Managerial Ethics and Behavior

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RESPONSE:

Ethics is the moral principles and values that govern the behaviors of a person or a group with respect to what is right and wrong. The Codified Law values and standard are written into law. Free choice is about behavior which law has not say over and for which a person or organization has freedom over. The domain of ethics lies between free choice domain (i.e., personal standards) and codified Law and is governed by social standards rather than laws. It is based on shared values and principles and obedience is not enforceable. Thus, disagreements and dilemmas about proper behavior often occur. An ethical dilemma is a situation that arises when all alternative choices or behaviors have been deemed undesirable because of potentially negative consequences, making it difficult to distinguish right from wrong. This paper looks three ethical criteria by example and one ethical dilemma as well.

Social Responsibility

The criterion here is to make choices and take actions that will contribute to the welfare and interests of society as well as to the welfare and interest of the organization. Distinguishing right from wrong. Being a good corporate citizenship. Ethical responsibility not necessarily codified in law, may not serve the firm's direct economic interests. To be ethical, decision makers use the following criterion: act with fairness, equity and impartiality, respect the rights of individuals, and treat people differently only when relevant to the organizational goals.

Example: PG&E Corporation

This corporation demonstrates the criterion social responsibility and corporate governance employing the criterion of fairness, equity and impartiality, respect the rights of individuals, and treat people differently only when relevant to the organizational goals. An executives decision demonstrated social responsibility and good corporate governance - implemented a number of policies, practices, and activities to ensure that their corporate governance and disclosure practices meet, or where appropriate, exceed current standards. Some examples, as reported on their website are these:
· We implemented numerous changes to our Corporate Governance Guidelines in 2003 to reflect and comply with the new requirements under the Sarbanes-Oxley Act and related regulations. These changes include new or revised Guidelines pertaining to director independence and qualifications, shareholder communications with the Board of Directors, Board performance evaluations, and director attendance at Board and shareholder meetings.
· Our governance policies and practices go beyond current legal and regulatory requirements in a number of respects. For example, it has long been company policy that at least 75 percent of the Board is composed of independent directors, although New York Stock Exchange (NYSE) rules require only a majority of the Board to be comprised of independent directors. In addition, the definition of "independence" in our Corporate Governance Guidelines is, in many ways, more stringent than applicable SEC and NYSE requirements.
· PG&E Corporation takes very seriously the opinion of its shareholders on corporate governance matters. For example, in 2003, in response to shareholder-approved proposals, the Board reinstated "simple majority" voting.

Corporate Governance Ratings: PG&E Corporation
Indeed, the company's corporate governance practices have been evaluated and rated by several institutional shareholder groups and corporate governance organizations. They have received ratings that are well above average compared to other utility companies, as well as general industry companies. For example, during 2003, Institutional Shareholder Services, a leading provider of proxy voting and corporate governance data services, ranked PG&E Corporation in the top 5 percent of the utility companies in the S&P 500 Index, as well as all companies in the S&P 500, based on its Corporate Governance Quotient rating system. In addition, in June 2003, Governance Metrics International, a corporate governance research and ratings agency, gave PG&E Corporation very high ratings in the areas of Board accountability and shareholder rights (9.0 out ...