Managing Ethical Behavior In Business

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.

• 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

(Crane & Matten 2007, p. 202ff.)Managing (ethical) behaviour in business: Jacqueline Süral, Insa Tönnemann,

17/11/14

Principles of Service Operations & Organization, BUS110, Dr. Andreas E. Wagner

3.4 Informal ethics management approaches

Some people like Trevino and Nelson think, that organizations should change their organization’s culture and thus their values in order to be more “ethical”. But the socalled culture change is a difficult approach, because values are resistant to change.

The “cultural learning” brings the subcultural groups of an enterprise into focus. In this case, “surveillance, dialogue, and critique between these subcultural groups” are encouraged and this leads to ethical interchange. (Crane & Matten 2007, p. 204ff.)

3.5 Leadership

By managing ethical behaviour the role of the company’s leader is always important.

The companies’ leaders determine basic things as authority, norms and the company’s culture, which all together give the background for ethical