Management Ethics concerning

Quality Management

Hrithika Dayananda Reddy @04276817

Archit Harish Shetty @04275138

Abhishek Venugopal @04293228

Mikkilineni Thanmai Chowdary @04276524

Rohini Vemuri @04315896

MGMT 534 Quality Management

Department of Management, Eberly College of Business

Indiana University of Pennsylvania, Fall 2023

Dr. Ramesh G. Soni

This research paper is concerned around management ethics in relation to quality

management within the organizational settings. It underscores the significance of code of

ethics like honesty, transparency and being accountable in decisions making relating to quality

management. The discussion includes the aspects of ethical practices, the role that

management plays in developing an ethical culture and what happens after acting on

considerate grounds to stakeholders. In addition, the Enron scandal case study demonstrates

what consequences can happen due to lack of ethics from management in context of quality

management. This paper also talks about the influence management ethics has on

employee’s performance and outlines the guidelines on how to develop and assess ethical

principles in quality management. In the future, the ethical quality management is expected to

gain major importance especially in international aspect which emphasis on sustainability, and

socially responsible behaviour. In conclusion, the paper highlights management ethics as the

key drivers of an organizational culture, decision-making and the company’s success.

Ethics in quality management refers to maintaining principles and values guiding ethical

decision-making and behaviour while managing an organization’s quality. Integrity,

transparency, fairness accountability and respect of stakeholders are some principles that

guide the operation. Employees and other stakeholders, for instance, build trust with their

satisfaction; this leads to increased trust hence success of the company. Organizations can

promote ethical decision-making at all levels and ensure that quality management practices

conform to ethical standards by integrating considerations of ethics into the development of

strategic plans, adopting a code of ethics as an operational guide, and establishing a culture

that recognizes the ethic-related performance while encouraging integrity in decision-making.

The above is a clear understanding that ethics play a key role in quality management and

helps create awareness amongst employees on ethical principles they should observe daily

while at work. Hence, organizations need to infuse ethics into their quality management

processes and systems, i.e., the management should be an ethical champion.

II. The Intersection of Ethics and Quality Management

Ethics intersecting quality management focuses on the role that ethical considerations play in

guaranteeing success and efficacy of quality management strategies. Ethics in quality

management is critical in directing decisions made, enhancing accountability and

transparency as well as building positive culture within the organization. Through ethical

practices, organizations can establish quality management that is executed with integrity as

well as in line with the morals of the organization. In addition, ethics in quality management

will help form the bonding and faith of stakeholders by showing credibility concerning doing

the right ethical thing. Therefore, ethics in quality management is both a concept and a

practical requirement for organizations. Therefore, an organization’s quality management

system as well as its processes must be weaved into the ethics to make decision-making

ethical and actions moral.

Ethics are a significant element in quality management. In effective quality management,

ethics not only serves to guarantee the highest achievable standards of quality but also

ensures that organizations operate in an ethical, responsible manner. Ethics in quality

management gives an organization a chance to win the loyalty and trust of customers,

employees, and other stakeholders. This will also help to avoid or manage any ethical issues

that may arise in the organization e.g., conflicts of interest, unworthy practices, etc. Ethics in

quality management as well leads to long-term success and sustainability, since organizations

with an ethic-based approach are less prone to legal issues that drain company resources.

Therefore, organization are required to be ethically responsible in the management of quality

for purposes of maintaining a sound reputation, trustworthiness, and long-term success

through ethical decision-making process, running the business with transparency and

accountability, and developing positive organizational culture as well as responding to ethical

dilemmas. Moreover, especially in healthcare facilities, inclusion of ethics to quality

management is essential (Arries., 2014). Healthcare ethics quality is needed to deal with

ethical issues that appear in clinical and organizational practices, as well as guaranteed

patient safety, privacy, and general welfare. Ethics quality therefore is another critical indicator

of the persistence in a quality improvement strategy for nursing. This implies that the

adherence to ethical management practices ensures benchmarking on highest standards

concerning quality healthcare. In conclusion, quality of ethics is a core component of quality

management.

IV. Evaluating Ethical Issues in Management

Ethical issues in management involve assessing the impact that certain decisions have on

different sectional stakeholders, this includes employees, customers, shareholders, and the

community. Managers are therefore required herein to critically review the ethical implications
of their actions and take decisions that protect the welfare and rights of all parties concerned.

In addition, evaluating ethical issues in management means that the managers must follow

ethics guiding them like honesty, fairness, and respect. This involves evaluating decisions’

potential costs or benefits, conducting adequate ethical analyses, and soliciting input from

relevant stakeholders. Additionally, ethical issues in management require looking into the

long-term impacts of decisions and whether they match an organization’s mission, values, and

code of conduct.

Managers need to address them without waiting for any ethical problems. Managers can

maintain ethical conduct, reduce the escalation of ethical dilemmas, and help the organization

run towards its values through a proactive approach. Manager’s active role in ethical behaviour

or decision making helps to adjust the organizational culture towards such values as integrity,

transparency, and accountability.

This involves specifying the standards and ongoing coaching of employees, establishing ways

in which to report ethical concerns and monitoring penalties for unethical conduct. Moreover,

managers should be active in the process of maintaining up-to-date ethical policies and

procedures that comply with current changes in legislation and society’s norms. Managers

must also show ethical behaviour in their individual actions and decisions. They should lead

by example and instil ethical responsibility throughout the organization. Evaluating ethical

issues in management is an essential component of quality management.

V. Strategies for Ethical Quality Management

Ethical quality management strategies include incorporating ethics into the organizational

culture, enforcing a code of ethics or conduct, providing ethics training and awareness

programs to staff members, creating channels for reporting ethical problems or concerns as

well as regular removal off unethical practices. Through such strategies, organizations may

facilitate the enhancement of their ethical performance and corporate culture that appreciates

and upholds ethical behaviour. The Management Ethics of Quality Management necessitates
the identification, prevention and addressing of ethical issues, infusing ethics into its

organizational culture, setting up stages and pathways to report ethics concerns, educating

workers regarding ethics issues relating to quality management practice, as well as auditing,

rewarding, recognizing ethical conduct towards management qualities and sanctions for any

unethical action.

Furthermore, the role of top management in stimulating ethical thought and conduct among

employees is vital (Ruiz-Palomino and Martínez-Cañas., 2011). Managers need to be the

champions of ethics and steer their employees through leadership by example, in terms of

ethical behaviour demonstrated in their actions as well as decisions for promoting values like

accountability and transparency that would shape an organizational culture (Ciulla, 2018).

Overall, management ethics in quality management involves actively managing ethical risks,

implementing ethical strategies and guidelines, leading by example, promoting integrity and

ethical decision-making, and creating an environment of ethical behaviour throughout the

organization.

Organizations can thus extend top management philosophy and present a normative standard

of acceptable ethical behaviour by adopting these strategies. This can also enhance

managerial decision-making, organisational design, and ethical play. Incorporating

management ethics in quality management and other aspects not only improves decision-

making processes but also build appropriate structures within organizations, which results to

reinforcement of ethical behaviours across the entire organization, enhancing the overall

reputation and performance.

VI. Hyosung CSR Ethics Principles

Presently, Hyosung has taken a step towards transparency and ethical business practices by

developing the ‘Code of Ethics Practiced by Hyosung affiliated Companies’ that applies to all

employees in their companies. The code brings out the need to monitor and report breaches,
creating a sense of accountability. Unethical behaviours or corruption can be reported through

a dedicated Reporting Centre, assuring the confidentiality of informers.

The company's ethical principles are structured around key pillars:

I. Compliance with Laws and Regulations: Hyosung emphasizes strict compliance with

national laws, regulations, and socially accepted norms. The company agrees to conduct its

business on an open and honest basis, to play by market rules and not involve in criminal

activities like insider trading or money laundering.

II. Customer-respecting Management: Customer trust is essential, and Hyosung strives to

extend distinguished quality and service to cover customer needs. The company advocates

for wholesome partnership with its customers based on transparency and fairness in the

business.

III. Shareholder-oriented Management: Hyosung is aware of its responsibility towards

shareholders and investors as well to make profits by creating value and transparent

management. Trust can be earned through respect for the rights of shareholders and timely

information provision.
IV. Employee-respecting Management: Hyosung recognizes employees as its most important

asset and pledges to cultivate a corporate culture of mutual trust and understanding. The

business achieves a pleasant and accident-free working environment that presents no case

for irrational prejudice.

V. Employees Compliance Management: This will make employees undertake their duties in

a transparent and fair way, while shunning unethical behaviour within the organization. The

code prohibits giving or receiving bribes, enhances conflict of interest control, and stresses

the need for preserving corporate as well as client data.

VI. Suppliers Shared Growth Management: Hyosung sees suppliers as the basis of

competitive advantage and pursues mutual growth by maintaining open and equal trade. The

company is guided by the principles of human rights, environment and social values in its

supplier selection thus avoiding unfair trade practices.

VII. Social Responsibility Management: As a responsible corporate member of society

Hyosung seeks mutual prosperity by fulfilling duties and responsibilities through social

contribution efforts. The company intends to be sustainable for the environment and hopes

that community will appreciate its efforts.

To sum up, the Code of Ethics for Hyosung shows a dedication to ethical management

activities in its operations comprising observance of laws, satisfaction of customers and

shareholders, employees’ well-being and responsible behaviour towards suppliers and the

society. The code serves as a guiding framework to ensure the company's integrity and

commitment to ethical business conduct.

VII. Case Study on Management Ethics and Quality

The Enron scandal is one of the most notorious instances in management history which

speaks volumes about ethical issues in management and effects it may have on quality &

performance practices (Im & Giseok, 2019).

main proponents were the senior managers of the company and was prevalent across board.

Such culture supported fraudulent accounting, false note of financial statements and hiding

big deals of borrowing liabilities. Quality management was one of the victims of these unethical

practices in Enron. The managers were interested in meeting short-term profit targets and

artificially boosting the price of the company’s shares; consequently, they ignored quality

management principles. Such an approach to quality management principles provoked bad

decisions, opacity, and breach of company’s integrity. Consequently, the company collapsed

and one of the largest auditing firms in the world filed for bankruptcy (Žiaran et al., 2015).

The Enron scandal involved misconduct by management that directly affected the quality of

financial reporting. Shareholders and investors were deceived by manipulating financial

reports to paint a more positive picture of the company's financial health. This lack of ethical

behaviour in management eventually weakened the quality of overall quality management

practices at Enron. Some of the aspects of quality management include internal controls, risk

management and ethical adherence. However, in the situation of Enron these attributes were

undermined and neglected due to an unethical management. In that respect, the huge

significance of management’s ethical behaviour as related to quality management practices is

exemplified by this Enron scandal.

The scandal revealed the weaknesses within Enron governance structure and raised

questions about reliability of internal controls as well as risk management mechanisms. The

company suffered direct failures in maintaining quality standards in its operations and

decision-making. The Enron scandal resulted in a movement of regulatory reforms that sought

to enhance corporate governance and ethical behaviour. Some of the changes that took place

consisted of the establishment of Sarbanes-Oxley Act, which introduced ultra-financial

reporting rules and enhanced top management responsibility. The changes were aimed at

rebuilding confidence in the financial report preparation and better-quality management

factor in management and its direct impact on quality management practices.

VIII. Challenges and Opportunities in Integrating Ethics into Quality Management

There are challenges and opportunities of integrating ethics into quality management for

organizations that want to maintain ethical standards as well as increased operational

effectiveness. There can also be anticipated resistance to change by employees and

management whenever ethical considerations start bringing complexities or disruptions in

established processes. Such resistance can hinder the prevalence of ethics in a firm, hence

inhibiting successful quality management. Second, the confusion regarding whether to ensure

cost reduction or fulfil the short-term targets unfairly jeopardises matters of ethics, presenting

a dilemma for many organizations. In addition, the absence of knowledge and competence in

ethical principles create difficulties, since staff members may involuntarily perform actions that

ignore ethical practices.

Furthermore, cultural and diversity challenges complicate matters considering that ethical

standards may vary across cultures and organizations characterized by diverse workforces

must find grounds for aligning their respective ethical values. Secondly, the inconsistent

application of ethical codes, as well as lack of responsibility by those who violate them may

seriously affect perception and be perceived that ethics do not form integral part on this

organization.

Nevertheless, these challenges present important opportunities for institutions that can

successfully integrate ethics into quality management. Focusing on ethics can enhance the

company’s image and give customers who appreciate ethical practices a reason to stay loyal

to the brand, thereby providing a competitive edge in the market. It may also lead to innovation

in quality management practices with ethical considerations that promote constant

development and the finding of sustainable solutions that meet changing customer needs.

Ethical practices create a positive organizational culture, leading to employee engagement,

organization.

In addition, ethical quality management forms trust with customers, suppliers and regulatory

bodies among others creating grounds for long-term relationships and increased cooperation.

Organizations that are compliant with the law and legal guidelines do not only reduce the risk

of becoming embroiled in a lawsuit, but they also take up responsible corporate practices.

Therefore, blending in ethics with the quality management is an uphill task; however, if

organizations cross this tussle, they will find numerous opportunities fostering sustainable

growth and maintaining a good relationship with stakeholders as well ensuring

competitiveness in the market.

IX. Effect of Management Ethics on Employee Performance

The impact of management ethics on employee performance is important. Management role

modelling is the origin and starting point for employees towards ethical conduct. Ethical

management in quality perspectives contributes to better decision-making, integrity, and

ethical behaviours within the organization, as well as its adherence to ethics standards or

regulations. In giving management ethics a priority in quality management, organization

dynamism is built via making employees feel valued, appreciated, and trusted to make ethical

decisions. In addition, (Ki et al., 2011) affirms that ethical behaviour is influenced by top

management support for ethical behaviour.

This support may be expressed in such actions as being role models, prompt punishment for

unethical behaviour or promotion of codes of ethics. In addition, management ethics helps to

avert ethical dilemmas by making them assume personal responsibilities and respond for their

actions. When management emphasizes ethics and applies ethical principles to making

decisions, it can lead the employees in the correct path of ethical choices. In conclusion,

quality management contributes to an organization regarding its ethics in the management for
promoting ethical behaviour, improving decision-making processes, and strengthening of

organizational structure all contributing towards better overall performance and sustainability.

X. Implications of Management Ethics in International Quality Management

There is a significant role of management ethics in International Quality Management that

influences the organization behaviour, organizational culture, and decision-making. Efficient

international quality management is based on the devotion to ethical norms, which are not

limited by national borders. Management ethics in this context have serious implications on

many parts of business operations and relationships.

One key implication refers to the development of confidence among international players.

Ethics in management helps create trustworthy environments for employees, customers, and

partners. Trust is a crucial factor in any good relationship that exists between international

businesses especially given diverse cultures and regulation environments. Such organizations

are likely to develop healthy relationships and partnerships across their borders (Treviño &

Nelson, 2016). Similarly, in an international context ethical management also supports the

creation of positive corporate image. The reputation of a company is an important intangible

asset that determines its competitive advantage. An organization can globally improve their

image as well as the perception of its brand by always observing ethical standards in

management. Their positive societal reputation can be instrumental in expanding business

and forming new partnerships (Freeman and Reed, 1983),

Therefore, management ethics account for considerable implications in international quality

management terms of trust-building, corporate reputation, and regulatory compliance.

Organizations that integrate ethical into their management practices have greater potential of

succeeding in the turbulent and complex global business market.

XI. Future Trends in Ethical Quality Management

In future, ethical quality management will become even more significant especially as

organizations come under increasing scrutiny and public demands for transparency and
accountabilities. Additionally, technology and the expansion of globalization have made it

easier for unethical practices to be exposed. As such, management ethics will become a

priority for organizations that want to sustain their reputation, keep the customer, and remain

successful. In addition, in the ever-changing business environment with new emerging issues,

management ethics will be very essential to assist organizations steer through complex ethical

choices and make valid moral judgments. Management ethics in quality management helps

organizations to be proactive in managing ethical risks, instituting universal codes of conduct

for guiding operations at all levels, setting examples as leaders by behaving ethically and with

integrity and ensuring that the business is driven towards excellence.

Through prioritizing management ethics in quality management, organizations can develop a

culture that respects ethical decisions making, building trust and transparency as well as

upholding the wellbeing of employees and stakeholders. This will not only assist in building a

good image and attracting the consumers but also fulfil legal laws etc.

Organizations can therefore strategize to resolve ethical dilemmas and prevent unethical acts

by incorporating ethics in their management processes and decision-making (Wesarat et al.,

2017). This can result in high employee morale, increased organizational performance, and

competitive advantage.

XII. Final Thoughts

To conclude, the research paper emphasizes the significance of management ethics in quality

management within organization. It underscores the importance of ethical practices like

honesty and transparency during quality management decision making. Enron scandal

provides a vivid case in point that outlines the devastating effects of unethical management

on quality management. The paper highlights the importance of management in nurturing

ethical culture, addressing ethical concerns and integrating ethics into the quality management

system. For long-term success, sustainability, positive stakeholder relations and ethical

integration in quality management are considered vital. The paper foresees a strong focus on
ethical quality management in the years to come, particularly at the international level where

transparency and socially responsible conduct will be integral for business success. Simply,

management ethics is presented as the key determinant of how the organization will do its

business and help steer or drive this success path.

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