Managerial Decision Case

16-26 Ethical Consideration

It has been argued that ethical leadership is manifested by the long-run sustainable
success of an organization. According to this argument it is the ethical responsibility of an ethical
leader to undertake actions that will provide sufficient profits and strength so that a company can
weather difficult times when they come. Long range sustainability is provided by leaders who
manifest five ethical leadership qualities: ethical communication, ethical quality, ethical
collaboration, ethical succession planning, and ethical tenure. Ethical communication means that
leaders communicate information accurately and truthfully.

Open communication is vital for long-run sustainability. Ethical quality has to do with
producing quality products, quality delivery of those products, and quality customer service.
Cutting waste is an essential element of this component of ethical leadership. Ethical
collaboration means that ethical leaders surround themselves with sound advisors who can help
identify best practices, solve problems, and resolve difficult issues that may surface. Ethical
succession planning is the art of fostering and developing leadership talent within the
organization so that others are available to take over the organization and run it well. Ethical
tenure has to do with long a leader should lead. Essentially, leaders should lead as long as they
wish provided they are trustworthy. The goal should be serving and building the organization
and not themselves.

Required

1. Long-run sustainability and ethical quality are directly associated with lean
manufacturing. Do you think that it is unethical for management not to pursue lean
manufacturing?
In our opinion, it is unethical for management not to pursue lean manufacturing
because lean manufacturing has indeed become a very important part of the company
even though not all companies need this concept. Lean Manufacturing is a production
practice that considers all existing resource expenditures to get economic value to
customers without any waste and increase product value added in order to provide value
 to customers. In addition, Lean manufacturing is also related to ethical quality and long-
run sustainability which aims to produce quality products, quality delivery of these
products, and quality customer service.

2. Evaluate each of the five qualities of ethical leadership using the standards of ethical
conduct for management accountants (see Chapter 1). Identify the standards that
you feel are most relevant for each leadership quality.
Ethical behavior involves choosing actions that are “right,” “proper,” and “just.”
Ethical leadership is leadership centered around appropriate conduct through respect for
ethics and values, as well as the rights and dignity of others. Ethical leadership can
provide value to businesses by inspiring employees to be motivated and live up to the
company’s values. Experience suggests that ethical leadership leads to greater employee
satisfaction and lower turnover rates.
In Chapter 1 we found the ten standards of ethical conduct for management
accountants. The ten core values referred to in the quotation follow:
1) Honesty
2) Integrity
3) Promise keeping
4) Fidelity
5) Fairness
6) Caring for others
7) Respect for others
8) Responsible citizenship
9) Pursuit of excellence
10) Accountability
We will evaluate the 5 principles of ethical leadership that we think are most appropriate
and most relevant for each leadership quality.
a) Honest
We need honesty in everything that happens in life, including in the world of
work. Dishonest behavior is a form of lying or misrepresentation of reality.
Dishonest behavior by leadership creates an atmosphere of distrust and can lead to
 leadership being viewed as unreliable. People will lose faith in dishonest
leadership. As a result, it is very important for ethical leaders to behave honestly.
b) Justice
Ethical leaders are also concerned with issues of fairness and honesty. As
a leader, we have prioritized treating everyone the same way and placing fairness
and honesty at the center of their broader decision-making. They make it a rule to
never give special treatment to a particular individual, unless a particular situation
demands it for the purposes of justice.
c) Respect others
Leaders who show respect for their co-workers and superiors approach
others with an inherent sense of their worth and worth as individuals. Respect
means listening to others carefully and affirming their inherent value. Leaders
must also guide others to realize their own goals, values, and needs so that ethical
qualities spread throughout the organization.
d) Integrity
Integrity refers to the quality of having a strong and honest moral purpose.
Ethical leaders demonstrate appropriate values to those around them through their
own behavior. Leaders who act with integrity can strengthen an organization by
attracting talented and ethical employees. People generally want to work for
leaders they perceive to be acting with integrity. Investors and customers feel the
appeal of leadership who acts with integrity and are more likely to be attracted to
the organization.
e) Accountability
Accountability denote responsibility, and responsibility produces
consequences. A leader really needs to hold the principle of accountability
because he must know who should be responsible, to whom should be
responsible, for what they are responsible, and what the consequences of that
responsibility.
3. Are there any other ethical qualities that you might add to the five already
identified? You may also wish to elaborate on any of the five, adding to their
definition.
 Yes, in our opinion we also need to hold the principle of “Pursuit of Excellence”
because the pursuit of excellence in everything, both in personal encounters and
professional accountability, diligent, trustworthy/reliable, diligent, diligent, and full of
commitment, do all tasks to the best of their ability , develop and maintain a high level of
competence.