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Ethical Models to Balance Stakeholder Interests Essay

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Updated: Jul 28th, 2020


The value systems from which organizations derive their culture dictates the ethical behavior of their managers and employees (Jones, 2010). In many companies, especially large firms, managers are supposed to abide by a set of rules that guide them as they discharge their duties. However, an effective organization seeks to balance the interests of all stakeholders to ensure that all groups are minimally satisfied (Sims, 2002). Managers are often faced with ethical dilemmas when confronted with issues that need them to make a decision that weighs heavily on the interests of opposing parties (Jones, 2010). In making appropriate decisions, managers weigh the balance between stakeholders and take actions that will be able to appeal to both parties.

Utilitarian Approach

The utilitarian approach proposes that managers should focus on providing the most significant benefits for a large number of stakeholders at the lowest cost possible. In essence, managers are supposed to weigh the costs and the benefits of their actions as a way of balancing between two different courses of action (Sims, 2002).

The utilitarian approach has been held as the most popular business ethics and management approach because it is in line with some of the business goals, such as profitability, efficiency, and productivity (Jones, 2010). Through profit maximization, managers can argue that they make such decisions to secure and safeguard the greatest god for the most significant number of people. This principle anticipates that if a business decision only brings good to a few people then, such an action will be rendered unsustainable.

The Moral Rights Approach

According to the moral rights view, one is subject to uphold respect for the rights of other individuals, such as the right to free speech, privacy, and respect for due process. This principle supports that even though an action derives the highest good, it is not actionable if it does not allow others to access their rights (Sims, 2002).

The position contemplated by this rule implies that employees are protected even if they report their employer of unethical or illegal activities. With the preceding, managers are constrained to respect individual rights (Jones, 2010). In the interest of the employees, managers may find this rule untenable since the rules may not add up to establish the goals of an organization.

The Justice Approach

This approach embodies the principles of democracy and serves to safeguard the interests of the minority in society. This approach suggests that managers, in their effort to enforce rules, must endeavor to apply the rules somewhat, impartially, and equitably to ensure equal allocation of resources, costs, and benefits (Jones, 2010).

This approach finds application in organizations that have unions. Union members tend to favor this view. The view suggests that people should be paid or rewarded equitably for the same job regardless of the differences in actual performances. According to the principles of justice approach, people should receive equal treatment and be rewarded differently based on skills, but not gender, race, or religion.


It is tough to apply a single approach to managing an organization. The fact that a unique approach cannot be applied consistently requires that a manager exercise his or her skills to ensure that a mix of approaches works for the good of the organization (Sims, 2002). All these approaches are available to organizations and managers to identify and utilize that which resonates with the underlying circumstances to improve the performance of all stakeholders.

Arguably, no one can have the monopoly to assert the greatness of a single approach over the other. However, considerable evidence demonstrates that the utilitarian approach remains the most conspicuous in organizations today (Jones, 2010). This is because the theory of utilitarianism suggests that people should act in a manner that brings the highest good to the most considerable number of people within a setting, such as a business.

An action that appeals to the most significant population is a welcome approach that can promote the growth of any business entity (Sims, 2002). Usually, ideally, an action that appeals to the majority of different groups of stakeholders in an organization tends to be supported and embraced.

Therefore, the utilitarian approach not only brakes from the downsides of justice and moral approaches but also seeks to propel increase productivity and efficiency (Jones, 2010). While the moral rights view is consistent with the rights of privacy and freedom and liberty, many organizations fear that such an approach introduces a legalistic work environment that impedes productivity and efficiency of the workflow (Sims, 2002).

Businesses exist to make profits as they support the society and the community in which they operate. The justice perspective has been viewed as a means of protecting the rights of unrepresented and the less powerful in an organization, but encourages a sense of entitlement and has the tendency to reduce risk-taking and hinders innovation and productivity (Sims, 2002). Individuals and corporate managers tend to accommodate and deploy utilitarian principles.

However, it should be understood that times are changing and that there is a need to develop a hybrid approach that outsources preferable aspects of all methods to bring forth a holistic managerial approach (Sims, 2002). Although not an entirely knitted approach, the utilitarian approach embraces a wide range of aspects that make it the populous approach in modern business practice.


Jones, G. R. (2010). Organizational theory, design, and change (6th ed.). Upper Saddle River, New Jersey: Prentice Hall.

Sims, R. R. (2002). Managing organizational behavior. Westport, CT: Greenwood Press.

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