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This report will analyse the ethics of the Melbourne Storm NRL salary cap breaches which rocked Australian sport earlier this year (Barrett, 2010). In order to do so, three management literature articles will be analysed to discover new insights relating to ethical theories associated with making decisions within organisations. These will then be applied to the management executives of Melbourne's rugby league team to establish why the system of paying playing outside the salary cap was an unethical decision, and to understand why the managers responded this way. Finally it will conclude with reflections on what can be learned from the breaches and how ethics can be put into practice in organisations.
Management Literature on Ethics (750 words)
Three articles were examined relating to ethics in business practices. All articles emphasise how important it is for a business to establish an ethical decision-making framework to be followed when individuals within the organisation must make a decision. They note that often the decision-maker choices an outcome which will benefit them, rather than analysing the impacts it will have on others as well.
Implementing Ethics in Business Organisations (Schnebel & Bienert, 2004) focuses on the importance of having clear ethical-communication processes within organisations. The advantages of ethics can only be recognised if businesses pursue a clear set of ethics which is understood by all managers and employees so they have common visions and ideas. Although management needs have clear communication of moral values throughout the organisation, there also needs to be an element of participation. This creates a combination of both hierarchical and participative leadership (Campling, et al., 2008). It is crucial for a company to find the balance between value-communication and space, where individuals create their own values of ethical responsibility to some extent so they can participate in self-directed decision-making and creativity.
A balance of "value commitment" and the "space" that is needed for innovation... is crucial for the success of a company...
Recently, managers have increasingly been participating in unethical and illegal behaviour in order to gain a competitive advantage. By bending the rules, this gives them precedence over other organisations and they become one of the small minorities of winners in a large economy. Businesses have been using an individualism view of ethical behaviour, which endorses their long-term self-interests (Campling, et al., 2008). The challenge of business ethics is to interconnect this establishment of self-interest and the function of traditional values, where the capitalist economy can only function when players follow an accepted set of rules.
Integrating Ethics into Action Theory and Organisational Theory (Argandoña, 2008) discusses the theories developed by Pérez López. It argues that without considering ethics in decision-making and the functioning of organisations, there is no guarantee of continuity and survival. Traditionally, companies have naturally focused upon the effectiveness of an action (that is the result of the decision based on economic criteria), however they must also consider the efficiency and consistency of this action, which generally are only taken into account with a conscious and positive effort. The efficiency of an action looks at the value of learning and development of operational skills created by a decision for the active agent (decision-maker) and consistency of an action takes into account the value of that the active agent passes onto the learning of the reactive agent (one whom feels the affect of a decision). This consistency aspect (which considers the external effects and therefore ethics) looks at the extent to which the action helps to develop the moral development of the active agent so that helps focus the decision so that it satisfies the needs of the organisation.
Evaluating human acts according to how much they improve the person who performs them is the very substance of ethics.
Pérez López developed the "logical structure of ethical decision-making" which essentially is the process through which one discovers what ethical behaviour consists of and this is achieved by developing moral behaviour. Morality is not about making good decisions, but acquiring the ability (moral virtues) that make it possible to ensure one always makes a good decision.
The third article, Management and Business Ethics: A Critique and Integration of Ethical Decision-making Models (Bartlett, 2003), identifies the gap which exists between theory and practice of management of ethics within organisations. In previous literature, two approaches have been taken to the study of business ethics - moral philosophy and the psychology of moral development; however these are constrained when applying theory to ethical practice. Limitations in previous studies exist as although they recognise the relationship between personal values and moral reasoning; they leap from values to a decision without emphasising the intermediary step of reasoning. Instead, researchers need to recognise the complexity and disarray of real-life management practices and implement methods of investigation and theoretical and conceptual frameworks that allow for this. By adopting a decision-making framework, the reasoning process could be examined and provide a complete justification of ethical decision-making in organisations. Possibly the most promising technique, is the development and application of an extensive work values/ethical decision-making framework. This approach offers a theoretical method, which analyses the individual decision-making framework and the influence of organisational culture through values. Ethics literature features two dominant views - individual ethical systems (which present an 'undersocialised' view as it ignores the social context within which ethical behaviour occurs) and organisational cultures (which represents an 'oversocialised' conception as it neglects individual psychological factors). However, these are two adversity which are impractical and the true position of organisational ethics occurs somewhere between this extremes.
Ethics in Practice
Participants should be enabled to evaluate whether they want to adapt themselves to the values and goals of the organisation or not (ethical commitment - acceptance of values of the company) - Melbourne Storm players should have been aware of the salary cap breaches so they could make a choice whether they wished to be involved with that or not - Value-communication so that players could make an informed decision on where they stood in terms of ethical commitment
Executives of Melbourne Storm engaged in individualism view of ethical behaviour (concerned for doing the best they could for themselves economically)
The Melbourne Storm appeared to take the communication of expected value-commitment approach to value-communication - the position of leadership was clear (it was an executive decision not including the players) and the organisations values were goal orientated (creating a winning team)
The managers only considered the effectiveness of the action (the economic benefits that the decision would create because it would increase the teams winnings and therefore revenue) and did not consider the at all the consistency of the action (how the decision would affect the players and fans of the Melbourne Storm)