What Is Ethical Management? (Plus Benefits and Examples)

Updated June 24, 2022

When you think of a leader, you may imagine someone who is confident, emotionally stable and good at public speaking. It's also important for leaders to account for moral principles in their decision-making, a practice known as ethical management. Understanding this practice allows you to create a positive reputation for the organization you work for and promote productivity. In this article, we define ethical management, list its benefits, provide examples of it and explain how to implement an ethical management plan.

Related: 15 Ethical Principles in Business

What is ethical management?

Ethical management is the process of accounting for morals while overseeing an organization. This practice allows managers to prioritize the well-being of employees, customers and the community while considering the company's bottom line. By adhering to the company's core values and making challenging decisions on a case-by-case basis, an ethical management team promotes principles like honesty and fairness.

Like other moral deliberations, ethical management can have gray areas where the decision-making process is more complicated than right versus wrong. For instance, consider a manager who discovers a manufacturing plant taking shortcuts to make a product. The shortcuts resulted in reduced labor costs, but the manager realizes that the company's increased profits are likely only temporary. By reporting the manufacturing plant, the manager maintains product standards and ensures overall customer satisfaction.

Related: How To Find a Job That Aligns With Your Ethical Values

Benefits of ethical management in business

Ethical management in business can:

Promote productivity

Employees under ethical management teams are often more productive. They may replicate the moral behavior of their leaders, encouraging them to work harder and promote the company's values. Ethical management can also facilitate positive relationships between employees and boost overall morale.

Create a positive reputation for the company

A company's reputation has a significant impact on whether customers and vendors decide to patronize it. Ethical organizations tend to obtain positive press that helps them build essential partnerships with the public and other organizations in the industry. By maintaining its reputation, an organization can increase its sales and maintain mutually beneficial relationships with vendors.

Related: How To Improve Ethical Leadership Skills (With Examples)

Facilitate community well-being

While profits are important, it's just as essential for a company to facilitate community well-being. This social responsibility allows it to build a good reputation and create a lasting legacy. Ethical companies tend to champion causes that concern their audiences, whether directly or indirectly. For instance, even if a company doesn't donate to environmental organizations, it might choose to partner with an eco-friendly supplier to reduce waste.

Examples of ethical management

Here are some examples of ethical management:

Example 1

Two employees who practice different religions get into an argument over their beliefs. Their manager's religious beliefs align closely with one of the employees', but the manager is careful not to express any bias. They inform each employee of the importance of respecting others' beliefs and help them develop their communication skills so that they can continue working on the same team.

Example 2

A company develops a new product and researches different vendors to source raw materials. The first vendor produces environmentally-friendly raw materials. The second vendor doesn't, but its materials are a little cheaper. After consulting with their colleagues, an executive decides the extra cost of the first vendor is worth maintaining the company's commitment to the environment.

Example 3

A news story exposing an employee for unethical behavior goes viral. The company remains transparent about the problem by addressing it in a press conference and updating the public on the progress of the investigation. By apologizing for any harm and enacting steps to prevent future incidents, the company retains the public's trust.

Related: 9 Ethical Leadership Traits and How To Develop Them

How to implement an ethical management plan

Here's how to implement an ethical management plan:

1. Identify the organization's values

Identifying the organization's values can give you a foundation to use for an ethical management plan. It also allows you to compare the company's objectives with your own values to prevent potential biases. Consider consulting the company's website and asking executives about the company's overarching values. If the values are unclear, you might suggest a campaign to clearly define the company's mission.

2. Hire the right employees

Organizations can foster their values through a positive culture, but it's ideal to start with a good foundation. Hiring employees whose values align with the organization's can make it easier to establish a legacy of honesty and responsibility. During the recruiting and interviewing process, try to highlight the company's values to attract and retain compatible candidates.

Related: How To Answer Ethical Interview Questions

3. Promote a positive company culture

Management teams emulate the company's values and encourage others to do the same via a positive company culture. It's ideal to start promoting relevant values during orientation, as it welcomes employees and encourages them to practice good behavior. You can also conduct diversity training, schedule team-building activities and distribute rewards to those who embody the company's values.

4. Emphasize respect, transparency and procedural fairness

Approaches vary based on the organization's values, but most management teams put employees, customers and society above the bottom line. They can achieve this goal by respecting employees and encouraging everyone to do the same. Ethical management teams practice procedural fairness and remain transparent about their actions to guarantee impartial treatment.

5. Practice ethical behavior outside of work

Management teams set an example for their employees and represent the company even when they're off the clock, making it important for you to practice ethical behavior outside of work. Your actions can positively reflect on the company and demonstrate your ability to be consistent. Practicing ethical behavior outside of work is as simple as using social media appropriately and keeping your personal and professional relationships separate. If you want to be more ambitious with your ethical behavior outside of work, consider volunteering for a cause that aligns with the organization's values.

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