Description
The documentation describes on personal values and business decisions.
Personal values and business decisions
Our values guide how we behave as individuals, and collectively, our behaviors determine how we are perceived as a company. At the same time we are responsible for making business decisions that are consistent with our commitment to compliance and ethics. Our conduct on the job will have a major impact on the mission and vision of the company. Thus we need to understand the importance of personal values in decision making process. There is a strong co-relationship between personal values and business decisions and before understanding it lets understand them individually first. Values • •
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A principle, standard, or quality considered worthwhile or desirable. Values are a major motivating force for people because they categorise how people attach meaning, worth and importance to things. When a person's values are matched, they feel complete and satisfied. If values are not met, there is a sense of dissatisfaction, unease or incongruity which is reflected in the work they do.
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Values are those things that really matter to each of us ... the ideas and beliefs we hold as special. For example, Caring for others is a value; so is the freedom to express our opinions.
Decision • • • • A decision is a choice made from among alternative courses of action that are available. The purpose of making a decision is to establish and achieve goals and objectives. A decision is a judgment or conclusion reached or given. This definition emphasizes the choice, the selection of a single option based on a variety of factors.
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Once there are a number of options, the values inherent in the options will influence the decision-maker's selection. The more the options vary, the greater will be the role of those values in the decision making process.
Core Values There are always major discussions in society over values. Be it family, personal or business they are attributes humans strive to attain. Our morals, beliefs and values shape our lives and effect our daily decisions and give us the power to take action. In Business we use core values as a foundational statement that guides us in evaluation our options, and inventing new ones. If one understands the goals that motivates us, in turn our actions will directly have a massive impact on our actions. Also business owners use core values to eliminate personal friction and give him the ability to achieve the goals and objectives. Most start up business owners find for a guide to create their company mission statement. Core Values are Important for the success to the organization or individual. They play a very important role in the company they are the ones which forma the pillars for the company and also act as the code of conduct. Some of the important core values code of conduct for the companies is as follows 1. Courage The first place to start is for every individual to become aware of their core values and to have the courage and discipline to live out of them in all aspects of their lives. This is one of the most important core values. 2. Honesty Honesty is the human quality of communicating and acting truthfully, in accordance with a sense of fairness and sincerity. This includes all varieties of communication, both verbal and non-verbal. Honesty implies a lack of deceit. A statement can be
strictly true and still be dishonest if the intention of the statement is to deceive its audience. Similarly, a falsehood can be spoken honestly if the speaker actually believes it to be true. Honesty is typically considered virtuous behaviour, and has strong positive connotations in most situations. A principal reason for this may be that honesty simplifies communication, in that honest statements can be trusted at face value, not necessarily as true, but as genuinely believed. Additionally, honesty helps to form bonds of trust in human relationships 3. Respect To give particular attention to, show consideration for, or hold in high or special regard. In organizations it plays a very vital role and one of the main questions which often comes to an individual’s mind is whether respect should be earned or respect should be given? according to me respect is one of those thing which one should earn until and unless one earns it one would not realize its importance and if it’s given then the person will not know for what reason is he given so it may be just because the person may be high in the hierarchy or just because he’s an influential person. 4. Responsibility The word responsibility is surprisingly modern. It is also, as Paul Ricoeur has observed, “not really well-established within the philosophical tradition” (2000: 11). This is reflected in the fact that we can locate two rather different philosophical approaches to responsibility “What is it to be responsible?” is most often asked by philosophers as a question about the foundations of moral agency. What sort of creature can properly be held responsible for its actions? The simple answer is: a normal human adult. To explain and justify this reply, philosophers tend to turn to psychological and metaphysical features of normal adults, such as free will. We might also approach the same issue with a somewhat different emphasis: What features of (normal, adult) human interaction are involved in our holding one another responsible? In organizations responsibility is very important. There are so many
tasks to do in an organization and until and unless someone takes the responsibility of doing it cannot be done. Taking responsibility is like taking a big risk as the person does not know whether the work would be done or no. 5. Fairness Demonstrating fairness, equity, impartiality, righteous action, to some, justice is about conformity to truth. To others, it’s about conformity to law but law and justice are 2 different concepts. “The law is something we must live with. Justice is somewhat harder to come by.” Sherlock Holmes, in The Case of the Red Circle. It also means doing justice. Justice is one such value which means doing the right thing with the right person and looking at the work equally. This is one value if not followed properly then this would spoil the entire organization and also would lead too much of the politics in the organizations. One should be fair with each and every employee of the organization.
Decision-Making So how are personal values and decision making related? Our personal values very much determine our goals and outcomes in life. The goals we choose are the outer expression of our personal values. And decision making is similarly based upon our core values. For a start, even choosing your goals is decision making! A person's values will determine how they perceive any particular situation. Someone who values 'safety' will approach a situation checking for safety versus danger. A person who values 'excitement' will have a different perspective on the same situation and will be searching for different kinds of experiences.
So we can understand how personal values and decision making drive each other. The values determine the outcomes set and the decision making designed to achieve them. The decision making, in turn, is organised to ensure the personal values are matched. Personal values may conflict with ethical decision making if those personal values are different than the organizational norms of the business or institution. These personal values could be rooted in religious beliefs or a family norm that shunned or promoted a certain concept. These could be insignificant to the organization but the nuance of that concept could start a domino effect that could cause dissention among the corporate or institutional structure. Before a leader makes an ethical decision, they should make sure that the decision is based on the organizational norm rather than their own value system. If a person bases their life on personal values, then it is imperative that they uses a system of checks and balances to make sure those values do not conflict with the ethics of the company or organization. A belief as simple as the idea that all negative behaviour must be confronted could be against the corporate structure where some negative behaviour is tolerated while others are discouraged.
Personal Values and Professional Responsibilities
If managers were robots, their personal values would not matter. They would process the facts of a situation and their responsibilities in exactly the same way and make the same decisions. But values differ from manager to manager, sometimes greatly, and this raises two important questions. One is empirical: How do managers’ values influence their work and their efforts to meet their responsibilities? The other is ethical: How should a manager’s values influence his or her work? The Ideal World
The ethical question is easier to answer, at least in general terms. Managers should believe strongly in the missions of their organizations and be deeply committed to meeting their professional responsibilities. This is a demanding, idealistic standard, but many of the best managers aspire to achieve it. “Alignment” is a conventional description for this ethical ideal, but this mechanistic term underplays the passion, commitment, and intensity of successful leaders. They do not succeed by checking items off a list or by running faster and faster, like rodents on a treadmill, to get larger doses of monetary pellets. The work of successful leaders expresses who they are and what they care deeply about. Their responsibilities and commitments are central to their identities. It is easy, of course, to romanticize the role of commitment in outstanding leadership. Woody Allen’s famous observation that 80% of success is just showing up contains a large element of truth. And management work is usually hard, sometimes frustrating, and at times exhausting. But this is precisely why enduring success depends on deep personal commitment. In Peter Drucker’s words, “Leadership is not rank or privileges, titles or money. Leadership is responsibility.” Leaders’ values also send powerful messages to their organizations—about what is really important and how members of the organization should treat one another and outside groups. Some of these messages are communicated through words, some through actions, and some unconsciously. For example, research by psychologist Daniel Goleman indicates that a manager’s emotions and moods resonate throughout an organization and directly influence its bottom line. In short, a high ethical ideal asks managers to commit themselves personally to common values, such as honesty, respect, and hard work, and to whatever specific values, such as creativity, service to customers, or attention to detail, reinforce their firm’s strategy. The Real World
Unfortunately, there are at least four obstacles that can keep managers from working and living by their personal values. Sustaining commitment. Management work is hard, competitors are often relentless, corporate politics diverts time and energy, macroeconomic forces sometimes swamp years of effort, and managers get no exemption from the vicissitudes of life. Then it becomes hard for them to sustain the intensity and commitment required to make good on challenging and often competing responsibilities. Decades ago, Chester Barnard, one of the most respected authorities on management, wrote, “It seems to me inevitable that the struggle to maintain cooperation among men should as surely destroy some men morally as battle destroys them physically.” Barnard, who had run a company himself, knew that management was not the upbeat adventure described in many business best-sellers. Simply maintaining cooperation among other people was a “struggle” that taxed, sometimes severely, the most capable and determined executives. Unbridled self-interest. In The Wealth of Nations, Adam Smith wrote, “It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our necessities but of their advantages.”4 Capitalism accepts Smith’s insight. It treats self-interest as an innately human trait and —through markets and incentives—transmutes it into behaviour benefiting others. But sometimes self-interest distorts or overwhelms managers’ decisions. They ignore their roles as agents, fiduciaries, and responsible members of organizations and society. In the recent scandals, vast sums of money were dangled in front of many executives and some grabbed at it, regardless of the law, ethics, or responsibilities to their organizations.
Self-interest is especially pernicious when it operates unconsciously. Until recently, the unconscious mind was viewed in Freudian terms, as a seething cauldron of primal instincts. Recent work in cognitive neuroscience now compares it to a computer operating system. In other words, much of our mind operates silently, powerfully, and inaccessibly. Unconscious forces structure and drive much of what we perceive, feel, think, and do. We are often, as the title of a recent study puts it, strangers to ourselves. This view is disconcerting, but a growing number of experiments confirm it. One study, for example, involved a large group of professional auditors from a public accounting firm. All of them were shown the same five ambiguous accounting vignettes and asked to make objective judgments about the accounting. But half the group had been told to assume it was the auditor of the company who produced the accounting. In the end, this group was 30% more likely to conclude that the accounting complied with generally accepted accounting principles.6 In other words, although the auditors were trying to be objective, they were influenced by an unconscious bias toward clients, even when they were only pretending to have a client. Right-versus-right conflicts. Managers are often advised to follow their moral compass, especially when things get tough. But sometimes their moral compass points them in two different directions. Suppose, for example, you know that Ted, who reports to you, will be laid off next month. Suppose also that you have promised to keep this information confidential. What do you say if Ted tells you he has been hearing rumors and asks you, point-blank, if he is going to lose his job? Do you tell the truth or keep your promise? Cases like this are conflicts between right and right, not between right and wrong. When this happens, the needle on the moral compass swings back and forth, and a manager’s personal values are no longer a straightforward guide to responsible action.
Right-versus-wrong situations. In many situations, managers are clear about their personal values and know what they should do. But they hesitate. The problem is not flagging commitment or self interest or a right-versus-right dilemma. It is strong pressure to do something they think is morally dubious or downright unethical or illegal—like booking sales in this quarter for goods that have not been shipped. Sometimes, the pressure to cross the line comes directly and explicitly from a superior, accompanied by a threat or inducement. Sometimes, the boss just winks, hints, and nudges—in order to avoid culpability, if something goes wrong. And, in other cases, no one asks anyone to do anything, but a manager feel that something needs to get done, regardless of ethics or legality. These situations are the greatest departure from the ideal world described earlier. They involve the prospect of doing something seriously wrong or illegal, with potentially dire consequences for the individuals involved and for their organization. In other situations, the problem is best described as “right versus almost wrong.” These cases fall in gray areas. Some involve common practices that are ethically dubious, like aggressive bluffing. Others involve the relentless pursuit of loopholes, emphasis on the letter rather than the spirit of agreements and contracts, or efforts to get as close as possible to a legal or ethical boundary without crossing it.
Solutions to Overcome the Difference
When a manager faces the challenge of sustaining commitment, the answer may be as simple as a vacation or as complex as a new assignment or a new job. When the problem is excessive self-interest or a right-versus-right conflict, the answer often lies in personal reflection, careful attention to one’s responsibilities, and conversations with mentors, trusted colleagues, and friends.
The economist Albert Hirschman developed a powerful, practical way to describe the basic options.
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Exit - At first glance, this option seems clear. It involves quitting and looking for another job. In fact, managers are sometimes advised to keep some money in a “Go to Hell” account, in case they have to quit a job on short notice. In reality, however, this option is not so simple. Exits, for example, can be quiet —“I’m leaving to pursue other options”—or they can be noisy—“I’m quitting and going to the SEC”—or they can be somewhere in between. Moreover, the ethics of exiting are tricky. Exit lets responsible people escape bad situations, but, as a result, perpetrators may get more room to maneuver. In other words, the exit option cannot be assessed in isolation. It has to be compared to the alternatives.
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Loyalty - Initially, the ethics of this option seem straightforward—and quite dubious. Doing what you are told to do or expected to do is wrong, if it involves illegal or unethical behaviour. But sometimes situations fall in gray areas. A newcomer might object to an industry practice, like very hard, almost ruthless bargaining, but later learn that these are the long-established rules by which everyone plays. In other cases, responsible people do not exit or even object to matters that make them uncomfortable—because they decide to fight these battles another day, or because it will make it hard for them to achieve other worthwhile goals. These gray-area cases have to be handled with care. Some are slippery slopes, and all set an example for others in an organization. Strong personal values are crucial for drawing lines in these blurry situations.
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Voice - Voice involves stepping forward, asking questions, offering alternatives, persuading, and sometimes warning and objecting. It is basically shorthand for the art of managing very difficult situations, and what voice means depends heavily on the specifics of particular cases. Sometimes, voice means literally saying what one thinks: Bad decisions are often avoided only because someone has the courage to speak their convictions.
Other cases are more complicated. Telling bosses that their ideas are unethical usually leads nowhere. The art in these situations is finding ways to caution, warn, and persuade and offering alternatives to dubious propositions. This is very hard work, requiring sensitivity, diplomacy, imagination, and a strong sense for what is practical. It also requires careful thought about exit and loyalty—because, if voice fails, these are the fallback positions. Personal values may conflict with ethical decision making if those personal values are different than the organizational norms of the business or institution. These personal values could be rooted in religious beliefs or a family norm that shunned or promoted a certain concept. These could be insignificant to the organization but the nuance of that concept could start a domino effect that could cause dissention among the corporate or institutional structure. Before a leader makes an ethical decision, they should make sure that the decision is based on the organizational norm rather than their own value system. A belief as simple as the idea that all negative behaviour must be confronted could be against the corporate structure where some negative behaviour is tolerated while others are discouraged
Process for Avoiding Conflict A strategy of eliminating the chance for this conflict is simple communication. 1. The leader should talk with their immediate subordinates or middle level managers and find out their opinions about the personal value and see if it is a conflict of interest. 2. The middle managers should then ask their subordinates about the issue without disclosing the decision that should be made. 3. The consensus of the ethical dilemma should provide enough information so that the leader can find out if the personal value is detrimental or not. 4. With that information the leader can make their decision with a firm belief that it is ethical and their personal value is not reflected in it.
5. If a person bases their life on personal values, then it is imperative that they uses a system of checks and balances to make sure those values do not conflict with the ethics of the company or organization.
Conclusion
The concern for ethical decision-making among the regulators, social groups, and managers has substantially increased in recent years following the failure of some of the prominent business organizations owing to strong social condemnation of some of their business practices. Ethical problems are problems of choice owing to the conflicting nature of values. Individual values strongly influence the choices of managers. They manifest themselves as interests and motives and thus determine one’s behaviour. Thus ethical problems occur when the individual values and the organisational norms conflict with each other. The intensity of the problem can vary depending upon how strong the individual’s values are and what the consequences of compliance or noncompliance of the organizational standards are. In most cases, individual values have greater influence on the decision-making than the organization’s ethical standards. Hence, the improved concern for ethics in decision making requires an alignment of individual values with organizational ethics. Often, due to conflicting interests of different stakeholders, managers in organizations face the dilemma of identifying the righteous decision as perceived by these stakeholders. Hence, it is important to guide managers — by articulating and communicating unambiguously — regarding what is right and what is not. Intense socialization will be required at different levels to imbibe organizational values and ethical practices. The socialization that leads to willing adoption of practices is likely to lead to better implementation of ethical practices. The scope of socialization could be
extended to include the family members of employees to develop a sense of pride among them for being ethical.
Case example: TISCO
Nearly a century old, Tata Iron and Steel Company Ltd. (TISCO), more popularly known as Tata Steel, is one of India’s oldest companies. Established in 1907 by Mr. Jamsetji Tata — a visionary — it is Asia’s first and India’s largest integrated private sector steel company. Since its inception, the company has focused on the customer, operational excellence, employee welfare, organizational leadership, and social responsibilities and citizenship. Consistent with its thrust on these dimensions, the company is one of the most respected companies in the country for its value-based practices, ethical and dynamic practices, and competitive performance. The name ‘Tata’ has always been synonymous with trust. The statement of purpose of the Tata group (Tata Steel belongs to this group) explicitly seeks to improve the quality of life in the communities it serves. It says, “Our heritage of returning to society what we earn evokes trust among consumers, employees, shareholders, and the community. This heritage will be continuously enriched by formalizing the high standards of behaviour expected from employees and companies.” The values and principles that had governed the company (and Tata group) were articulated for the first time in 1998. It was in this year that the company formally published its ‘code of conduct.’ This document was aimed to guide each employee on the values, ethics, and business principles expected of them Among other things, the implementation of the Tata code of conduct was mandatory for the relatively autonomous group companies to leverage on ‘Tata’ as a brand. The successful implementation of this code of conduct was not a matter of choice for Tata Steel. One of the senior managers of the company stated:
“Deciding to implement the Tata code of conduct was easy for us. We had always believed in ethical practices. However, we had to ensure that every one of more than 50,000 employees practised the code.” To implement the code of conduct, the company created a new position of ‘ethics counsellor’ at the senior management level. He was internally identified and made to report to the Managing Director of the company for the day-to-day functioning. However, he directly reported to the group headquarters. In his own words: “The company management encourages me to interact directly with the group headquarters. On my part, I discuss most of the issues with the MD to facilitate better voluntary implementation of the code of conduct by the employees.” In every department, one person was identified by the head of the department to additionally look after the implementation of the code of conduct in the department. These ethics coordinators reported to the ethics counsellor directly on matters related to ethics. However, for other purposes, they continued to report to the heads of their respective departments. The ethics coordinators in consultation with the ethics counsellor organized a large number of awareness programmes every year. Such programmes were extended to the other stakeholders like suppliers and dealers of the company. Having succeeded in creating awareness among the employees, the ethics counsellor organized nearly 15 awareness programmes for the families of the executives. The family members were made to feel proud that one of them was part of a ‘value-based’ organization. The ethics counsellor stated: “We realized that it was not adequate to create awareness among the employees alone. Frequently, executives succumb to the temptation of accepting favours owing to the unreasonable expectations of the family members. Further, we also realized that if the families of the employees could take pride in the honesty of Tata Steel employees, they
would encourage the employees to follow the code of conduct in letter and spirit. Formal control systems to uphold the code of conduct do not work owing to a lack of direct monitoring mechanisms.” The workshops for the families were primarily restricted to the senior management levels. The ethics counsellor stated that implementation of the code was more critical for this group of employees. “Owing to larger responsibilities, they experience more temptations for violation of the code,” he explained. Having organized the workshops, the company looked into the possibility of integrating ethics in the performance management system. Every month, one ethics coordinator was rewarded on the basis of quality of work. The employees and other stakeholders were rewarded whenever they demonstrated unique behavior of high moral value. However, the company decided not to make it a part of performance appraisal system as the management felt that following the code was not a matter of discretion. Any proven violation of the code was viewed seriously. In fact, one of the employees was dismissed from the company for violation of the code of conduct. The news was widely publicized though the name of the employee was not revealed. The outcome of these efforts was found to be encouraging. One of the executives stated, “I received an honorarium of Rs. 2,000 for delivering a lecture in one of the prestigious management institutes. I proactively asked the ethics counsellor whether I could accept such payment. I did not want to violate the code of conduct even by mistake. I strongly believe in the ethics of the company.” The executives were extremely happy when they realized the advantage of the code of conduct in maintaining their relationships with external stakeholders. The managers found it difficult to interact with government officials without arranging for any favours in the early days after implementing the code of conduct. However, the executives continued to insist on the directives of the top management and the principles of
the code of conduct. Slowly, the officials realized that the company would continue to follow the code honestly. They stopped seeking gratifications from the company. One of the managers summarized the issue in the following words: “We are willing to provide any information required to the officials. We are also willing to wait for clearances and certificates from the government officials. However, we cannot grant any favours to them. Now, these officials respect us for our values and ethics. They treat us differently. I now feel better and more comfortable while interacting with external agencies. During interactions with the managers, it was observed that the employees took pride in their association with a company that believed in the code of conduct. This sense of pride enhances the commitment of employees (Bhat and Maheshwari, 2004) which, in turn, influences the performance of the company. Even interviews with the retired employees reflected a high respect for the company. Such behaviour of the employees enhances the image of an organization, adds to the positive response of external stakeholders towards the organization, and reduces the transactional cost.
doc_389151027.doc
The documentation describes on personal values and business decisions.
Personal values and business decisions
Our values guide how we behave as individuals, and collectively, our behaviors determine how we are perceived as a company. At the same time we are responsible for making business decisions that are consistent with our commitment to compliance and ethics. Our conduct on the job will have a major impact on the mission and vision of the company. Thus we need to understand the importance of personal values in decision making process. There is a strong co-relationship between personal values and business decisions and before understanding it lets understand them individually first. Values • •
•
A principle, standard, or quality considered worthwhile or desirable. Values are a major motivating force for people because they categorise how people attach meaning, worth and importance to things. When a person's values are matched, they feel complete and satisfied. If values are not met, there is a sense of dissatisfaction, unease or incongruity which is reflected in the work they do.
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Values are those things that really matter to each of us ... the ideas and beliefs we hold as special. For example, Caring for others is a value; so is the freedom to express our opinions.
Decision • • • • A decision is a choice made from among alternative courses of action that are available. The purpose of making a decision is to establish and achieve goals and objectives. A decision is a judgment or conclusion reached or given. This definition emphasizes the choice, the selection of a single option based on a variety of factors.
•
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Once there are a number of options, the values inherent in the options will influence the decision-maker's selection. The more the options vary, the greater will be the role of those values in the decision making process.
Core Values There are always major discussions in society over values. Be it family, personal or business they are attributes humans strive to attain. Our morals, beliefs and values shape our lives and effect our daily decisions and give us the power to take action. In Business we use core values as a foundational statement that guides us in evaluation our options, and inventing new ones. If one understands the goals that motivates us, in turn our actions will directly have a massive impact on our actions. Also business owners use core values to eliminate personal friction and give him the ability to achieve the goals and objectives. Most start up business owners find for a guide to create their company mission statement. Core Values are Important for the success to the organization or individual. They play a very important role in the company they are the ones which forma the pillars for the company and also act as the code of conduct. Some of the important core values code of conduct for the companies is as follows 1. Courage The first place to start is for every individual to become aware of their core values and to have the courage and discipline to live out of them in all aspects of their lives. This is one of the most important core values. 2. Honesty Honesty is the human quality of communicating and acting truthfully, in accordance with a sense of fairness and sincerity. This includes all varieties of communication, both verbal and non-verbal. Honesty implies a lack of deceit. A statement can be
strictly true and still be dishonest if the intention of the statement is to deceive its audience. Similarly, a falsehood can be spoken honestly if the speaker actually believes it to be true. Honesty is typically considered virtuous behaviour, and has strong positive connotations in most situations. A principal reason for this may be that honesty simplifies communication, in that honest statements can be trusted at face value, not necessarily as true, but as genuinely believed. Additionally, honesty helps to form bonds of trust in human relationships 3. Respect To give particular attention to, show consideration for, or hold in high or special regard. In organizations it plays a very vital role and one of the main questions which often comes to an individual’s mind is whether respect should be earned or respect should be given? according to me respect is one of those thing which one should earn until and unless one earns it one would not realize its importance and if it’s given then the person will not know for what reason is he given so it may be just because the person may be high in the hierarchy or just because he’s an influential person. 4. Responsibility The word responsibility is surprisingly modern. It is also, as Paul Ricoeur has observed, “not really well-established within the philosophical tradition” (2000: 11). This is reflected in the fact that we can locate two rather different philosophical approaches to responsibility “What is it to be responsible?” is most often asked by philosophers as a question about the foundations of moral agency. What sort of creature can properly be held responsible for its actions? The simple answer is: a normal human adult. To explain and justify this reply, philosophers tend to turn to psychological and metaphysical features of normal adults, such as free will. We might also approach the same issue with a somewhat different emphasis: What features of (normal, adult) human interaction are involved in our holding one another responsible? In organizations responsibility is very important. There are so many
tasks to do in an organization and until and unless someone takes the responsibility of doing it cannot be done. Taking responsibility is like taking a big risk as the person does not know whether the work would be done or no. 5. Fairness Demonstrating fairness, equity, impartiality, righteous action, to some, justice is about conformity to truth. To others, it’s about conformity to law but law and justice are 2 different concepts. “The law is something we must live with. Justice is somewhat harder to come by.” Sherlock Holmes, in The Case of the Red Circle. It also means doing justice. Justice is one such value which means doing the right thing with the right person and looking at the work equally. This is one value if not followed properly then this would spoil the entire organization and also would lead too much of the politics in the organizations. One should be fair with each and every employee of the organization.
Decision-Making So how are personal values and decision making related? Our personal values very much determine our goals and outcomes in life. The goals we choose are the outer expression of our personal values. And decision making is similarly based upon our core values. For a start, even choosing your goals is decision making! A person's values will determine how they perceive any particular situation. Someone who values 'safety' will approach a situation checking for safety versus danger. A person who values 'excitement' will have a different perspective on the same situation and will be searching for different kinds of experiences.
So we can understand how personal values and decision making drive each other. The values determine the outcomes set and the decision making designed to achieve them. The decision making, in turn, is organised to ensure the personal values are matched. Personal values may conflict with ethical decision making if those personal values are different than the organizational norms of the business or institution. These personal values could be rooted in religious beliefs or a family norm that shunned or promoted a certain concept. These could be insignificant to the organization but the nuance of that concept could start a domino effect that could cause dissention among the corporate or institutional structure. Before a leader makes an ethical decision, they should make sure that the decision is based on the organizational norm rather than their own value system. If a person bases their life on personal values, then it is imperative that they uses a system of checks and balances to make sure those values do not conflict with the ethics of the company or organization. A belief as simple as the idea that all negative behaviour must be confronted could be against the corporate structure where some negative behaviour is tolerated while others are discouraged.
Personal Values and Professional Responsibilities
If managers were robots, their personal values would not matter. They would process the facts of a situation and their responsibilities in exactly the same way and make the same decisions. But values differ from manager to manager, sometimes greatly, and this raises two important questions. One is empirical: How do managers’ values influence their work and their efforts to meet their responsibilities? The other is ethical: How should a manager’s values influence his or her work? The Ideal World
The ethical question is easier to answer, at least in general terms. Managers should believe strongly in the missions of their organizations and be deeply committed to meeting their professional responsibilities. This is a demanding, idealistic standard, but many of the best managers aspire to achieve it. “Alignment” is a conventional description for this ethical ideal, but this mechanistic term underplays the passion, commitment, and intensity of successful leaders. They do not succeed by checking items off a list or by running faster and faster, like rodents on a treadmill, to get larger doses of monetary pellets. The work of successful leaders expresses who they are and what they care deeply about. Their responsibilities and commitments are central to their identities. It is easy, of course, to romanticize the role of commitment in outstanding leadership. Woody Allen’s famous observation that 80% of success is just showing up contains a large element of truth. And management work is usually hard, sometimes frustrating, and at times exhausting. But this is precisely why enduring success depends on deep personal commitment. In Peter Drucker’s words, “Leadership is not rank or privileges, titles or money. Leadership is responsibility.” Leaders’ values also send powerful messages to their organizations—about what is really important and how members of the organization should treat one another and outside groups. Some of these messages are communicated through words, some through actions, and some unconsciously. For example, research by psychologist Daniel Goleman indicates that a manager’s emotions and moods resonate throughout an organization and directly influence its bottom line. In short, a high ethical ideal asks managers to commit themselves personally to common values, such as honesty, respect, and hard work, and to whatever specific values, such as creativity, service to customers, or attention to detail, reinforce their firm’s strategy. The Real World
Unfortunately, there are at least four obstacles that can keep managers from working and living by their personal values. Sustaining commitment. Management work is hard, competitors are often relentless, corporate politics diverts time and energy, macroeconomic forces sometimes swamp years of effort, and managers get no exemption from the vicissitudes of life. Then it becomes hard for them to sustain the intensity and commitment required to make good on challenging and often competing responsibilities. Decades ago, Chester Barnard, one of the most respected authorities on management, wrote, “It seems to me inevitable that the struggle to maintain cooperation among men should as surely destroy some men morally as battle destroys them physically.” Barnard, who had run a company himself, knew that management was not the upbeat adventure described in many business best-sellers. Simply maintaining cooperation among other people was a “struggle” that taxed, sometimes severely, the most capable and determined executives. Unbridled self-interest. In The Wealth of Nations, Adam Smith wrote, “It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our necessities but of their advantages.”4 Capitalism accepts Smith’s insight. It treats self-interest as an innately human trait and —through markets and incentives—transmutes it into behaviour benefiting others. But sometimes self-interest distorts or overwhelms managers’ decisions. They ignore their roles as agents, fiduciaries, and responsible members of organizations and society. In the recent scandals, vast sums of money were dangled in front of many executives and some grabbed at it, regardless of the law, ethics, or responsibilities to their organizations.
Self-interest is especially pernicious when it operates unconsciously. Until recently, the unconscious mind was viewed in Freudian terms, as a seething cauldron of primal instincts. Recent work in cognitive neuroscience now compares it to a computer operating system. In other words, much of our mind operates silently, powerfully, and inaccessibly. Unconscious forces structure and drive much of what we perceive, feel, think, and do. We are often, as the title of a recent study puts it, strangers to ourselves. This view is disconcerting, but a growing number of experiments confirm it. One study, for example, involved a large group of professional auditors from a public accounting firm. All of them were shown the same five ambiguous accounting vignettes and asked to make objective judgments about the accounting. But half the group had been told to assume it was the auditor of the company who produced the accounting. In the end, this group was 30% more likely to conclude that the accounting complied with generally accepted accounting principles.6 In other words, although the auditors were trying to be objective, they were influenced by an unconscious bias toward clients, even when they were only pretending to have a client. Right-versus-right conflicts. Managers are often advised to follow their moral compass, especially when things get tough. But sometimes their moral compass points them in two different directions. Suppose, for example, you know that Ted, who reports to you, will be laid off next month. Suppose also that you have promised to keep this information confidential. What do you say if Ted tells you he has been hearing rumors and asks you, point-blank, if he is going to lose his job? Do you tell the truth or keep your promise? Cases like this are conflicts between right and right, not between right and wrong. When this happens, the needle on the moral compass swings back and forth, and a manager’s personal values are no longer a straightforward guide to responsible action.
Right-versus-wrong situations. In many situations, managers are clear about their personal values and know what they should do. But they hesitate. The problem is not flagging commitment or self interest or a right-versus-right dilemma. It is strong pressure to do something they think is morally dubious or downright unethical or illegal—like booking sales in this quarter for goods that have not been shipped. Sometimes, the pressure to cross the line comes directly and explicitly from a superior, accompanied by a threat or inducement. Sometimes, the boss just winks, hints, and nudges—in order to avoid culpability, if something goes wrong. And, in other cases, no one asks anyone to do anything, but a manager feel that something needs to get done, regardless of ethics or legality. These situations are the greatest departure from the ideal world described earlier. They involve the prospect of doing something seriously wrong or illegal, with potentially dire consequences for the individuals involved and for their organization. In other situations, the problem is best described as “right versus almost wrong.” These cases fall in gray areas. Some involve common practices that are ethically dubious, like aggressive bluffing. Others involve the relentless pursuit of loopholes, emphasis on the letter rather than the spirit of agreements and contracts, or efforts to get as close as possible to a legal or ethical boundary without crossing it.
Solutions to Overcome the Difference
When a manager faces the challenge of sustaining commitment, the answer may be as simple as a vacation or as complex as a new assignment or a new job. When the problem is excessive self-interest or a right-versus-right conflict, the answer often lies in personal reflection, careful attention to one’s responsibilities, and conversations with mentors, trusted colleagues, and friends.
The economist Albert Hirschman developed a powerful, practical way to describe the basic options.
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Exit - At first glance, this option seems clear. It involves quitting and looking for another job. In fact, managers are sometimes advised to keep some money in a “Go to Hell” account, in case they have to quit a job on short notice. In reality, however, this option is not so simple. Exits, for example, can be quiet —“I’m leaving to pursue other options”—or they can be noisy—“I’m quitting and going to the SEC”—or they can be somewhere in between. Moreover, the ethics of exiting are tricky. Exit lets responsible people escape bad situations, but, as a result, perpetrators may get more room to maneuver. In other words, the exit option cannot be assessed in isolation. It has to be compared to the alternatives.
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Loyalty - Initially, the ethics of this option seem straightforward—and quite dubious. Doing what you are told to do or expected to do is wrong, if it involves illegal or unethical behaviour. But sometimes situations fall in gray areas. A newcomer might object to an industry practice, like very hard, almost ruthless bargaining, but later learn that these are the long-established rules by which everyone plays. In other cases, responsible people do not exit or even object to matters that make them uncomfortable—because they decide to fight these battles another day, or because it will make it hard for them to achieve other worthwhile goals. These gray-area cases have to be handled with care. Some are slippery slopes, and all set an example for others in an organization. Strong personal values are crucial for drawing lines in these blurry situations.
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Voice - Voice involves stepping forward, asking questions, offering alternatives, persuading, and sometimes warning and objecting. It is basically shorthand for the art of managing very difficult situations, and what voice means depends heavily on the specifics of particular cases. Sometimes, voice means literally saying what one thinks: Bad decisions are often avoided only because someone has the courage to speak their convictions.
Other cases are more complicated. Telling bosses that their ideas are unethical usually leads nowhere. The art in these situations is finding ways to caution, warn, and persuade and offering alternatives to dubious propositions. This is very hard work, requiring sensitivity, diplomacy, imagination, and a strong sense for what is practical. It also requires careful thought about exit and loyalty—because, if voice fails, these are the fallback positions. Personal values may conflict with ethical decision making if those personal values are different than the organizational norms of the business or institution. These personal values could be rooted in religious beliefs or a family norm that shunned or promoted a certain concept. These could be insignificant to the organization but the nuance of that concept could start a domino effect that could cause dissention among the corporate or institutional structure. Before a leader makes an ethical decision, they should make sure that the decision is based on the organizational norm rather than their own value system. A belief as simple as the idea that all negative behaviour must be confronted could be against the corporate structure where some negative behaviour is tolerated while others are discouraged
Process for Avoiding Conflict A strategy of eliminating the chance for this conflict is simple communication. 1. The leader should talk with their immediate subordinates or middle level managers and find out their opinions about the personal value and see if it is a conflict of interest. 2. The middle managers should then ask their subordinates about the issue without disclosing the decision that should be made. 3. The consensus of the ethical dilemma should provide enough information so that the leader can find out if the personal value is detrimental or not. 4. With that information the leader can make their decision with a firm belief that it is ethical and their personal value is not reflected in it.
5. If a person bases their life on personal values, then it is imperative that they uses a system of checks and balances to make sure those values do not conflict with the ethics of the company or organization.
Conclusion
The concern for ethical decision-making among the regulators, social groups, and managers has substantially increased in recent years following the failure of some of the prominent business organizations owing to strong social condemnation of some of their business practices. Ethical problems are problems of choice owing to the conflicting nature of values. Individual values strongly influence the choices of managers. They manifest themselves as interests and motives and thus determine one’s behaviour. Thus ethical problems occur when the individual values and the organisational norms conflict with each other. The intensity of the problem can vary depending upon how strong the individual’s values are and what the consequences of compliance or noncompliance of the organizational standards are. In most cases, individual values have greater influence on the decision-making than the organization’s ethical standards. Hence, the improved concern for ethics in decision making requires an alignment of individual values with organizational ethics. Often, due to conflicting interests of different stakeholders, managers in organizations face the dilemma of identifying the righteous decision as perceived by these stakeholders. Hence, it is important to guide managers — by articulating and communicating unambiguously — regarding what is right and what is not. Intense socialization will be required at different levels to imbibe organizational values and ethical practices. The socialization that leads to willing adoption of practices is likely to lead to better implementation of ethical practices. The scope of socialization could be
extended to include the family members of employees to develop a sense of pride among them for being ethical.
Case example: TISCO
Nearly a century old, Tata Iron and Steel Company Ltd. (TISCO), more popularly known as Tata Steel, is one of India’s oldest companies. Established in 1907 by Mr. Jamsetji Tata — a visionary — it is Asia’s first and India’s largest integrated private sector steel company. Since its inception, the company has focused on the customer, operational excellence, employee welfare, organizational leadership, and social responsibilities and citizenship. Consistent with its thrust on these dimensions, the company is one of the most respected companies in the country for its value-based practices, ethical and dynamic practices, and competitive performance. The name ‘Tata’ has always been synonymous with trust. The statement of purpose of the Tata group (Tata Steel belongs to this group) explicitly seeks to improve the quality of life in the communities it serves. It says, “Our heritage of returning to society what we earn evokes trust among consumers, employees, shareholders, and the community. This heritage will be continuously enriched by formalizing the high standards of behaviour expected from employees and companies.” The values and principles that had governed the company (and Tata group) were articulated for the first time in 1998. It was in this year that the company formally published its ‘code of conduct.’ This document was aimed to guide each employee on the values, ethics, and business principles expected of them Among other things, the implementation of the Tata code of conduct was mandatory for the relatively autonomous group companies to leverage on ‘Tata’ as a brand. The successful implementation of this code of conduct was not a matter of choice for Tata Steel. One of the senior managers of the company stated:
“Deciding to implement the Tata code of conduct was easy for us. We had always believed in ethical practices. However, we had to ensure that every one of more than 50,000 employees practised the code.” To implement the code of conduct, the company created a new position of ‘ethics counsellor’ at the senior management level. He was internally identified and made to report to the Managing Director of the company for the day-to-day functioning. However, he directly reported to the group headquarters. In his own words: “The company management encourages me to interact directly with the group headquarters. On my part, I discuss most of the issues with the MD to facilitate better voluntary implementation of the code of conduct by the employees.” In every department, one person was identified by the head of the department to additionally look after the implementation of the code of conduct in the department. These ethics coordinators reported to the ethics counsellor directly on matters related to ethics. However, for other purposes, they continued to report to the heads of their respective departments. The ethics coordinators in consultation with the ethics counsellor organized a large number of awareness programmes every year. Such programmes were extended to the other stakeholders like suppliers and dealers of the company. Having succeeded in creating awareness among the employees, the ethics counsellor organized nearly 15 awareness programmes for the families of the executives. The family members were made to feel proud that one of them was part of a ‘value-based’ organization. The ethics counsellor stated: “We realized that it was not adequate to create awareness among the employees alone. Frequently, executives succumb to the temptation of accepting favours owing to the unreasonable expectations of the family members. Further, we also realized that if the families of the employees could take pride in the honesty of Tata Steel employees, they
would encourage the employees to follow the code of conduct in letter and spirit. Formal control systems to uphold the code of conduct do not work owing to a lack of direct monitoring mechanisms.” The workshops for the families were primarily restricted to the senior management levels. The ethics counsellor stated that implementation of the code was more critical for this group of employees. “Owing to larger responsibilities, they experience more temptations for violation of the code,” he explained. Having organized the workshops, the company looked into the possibility of integrating ethics in the performance management system. Every month, one ethics coordinator was rewarded on the basis of quality of work. The employees and other stakeholders were rewarded whenever they demonstrated unique behavior of high moral value. However, the company decided not to make it a part of performance appraisal system as the management felt that following the code was not a matter of discretion. Any proven violation of the code was viewed seriously. In fact, one of the employees was dismissed from the company for violation of the code of conduct. The news was widely publicized though the name of the employee was not revealed. The outcome of these efforts was found to be encouraging. One of the executives stated, “I received an honorarium of Rs. 2,000 for delivering a lecture in one of the prestigious management institutes. I proactively asked the ethics counsellor whether I could accept such payment. I did not want to violate the code of conduct even by mistake. I strongly believe in the ethics of the company.” The executives were extremely happy when they realized the advantage of the code of conduct in maintaining their relationships with external stakeholders. The managers found it difficult to interact with government officials without arranging for any favours in the early days after implementing the code of conduct. However, the executives continued to insist on the directives of the top management and the principles of
the code of conduct. Slowly, the officials realized that the company would continue to follow the code honestly. They stopped seeking gratifications from the company. One of the managers summarized the issue in the following words: “We are willing to provide any information required to the officials. We are also willing to wait for clearances and certificates from the government officials. However, we cannot grant any favours to them. Now, these officials respect us for our values and ethics. They treat us differently. I now feel better and more comfortable while interacting with external agencies. During interactions with the managers, it was observed that the employees took pride in their association with a company that believed in the code of conduct. This sense of pride enhances the commitment of employees (Bhat and Maheshwari, 2004) which, in turn, influences the performance of the company. Even interviews with the retired employees reflected a high respect for the company. Such behaviour of the employees enhances the image of an organization, adds to the positive response of external stakeholders towards the organization, and reduces the transactional cost.
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