Ethics in Performance Management

Ethics is a process of rational thinking aimed at establishing What values to hold and when to
hold them
A Moral principle or a set of moral Values held by an individual or group

Ethical- of or Based on a system of moral beliefs about right and wrong, in accordance
with principles of professional Conduct.

Managerial Ethics Standards and Moral Judgment managers use in their Business.

Ethical Behaviour
Higher employee loyalty
Encouragement of personal sacrifice
Honouring of Organisational policies
Reduction in Turnover
Satisfied Customers

Unethical Behaviour
Manufacturing- Use of inferior quality of material
Marketing- Misleading customers about product features or service differentiations.
Distribution- Changing priority of booked orders without informing customers.
Customer Care- Not keeping commitment on Guarantees.

Ethical and Unethical Behaviour

Sources of Ethics
Organisational

Employer

Managers

Peer Group

Personal

Individual Employee

Family

Friends

Profession

Environment

Society

Regions of the country

Religious beliefs

Law

Objectives of Ethics in Performance Management

Building a Better Society
Cultivates High performance Teams
Attracts and Retains Talents
Maintains Legal Sanctity
Improves Reporting
Promotes a strong Corporate Image
Ethical Performance Management
It is defined as the process of Planning, managing, appraising and monitoring Employee.
Performance is based on principle of Fairness, objectivity, transparency and Good Corporate
governance to achieve the Organisational Objectives.
It promotes effective self-regulatory practices and management systems that foster a
relationship of confidence and mutual trust between managers, employees and the
organization.

Principles of Ethical Management

Employees are driven by Core values of the Organisation.
Promotes fairness and Justice in Order to Avoid ethical dilemmas
Recognizes individuals for assuming responsibility for actions
Operationalizes ethical culture
Robust Process
Moral Development
Is a measure of an individuals independence as his/her moral judgment becomes less and less
dependent on outside influences
Stages start with making a choice between right and wrong based on personal consequences
As development evolves, moral judgment is less dependent on outside factors
Individuals with highly-developed moral development can make clear distinctions to define
moral principles separate from any authority
People who lack strong moral development are much less likely to do the wrong things if they are
constrained by rules, policies, job descriptions, or strong cultural norms that discourage such
behaviours. On the other hand, highly moral individuals can be corrupted by an organizational
structure and culture that permits or encourages unethical practices.
Eventually, individuals can make a clear effort to define moral principles apart from the authority of
the groups to which they belong or society in general.
Values
Basic convictions about what is right and wrong
Influence ethical behaviour
Values are developed in early years

In addition to a persons moral development, values that a person has will also influence
ethical behaviour. Values are developed in early years by watching and learning from
our parents, teachers, and friends. Values represent our basic convictions about what is
right and wrong. This means that managers in the same organization may often possess
very different personal values.

Unlike moral development which can be measured, values are broad and cover a wide
range of issues.

Organizational Factors That Affect Ethical and Unethical Behaviour

While values and moral development are part of personal development, organizational factors can also
affect ethical behaviour.
While values and moral development are part of personal development, organizational factors
can also affect ethical behaviour.
The strength of an organizations culture influences ethical behaviour. An organizational culture
most likely to encourage high ethical standards is one that is high in risk tolerance, control, and
conflict tolerance. Managers in such cultures are encouraged to be aggressive and innovative,
are aware that unethical practices will be discovered, and feel free to openly challenge
expectations they consider to be unrealistic or personally undesirable. A strong culture will
exert more influence on manages than a weak one.
The structural design of an organization also shapes the ethical behaviour of managers. Some
structures provide strong guidance and continuously remind managers of what is ethical while
others create ambiguity and uncertainty.

Ethical Issues and Dilemas

Managerial Malpractices
Moral Mazes
Different Standards
Value Conflict
Corporate Goal Achievement
Superiors taking credit for subordinates work
Employee engagement
Managerial Favouritism
Peer Pressure
Career Aspirations
Workplace Politics

Determinants of Issue Intensity

The intensity or passion of the issue can influence ethical behaviour as shown above. These 6
characteristics determine how important an ethical issue is to an individual. According to these
guidelines, the larger the number of people harmed, the more agreement that the action is wrong, the
greater the likelihood that the action will cause harm, the more immediately that the consequences of
the action will be felt, the closer the person feels to the victim, and the more concentrated the effect of
the action on the victim, the greater the issue intensity. The more important or intense an ethical issue
is, the more we should expect managers to behave ethically.
Businesses Improving Ethical Behaviour
Given the various business scandals in the last several years, companies are refocusing attention on
business ethics. The spotlight is not only on the managers who run things, but also on the boards of
directors.
Corporate governance refers to the mechanisms that make it possible to direct, control, and evaluate a
company and its management. Boards also rely on corporate governance to protect the interests and
rights of shareholders.