Running head: ETHICAL MANAGEMENT DILEMMAS 1
Abstract
Ethical Management Dilemmas
Business 530-D02 Faith Integration
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Liberty University
May 3, 2015
ETHICAL MANAGEMENT DILEMMAS 2
There are numerous principles presented in the Bible that are relevant and applicable to todays’
globalized, fast paced world of corporate finance. Proverbs 13:11 (New King James) says, “Wealth
gained by dishonesty will be diminished, but he who gathers by labor will increase.” Corporations
such as Enron have violated shareholders trust through dishonest financial
practices, but more importantly, management violated the very foundation of God’s principles.
God’s word teaches us to not be deceived. Trust, stewardship, and ethical behavior embody three
fundamental building blocks essential to financial success of a firm. Financial managers encounter
temptations of greed and unethical behavior when faced with maximizing value and profits for
shareholders, exhibiting ethical corporate responsibility or investment decisions of
risk and return. This faith integration paper will discuss the importance of corporate managers to
act ethically and responsibly in their decisions to maximize value, while weighing risk and return
dilemmas to build and manage corporate assets in a way that brings glory to God.
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Ethical Management Dilemmas
Business professionals in today’s world face an astronomical amount of ethical decisions.
In many situations, a manager or business professional is asked to perform a task that would go
against God’s principals. It is necessary that in the many unethical business practices in place
today, Christians must be the guiding light to help make ethical decisions by trusting in the Lord
and following the Bible. Managers in particular have an influence on the employees that they
manage giving Christian managers the opportunity to be an example of proper ethics in
management dilemmas.
Corporate Responsibility of Managers
Corporate responsibility is more than companies merely following the rules and
regulations set forth to them by the government. Companies make commitments to make sure
their companies are run the proper way. Managers are brought in by the company’s owners to
help with the overall day-to-day activities involved with running a company in the proper way.
According to the Fundamentals of Corporate Finance 7th edition, managers are brought in to
help maximize the value of the company and its shareholders (Brealey, Myers, & Marcus 2012).
Enron and other Corporate examples
While maximizing the value for shareholders the managers also have the responsibility of
making sure they have following the proper guidelines for their industry. The managers must not
allow themselves or their employees to cut corners when it comes to doing business properly and
ethically. A well-known an example of maximizing shareholders wealth but not working
unethically is the Enron scandal. From the top down managers and employees lowered their
ethical standards.
Role of the Manager related to God’s Word
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In Romans 13:1-7 the Bible speaks about submitting to the governing powers. The bible
tells us we must follow the authorities and the authorities that exist are authorities created by
God. Anyone who rebels against such authorities is thus rebelling against God. God commands
us to do what is right. If managers lead their employees in the right direction according to
biblical principles will in turn be rewarded.
Ethics of Maximizing Value through Leadership
The word of God says in Proverbs 20:23, “The Lord detests differing weights, and
dishonest scales do not please him” (Life Church TV, 2015). These words were meant to provide
guidance on how human beings are to conduct themselves in their personal lives as well as
business dealings with each other.
Since we’ve already established that, “the natural financial objective of the corporation is
to maximize market value,” one can assume that the primary responsibility of the capital
budgeting decisions that achieves that objectives are decided upon by the Chief Financial Officer
(CFO) and his team (Fundamental, 7th. ed., 2012). It is up to the CFO to ensure that the
company makes ethical financial decisions that are beneficial to the stakeholders as well as the
shareholders in the company. The CFO needs to differentiate from financial decisions that will
benefit the company in the short-term but translate into a lower value proposition for the
company over the long run.
Corruption Related to Long-Term Success
“Unethical business practices can lead to smeared public relations and a loss of trust and
respect on the part of the consumer,” (Miksen, 2015). Some of the ways that companies attempt
to maximize value unethically are through Ponzi schemes, employing child labor, and cutting
corners such as “aggressively reducing prices to capture new customers, even when this leads to
continuing losses (7th. ed., 2012).” Consumer perception influences the stock valuation for the
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company and may either positively or negatively impact the company’s profitability. A negative
company perception may influence consumers to choose competitor products and services which
will translate to lower market share.
Ethical Decisions in Project Management
Managers can also make unethical decisions in selecting and overseeing projects. They
may base their decisions on job safety as opposed to the potential for profits if the project looks
like it is too high of a risk and would reflect poorly on them if pursued. Also, when overseeing
the project, it is extremely important that managers conduct themselves ethically and provide
leadership and direction to the project team members. If a project fails, a manager must be able
to own up to their part in the projects failure as opposed to blaming it on the team members. At
the end of the day, the project manager holds the ultimate responsibility of ensuring the success
of a project. Just as the project team would get the overall praise for a successful project, they
should receive the overall blame for the failure.
Ethics of Investment: Risk and Return
Is it possible to be an ethical investor and still maximize profits? Can an investor
maximize what to invest if what is perceived as ethical companies are limited (Eley, 2015). In
this instance companies that follow a path that would be acceptable to our Lord would be
considered ethical. The overall goal of any investor is to make a profit as large as possible. If
enough research is conducted into any corporation, it will be found that it can be deemed
unethical by some standard of opinion. An investor would have to set strict guidelines as to what
areas they would like avoid, and maintain those ethical beliefs.
Example of Risk in Ethics of Investment
There are still companies that operate on Godly principles although as an investor, the
problem is that most of these companies are privately held. If a company decides to go the
corporate route and put shares onto the primary market they are opening themselves up to non-
Christians purchasing these shares and pushing for changes in their policies. The best example of
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a company that is privately held that holds to biblical principles is Chick-fil-A. Chick-fil-A has
been criticized on two fronts: a) the CEO having an open stance against gay rights, and b) the
store losing profits by closing on Sunday. Both of these practices would be put into question if
the company were to become a traded company. Would it be better to have this company in the
public’s hands to force them to run it in a manner that they would deem unethical? “For the love
of money is a root of all evils. It is through this craving that some have wandered away from the
faith and pierced themselves with many pangs” (Timothy 6:10, English Standard Version).
Conclusion
Ethics in the workplace are to be kept as of utmost importance to Christian managers. As
mentioned, companies that let their morals become compromised have a reputation for becoming
corrupt and eventually the center of a major scandal. While many companies today have
practices in place that are considered immoral, it is important to point out that there are still
companies of sound morals. Managers have the responsibility to influence and guide other
employees to remain ethical. 1 Timothy 4:12 says “Let no one despise you for your youth, but
set the believers an example in speech, in conduct, in love, in faith, in purity.” This tells
Christians that they should lead, regardless of age, with their love for God in mind and show that
to the people they lead through their own actions.
Christians in leadership roles are extremely important. These positions have the ability to
corrupt values as well as uplift, encourage, and improve values. Proverbs 16:9 tells the Christian
leader “The heart of man plans his way, but the Lord establishes his steps.” Trust in the Lord and
He will guide you to make the correct decisions in all expects of life.
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References
Brealey, R. A., Myers, S. C., & Marcus, A. J. (2012). Fundamentals of Corporate Finance
(7th.ed.). New York, New York: McGraw-Hill Irvin, pg. 13.
Eley, J. (2015). The wages of sin outweigh ethical returns. Financial Times, 2(20). Retrieved
from http://search.proquest.com.ezproxy.liberty.edu:2048/docview/1665054989?pq-
origsite=summon&accountid=12085
Jain, P. (2013). Confessions of an Enron executive: we lacked finesse. Emergence: Complexity &
Organization, 15(2), 104-109.
Life Church TV (2015). Bible (NIV). Retrieved from https://www.bible.com/
Miksen, Chris (2015). Ethical Issues in Maximizing Profit. Retrieved from
http://smallbusiness.chron.com/ethical-issues-maximizing-profit-34328.html
