Explain the importance of ethical principles for guiding the behavior of the leader-manager.

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pohnpei397 | College Teacher | (Level 3) Distinguished Educator

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It is important that ethical principles should guide the actions of managers and other business leaders.  This is because managers who do not base their actions on ethics can end up harming large numbers of other people.

Businesses today can be very large and can impact large numbers of people.  When managers and other leaders act unethically, those people can be hurt.  As an example of this, let us think of the case of Enron.  When its leaders acted unethically, the company ended up going bankrupt.  This hurt many people.  First of all, it hurt employees.  Most employees had known nothing of the wrongdoing at the higher levels.  Many of them had (albeit unwisely) put their retirement funds all in Enron stock.  When the company was destroyed by the leaders’ unethical acts, these people lost their jobs and their savings.  Second, the leaders’ actions hurt all the people who owned stock in the company.  They typically had no way to know what the leaders were doing and were not at fault for what the leaders did.  Again, all of these people essentially lost all the money they had put into Enron.

For reasons like these, it is important that leaders and managers should act ethically.  Unethical actions can result in great harm to innocent people.

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