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What are Management Ethics?

Updated on December 10, 2012
drmiddlebrook profile image

Former university professor of marketing and communications, is an independent publisher and marketing/communications consultant.

Truth. It has to be the goal of ethics in management, and in life.
Truth. It has to be the goal of ethics in management, and in life. | Source

Ethics and Morality, Defined

What is the meaning of the word “ethics”? What is the meaning of “morality”? What, if anything, do the two words have in common? And why are these words important to the practice of business management? Before we get into our discussion, let us take a close look at the definition of each of these two words.

I have a doctorate in business specializing in marketing, and I once taught business ethics (as an adjunct professor) in the weekend MBA program of the highly regarded Cameron School of Business, at University of St. Thomas, in Houston, Texas.

The Free Dictionary, online, gives several good and useful definitions of “ethics.” It says this word means:

1. A set of principles of right conduct; a theory or a system of moral values: "An ethic of service is at war with a craving for gain" (Gregg Easterbrook).

2. (Used with a sing. verb) The study of the general nature of morals and of the specific moral choices to be made by a person; moral philosophy.

3. (Used with a sing. or pl. verb) The rules or standards governing the conduct of a person or the members of a profession: For example, medical ethics.

Justice and fairness are central elements of ethical business management.
Justice and fairness are central elements of ethical business management. | Source

The word “morality” is defined by the same source as:

1.Conformity to the rules of right conduct; moral or virtuous conduct.

2. Moral quality or character.

3. Virtue in sexual matters; chastity.

4. A doctrine or system of morals.

5. Moral instruction; a moral lesson, precept, discourse, or utterance.

Management Ethics

With our definitions in mind, it is clear that both morality and ethics refer to “standards.” These standards represent our society's rules governing “right or wrong conduct,” whether they are concerned with the management of business, or with the “right or wrong” of personal codes of conduct (morality). In business, ethical conduct is considered to be good and moral, and unethical conduct is considered to be bad, and immoral.

Ethics, as a topic of study, is concerned with an individual’s moral standards or the moral standards of a society. Management ethics, therefore, are concerned with moral standards used in the conduct of business management.

In a perfectly competitive free market, the pursuit of profit should, by itself, be enough to ensure that members of society will be served in the most socially beneficial ways. But, since there is no such thing as a perfectly competitive free market, time and again, we are inundated with news stories about corporate misconduct and illegal activities taking place in the world of business. Presented in the next segment is such a story that, even though it happened nearly 50 years ago, is still considered a "landmark" case of unethical (and illegal) corporate wrongdoing.

Thousands of news-making cases have been the result of workplace wrongdoing.
Thousands of news-making cases have been the result of workplace wrongdoing. | Source

"Whistle-Blowing," The Famous B. F. Goodrich Case Study

B. F. Goodrich Tires and Goodrich Corporation were once the same company (the company once known as B. F. Goodrich Tires, in 1988, was sold to Michelin). In 2001, the company name was changed to what it is today, Goodrich Corporation. However, back when the company was B. F. Goodrich Tires, in 1967 the company was offered a chance to bid on a contract to supply wheels and brakes for U. S. Air Force vehicles.

The company had innovative technical designs featuring a lightweight, four-rotor brake, and that helped them to win the Air Force contract. Before the brakes could be accepted, they had to pass Air Force qualifying tests and the company had to present a report discussing in detail, for the Air Force, how the brakes passed specific qualifying tests. The company had approximately one year to design and test the brakes, with two weeks reserved for flight testing. In June of 1968, the brakes failed during test flights, and a former B. F. Goodrich employee, Kermit Vandivier, accused the company and its personnel of falsifying the qualification tests.

Because of the accusation, a United States senator, William Proxmire (a Wisconsin Democrat), requested a formal governmental inquiry into the qualification testing. A four-hour Congressional hearing, chaired by Senator Proxmire, convened to investigate brake problems of the Air Force A7D Aircraft, in which the B. F. Goodrich brakes had been installed.

In this case, was it right or wrong for the "whistle-blowing" employee to be fired?
In this case, was it right or wrong for the "whistle-blowing" employee to be fired? | Source

Kermit Vandivier worked for B. F. Goodrich as a technical writer. Feeling that he could not talk to his supervisor, he went "behind the backs" of his managers at B. F. Goodrich (he also contacted his attorney and later the FBI), to report the events that were occurring at the company. It is important to note that during the time when this occurred, it was uncommon for an employee to blow the whistle on corporate wrongdoing.

Vandivier was later dismissed from the company for revealing the information, and his conscience bothered him because, as a technical writer for the company, he had taken part in preparing the falsified report that became part of the crime of conspiracy to defraud the U.S. government.

As an employee of B. F. Goodrich, and as a man with a family to support financially, Vandivier felt that he was stuck between a rock and a hard place. If he had refused to help falsify the report, he would have been fired immediately for not doing what he was being paid to do as an employee. At the same time, he knew if he chose to help falsify the report, he would be running the risk of the deception being discovered later, and that then he would be considered as part of a criminal conspiracy. Not only would he be risking loss of a job, he'd also be facing possibly having to serve time in prison. Vandivier did what he believed was the only thing he could do: He did his job, but he also contacted the FBI to protect himself, legally, from further participation in his company's criminal activity. After he was made an "outcast" inside the company, Vandivier wrote a letter of resignation and submitted it to the plant's chief engineer, a man who was far removed from the day-to-day workings of the company. Upon receiving the letter, in which Vandivier had detailed all of his accusations against the company, the chief engineer fired Vandivier.

In 1972, Vandivier wrote an article titled, "Why Should My Conscience Bother Me?" The article gave the former B. F. Goodrich employee's version of the brake-testing incident, and it helped to eventually make the case a landmark example of a lone individual standing up to blow the whistle on the wrongful deeds of a large corporation.

It is important to consider all angles of management issues in order to know when it might be time, as an employee, to "blow the whistle."
It is important to consider all angles of management issues in order to know when it might be time, as an employee, to "blow the whistle." | Source

What Do You Think?

Should ethical/moral standards apply to corporations, or only to individuals? Vote below to tell us what you think.

See results

Questions For You to Consider

Where do business management morals come from? Why is morality important in business? Do people always live up to the moral standards they hold? Do you always do what you believe to be morally right? Do you always pursue what you believe is morally good? Why or why not?

If he believed in the value of honesty and integrity, then why did Vandivier behave as he did? Did he feel he had to betray his values in order to keep his job? Was his paycheck and his ability to earn a living more important than his values? Why or why not?

Did Vandivier believe that it is right to tell the truth, and wrong to tell to a lie? Did he believe it is wrong to endanger the lives of others? Did he believe that integrity is good and dishonesty is bad? Why did he behave as he did, if he held these beliefs? If you were ever in a similar situation, what would you do?

M.G. Velasquez is author of a textbook titled, Business Ethics: Concepts and Cases. I used his text when I taught a course in business ethics as part of an executive MBA program at a local university. In his text (which includes the B. F. Goodrich case study, among many other case studies), Valasquez defines business ethics as: "A study of moral standards and how they apply to the systems and organizations through which modern societies produce and distribute goods and services, and to the people who work within these organizations."

According to the Velasquez text, business ethics investigates three different kinds of issues:

  • Systemic Issues: Ethical questions about the economic, political, legal and other social systems within which business operates.
  • Corporate Issues: Ethical questions about a particular company.
  • Individual Issues: Ethical questions about a particular individual or individuals within a company.

Were there systemic, corporate, and/or individual ethical issues in the case of Vandivier? Or, were all three types of issues present in this case?

Does it make sense to you for there to be ethical/moral standards in the management of business? What are the reasons for or against such standards? Why should we continue (or not) to have them as part of the practice of doing business? What can be said in their favor, and what can be said against them? Is it really reasonable for for us to hold corporations to standards of ethics and morality? What would be most likely to happen if we didn't?

When managers are more concerned with self-interests than with doing the right thing, problems will arise.
When managers are more concerned with self-interests than with doing the right thing, problems will arise. | Source

A Society That Prizes Standards

Ours is a society that believes it is good to have standards. We see them as a necessary and vital part of civilized behavior. We have standards of etiquette that we use to judge good and bad manners; standards of law are used to judge legal right and wrong; standards of language tell us what is grammatically correct or incorrect; standards of aesthetics are used to judge good and bad art, and athletic standards are used to judge the quality of game and rules of conduct that must be observed by individuals and teams in the world of sports.

As a society that observes standards, we also have standards related to ethics and morality, as well as standards used outside of a moral or ethical framework. Whenever we make judgments about the right or wrong way to do things, or about what things are good or bad to do, we are using “standards” or rules, of some kind, to make our judgments. Moral standards:

  • Are those related to matters we believe to be of serious consequence.
  • Are based on what society regards as good reasoning and not on authority.
  • Override any self-interest.
  • Are based on the impartiality of considerations (universality).
  • If transgressed against, are associated with feelings of guilt, shame, and are subject to being discussed as being morally right or wrong.

There must be moral aspects to any free-market system to help define the competitive nature of the system. Anti-competitive activities undermine the competitive nature of the free-market system. When companies take part in activities that are deceptive in nature, the marketplace is no longer competitive, just or fair. Once the competitive nature of the system is compromised, the market system is no longer "free."

Employers want to be served by their employees in ways that will advance the employer's self-interests. At the same time, and as a loyal agent of the employer, the manager/employee has a duty to serve the employer in ways that will advance the employer’s self-interests. Still, the employer has an obligation to society to be ethical in managing his/her business. Business people are residents of society, and as such, they must obey the laws of society. In addition to obeying laws, it is also in the best interest of the business and society, for companies to have and to adhere to a code of ethics.


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    • drmiddlebrook profile imageAUTHOR

      Sallie B Middlebrook PhD 

      6 years ago from Texas, USA

      Thank you, Jatinder Joshi, for visiting my Hub, for the compliment, and for sharing your comments. You're absolutely right, of course, that businesses "need to operate to a code of ethics ... acceptable to the society at large." Unfortunately for all of us, many do not. And, it's also true that even when some companies have such codes--in writing, they don't always live up to them. Violations, when brought to light, continue to eat away at our ability to trust business, in general. So sad, but true.

    • Jatinder Joshi profile image

      Jatinder Joshi 

      6 years ago from Whitby, Ontario, Canada

      Great article. Thank you for sharing.

      Businesses operate to satisfy the needs of the society in which they operate, and thus they need to operate to a code of ethics that is acceptable to the society at large, as you have very rightly pointed out in the end.

    • drmiddlebrook profile imageAUTHOR

      Sallie B Middlebrook PhD 

      7 years ago from Texas, USA

      Thank you so much, YaffeRealtyUSA, for reading, for your gracious compliments, and for observing the effort I put into the writing of this article. It is always great to hear that any company is doing its best to adhere to a code of ethics, and to act in ethical ways during the conduct of business and employment. I don't think any of us, even the most unethical, would want to live in a society with no standards of ethics or morality. Sadly, it is BECAUSE most of us desire, respect, and innocently expect others to respect and desire these things that makes it easy, sometimes, for us to be betrayed by those who feel the rules don't (or shouldn't) apply to them.

    • YaffeRealtyUSA profile image

      Federico Yaffe 

      7 years ago from Aventura, Florida

      Great article! The content is really thorough, it is clear you put some effort into it! good job! Ethics and Morality are an essential part of any office environment. At Yaffe International Realty we do our best to keep the things you are writing about always present in the work area.

    • drmiddlebrook profile imageAUTHOR

      Sallie B Middlebrook PhD 

      7 years ago from Texas, USA

      Hello dwachira. Thanks for reading, for the vote up, and the sharing. I appreciate all. I also agree with you that "ego" is often involved in the decisions we make at work, or in search of work. That is why it is so important, first, to know yourself and your values, and next, to be prepared to stand up for the things you value. I think when you feel you have to lie to get a job, that ultimately, you will have to continue to lie to keep that job. Being so "inauthentic" will then affect your personal development in negative ways. I don't have all the answers, but I appreciate the question you brought to the surface. "Should a person go against his/her moral values to satisfy either a personal need, or their ego?" That is a very good question, and possibly a topic for another Hub!

    • drmiddlebrook profile imageAUTHOR

      Sallie B Middlebrook PhD 

      7 years ago from Texas, USA

      Hi Maralexa. Thank you so much for the "Follow," and for the vote up, and all the other wonderful votes. You've gained a new fan as well; I think we have several similar interests. I'll be reading some of your Hubs soon.

      You're absolutely right about the Vandivier case. I cannot imagine anyone handling the situation better, other than simply resigning before participating in writing the report. Most of us, however, would not have been able to make that choice either, because we all have a need for financial security. Although he ended up without his job, anyway, I can understand that it would have been very difficult to make that choice when he was actually inside "the situation," wondering what to do from one moment to the next. What a horrible position to be in. It's much easier to see the right choice after everything is already said and done. I think the real bottom-line issue, for me, would have been what kind of company I wanted to work for. My "ideals" have led me to leave several places of employment, at the cost of my own financial security. But, I have no regrets that leaving was the right thing for me to do.

      It would be wonderful if people did not have to make such choices, as those Vandivier had to make. I'm not at the top of Maslow's hierarchy yet, but if I ever make it there, and "self-actualization" is my most important need, I'm praying that part of that need will also include my desire to act in morally responsible ways where I do not knowingly do anything that would harm others. Circumstances might indeed do more than character or personality, to determine human behavior, but I believe that circumstances also reveal character. I just hope if I'm ever tested in a similar manner as Vandivier, that I will do what I feel is right.

      Thanks for such a thought-provoking and stimulating response to my Hub.

    • Maralexa profile image

      Marilyn Alexander 

      7 years ago from Vancouver, Canada

      Many of us have reached a high level in Maslow's hierarchy of needs. As a result, we need to be more responsible for our ‘need for status, recognition, prestige and attention’. If we act in a manner that is considered by others (not involved in the situation) as immoral or unethical, it may be because of group pressure or the need to obey authority.

      This reminds me of Au fait’s hub entitled, 'Situation Psychology: Circumstances More Than Character or Personality Determine Human Behavior.'

      In the situation you describe with Vandivier and B.F. Goodrich, I don't know how he could have acted differently or, perhaps, better. There must have been tremendous pressure on him to do what he did (participate unethically in business). Both peer pressure and the pressure to obey authority in participating and then later in keeping his mouth shut, must have been unbearable.

      His choice to 'blow the whistle' had to end in his resignation (his choice showed his inability to go along with unethical behavior) or end in his dismissal (an organization can not keep employees who not only won't live by its 'rules' but who report unethical behavior to outside authorities.) I may not like this but it certainly follows Machiavelli's theories.

      Thank you for a very stimulating article. There are many parts to it and it raises many interesting questions. I enjoyed it immensely and could discuss it with you for hours.

      Voted up and interesting, useful, awesome. You have a new fan!

    • dwachira profile image

      Danson Wachira 

      7 years ago from Nairobi, Kenya

      Hi drmiddlebrook,

      Everyday people go against their moral values to please their ego, it could in a job interview of in job promotions. You did well to highlight this issue here. The society need to get the real meaning of holding morality and ethics, not only at working places but also in social day-to-day life. Great article, voted up and shared.

    • drmiddlebrook profile imageAUTHOR

      Sallie B Middlebrook PhD 

      7 years ago from Texas, USA

      Christine Miranda, if the principal and vice principal knew and didn't tell, they were either doing the same thing with the students of their choice, or the men had something else on them that kept them from talking for fear of reprisal. People who are doing the right thing don't hide wrongdoing for others. Those teachers reported to the principal and vice principal. That is supposed to mean something in the power structure of the school. The fact that it did not tells me something else is going on there. Shame on all of them, and may the justice system deal with them all, righteously.

    • Christine Miranda profile image

      Christine Miranda 

      7 years ago from My office.

      State pen...that's a good one. Now three male teachers from New Jersey are in the news for having sex with female students and the female principal and female vice principal knew and didn't report it. 5 adults with no morals or ethics! It's sad.

    • drmiddlebrook profile imageAUTHOR

      Sallie B Middlebrook PhD 

      7 years ago from Texas, USA

      Thanks for the read, and the vote up, Christine Miranda. I appreciate it so much! And I'm not so sure that horse (Penn State) is all that dead. Some in the academic community are saying what we've seen is only part of the problems there, and that instead of being called Penn State, the school needs to turn it around to become the "state pen." Let's pray that's not so.

    • Christine Miranda profile image

      Christine Miranda 

      7 years ago from My office.

      I hate to beat a dead horse but Penn State is a prime example of what can happen when individuals and officials have no ethics or morals. Good hub, well written. Voted up & more.

    • drmiddlebrook profile imageAUTHOR

      Sallie B Middlebrook PhD 

      7 years ago from Texas, USA

      Jpcme, thanks for reading. And you're right, it's so sad, but it's true. There is a lack of morality and ethics in business that is hurting us all.

    • jpcmc profile image

      JP Carlos 

      7 years ago from Quezon CIty, Phlippines

      If only more businesses professionals have morals what a wonderful world it would be. Nowadays being called professional does not necessarily mean you have morals, what a shame.


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