Corporate Governance And Ethics: Modernity Essay

Question:

Discuss about the Corporate Governance and Ethics for Modernity.

Answer:

Introduction

The concern of the following essay is to understand and determine whether in the era of modernity, leadership is an essential aspect for making ethical decisions or not. In general the role of ethics and morality is to take concern about the assessment of the notions of rights or wrong and of moral standards. Therefore, it can be said that ethics are a set of principles whose responsibility is to govern behavior of an individual’s or an organization’s behavior and code of conducting any particular activity. On the other hand, the phrase “business ethics” is indicative of the set of principles and standards for governing and controlling individuals and groups in a workplace (Ciulla 2014). In this context, it is to say that ethical aspects are related with human mode of interaction, therefore they take concern about the human behaviors. On the other side, leadership is a major organizational aspect that is implemented to control and govern workforces (Brown and Trevi?o 2014). Thus, the following discourse will evaluate and understand whether leadership is connected with ethical decision-making or not.

Therefore, the argument point, which will be focused throughout the essay is leadership is essential in developing the ethical decision making process.

As per Trevino and Nelson (2006), leaders should be considered as the moral agents of an organization who should have rational opinions as well as have the capability to take morally appropriate decisions in right time. To understand the validity of the question, Kohlberg’s theoretical stages of cognitive moral development should be considered. The first stage of Kohlberg’s cognitive moral development indicates that moral decision or the process of determining which behavior is right or what is not, is controlled by rewards, favor and punishment associate with an action. As per Jones (1991), the power of leadership provides the capability to maintain and create a culture along with the ability to bring change in it. According to Tricker (2009), one of the most significant aspect of an organization’s ethical culture is leadership as leaders affect organizational culture through role modeling or teaching, providing attention, observing and controlling critical incidents. In this respect, it is required to contemplate that some of the chief responsibilities of leaders and managers is to maintain every possible ethical behavior within an organization as per the fact that they affect organizational policies, practices as well as the culture (Trevino and Nelson 2006). Henceforth, they have the accountability to maintain and communicate their standards in form of playing the character of a role model.

The aim of the present context demands to elaborate the definition and meaning of ethical leadership. In the words of Carroll (2001), an ethical leader is the amalgamation of a good character and the capability to set ethical standards and expectations. More precisely, a person who has all the traits of a moral person and a moral manager can establish an appropriate as well as ethical leadership. It means behavioral traits of a moral person, such as integrity, trustworthiness and honesty and the capacity to hold the values, fair objectives, concern for the society and the obedience to follow ethical rules should be there in a leader (Ferrell et al. 2005). On the other hand, predominant traits of a moral manager are to maintain role modeling with the help of visible action. As argued by Hartman and Desjardins (2008), a moral manger should have the ability to communicate about the values and ethics maintained by his/her organization to the subordinates. However, as per Shapiro and Stefkovich (2016), a moral manager should be capable of maintaining disciplines and should use the transactional leadership method of providing rewards or punishment.


Henceforth, from the above brief, it can be established that a fruitful and ethical leadership should be possessed with honesty, integrity and value for society along with the traits of maintaining disciplines and holding the position of a role model. Based on (), an ethical leadership, which is essentially required in time of making ethical decisions, should have the capability of making fair and justified judgments (Shapiro and Stefkovich 2016). It should be considered in this respect that an ethical leader needs to stay hypocritical all the time and should stay impartial and rational. It is because of the fact that a moral or ethical decision is always determined by those reasons, which would seem acceptable to other persons. It needs to be contemplated here that a minimum conception of morality in a person demands the trait of impartiality through which the person can consider interests of all those people who would be affected by the moral decision (Carroll 2001).

Nevertheless, it is fortunate to denote here that studies and researches have indicated that employees prefer to work in those organizations whose corporate culture promotes appropriate moral behaviors among its employees. Most significantly, it has been identified from surveys that an organization can promptly ensure and maintain high ethical standards through having a responsible and dutiful management. According to Cianci et al. (2014), it is chiefly the responsibility of management to ensure ethical standards by making value driven decision-making and showing zero tolerance for ethical violation. Considering the question about whether leadership is required in developing ethical decision making process, it can be said after the brief discourse above that leadership is needed to develop the trend of making ethical decision because of several reasons (Crossan et al. 2013). The first one is – without leadership there would be no harmony and no one to decide and conclude what is right or what is wrong. Second, without leadership there would be chance of having biased judgments as there would be no one to take the neutral standpoint.


However, in this context it is necessary to denote that if leadership is essential for developing ethical judgment then managers are required to adopt the theoretical standpoints of justice ethics. According to the justice ethics, managers should divide responsibility equally among the subordinates without discriminating on the basis of gender, race and favoritism. Furthermore, as per two of the dominant traits of justice ethics, which are distributive and procedural, benefits for the employees would be derived after having a thorough evaluation of every outcome and decision making process should be procedural (Kuntz et al. 2013). It means, participation and the decision making process should be based on those procedures, which would bring the outcomes. In this context, it is significant to mention that with the help of the application of justice ethics, it becomes easy for the leaders to determine whether the distribution of burden and benefits among the subordinates have been distributed appropriately or not. However, the unfortunate part about the particular theoretical approach is that the leaders applying the approach always sacrifice rights of some people in order to ensure equitable distribution of benefits (Brown and Trevi?o 2014). The theoretical approach is indicative of the fact that for attending each of the aspects of justice theory in an organization, there is a need to have a firm leadership.

On the other hand, if the moral activities within an organization can be visualized from the point of view of Kantianism, then it can be said that development of moral decision making relies on the several abstract universal principles, such as fairness, promise, justice, respect and honesty (Ciulla 2014). Moreover, Kantianism focuses on doing what is morally right rather than doing something for contributing to the social welfare. In the words of Ferrell et al. (2005), considering the Kantianism theoretical approach, it is to say that leadership is not the significant aspect to determine the development of ethical decision making. It is because of the fact that following the percept of Kantianism, an ethical decision making is a product of respect, fairness, honest justice and always approaching the way that is right. A leader has the responsibility to focus more on to maximize the welfare of the subordinates in an organization rather than only concentrating upon establishing the right thing (Shapiro. and Stefkovich 2016). In this particular ground, the discussion about the essentiality of leadership in the development of moral decision making process proves fruitless. It is contradictory as per the matter that a moral decision making process needs to only concentrate on making judgments for the right option, whereas a leader or management has a relatively wider duty to think about the wellness of the subordinate workforce. As stated by Brown and Trevi?o (2014), it is the fundamental duty of the leaders to make beneficial decisions for everyone who is involved. Therefore, focus only on the moral good would not accomplish the priorities that a management needs to follow. On the other hand, as argued by Kuntz et al. (2013), the fundamental purpose of organizational perspective regarding making ethical decisions is to ensure employee welfare as well as a systematic corporate functionality.

In this respect, the thematic concept of Utilitarianism could be explained. The theoretical approach of Utilitarianism unlike the theoretical approach of Kantianism is concerned with establishing moral decisions, which would effectively promote the overall good of the society. The particular theoretical approach appropriately supports the present hypothesis that says that leadership is necessary in order to have a fruitful development of decision making (Cianci et al. 2014). Utilitarianism says that a moral decision is the one that proves convenient in maximizing the number of good consequence for mitigating bad consequence for a greatest number of individuals. The approach rightly supports the predominant duty of a moral leadership, which is to support the process of making moral judgment for the betterment of the workforce. According to the words of Tricker (2009), the Utilitarianism theory believes that a decision would be best when it would not compromise the ethical ground as well as would yield to bring the greatest net benefit. Therefore, the emphasis here is upon majority.


As per the Utilitarianism theory, the procedure of ethical decision making process in an organization involves – a process of defining a particular issue, identifying affected stakeholders, listing all the alternative courses of action and identifying and calculating all the long-term and short-term costs. Therefore, it is easy to understand that each of process of developing moral judgments requires having a firm and experienced leadership (Crossan et al. 2013). If management desires to utilize the theoretical approach in time of developing and accomplishing an apt and ethical decision, following the discussed theory, they should start with analyzing the impact of the ethical issue on the stakeholders (Ciulla 2014). However, the main pitfall of the distinct theoretical approach is, most of the time in case of giving focus on moral end, decisions ignore the moral considerations.

However, in favor of the present argument, it can be said that the process of developing ethical decision significantly includes the method of giving recognition to the aspect of personal rewards along with satisfaction. On the other hand, it is the duty of the management to give rewards or punishments to their subordinates on behalf of ethical judgment (Hartman and Desjardins 2008). Therefore, it should be said that leadership is an essential aspect without which, it is impossible to accomplish development of ethical decision making.

From the above cohesive discourse, it is easy to underpin that a proper development of ethical decision is beyond possibility without the effectiveness of leadership. The argument has been supported by the Utilitarianism theory that has listed thoroughly the ways to make ethical judgments. According to the theory, a moral decision making process includes the duty of giving rewards, observing the impact of an ethical issue on the stakeholders and finally set up alternative options to mitigate them. Each of the procedures is understandably associated with leadership traits. As per the above essay an appropriate leadership is determined by the attributes of a ethical person as well as the characteristic features of a moral manager. Thus the argument brings light to the fact that in order to build a proper ethical judgment; there is the essential need of management or leadership. However, the argument has been also contradicted by the approach of Kantianism though the Utilitarianism approach has potentially taken edge over it.

References

Brown, M.E. and Trevi?o, L.K., 2014. Do role models matter? An investigation of role modeling as an antecedent of perceived ethical leadership. Journal of Business Ethics, 122(4), pp.587-598.

Carroll, AB., 2001. 'Models of management morality for the new millennium.' Business Ethics Quarterly, v. 11, n. 2, pp. 365-71.

Cianci, A.M., Hannah, S.T., Roberts, R.P. and Tsakumis, G.T., 2014. The effects of authentic leadership on followers' ethical decision-making in the face of temptation: An experimental study. The Leadership Quarterly, 25(3), pp.581-594.

Ciulla, J.B. ed., 2014. Ethics, the heart of leadership. ABC-CLIO.

Crossan, M., Mazutis, D. and Seijts, G., 2013. In search of virtue: The role of virtues, values and character strengths in ethical decision making. Journal of Business Ethics, 113(4), pp.567-581.

Ferrell, OC, Fraedrich, J & Ferrell, L., 2005. Business ethics: Ethical decision making and cases, Houghton Mifflin, Boston.

Hartman, LP., and Desjardins, J., 2008. Business ethics: Decision making for personal integrity & social responsibility, McGraw-Hill irwin, Boston.

Jones, TM., 1991. 'Ethical decision making by individuals in organizations: An issue-contingent model', Academy of Management Review, vol. 16, no. 2, pp. 366-95.

Kuntz, J.R.C., Kuntz, J.R., Elenkov, D. and Nabirukhina, A., 2013. Characterizing ethical cases: A cross-cultural investigation of individual differences, organisational climate, and leadership on ethical decision-making. Journal of Business Ethics, 113(2), pp.317-331.

Shapiro, J.P. and Stefkovich, J.A., 2016. Ethical leadership and decision making in education: Applying theoretical perspectives to complex dilemmas. Routledge.

Trevino, LK, and Nelson, K. A., 2006. Managing business ethics: Straight talk about how to do it right, 4 edn, John Wiley & Sons, New York.

Tricker, B., 2009. Corporate Governance: Principles, Policies and Practices, Oxford University Press, UK.

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