Ethics and Managerial Performance
Ethics is an essential part of life and has been an issue of contention since the times of Aristotle. Organizational managers have responsibility to improve the performances of their corporations and this can be achieved when they are effective in their duties. Although there are many facets which have been determined to make them more effective, there is still inadequate knowledge concerning how they can use ethics-based management approaches to enhance their performances and thus that of the entire firm. The present study resolved to critically examine how the application of deontological and teleological ethical models in companies can affect the effectiveness of managers. The results showed that the firms which performance better are regarded as having leadership which is effective and that the application of deontological and teleological theories significantly improves the performances of companies. The findings imply that when the management practices ethical practice in their decision making, human resource management, and corporate governance, they gain competitiveness such as reduced employee turnover, increase employee morale, enhanced trust in the company, and better and higher quality of products and services, factors which increases the effectiveness of managers.
Key words: Ethics, Management, deontological, teleological
Background
As the business environment becomes more competitive and open to international competition, enterprises must find ways to survive through continuous improvement of their performances. Organisational stakeholders such as customers, shareholders, the government, and the community require them to conduct business in an ethical manner and in a way that promotes the principle of sustainability and maximisation of community benefits. Although many organizations across the world insist that the responsibilities of upholding codes of ethics and conduct fall on everyone, it is the management who bears the biggest burden as a result of being the front line company agent. Furthermore, the success of most organisations significantly hinges on the effectiveness of their leaders and managers. The effectiveness of managers depends on their abilities to manage corporate stakeholders in a way that exhibits leadership qualities (Moore, R2018). The managers are expected to build relationships with the community and investors, motivate employees, and deliver safe products to the customers so that when these factors are aggregated, their effects will produce increased organisational performances and growth.
Organisations have aims and objectives, and active managers are those who are capable of achieving them. Therefore, there cannot be an absolute measure of managerial effectiveness, but one can be considered as valid as long as he/she is capable of meeting the needs, goals, and visions of their organisations. Thus, it is essential that every leader or manager is aware of the purpose of their respective organisations, what their job functions entail, and the specific work objectives that they must meet (Kaptein, 2015). The most common terms used to describe the effectiveness is the ability to meet the critical performance indicators (KPIs). The process of setting KPIs is an organisation-wide process and can be achieved through management by objectives (MBO). The purpose of MBO is identifying all the areas against which targets are set, and the performance or effectiveness of a person is measured.
However, not all employees or managers meet their KPIs and as such it is required of them to improve or find strategies through which they can consistently meet these job roles and responsibilities. Although there is a plethora of evidence on how employees, especially the managers can meet their KPIs and thus become more active, there is inadequate evidence about how the managers can leverage the benefits associated with adopting an ethical-driven management approach to become more active (von Weltzien Hoivik and Melé, 2009). Therefore, the area requires further contribution of knowledge, a factor that can be achieved through the exploration of how corporate managers are affected when they apply appropriate ethical standards in their styles of leadership.
Ethical management or leadership have been shown to guide and direct organisational members towards the achievement of objectives and goals, and in the process benefiting the organisation and its stakeholders. In other words, ethical management is proposed to be effective. Moral management/leadership, through role modelling, helps to promote altruistic behaviours among the organisational members, and as such the employees are expected to be more mutually dependent, focused on cooperation, and more committed to the corporate aspirations (Shin et al., 2015). Through ethical behaviours, managers can earn the confidence and loyalty of employees. Furthermore, Souter et al. (2015) noted that employees would show more optimism, positivity, and hopefulness in their organisation and work situations if they perceive their managers or leaders as morally upright. When the moral and ethical integrity of the manager is in doubt, such a leader will fail in influencing the employees to achieve the organisational goals and in the process become less effective.
Research Rationale
The importance of ethical considerations in management cannot be underestimated. Ethics in practice is what makes sense but not having the standards drafted in books. The need for companies across the world to exercise more ethical standards with regards to being faire to their communities continues to increase. There is need for companies to increase benefits they provide to the society through desisting form engaging in unethical activities such as corruption and fraud, and through the creation of sustainable communities. The organisational management is tasked with ensuring that their organisations have competitive advantages, register robust performance, and engage in sustainable activities. The managers, therefore, must be effective in their duties and responsibilities so that they can deliver the expectations. Practising an ethical managerial approach has been touted as one of the strategies of ensuring that the management is effective and that the organisation performs better (Perry, Wood, and Fernie, 2015). However, although several studies on ethical management and organisational performance, there is still a need to consolidate this research and provide concrete evidence to the managers that they can improve their effectiveness through an ethical managerial approach.
The Research Objectives
The present study resolved to explore how management is affected by ethics-based management approaches and standards in their business enterprises. Specifically, the paper will examine how ethical aspects such corporate social responsibility (CSR), code of ethics and conduct, and corporate governance helps managers to be more effective in meeting their objectives and organisational goals. The paper aims to explore how deontological and teleological ethical approaches can affect the effectiveness of managers through increased corporate performance
Research Questions
The following question guided the present study:
What are the implications of ethical driven management on the effectiveness of organisational management and leaders?
Summary of the Chapter
There is increasing pressure for managers to be more effective and meet the organisational goals and objectives through a sustainable approach. As organisations strive to attain competitive advantages, incorporating ethical approaches in their management style provides an opportunity to gain favourable perception form the stakeholders and thus becoming a source of value. The current paper, therefore, seeks to explore how ethical driven management can help managers to be effective, meet their KPIs, and in the process help to improve the performances of their organisations. The guiding question which shall be answered is: what are the impacts of ethical management on the effectiveness of managers in organisations.
The Ethical Environment in Organisations
The importance of an ethical environment in promoting ethical based management has been widely researched. Shin et al. (2015) defined an ethical business environment as one that upholds trust and integrity and where moral values, standards, and codes are articulated and shared among the members with the aim of promoting competence and avoiding favouritism. Schaltegger and Burritt (2018) on the other hand added that an ethical environment is one where the individuals are appreciated, treated in a fair manner, and trusted. Indeed, Perry et al. (2015) further noted that an ethical environment is one where the voices of employees and other stakeholders are heard, and one that encourages the employees to become whistle-blowers in case of an infringement of ethical norms without the fear of risking their jobs. Bell et al. (2018) shortened his definition of an ethical environment and concluded that it is one that safeguards against possible moral failures. Therefore, one can find that an ethical environment is perceived as the organisational perceptions which affect the decisions which are oriented to ethical contents. According to Crane and Matten (2016), an ethical firm climate is a function of the managers, and that without the efforts of these leaders, firms may fail to operate in an environment which is ethical. According to Su (2014), an ethical workplace environment is one that supports a positive reputation for a company and in the process improves the employee morale. Similarly, Shaw et al. (2016) further illustrated that a business environment that violates basic ethics could significantly hurt a business through increased costs associated with high rates of lawsuits or even theft of ideas and goods. Therefore, it can be seen that over the past decades, the literature on the ethical environment and the approaches associated with it have reached a consensus.
Several studies have considered organisational performance as a function of an ethical environment, continuous improvement, high-quality workforce, and senior management and leadership, but with the moral climate at as the most important independent variable (Chowdhury & Fernando, 2014; Riivari & Lämsä, 2014; Hassan et al., 2016). There has been a growing interest in the need for an ethical environment in organisations of all sizes not only because of an increasing number of incidents of wrongdoing but also because there is evidence that it contributes to a better and productive performing organisations (Newman et al., 2014; Schaltegger & Burritt, 2018; Shaw et al., 2016). Indeed, Su (2014) confirmed that an ethical organisation could enable managers to curb corruption enhance the performances of the employees and in the process improving their commitment, engagement, and job satisfaction levels. Bell et al. (2018), however, differed from previous assertions and instead noted ethical environment is the most essential and influential determinants of the performance of the public sector. However, the findings did not explain how the management of organisations in the private sector can use an ethical environment to become more active and meet their KPIs.
Schaltegger & Burritt (2018) assessed the association between productivity and the ethical environment through a survey of executives and managers from the non-profit and public sector. Indeed, there was a significant association to suggest that companies need to establish teams whose work is to identify ethical problems and how they affect productivity of employees. Shaw et al. (2016) later examined the impacts of the code of ethics on organisational performance and discovered that corporate members who uphold robust ethical systems believe that their performance is influenced by those codes to a large extent. Similar results were echoed by Riivari and Lämsä (2014) who explored the attitudes of organisational managers towards ethics in the organisation and noted that indeed, codes of ethics were the most powerful tool that could be used by public institutions to become more effective eliminate fraudulent activities such as corruption. Similar findings were shown by Chowdhury and Fernando (2014) who managed to demonstrate that an organization with positive ethical climate registered higher productivity associated with increased teamwork and quality of products and services.
Ethical Decision Making in Organisations
To establish whether a certain manager practices ethical based leadership style, an examination of their decision making criteria is essential. Indeed, the issue has attracted full attention in the literature. Shin et al. (2015) noted that ethical decision making is a demonstration of the moral problem that involves justice and the rights of decision makers to influence the choices of others, and is characterised by the consideration of moral or ethical issues when an individual makes decisions. Moore (2018) on the other hand defined ethical choice as one that is both morally and legally acceptable within the broader community. The definition was consistent with the Souter et al. (2015) who considered behavioural ethics as consisting of the individual behaviours that are judged or subject to “generally accepted moral norms of behaviours”.
Given the negative impacts of unsound ethical decisions, the comprehension of how leaders make decisions as well as the issues which influence an individual’s ethical decision making is critical for all managers.
The impact of stressful situations on ethical decision making has been recognised in the literature (Honig et al., 2017; Menzel, 2014). High-stress levels in the decision makers can cause them to fail to understand the importance of ethical dilemmas and moral issues in the choices they make (Shojayifar et al., 2017; Poroch and Agheorghiesei, 2018; Weiss, 2014). Khan (2017) also echoed these assertions by claiming that stressful situations can lead to negative stress and this can increase the frequency of unethical and immoral actions. Indeed, Bhala et al. (2016) discovered that stress affects decision making through its impacts on the pro-social behaviours and motivations to take one’s interests into account and that it induces selective perception, a factor that is widely known as a bias among decision makers. Therefore, one can conclude that when the managers experience negative stress, their tendency to practice unethical practices in the organisation increases as a result of the increased ‘tunnel vision’ biases.
Ethical behaviour: Ethics and moral codes in Organisations
Ethical practices are also one of the dimensions which have been proven to affect the ethical-based management styles of managers in organisations. A review of existing models indicates that there are a variety of theories on ethical. Freeman (2014) considered organisational and individual factors as contingency and then asserted that moral dilemma might emerge from the cultural and social environment. The author related his assertions to the existence of professional codes of conduct, reward and punishment, and corporate policies. The marketing ethics theory has shown that when ethical problems are approached through the teleological and deontological approaches, moral judgment and intentions can be said to affect ethical behaviours. Carroll and Buchholtz (2014) suggested that the primary components of ethical conduct include locus of control and the ego strength of an individual. The situational factors include the factors in the immediate job context, the character of work, and organisational culture (Shaw et al., 2016). These factors imply that the ethnically based management approach of a particular manager is affected by both the situational and individual factors. Personal issues have been shown to change the behaviours of persons significantly. Majority of big companies around the world have adopted written codes of conduct or ethics to direct the actions of managers and other employees formally. Over the past four decades, an increasing number of similar companies have adopted such practices. Virtually all companies around the world currently operate based on codes which they use to ensure that the stakeholders including the suppliers show ethical behaviours which are in tandem with the standards and levels they demand.
Amstutz (2013) considered overly ambitious financial and business objectives as one of the organisational issues which may prompt unethical business behaviours. Indeed, similar findings were demonstrated by Lambek (2010) who argued that in business settings which promote intimidating and abusive practices, the management and the staff tend to show high levels of unethical practices. Similar findings were demonstrated by Crane and Matten (2016) who showed that managers who encourage antisocial behaviours such as harshness, yelling, ignorance, unreasonableness, false accusations, physical threats, and insults tend to exhibit low regard for ethical practices and as such increases employee dissatisfaction levels.
Conflict of interest is also an essential determinant of whether a manger practices ethical-based management approaches. Peters (2015) noted that the issue arises when an individual is forced to choose whether to advance her/his career goals or that that of the organisation. For managers, they can be forced to choose between developing their careers or that of other employees. Indeed, Tseng (2010) confirmed that conflict of interest is a source of unethical behaviours across many organisations around the world. Johnson et al. (2011) on the other hand noted that bribes, which include special favours, payments, and gifts are one of the factors considered to be a source of conflict of interest because they benefit an individual at the expense of the entire organisation or society. In many countries, bribes are illegal, and managers who encourage acceptance of gifts may be deemed to be engaging in unethical behaviours. When in countries that consider them criminal prosecutions may be initiated and this may cost the company money, and as a consequence may significantly reduce the effectiveness of such managers.
Different authors have considered fairness and honesty as a source of ethical behaviour (Nagy, 2011; Haack, 2013; De Hoogh and Den Hartog, 2008). At the minimum, managers are expected to encourage obedience to legal procedures and laws, and above this, they are required to avoid engaging in activities which might harm their employees, competitors, and clients (Kaptein, 2015; von Weltzien Hoivik and Melé, 2009; Perry et al., 2015). Groves and LaRocca (2011) noted that some of the activities which might cause harm to the stakeholders include deception, discrimination, misrepresentation, and even coercion. Cox (2015) contended that competition is one of the aspects which can be used to judge whether an organisation is practising fairness behaviours. Although there exist a plethora of laws which foster fair competition and discourage illegal malpractice, some corporations still control the markets through questionable practices. Managers who encourage such anticompetitive behaviours are considered to show unethical conduct.
The Gap in the Literature
Despite the existence of extensive research on ethical based management, there is still inadequate knowledge about how these factors fit within the deontological and teleological theories of ethics and how these, in turn, affect the effectiveness of managers. Thus, it is essential to put the ethical issues into the deontological and teleological perspectives and to discover how the effectiveness of managers who use these approaches are affected with regards to how they contribute to organizational performances.
Research Methods
The study resolved to establish how the application of ethics driven management approaches in organizations affects the effectiveness of managers regarding how they contribute to the overall corporate performance.
Eligibility Criteria
Studies which address how CEOs/leaders/managers use different ethical theories to manage their companies, and how the application of these factors contribute to the performances of firms were considered as eligible for further analysis. The ethical driven management was measured based on corporate social responsibility (CSR) initiatives. The outcomes were determined based on how the administration becomes more active (ability to meet KPIs). The results of the studies had to compare the level of effectiveness before and after the ethical approaches were implemented. It was necessary to compare the performances of corporations before and after a manager implements an ethical model in the organization. Only articles written and published in English were considered for the study so that the extra work and costs of translation could be eliminated. The articles had to be published not later than 2008 to ensure that more current information was obtained
Information Sources
The data used for the study will be collected from an electronic source. Online databases such as EBSCOhost and ProQuest were searched. Other electronic sources included Google Scholar and company based data from the respective company websites.
Search Strategy
The topic of study concerned how ethical driven management affects the effectiveness of management personnel and organisational leaders such as CEOs. Understanding the problem is essential because the results can be used to know how the administration meets their KPIs while practising socially responsible activities. An electronic search of the databases was conducted to ensure that the research objective was achieved. The key search terms included ethical management, corporate social responsibility, teleological, deontological, and management effectiveness. Search was conducted to obtain online sources such as eBooks, peer-reviewed articles, academic journals, and company-based sources such as financial statements and press releases. The search restricted the materials to those published on or after 2008. Results shall be organised under major themes including turnover, motivation, organisational culture, and employee attitudes. The results will be held under the main themes obtained from the literature. The first step shall involve examining the different aspects of deontological and teleological elements that make managers more effective. The next step shall involve establishing these associations with organisational performances.
Study Selection
A systematic review was used to select the studies. Key terms were searched, and the abstracts or executive summaries of the articles were screened to ascertain their edibility. Only sources that met the predefined criteria were selected for further review.
Data Collection Process
The abstracts and executive summaries were first analysed to establish whether the identified articles met the search criteria. The sources that met search criteria were recorded and included for further review.
Data Items
The variables of main items for which data were extracted included ethical theories, ethical management, ethical-driven management, corporate social responsibility, organisational performance, and management effectiveness. The company laws and codes of conduct shall be examined for adherence to anti-corruption and anti-bribery laws, conflicts of interest, rules of conduct, corporate governance, ethics, and sustainability reports/initiatives/measures.
Risk of Bias in Individual Studies
The researcher established that articles that were published by organisations such as the financial statements and sustainability report could be biased since the organisations themselves published them. The availability of independent auditors reports was examined to ensure that the bias was eliminated.
Chapter IV: Data Findings and Analysis
The identified articles have confirmed that indeed, managers who apply appropriate deontological or teleological ethics in their management approaches tend to be more effective than managers who do not apply ethical principles in their management styles. Ethical-driven management, according to Pullen et al. (2014), ensures that an organisation and everyone on the organisation acts ethically. Figure 1 below shows a value-driven management approach which managers can use to achieve an ethical-based leadership in their organizations. Value-driven management covers a more idealistic and broader approach to organisational ethics. At the bottom line, ethical-driven management aims to comply with regulations and seeks to create a more engaged and human relationship between an organisation and individuals.
Ethical Theories
To understand the concepts of managerial ethics and how it affects the effectiveness of managers, it is essential to review the concepts and methods of ethics. Previous research has not provided a standard definition of ethics. However, there is a consensus among different authors that ethics describe a system of moral principles that affect the decision making process and lives of people (Haack, 2013; Nagy, 2011; Cox, 2015). Contrary, Tseng et al. (2010) noted that ethics involve the issues which an individual or a society regards as either good or bad based on a given moral philosophy. There are a variety of topics covered under the wider ethics subject. According to Peters (2015), ethics covers the rights and responsibilities of individuals, how they can live a good life, moral decisions especially concerning what is wrong or right. Indeed, Peters (2015) observed that the concepts of ethics people hold had been derived from a variety of sources including philosophies, religion, and cultural beliefs.
Authors have described different approaches to ethics. According to Cox (2015), there is a tendency to divide the concept of ethics into three primary areas which include normative, metaethics, and applied ethics. Crane and Matten (2016) described normative ethics as concerning the moral judgment contents and the criteria for choosing what is wrong or right. Peters (2015, on the other hand, asserted that applied ethics addresses controversial topics such as animal rights, war, and capital punishment. Meta-ethics has been described as dealing with moral judgments and discusses the meaning as well as the origins of ethical principles.
The importance of ethics has also been examined in the literature, according to Crane and Matten (2016), ethics must be able to affect the manner in which human beings behaved for them to be considered as useful and noted that indeed, ethics does this. Haack (2013) confirmed that whenever an individual realises that it is morally right to do something or accomplish a particular task, then it would be highly unlikely and irrational for that individual not to do it. Lambek (2010), however, contradicted that human beings naturally tend to behave irrationally even if in their heads and minds they know the right course of actions. Peters (2015) noted that ethics do not provide the most appropriate tools for thinking about moral issues. Therefore, one can conclude that philosophers have never had a consensus about the effectiveness of ethical in controlling the decisions and actions of people. However, many researchers have determined that ethics can provide a moral framework (Lambek, 2010; Crane and Matten, 2016; Peters, 2015). According to Amstutz (2013), there are some topics such as euthanasia and abortion which might make people emotional and when arguing about them might fail to reason correctly. However, the use of ethical approaches to solving such contentious topics can offer some principles and rules which can make people appear calmer and thus find solutions to the moral dilemmas they face. Lambek (2010) on the other hand noted that ethics could help by pinpointing a disagreement. The use of an ethical framework might help people arguing about moral issues to discover that what they have disagreed about is just part a component of the entire point yet they have broadly disagreed on everything. As a result, Peters (2015) noted that ethics could be a source of strength for a group of people. Although many people tend to use ethics as a weapon to defend their actions, Amstutz (2013) noted individuals should use morality as a way of justifying both their actions and the practices of others, and in the process start viewing people as deserving of respect as themselves. Peters (2015) noted that ethics could be grouped into different perspectives including subjectivism, realism, emotivism, and prescriptivism. There is a consensus among different authors that moral realism describes the notions and beliefs that there are real objective truths and moral facts in the universe. The model posits that there are reality and factual information in the moral statements people make.
The subjectivism on the handholds that moral statements are nothing but reflections of the feelings and attitudes of individuals, and that there is no truth in any good comments made by people (Peters, 2015). The emotivism approaches hold that moral assertions are expressions of disapproval and approvals and that the statements do not represent the feelings or emotions of the speaker (Lambek, 2010; Amstutz, 2013). The prescriptivism approach posits that moral assertions are parts of recommendations and instructions and that there is always at least an aspect of prescription in elements in ethical statements made.
Teleological Theories and Ethics-Driven Management
From the literature, teleological arguments describe the ethics which locate moral goodness from the consequences of actions and behaviours of an individual but not from the expression or activity itself (Huimin and Ryan, 2011). Therefore, it is for this reason that is called the consequentialist model of ethics (Johnson et al., 2011). The theory holds that all rational actions of human beings are teleological in the sense that people tend to reason about means through they can reach a particular end or goal. In the case of organisational managers, they may decide to pursue or invest in a specific asset with a particular goal in mind, and according to the consequentialist theories, it is this goal that determines the morality and thus the success of such a manager (Groves & LaRocca, 2011). Under this model, moral behaviour is goal-oriented.
The consequentialist approach to management, according to Sparks and Pan (2010), is based on two principles. First, the model posits that the rightness or wrongness of an act is subject to its outcomes. Second, it posits that the better the result of a bill can produce the better or more right that behaviour or activity is (Sparks and Pan, 2010). Therefore, the approach posits that people, including organisational managers, should live in a manner that they can maximise the goodness of the consequences of their actions (Brunk, 2010). Specifically, the theory requires managers to choose investments which only maximise goodness to the stakeholders.
The teleological theory is divided into different forms which vary based on what the good thing is that individuals should aim to maximise. First, the utilitarian approach holds that individuals and managers should only undertake activities whose consequences maximises hu
