Ethics in Management - The Foundation of Trust

Published by MBA Skool Team, Published on August 13, 2015

People think management is all about making more and more profit and increasing your business but, only this is not true. This is only a part of it. In actual, for any organization to make long term profit and progress, it needs to follow certain ethics and principles. Employees should be treated well and in good manner, only then they will work properly and give their best to the organization.

Understanding of Ethics:

Ethics or ethical behaviour is also known as moral behaviour. The moral behaviour of a person is determined by four interrelated psychological components which are 1. moral sensibility, 2. moral judgement, 3. moral motivation, 4. moral character.

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Basic Ethical Principles:

A very basic ethical principle is the "Golden Rule" which states that "Treat others the way you would like to be treated" or "Do not do to others what you would not want done to you" . The golden rule was formulated by people from various religions and different sections of the society. So, it is applicable equally for everyone irrespective of their caste or religion. It is applicable globally.

Then, there came the First Principle of Natural Moral Law which states that "Good is to be done and pursued and bad is to be avoided". In other words, it can be said that "Seek truly ethical values and act in accordance with them" .

Then came the Human Dignity and the Personalistic Principle which states that "No human being should ever be treated as a mere means to an end. On the contrary, persons should be treated with respect and also with care and benevolence".

Then came the Principle of Common Good which states that "People, individuals and social groups within a community should contribute to the common good of their community in accordance with the capacities of each and should sacrifice individual interests when these conflict with the common good ".

Why good management requires ethics?

The need for good management can be understood in this way: when the manager of an organization takes any decision. His decision affects the whole organization and each and every person connected with that organization in either positive or negative manner which depends on the kind of decision he makes. When a manager takes decision it has two kinds of effects i.e. internal and external effect on the organization. Internal effects can be physical, operational and moral while external effects can be business results, impact on people and impact on environment. As we can see any wrong decision taken by the manager severely affects the whole community.

How ethics contribute to good management?

It has been seen from many studies that ethics is not only desirable for good management but, it's a necessity for good management. When management do not involve ethics, it become bad management. The organizations which have achieved a greater height and became highly successful have made this possible not only with hard work and determination but, only because it stood on the pillars of ethics. We must never forget that to become successful organizations need to have cooperation between its employees and the employer. Lack of cooperation affects the performance of the organization and if not rectified gradually leads to its downfall. Lack of ethics in management also affect employees motivation.

Necessity of Practical Wisdom:

In practical life many a times, situation comes when we need to make judgement between different values. It is the virtue of moral sound judgement. It is the practical wisdom which helps us analyse and make sound judgement when we have a confusion between which path to choose. Practical wisdom is required to exercise ethical principles and also, to find a mid-path between two irrational extremes.

Solving Ethical Dilemmas:

Ethical dilemma is a situation when a person faces a mental conflict between two duties. Both the duties seem important to him and he is unable to decide which one to choose. In such a condition, many times it happens that one of the duties is a pseudo duty and the other one is the authentic one. In such situations, pseudo duty must be identified as soon as possible and when we discover it, the dilemma is solved. Other dilemmas may be more complex and may require a lot of thinking and analysis to solve the dilemma.

Some other ethical dilemmas are Ethical duty versus obeying orders, Dilemma in irregular payments and Conflict between two ethical duties.

Making Sound Moral Judgement:

There are ethical theories which were given to help us solve ethical dilemma and make sound moral judgement. Basically, there are two mainstream group of theories based on duties (Deontologism) and theories which are based on evaluating and balancing the consequences of every action. This theory is known as Consequentialism among which Utilitarianism is most important. One of the most important theory is the Triple Font of Morality Theory which includes the virtues, values and consequences.

Possibility of applying Ethics in Management:

Many people have a view that ethics are unrealistic and cannot be applied to practical environment. They think that following ethics is fine unless and until the organization is running smoothly and properly but, applying ethics become impractical when managers have pressure of accomplishing bigger targets and when organization is facing lots of problems.

It becomes very difficult for a manager who follows ethics to survive in an environment which is already corrupt. In such an environment, corrupt people make pressure on him give bribe to do his work.

Also, there are situations when people don't have strong base of ethical values they themselves try to put their values at stake in return of handsome amount of money or getting quick promotion etc.


As we have seen in above discussion, applying ethics in management may be difficult in some situations but, not impossible. The most important thing is that managers need to carefully think about the situation, analyse it and then, use their imagination to solve the problem and look for a solution which can fulfil both criteria i.e. which is both ethical and feasible.


This article has been authored by Vinshi Choudhary from IIM Kashipur


1. Book- Management Ethics By Domenec Mele



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