What is Managerial Ethics? Definition, 3 Types, and Importance

What is Managerial Ethics?

Managerial ethics or management ethics is a moral code of conduct that a manager assumes while performing organizational activities. It includes the set of principles that guide what is wrong and what is right conduct in the organization.

In simple terms, ethics is the moral principle that guides an individual’s behavior as to what is wrong or what is right. And, managerial ethics is the standard of behavior that guides individual managers in their work.

A good manager sets a good example. Managers have to make many decisions for the growth and survival of the organization. Making ethical choices has been a critical task for managers today.

Managers have to obey the law but they also must act ethically. The top manager’s behavior influences the lower and middle managers. And, it is said that when the top managers behave and work ethically the rest members of the organization are influenced and motivated to work ethically.

Managers have to maintain ethical standards within the organization as well as make decisions that are ethical (acceptable) to society. Acting ethically helps organizations in achieving public support, long-term success, and peace in the workplace, and does not face government pressure.

Types of Managerial Ethics

The types of managerial ethics are also called models. Usually, there are three types of management ethics in the organization. They are:


Immoral means acting unethically. Immoral ethics is when a manager unethically acts in the organization. Managers do not assume the welfare of employees or society while executing business activities.

And, their sole goal is to maximize profits even if it is by means of breaking the legal laws or indiscriminately exploiting employees. In a simple sense, here a manager recognizes what is the wrong thing and does the wrong thing.


The moral is the condition where a manager acts ethically and abides by the legal standards and laws. Managers do their best to recognize the wrongdoing and try to minimize it.

Also Read: The 10 Key Managerial Roles

Here, the manager’s goal is to work ethically and maximize revenue within moral principles and standards. While making the decisions every organizational member is invited, everyone’s suggestions are valued, and the welfare of the employees, organization, public, and environment is equally valued.

The goal of moral managerial ethics is to achieve the organization’s desired goals and also achieve the welfare of employees and society.


In this ethics, managers are irrelevant to what is wrong and what is right in the work environment. They lack a sense of ethical awareness and perception.

It lies between immoral and moral management ethics. Usually, managers respond to ethical or unethical behaviors only when they are required to do so.

Importance of Managerial Ethics

Ethical standards affect managerial actions and practices. Managers need to conduct each activity of an organization from an ethical and moral perspective. Following are some importance of managerial ethics that your organization may get by maintaining it.

  • Healthy Working Environment – Management ethics ensure equality and fairness in the workplace. Every organizational member is treated fairly and given equal opportunities to express and act as they see fit. Fairness and respect for every organization member promote a healthy working environment.
  • Better Relationship Between Managers and Employees – A better relationship is maintained between managers and employees when employees are given value for what they are. And, it is ensured by management ethics.
  • Fair Competition – If every firm operates under business ethics – issues like unfair pricing, adulteration, black marketing, etc. are reduced which results in fair competition in the market.
  • Better Customer Relation – Customers are the main source of achieving organizational goals. It focuses on valuing customers’ needs, interests, and preferences and acting upon the customer’s expectations.
  • Customer Satisfaction – As business ethics focuses on working upon customers’ expectations it increases the success rate of achieving customer satisfaction. Better relationships with customers and exceeding their expectations result in greater customer satisfaction.
  • Good Public Image – Management ethics does not only focus on ethically working within the organization instead it equally emphasizes working ethically outside the organization.
  • Long-Run Success – It also gives importance to achieving long-run success for an organization by satisfying employees, and customers, and acting upon building a good public presence.
  • Less Government Interference – A business that works unethically and ignores the legal laws is always in the eye of the government.
  • Happy Stakeholders – Management ethics does not only focus on building good relationships with employees, customers, and society but with all the stakeholders who directly or indirectly have an influence on the organizational performance.
  • Promotes Social Responsibility – Managers work in society to fulfill the economic objectives of the organization. Business ethics guide them to work for society’s welfare, arrange awareness programs, support education, participate in environmental protection programs, etc. All these promote the social responsibility of the organization.

Hence, by all these discussions it seems that it is necessary that an organization should maintain a good practice of managerial ethics in its working environment.

Read Next: What is Social Responsibility?

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