ethical issue arises when the manager is too egotistic. The aspect makes him or her not to value the ideas given by the subordinates undermining the essence of teamwork in a firm. The form of egocentric leadership is termed as a dictatorship. Such a management inflicts a sense of fear and discomfort amongst the workers since they are not sure of what to expect from their leader. The leadership can be valuable in situations where certain operations within the firm need to be carried out hastily. Otherwise, the surrounding is not suitable for innovation, team, and relationship building. Most managers develop the trait since they believe that since they have been chosen for the elevated position, no one else can be better than them. Therefore, the employees’ ideas do not matter and will not be useful to the organization (Flucker, 2009).
Ethical dilemma
The following ethical dilemma will provide a critical comprehension concerning the ethical issues stated above. Mr. Belmar works for a marketing firm as an auditor under Mr. Tom Franklin, a hard-headed man with an iron fist. Belmar noticed a discrepancy in the company’s account shortly after he was given a chance to work in the firm. He immediately took the issue to the head of the auditing department, John. The matter involved a charge made on the firm’s account that could be traced to one of Franklin’s holiday cottages. John told Belmar the expense was founded because Mr. Tom Franklin took most of the organization’s confidential files to his cottage for safe keeping. Hence, he charges a security fee to the company’s account. However, John promised to forward Belmar concerns on the matter to the manager Mr. Tom Franklin during the upcoming general meeting. Unfortunately, Mr. Belmar was not present at the meeting, but he received a memo saying that Franklin had given an explanation regarding the matter, and it should be ignored. Franklin added that if Mr. Belmar had any doubts concerning his leadership, he was free to leave the enterprise. The remarks from the manager shut out any further attempts by Mr. Belmar in pursuing the matter. John, the head was the only one who could solve the issue, but since he had grown close to Mr. Franklin, he was hesitant to forward the problem to the shareholders even though he knew it was the suitable thing to do. Therefore, John found himself in an ethical dilemma (Avey et.al, 2012).
Resolution
The example illustrates the presence of the three ethical issues, that is, favoritism, manipulation of accounts, and dictatorship. The manager, Tom Franklin, concealed his personal expenditure by using the company’s confidential files as an excuse to install a security system for his holiday cottage. He had always charged the provision on the organization’s account and no one had been brave enough, or they were too ignorant to ask why and how much it costs except Mr. Belmar, the new intern. Since he was not aware of the fraudulent operations of the manager, he forwarded the issue to the head of his department hoping to receive an explanation (O’Toole and Mayer, 2013).
Tom Franklin became agitated with the matter and as per his nature of hard-headedness, he told Mr. Belmar to drop the issue or face the consequences. The threat shows a level of dictatorship whereby Mr. Franklin was not willing to listen to reason and provide an account of his action since he was the manager. Based on Franklin’s assumptions, he was the only one allowed to ask questions concerning the enterprise’s finances. Favoritism emanates from the fact that John had the ability to report and reprimand the manager, but he chose not to since Franklin was his close friend (Xu et.al, 2014).
The only solution to the ethical dilemma is to maintain transparency in the company’s operations. Mr. Franklin should be not allowed to utilize the firm’s resources for his personal endeavors. The manager is supposed to maintain the pillars of corporate governance that comprise of transparency, responsibility, accountability, integrity, amongst others. Companies can use the pillars to keep a competitive advantage especially during in era of globalization where the technologies and resources are available; hence, they require unique aspects to compete with their rivals (Neubert et.al, 2013).
Resolution Choice
The three ethical issues in the dilemma each have suitable measures that can be used to eliminate the unethical operations of the leadership in business. The misappropriation of funds by the management that arises from poor agency relationships can be handled by employing external auditors who will monitor and countercheck the finances of the firms. Secondly, the leadership can be compensated based on their performance to ensure that they put more effort into their roles. The managers should also be allowed to purchase shares in the industry so that they can share in the revenues or losses of the firm (Marsh, 2012).
If the executives are found guilty of any illegal action, due process of justice should be allowed to take place. The leaders should assess the principles that surround the actions instead of the results as provided in the Kantianism approach. The second ethical issue of favoritism is difficult to solve because it is in our nature to develop a liking for particular people or things. Sociologists have attempted to test the perceptions of biases that human beings exhibit proving that it can be extremely hard to change particular ideologies whether good or bad. Bias can be brought about by an individual’s culture or the environment. It is mostly associated with one’s tastes, educational background, or beliefs (Flucker, 2009).
The only way that leaders can eliminate stereotyping is by gradually accepting the diversity amongst the workforce. The third issue requires the manager to allow employees to air their opinions openly to develop a culture of creativity in the business. More ideas assist in solving issues that may erupt that are too difficult for one person to handle. It also creates mutual understanding and stronger ties amongst the laborers. The representation of people’s opinions concerning the health and prosperity of the firm develops a sense of utilitarianism whereby the interests of the majority are upheld instead unlike in dictatorship where the manager’s wishes are addressed (Avey et.al, 2012).
Conclusion
Ethical principles and theories are the guidelines for decision-making in business. Managers should assess their choices based on the situation to derive long-term benefits for the companies. Ethical leadership in entrepreneurship is the foundation for the success of the firm. A morally upright team of professionals surpasses all the resources that the company can own. They can develop a brand and reputation that will pull a mass of consumers. However, a business should not spend too much time, effort, and funds in carrying out ethical operations such as social responsibility since the fundamental purpose any profit-making business it to generate profits.
References
Avey J.B. et.al. (2012). Exploring the Process of Ethical Leadership: The Mediating Role of Employee Voice and Psychological Ownership. Journal of Business Ethics, Volume 107, Issue 1, pp 21-34.
Flucker W. E. (2009). Ethical Leadership: The Quest for Character, Civility, and Community. New York: Fortress Press.
Marsh C. (2012). Business Executives’ Perceptions of Ethical Leadership and Its Development. Journal of Business Ethics, Volume 114, Issue 3, pp 565-582.
Neubert M. J. et.al. (2013). The Influence of Ethical Leadership and Regulatory Focus on Employee Outcomes. Business Ethics Quarterly / Volume 23 / Issue 02 / pp 269-296.
O’Toole J. and Mayer D. (2013). Good Business: Exercising Effective and Ethical Leadership. New York: Routledge.
Xu A. J. et.al. (2014). Ethical Leadership Behavior and Employee Justice Perceptions: The Mediating Role of Trust in Organization. Journal of Business Ethics, pp 1-12.
Yidong T. and Xinxin L. (2012). How Ethical Leadership Influence Employees’ Innovative Work Behavior: A Perspective of Intrinsic Motivation. Journal of Business Ethics, Volume 116, Issue 2, pp 441-455.
