Ethical Decision-making in Business Operations

ethics-cross the finger

Last week, we had a special guest come to our MBA class. Rev. Anthony Rodgers, author of How God Restored My Life, shared with us his personal story that showcased a lifestyle of prestige, power, and wealth.  However, this pathway was through illegal and criminal behavior that the average individual would find distasteful.

Rev. Rodger’s was transformed; his life has become a symbol of how individuals can be redeemed and changed.  His lifestyle of drugs and crime are demised.  In the same vein, some business managers act immorally, unethically, and participate in illegal activities that can get organizations into trouble.  Do you remember Enron?  BP Oil?  There is a laundry list of these organizations.

If organizations are serious about having profitable operations, they must have good ethical systems.  Operations management does not exist in a vacuum; other business areas must be considered. Marketing and strategy are underlining principles that must be addressed for organizations selling abroad.

Michael Johnston and Greg Marshall, authors of Relationship Selling, argue that customers who reside in other countries pose unique ethical concerns for salespeople and management, especially in (1) cultural differences and (2) differences in corporate selling policies.[1]

Regis McKenna, author of Relationship Marketing, further suggests that effective marketing is the integration of the customer into the design of the product; to design a systematic process for interaction will create substance in the relationship.[2] Creating a good ethical system is critical for success.

First, any meaningful, ethical program must start with senior management behavior. In fact, ethical behavior must start at the top. Salespeople are not the only members of the sales force who face ethical concerns. Management must address significant ethical issues with (a) salespeople, (b) company policies, and (c) international customers and policies.

I do think that organizational culture is the cornerstone for understanding the ethical environment. Trust is the foundation of any meaningful corporate structure.  Gareth Jones and Jennifer George, authors of Contemporary Management, maintain that when leaders are ineffective, chances are good that workers will not perform to their capabilities.

Johnston and Marshall further suggest senior management style (do their actions match their words), the established culture of the organization, and external forces can create a climate where unethical or even illegal behavior is tolerated.[3] Therefore, senior managers should lead the way by example.

Second, the organization must evaluate the current corporate culture. There are both written and unwritten rules and behaviors that come into play. For example, Enron senior management demonstrated a lack of moral and ethical judgment that played a critical role in its decision-making (i.e. breaking laws) policies.  Therefore, one must review the organizational culture of the organization before attempting to implement an ethics program.

Last, the organization must be committed to a win-win approach. Companies need to have a plan for implementing ethics. However, these plans need to involve the workers. Typically, executives come up with a mandate on corporate policies and HR is forced to implement them.  There is little worker involvement.

Yet, ethical conduct impacts everyone.  Employees at various levels face ethical issues all the time. Their input would be invaluable. This fact has a great bearing on ethical behavior among employees.

Discuss your professional experience on how ethical decision making can impact business operations.

 © 2013 by Daryl D. Green


[1] Relationship Selling by Michael Johnston and Greg Marshall

[2] Relationship Marketing by Regis McKenna

[3] Contemporary Management by Gareth Jones and Jennifer George