The implication of ethics in project management

Written by Vinay Kumar Meena

Abstract

Project management is termed a vital component in the success of an organisation. However, at times ethical considerations are disregarded in order to achieve the objectives of a project. With the help of this article, the implications of ethics in project management will be highlighted along with the ethical standards in business being followed nowadays. The Project Management Institute (PMI) places a strong emphasis on the value of ethics in project management and offers ethical behaviour guidelines. There are four key values that every project manager shall uphold namely respect, responsibility, fairness and honesty. It further assists Project manager and team at the time of conflict of interest, stakeholder engagement, transparency and confidentiality with involved project members. Even after specified guidelines, ethical dilemmas are prone to happen due to unpredictable external and internal factors. For example, Project managers may occasionally experience pressure to make sacrifices or fulfil impossible timelines, which can result in ethical breaches. Other ethical dilemmas may arise when the Project manager has to make decisions where involved stakeholders have conflicts of interest, who have a higher influence on the decision and could potentially lead to a negative impact on the environment or society. Project managers shall have the knowledge and abilities to find out and resolve these ethical dilemmas in order to meet these challenges. The team shall have an ethical culture, participating in ongoing ethical practices and asking for guidance from pertinent professionals, if required. Through this article, a comprehensive view of ethics in project management along with common ethical dilemmas in project management and methodology for decision making will be provided.

Introduction

Figure 1: Core ethical characterctics,

Project management has been acknowledged as a vital knowledge field of study considering the huge socio-economic impact of projects on our lives and society. However, Ethics is not a newly developed concept, it has evolved with time. Ethics guide us in the way of “how to do it best.” The decisions and actions of project managers and their teams can have significant impacts on stakeholders, the organization, and society. Core ethical values like honesty, fairness, transparency, and accountability are essential for ensuring that projects are delivered responsibly and sustainably.

What is ethics?

Some definitions of ethics to understand the essence of the word 'Ethics'.

• “Ethics refers to a systematic study of the norms and values that guide how humans should live their lives.” -by Joseph Desjardins

• “Ethics is the activity of understanding moral values, resolving moral issues, and justifying moral judgments. It is also the discipline or area of study resulting from the activity.” -by Roland Schinzinger and Mike W. Martin

• “Ethics is a branch of philosophy dealing with values that related to the nature of human conduct and values associated with that conduct.” -by David P. Twoney and Marianne M. Jennings

Each of the definitions mentioned above was created by considering particular ethical characteristics Figure 1. These characteristics make a set of values that could ensure that decisions have been taken with high standards. These decisions influence involved people, resources, and the environment. Moreover, sometimes these elements can create conflicts, posing difficulties and potential risks in the project. Ethical values are essential for learning professionalism and facilitating the process of management and development in project management.

Ethics in project management?

Throughout the project's life cycle, project managers face difficult situations that might lead to ethical issues. Due to the competitive market environment, every project has an allocated budget with set deadlines. In addition to working with a variety of stakeholders and fulfilling demands, project managers also have to deal with several complex challenges. A project manager's actions might have long-term effects on society. In project teams, temporary relationships can make certain team members less concerned with the results of their actions. This dynamic realm makes ethics a difficult topic to address. Ethics in project management refers to the moral principles and standards that guide the behaviour and decision-making of project managers and their teams. Ethics plays an important role in project management because it ensures that the project is executed in an honest, transparent, and responsible manner that upholds the values of society, customers, and stakeholders. Ethics in project management refers to the moral principles and standards that guide the behaviour and decision-making of project managers and their teams.

Key factors affecting any project

The project's notion of ethics can be impacted by a variety of factors. Humans are impacted by circumstances that occur in work and non-work environments, which may alter how ethics are perceived and defined. In his book Ethics and Project Management, Ralph L. Kliem, categorized these factors into nine categories.

a) Peers: Peer pressure often comes either from the formal group or informal group of people, who has any relationship with the ongoing project.

b) Culture: project managers and team members must understand the cultural differences within their teams and organizations, communicate effectively, create an environment that values ethical behaviour, and help to deal with ethical dilemmas.

c) Power: Power is distributed hierarchically, and gives authority to people to do the task in a way to satisfy the project objectives. This factor has a strong influence on the means and outcomes of the project.

d) Competition: When competition is improperly handled, projects may experience dysfunctional decision-making and behaviour.

e) Reward: Decision-making and ethical behaviour are significantly influenced by positive and negative rewards. The team's propensity to adhere to excellent ethical behaviours will grow if the project manager rewards good ethical behaviour.

f) Experience: Experience performing an ethical transgression can be quite valuable, especially if it went undetected or was encouraged and involved no punishment.

g) Role expectations: Everyone has a role and responsibilities in a project. Each role is accompanied by expectations that may be set by other stakeholders or organizations. Despite their origins, expectations can have a significant impact on what a person should or should not do.

h) Organization Structure: Since hierarchy will always exist in organizational management, it is crucial to include ethics in these structures by allowing for the evaluation of actions.

i) Management style: An organization's management style affects formal paperwork, business practices, and ethical decision-making and behaviour throughout. Project managers and team dynamics can also have an impact on moral judgments, with group thinking occasionally resulting in unethical behaviour.

Key ethical values in project management

Ethical values are essential to the success of any project. It gives sense to an individual to differentiate between right and wrong. By upholding ethical values, project managers can build trust, maintain positive relationships with stakeholders, and achieve project goals responsibly and sustainably. Here are some of the key ethical values in project management:

a) Honesty and transparency: Project managers should be truthful and open about project status, risks, and challenges. They should not deceive or mislead stakeholders in any way.

b) Respect for stakeholders : Project managers should respect the needs and interests of stakeholders, including customers, employees, vendors, and the community. They should avoid conflicts of interest and ensure that all stakeholders are treated fairly.

c) Confidentiality: Project managers should protect sensitive information and not disclose it to unauthorized parties. They should also ensure that all team members understand the importance of confidentiality.

d) Compliance with laws and regulations : Project managers should ensure that the project complies with all applicable laws, regulations, and industry standards. They should also avoid engaging in any illegal or unethical activities.

e) Responsibility and accountability: Project managers should take responsibility for the project's outcomes and be accountable for their actions. They should also ensure that team members are accountable for their work and behaviour.

f) Social responsibility: Project managers should be aware of the impact that the project may have on the environment and society. They should take steps to minimize negative impacts and maximize positive ones.

g) Professionalism: Project managers should always behave professionally considering the given code of conduct. They should demonstrate competence, respect, and integrity in their interactions with team members and stakeholders.

Ethical dilemmas in project management

Figure 2: Common ethical problem involved in any project,

Ethical Dilemmas in project management can be complex and challenging. Although ethical dilemmas can be diverse, they can generally be categorized into two main groups: hard and soft ethics issues. Hard ethical issues are usually more evident and involve issues related to the matter of integrity, honesty, transparency, and adherence to legal or industry standards. These issues are resolved by following principles of ethical decision-making, ethical frameworks and professional codes of conduct. On the other hand, Soft ethical issues are more subjective. These issues vary from person to person and are often generated due to different perspectives or conflicts of interest. These ethical issues are based on cultural, social, or individual beliefs and they are often difficult to anticipate and address proactively. These issues can arise when project managers are faced with difficult choices that challenge their moral principles and values. Project managers must be aware of these dilemmas and make ethical decisions that prioritize the interests of stakeholders, maintain the integrity of the project, and uphold moral principles and values. Here are some major ethical dilemmas that project managers may encounter :

a) Conflicts of interest: Project managers may face situations where their personal interests or relationships conflict with the interests of the project or stakeholders. For example, a project manager may have a financial interest in a vendor or supplier that they select for the project, creating a conflict of interest.

b) Stakeholder interests : Project managers must balance the interests of various stakeholders, including customers, team members, and shareholders. This can be difficult when stakeholders have competing interests, making it challenging to satisfy everyone.

c) Resource allocation: Project managers may need to make decisions about how to allocate limited resources, such as time, money, and personnel. This can be challenging when resources are scarce or when stakeholders have conflicting demands.

d) Ethical sourcing: Project managers must ensure that all vendors and suppliers they work with are ethically and socially responsible. This can be challenging when suppliers are located in countries with weak labour laws or have a history of unethical practices.

e) Project scope: Project managers may face pressure to deliver projects on time and within budget, which can lead to scope creep or cutting corners. This can compromise the quality of the project and lead to ethical issues.

f) Communication: Project managers must communicate effectively with stakeholders, team members, and customers. This can be challenging when communication is ambiguous or when information is withheld, leading to mistrust and ethical concerns.

g) Confidentiality: Project managers must protect confidential information, such as trade secrets and personal data. This can be challenging when stakeholders request access to sensitive information or when team members share information without authorization.

Consequence of ethical Failure

When an ethical dilemma or issue develops, the project manager should address it carefully otherwise the outcome can have adverse effects on an individual or an organization. A few major consequences are explained below:

a) Tarnished reputation: If the ethical misconducts are not addressed properly it will have a negative impact on the reputation of the organization or project manager and may even cause trust issues with the stakeholders

b) Tarnished credibility: Every member involved in the project must show their credibility towards the project objectives. Otherwise, Poor project management will lead to poor or unsatisfactory results that will harm the organization in the long run.

c) Hindered careers: If an ethical challenge or transgression goes unsolved, people may perceive project managers as incompetent, lacking ethical character, or simply ignorant towards the ethical quandaries. It results in creating a barrier to any future opportunities.

d) Legal consequences: Every project has a certain goal and a set of rules that should be taken into account when delivering the end result. When a project manager engages in unethical behaviour or witnesses it and does nothing to stop it, there will be legal consequences. In many ways, allowing unethical conditions or infractions is a leadership failure; project managers are in charge of the team's overall success.

Ethical decision-making framework

Figure 3: Decision-making hierarchy,

A project manager's sensitivity to ethical issues and a precise approach to examining the ethical aspects are necessary for making morally sound decisions. Having a method of making ethical decisions is crucial in the age of globalization, where cultures, values, and beliefs are perpetually clashing. The framework should direct our analysis of the issue, inspire us to seek new information and viewpoints, and assist us in reaching morally sound decisions. Regular use of the framework results in habit formation, which promotes moral behaviour and moral leadership.

The framework for ethical decision-making should broadly follow the steps outlined below :

a) Identify the Ethical Issue

b) Analyse the facts

c) Evaluate Alternative Options

d) Make a Decision

e) Implementation

f) Reflect on the Outcome

The decision-making hierarchy Figure 3 offers a step-by-step approach that may be used to examine and weigh various ethical factors, and it can aid in guiding people and organizations through the challenging process of making ethical decisions. By following this hierarchy, it is possible to make sure that crucial ethical considerations are taken into account, appraised, and that the decision-making process is transparent and consistent.

Case study

The Volkswagen emission (VW) scandal case is an example of unethical behaviour that has been examined below to help understand the use of the ethical decision-making framework. which also emphasizes the consequences of an unethical action and how ethical decision-making procedures serve to mitigate the negative outcomes.

Identify the Ethical Issue: In this case, Volkswagen deliberately installed a faulty device in their diesel cars to deceive the pollution test in laboratory conditions. The senior managers were well aware of this device even after that they rewarded the people involved for their work. This case involved the ethical issues of No compliance with their promise and lack of responsibility and accountability for their work.

Analyse the facts: In 2015, Volkswagen was caught cheating on emissions tests in their diesel vehicles. The scandal involved the use of illegal software that could detect when the car was being tested under laboratory conditions and reduce emissions to meet legal standards but would produce higher emissions in normal driving conditions. As a result, VW stocks lost 40% of their value in a few days. Also, faces some serious repercussions like dealing with several lawsuits and paying high penalties to the governments of different countries, its reputation was tarnished and to compensate the customer VW had to call all their vehicle back to the factory for correction.

Evaluate Alternative Options: The management board of VW took several measures to reconcile this matter apologizing to the customers, resettlement of lawsuit, started providing competitive warranties for their new vehicles and committing to producing environment-friendly vehicles.

Make a Decision: VW management board decided to fire the involved employees and managers, restructure the company and establish a lean organizational structure that allows for direct connection with senior management, resulting in fewer errors.

Implementation: Volkswagen agreed to settle its lawsuits with different countries based on their environmental laws and pay over $20 billion in settlements and fines in the US alone. VW recalled all the affected vehicles and offered buyback at no cost incurred upon customers. In order to improve its relations with stakeholders, VW also acknowledges the importance to increase the transparency and oversight of the organization, which also involved some cultural changes and decision-making behaviour of the company. Also, announced the plan to produce 80 models of electric cars by 2025 and spend $62 billion to advance battery technologies.

Reflect on the Outcome: Volkswagen acknowledged that a corporate culture that valued profits over moral conduct was to blame for the emissions scandal. Since then, the company has implemented cultural changes to encourage moral decision-making as well as openness and integrity across the board. As a result of the ethical reorganization, VW was able to recover from the crisis and expand sales in emerging nations, allowing it to enter a new market in those nations.

By following these ethical decision-making steps, project managers can mitigate the challenges that occur due to ethical transgression and also help to rebuild trust and credibility with stakeholders and help to ensure that projects are carried out in a responsible, sustainable, and ethical manner.

Benefits of ethical conduct in project management

Ethics is a vital aspect of project management that provides the structure for decisions and actions. As the laws and customs are changing with every project deliverables that creates an urge to have a ethical standard framework to deliver the intended project professionally and sustainably. Actions taken ethically lay down the foundation of good project governance which fosters trust among the stakeholders. Ethical practices help to build trust and confidence, mitigate risks, and uphold social responsibility. The following are some of the key benefits of ethics in project management.:

a) Upholding professional standards: Ethical standards help a project manager to uphold the highest standards of professionalism while delivering a project. Ethics facilitates project managers to envisage the future consequences of the project on society. That means conducting oneself ethically and adhering to ethical codes of conduct set by professional bodies also upholding professionalism in the task.

b) Stakeholder confidence: Ethical practices help to build trust and confidence among stakeholders, project sponsors, team members, customers, and end-users. An ethical project manager is more likely to be regarded with trust and respect, which can increase project success.

c) Risk management: A project can face a wide range of risks during the whole project cycle, which includes legal action, financial loss, and reputational damage. Where the project manager has to take action and apply appropriate strategies to mitigate the risk and its impact. By adhering to ethical principles and standards, project managers can minimize the risk of these inconsequential outcomes.

d) Sustainable outcomes: Ethics also help to ensure that project outcomes are sustainable and that they benefit all stakeholders, including those who may be affected by the project but are not direct beneficiaries.

e) Corporate social responsibility: Ethical behaviour in project management helps organizations to fulfil their social responsibility by ensuring that projects are undertaken with consideration for their impact on the environment and society.

Conclusion

In summary, ethics is a critical component of project management that should be given serious consideration. Every project has a clearly stated goal that must be achieved on schedule and within budget for the project to be termed successful. Throughout the project life cycle, there are several internal and external factors are involved that influence the project objective. Which creates an urge for ethical decision-making. However, a set of guiding principles, rules, or codes of conduct are needed to ensure the project team's accountability and sustainability of the project. Moreover, ethical values aid an individual to distinguish between right and wrong which helps them avoid the undesirable result. An ethical decision-making framework provides a step-by-step technique for an organization or project manager to limit the impact of project risk. By adhering to ethical practices, project managers may ensure that projects are successful, sustainable, and yield significant social and economic benefits to society.

Annotated bibliography

• Ralph L. Kliem, Ethics and Project Management [2012] ©Published by Taylor & Francis Group: This book discussed the importance of ethics in project management. It covers chapters that are very fundamental and essential to understanding the subject. Each aspect is thoroughly explained with examples to make the explication comprehensive. For understanding the specifics of related topics including ethical dilemmas, ethical decision-making, and how to increase the effectiveness of a project manager's decisions to get the best outcomes. Additionally, also talked about the code of conduct and principle standards of PMI. This book is very relevant to learn how benign neglect can result in serious consequences for individuals and organizations.

• Project Management: A guide to the Project Management Body of Knowledge (PMBOK Guide), 7th Edition (2021): This book is a good source to understand the functionality of project management with other fields like operation management or risk management. It includes exact definitions and working of project management. The key concepts like body knowledge, roles and responsibilities of a project manager, relationship with the stakeholder and framework for risk management in project, program and portfolio management are explained in this book.

• Jae C. Jung | Elizabeth Sharon The Volkswagen emissions scandal and its aftermath: This article provides a good case to understand the importance of ethical practice while working in an organization. Additionally, the repercussions of unethical behaviour create a need to understand the significance of this subject in real-world situations.