Importance Of Ethical Behaviour In Business

2188 Words9 Pages
Managing (ethical) behaviour in business: Jacqueline Süral, Insa Tönnemann,
17/11/14
Principles of Service Operations & Organization, BUS110, Dr. Andreas E. Wagner
Introduction
“Business ethics was generally known to be an oxymoron” (Newton, Ford 2002, p.
x). Milton Friedman asserted once that “a company’s only social responsibility was to make as much money as possible for its stockholders”. But in consequence of the latest corporate scandals caused by moral hazard, this point of view has fundamentally changed and there have been numerous proceedings of managing
(ethical) uour in business. Hence, companies today not only focus primarily on their employee’s behaviour but also develop techniques concerning the management’s social responsibilities.
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• A “social” report deals with much more as environmental issues, for example human rights, employee conditions or community relations.
• Reports covering “sustainability” focus on three main issues, which are of social, economical and environmental nature.
• The word for assessing performance is still pretty unclear. Still it is definite that accounting includes auditing and reporting. (Crane & Matten 2007, p.
195ff.)
3.2 Social Accounting
Social accounting means assessing ethical performance in social, ethical and environmental issues. This report is dedicated to stakeholders and different to financial accounting not yet a must by law.
Due to the unaccountability of ethical issues, there are no clear regulations on composing the social accounting report. Hence, it is difficult to find out the actual impact of each activity.
Social reports are reflections of the companies and stakeholders mutual values.
The so-called Stakeholder satisfaction surveys (communication with stakeholders and finding out about their opinions) have become extremely important parts of social accounting. The social auditing has also become more and more
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The companies’ leaders determine basic things as authority, norms and the company’s culture, which all together give the background for ethical decisionmaking.

Dealing with leadership, it is important to distinguish leadership from management,
Managers give order by organizing and controlling, while leaders are moral directors.
They show their employees values; they inspire and motivate them or offer a direction. In this way, they also shape the ethical decision making of their employees. Hence, it is essential to form an effective ethical leadership. (Crane &
Matten 2007, p. 205ff.)
Conclusion
To sum up, companies today are obligated to act in an ethical manner, whereas profitability was their first intention in the past. Nowadays, ethical behaviour and profitability do not seem to be contradictory anymore. Moreover, organizations need ethical values to survive and make money in the long run, since stakeholders would respond to companies’ wrongdoing. That is why, it is important to manage ethical behaviour. Managing ethical behaviour can be quite a challenge though due to the unaccountability of impact of ethical actions. However, it is a good idea to
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