ETHICS AS BASIS FOR MANAGEMENT SCIENCE

Abstract

The book Ethics for Organisation is planned for 1H2012. It includes social responsibility and governance, and calls the result ethics. This is not without problems; even Human Rights are controversial in some countries. Governance is relatively new in this context, but is increasingly important, many European countries have national governance codes, and EU initiatives are in progress. This means that governance is partly in place, partly under development. Ethics is normally targeted at individuals, assuming that the organisation consists of individuals, which indeed is true. A further assumption is that they continue to act as individuals, even in the organisation. Systems theory is opposed to this view, arguing that elements in a system changes when part of a system. Various measurements of organisations, especially programming teams, find that teams are very different, with productivity varying by a factor of 10 or more (example DeMarco 1999). It is difficult to explain these variations by only individual differences. Even technology or facilities may be part of the system, more space and less noise result in more productivity. One assumption in the book is that ethics is likewise influenced by systemic factors. This is indicated by both the Enron case and the financial crisis. In the latter, individuals behaved almost “logically” within the system. Bank employees were told to be productive, and ignore risk to avoid efficiency losses. This was part of a larger system, partly national, partly international providing a framework that led to the crisis. This does not say that individuals were faultless, but the major reasons appear to be systemic. The book is targeted at organisations, especially international ones, with different cultures, religions and nationalities. A major challenge is to create a culture, or an ethics, that is both valid and accepted internationally, but it has been done. Notable examples are Red Cross and other NGOs, but even businesses have established impressive guidelines. Some examples in the book are even successful economically, Novo Nordisk and Kone have both seen their shares go up by 250% after 2009. The reason for the success is probably active management, setting smart and stakeholder oriented goals, following up and cooperating to reach major goals. Kone has for instance reduced energy needs for its new lifts by 50% since 2008. This reduction will benefit its customers.