When engaging in business management and activities, Ethics is placed as top priority.

All
standards for businesses are based onEthical Standards for transparent, fair, logical
operations. Keeping the ethical standards means that the companys decision making is
notonly based on economical principals, but also on the premise of ethical judgments
including transparent accounting, fair terms, legaltax-paying, environment protection to abide
by the standards fairly and uprightly, stricter than the law or government regulations.
Thus, ethical management is what CEOs and executives should implement when engaging in
business activities.

There may be several reasons such as meeting the requirements to take social
responsibilities, the appearance of shareholders who pursue ethical values,
strengthened efforts for ethical management worldwide, and enhanced company
confidence and sovereigncredit ratings. However, the ultimate goal is to maintain a
sustainable management by enhancing the companys value.

Ethical management is playing a huge role in elevating a companys market value.

According to the 2001 price-earnings ratio of Americas most respected 10
companies, there average rate was 9.7%, exceeding the average -11.9% of S&P 500
companies. This is also applied in Korea, and trustworthy companies price-earnings
ratio are 2.3 times higher than others in average. According to a recent report by The
Federation of Korean Industries, ethical management companies with exclusive
departments showed an average stock increase ratio of 41.3% from 2001 to 2003.

Companies exist to earn profits. However, as products became similarly competitive,

consumers have put priority on the characteristics of a company, instead of
considering quality, service, and price when making purchasing decisions. Actual
market data shows that consumers experienced not purchasing unethical companies
products, and as these companies credit went down, so did their sales and profits.
Accordingly, earning profits only became possible by gaining trust among
stakeholders, and unethical management can return long-term damage to companies.

Ethical management contributes to enhancing work efficiency and competitiveness.

It was generally found that companies which made unjust work or decision makings
showed high absent-without-leave and turnover rates. The more unmoral a company
is, the more employees morals lack, leading to low productivity. Also, unethical
irregularities of individuals in an organization where ethical standards have not taken
place leads to cost burden and the lack of competitiveness of a company.
However, when a company gains trust, employees can work efficiently and precisely.
Also, various costs can be reduced, leading to enhanced productivity. The ultimate
goal of ethical management exceeds the meaning of not committing irregularities, and
is aimed to implement transparent management according to global standards. When
 trust is gained from ethical management, customers put faith on the company, leading
to maximized profits.

Creating a culture of ethics is often frustrated by a lack of attention and commitment by

middle managers.

Creating a culture of ethics requires all levels of employees believe that the organization
wants to act ethically in all it does. Emphasis since 2001 on "tone at the top," one of the
legacies of the misbehaviour by top management in the Enron, WorldCom, Tyco and other
scandals, has helped many top executives realize they must create this tone by their own
behavior.
Too often, however, the behavior of middle managers remains unchanged, and undermines
ethical messages and the creation of an ethical culture which is a corporate priority. If middle
managers are not committed to the values and ethics, this is immediately apparent to the
lower level employees. The implementation of ethics in an organization is only as strong as
its weakest link as it flows down into the organization.

An organization's "tone at the top" must be translated into a "tone at the middle" before it can
reach the rest of the organization.

What is needed in every organization is an understanding by the top management and by the
ethics/compliance professionals that they are seeking to influence specific behaviors of
middle managers, just as they have focused in recent years on specific behaviors by top
executives.
The problem of motivating middle managers, however, is in many ways more difficult.
Middle managers are given explicit and often unyielding financial, sales, and cost control
goals to achieve. At times, they may perceive that top management is actually giving them
the message to focus on the quantifiable business goals and not on the "softer" ethical goals,
that the ethical messages were "for the record" and not real. At other times, they may perceive
that top management simply does not realize they cannot meet the stretch performance goals
without "stretching" the ethical standards of the organizations. In these cases, many middle
managers decide for themselves to take the expedient path.

There are specific behaviors which middle managers must demonstrate in order for lower
level employees to understand that the organization is serious about ethics.
It is possible to specify the middle management behavior that will help the creation of an
ethical culture. These are similar to that of the top management but include some unique
actions. The key behavior are:

1. Talk frequently about the ethical values and ethical commitment of the organization

2. Anticipate ethical dilemmas which typically arise in his or her area of responsibility

3. Talk about how the ethical values and commitments apply to the work of the specific
group

4. Talk about how the ethical values and commitments apply to specific decisions the
middle manager makes or participates in.

5. Recognize ethical issues when they do arise

6. Ask questions when the ethical action is unclear

7. Make ethical decisions consistent with organizational values and ethics

8. Report concerns about ethical and unethical actions to top managers

There are specific techniques which help the top to communicate the organization's real
ethical commitment to the middle managers in ways that convince them the organization is
serious.

Motivating middle managers to reinforce the ethical culture of the organization by their own
actions requires several specific actions by top executives. Among them are:

1. Top executives must themselves exhibit all the "tone at the top" behaviors, including
acting ethically, talking frequently about the organization's values and ethics, and
supporting the organization's and individual employee's adherence to the values

2. Top executives must explicitly ask middle managers what dilemmas arise in
implementing the ethical commitments of the organization in the work of that group

3. Top executives must give general guidance about how values apply to those specific
dilemmas

4. Top executives must explicitly delegate resolution of those dilemmas to the middle
managers
 5. Top executives must make it clear to middle managers that their ethical performance
is being watched as closely as their financial performance

6. Top executives must make ethical competence and commitment of middle managers a
part of their performance evaluation

7. The organization must provide opportunities for middle managers to work with peers
on resolving the hard cases.

8. Top executives must be available to the middle managers to discuss/coach/resolve the

hardest cases

Every day, managers and employees need to make decisions that have moral implications.
And those decisions impact their companies, company shareholders, and all the other
stakeholders in interest. Conducting business in an ethical manner is incumbent upon
everyone in an organization for legal and business reasons. And as a manager, its important
to understand your ethical obligations so that you can meet your companys expectations as
well as model appropriate behavior for others.

Ethics is a set of standards for judging right from wrong. At its most basic level, it means
acting fairly and honestly in individual as well as group decision making. On a business level,
it can refer, for example, to fair and honest competition, acting without deception or
misrepresentation, and working within the boundaries of the law.

In the wake of corporate scandals over the past several years, most organizations have written
or updated their Codes of Conduct and Ethics Rules. The first thing a manager should do is to
read and understand those documents. That means understanding the actual words used in the
documents along with the spirit and intent behind the words. The second thing to do is to be
sure that your staff also reads and understands the documents and can come to you with any
questions.

If you act consistently with Codes of Conduct and Ethics Rules, you provide a foundation of
trust in your relationships with others. Part of your goal is to show others what it means to
make ethical decisions. The other part of your goal is to encourage others to come forward if
they suspect that someone is not acting ethically. As a result, your organization will be in a
position to look at that behavior and stop it before it is out of control or worse, crosses the
line into illegal conduct.
Everyday decisions involve ethical issues. Did you consider only legitimate business reasons
for promoting some employees and not others? Was your decision to discipline a particular
employee fair and consistent with how youve treated others? Are you tolerating behavior
from some that you do not tolerate in others? These are just some examples of questions you
can ask yourself to be sure you are acting responsibly and ethically.

And dont forget that ethics rules will not always answer the issues you confront. Sometimes,
for example, the line between ethical and legal conduct can get blurred. What if you found a
document on the street that had sensitive information about a competitors product? Would
you use it? It would be illegal if you stole such a document from the companys premises, but
say you found it on the street. Is it ethical to use it even though you assume that someone
must have dropped it by accident? These are not easy questions but are important to consider.

As part of a companys attempt to create an ethical work environment, its important to offer
an effective ethics training program. And the training should include more than just a review
of your companys ethics rules. The broader topic of ethics in a global economy is very
important in todays world of international business.

Perhaps some kinds of behavior that we find acceptable in the U.S. are not acceptable in
another culture, or vice versa. That doesnt mean that some conduct should be tolerated in
one place and not another. Rather, your company should set standards to which everyone can
and should adhere.

Remember, as a leader in your organization, how you behave and communicate is the basis
on which others will judge you. If you act ethically and require the same of others, you
represent your company well and position yourself as someone your employees can respect.
There is no better way to attract and retain good employees than to have the respect of those
you interact with every day.
Definition
Necessity
FAQs
Integrity Contract