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What Is Managerial Ethics? -Definition & Examples

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Lesson Transcript
Instructor: Susan Fenner

Susan has an MBA in Management from the University of North Alabama. She teaches online and campus-based Business courses.

Managers are called on to make ethical decisions on the job every day. But how do they know they are making the right decision? Let's take a look at managerial ethics and its applications in the workplace.

Definition

Wouldn't it be great if everyone just did the right thing all of the time? Of course it would! But who is to say what is the right thing? What happens when people don't agree? Who gets to decide? Well, when we're talking about managerial ethics, setting the standard for ethical behavior in an organization is best done from the top down.

Let's take a look at the formal definition of managerial ethics, and then we can see how it plays out in the workplace. Managerial ethics is a set of principles and rules dictated by upper management that define what is right and what is wrong in an organization. It is the guideline that helps direct a lower manager's decisions in the scope of his or her job when a conflict of values is presented.

Examples

Dan is the production manager for a printing company. Taco Junction, one of their best customers, placed an order for 5,000 menus, to be delivered on the first of the month. Dan just found out that the order will be delayed by one week because someone on his team ordered the wrong paper.

Dan has a conflict. Should he call Taco Junction and explain what really happened, or should he lie and shift the blame to the paper supplier, claiming they sent the wrong paper? Dan surely doesn't want to lose Taco Junction as a customer, and they're not going to be happy about the delay.

Luckily for Dan, his company has a clearly defined set of managerial ethics that covers situations like this. Their policy is simple: don't lie - period! Even if they lose the customer, it is preferable to losing their values. Dan knows his company will back him if he calls and tells the truth, even if it results in a loss of business. Dan picks up the phone and makes the call, hoping for the best, and knowing he is doing the right thing.

Here is another example:

Anita is a business professor at a proprietary (for profit) college. The college has a policy that professors should never accept late assignments, unless arrangements have been made in advance. One of her students, Steve, turned in his final project late. He explained to Anita that his boss made him work late and he was unable to complete the assignment on time. If Steve gets a zero for the project, he will fail the course.

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