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Ethical Issues in
Change Management:
An Empirical Study
A. UDAY BHASKAR
KANIKA T. BHAL
C.S. VENKATA RATNAM
This research
was conducted to study the ethical issues involved in managing change-related issues and
whether people in organizations perceive them to be ethical. Besides assessing peoples perceptions
of ethicality, it also explored the reasons people give for judging a situation as ethical or unethical. Research
was conducted using scenarios involving ethical dilemmas related to lay offs, skills obsolescence, misinformation and preference for younger over older employees. Results show that the respondents were divided
over three situations, namely, lay offs, misinformation and preference for younger employees. The issue of
skills obsolescence was considered unethical by most. The reasons given for judging a situation were different,
implying that the ethical and unethical were not treated as two ends of a continuum.
assess
Introduction
Organizations across the globe are facing phenomenal changes. These changes are exemplified
by the global integration of business, transnational flow of capital, fast-changing technology,
frenzied competition, and frequent ups and downs
in business cycles among other things. In response to those changes, organizations develop
A. Uday Bhaskar is Research Scholar, DMS, Indian Institute of Technology (IIT) Delhi, Hauz Khas, New Delhi 110 016.
Kanika T. Bhal is Associate Professor, DMS, IIT Delhi. E-mail: kanika@dms.iitd.ernet.in.
C.S. Venkata Ratnam is Professor, International Management Institute, B-10 Qutab Institutional Area, Tara Crescent,
New Delhi 110 016.
20
conducting business
and
develop adaptability to
21
values cannot be overemphasized. Group, organizational and cultural ethics together influence
the personal set of values that one adopts to define
ones own code of ethics, and this code of ethics
can exert a major influence on his/her behaviour
in the organization. 10 Increasingly, it is becoming
clear that excellence in managing and performance demands attention to corporate culture and
values, and that policy making requires ethical
insight and moral courage as well as technical
know-how and organizational skills.
Ethical theories mainly concern themselves
with identifying the bases for judging the ethical
content of an act. The earliest understanding of
ethical theories is divided into two fundamental
types, teleological and deontological.&dquo; According to the teleologists, the consequences of
an action or practice determine its moral worth.
The most widely studied teleological theory is
utilitarianism. According to utilitarianism, an
action or practice is right if it leads to the greatest
possible balance of good consequences or to the
least possible balance of bad consequences for
all the people involved. Deontologism emphasizes that the concept of duty is independent of
the concept of good, and the actions are not justified by their consequences. Besides good outcome there are other factors as well that determine
the rightness of the action. For example, the
fairness of distribution, a personal promise, or a
contractual relationship like parent-child, business affiliations and contracts, and friendship,
which are non-consequential but enrich the moral
life.
Managing change generates a lot of ethical
issues related to the approach to change, target
of change, the managers responsibility and
manipulation
of
22
adjustments, which build on the existing knowhow within the organization, tend to consolidate
industry leadership. Adoption of radically differ-
ramifications.&dquo;
So how do people make ethical change decisions ? To approach the inescapable fact of downsizing humanely and ethically, what kinds of
things do we need to take into account? What
strategies should we use? Who should do the
planning? What should be the timing of the action
and what factors should affect it? Who should
know what and when they should know it? How
should those leaving and those staying be
affected? What public face should be put on the
action? These questions dominate the thinking
of ethicists and practitioners alike. This paper
is a beginning into understanding peoples perceptions of ethicality in different change-related
situations and also the logic they give for their
Objectives
The research was conducted to study the ethical
issues involved in managing change-related
issues and assess whether the people in organizations perceive them to be ethical or unethical.
As mentioned earlier, it is not enough to assess
peoples perceptions
also aims to
assess
Methodology
The focus of the study was to find out the perceived ethicality in managing change related to
technological and business cycles. The study was
conducted through a questionnaire survey of professionals working in public, private and multinational companies (constituting 38 respondents)
and the MBA students of IIT Delhi, some of
whom were also working executives (17 respondents). Thus, a total of 55 respondents constituted
the sample for the survey. The average age of
the respondents was 29.43 years and the average
experience was 9.1 years. Nineteen respondents
were from the private sector (Indian), nine from
MNCs, three from the government and eight from
the public sector. Sixteen respondents were students with no work experience. Those with work
experience belonged to different functional areas.
The Questionnaire
A structured questionnaire was used for the
survey. It contained four hypothetical situations/
scenarios pertaining to managing change in
organizations. Each scenario was followed by one
question assessing
lowing paragraphs.
Scenario One:
Lay Offs
23
employees. The respondents have to consider whether the organizations action is ethical.
The respondents are required to tick the appropriate response as either unethical or ethical. And
they also have to give reasons to justify their
choice.
to its
Scenario One:
Lay offs
so.
Table 1
Younger over
24
issue
was
were
asked to
the manner in which it is done is incorrect. Clearly, it seems that people do not object so much to
Table 2
One
Table 3
25
Table 4
that 23 out of a
the action of the
management as ethical and the remaining 28 respondents saw it as unethical. The chi-square test
shows that there is no significant difference
between the two perceptions. Almost equal numbers perceive it as ethical or unethical. Clearly,
there is a dilemma and it may be interesting to
look at the logic that people gave for their decisions. It is interesting to note some of the sample
reasons that people give for their perception are
contained in Table 6. Those who perceive it as
fair give reasons like it may help the organization
in the longer run and in times of uncertainty.
Whereas those who perceive it as unfair feel that
the individuals right to information has been
flouted. Those who perceive it as ethical are
focused on the organization, whereas those who
Two
it as unethical are focused on the individual. Thus, though the individuals right is
flouted, the organization is expected to benefit.
perceive
Table 5
Three
Table 6
26
Results
obtained showed that there was a divided opinion
as to whether the managements action was ethical. Twenty-two respondents perceived the managements action unfair out a sample of 50, and
28 felt that it was fair. The chi-square (Table 7)
results show that there is no significant difference,
which implies that it is a dilemma situation.
Citi-square
The
are
on
Conclusion
There were some interesting findings in the study.
Out of the four scenarios on which responses were
sought in terms of ethical or unethical perception,
there was a dilemma in three scenarios. In Scenario One, relating to lay offs, respondents stressed
more on the process rather than on the outcome.
They did not perceive the action of the management as unethical per se since the other extreme
is not ethical, and ethicality and unethicality do
not lie on a continuum. Scenario Two is perceived
Table 7
Test for Scenario Four
to be unethical as the
Table 8
27
again a case of a dilemma, reflecting a combination of the capitalistic logic of equity and the
traditional socialistic logic combining both equity
and need.
Since ethicality and
two extremes
on a
unethicality
are
not the
that employees are fully aware of the presthat necessitate decisions. The explanation
of the reasons behind a closure is an important
element in the management of meaning. A decision that is an outcome of acceptable criteria is
itself acceptable. With the current concern for
incorporating ethics in business, it is important
that businesses incorporate it as an important
dimension in decision making as it is likely to
influence not only the people working for the
organization but also customers and stockholders
in the long run.
ensure
sures
1. J.P.
Kotter, Leading Change: Why transformation efforts fail, Harvard Business Review, 2000.
2. I.T. Kay and M. Shelton, The People Problem in
Mergers, The McKinsey Quarterly, 2000, 4, 27-37.
3. C.A. Bartlett and S. Ghoshal, Building Competitive
MIT Sloan
Management
ness
Review, 2000.
5. S.K.
10. Dunham,
11.
12. D.
2002).
15. S. Robbins, How to Communicate Layoffs, Harvard
Management Communication Letter, Article, 2001.
16. T. Nashville, Downsizing with Dignity, EBSCO Host:
Business Source Primer database, 2001.
17. For detailed issues of technology and social change,
see S.R. Barley, Technology as an Occasion for Structuring : Evidence from Observations of CT Scanners and
Social Order of Radiology Department, Administrative
Science Quarterly, 1986, 31, 78-108. For a description
of managerial issues; see A.D. Chandler (Jr), The Visible
Hand: The Managerial Revolution in American
Business (Cambridge, MA: Belknap Press, 1977).
18. L. Kohlberg, Moral Stages and Moralization: The
Cognitive-Developmental Approach, in Thomas
Lickona, ed., Moral Development and Behavior:
Theory, Research and Social Issues (New York: Holt,
Rinehart and Winston, 1976), 31-53.