The pressure on the managers to keep variances under control, which could be only be achieved by the setting up of higher performance standards. But such tight variance control would also results in various ethical issues due to lower performance in quality and quantity of the products and the services. The ethical issues concerned with the situation are :
a) Each and every production process do not variances one or the other kind. If the variances are to be reduced to nil, it would be very unethical to the production department as variances do happen if some activity took place.
b) No variance is possible only in the case of “no activity”, so it would be unethical to the company to set up very high performance standards as execution of the no variance or high standards will lead to low production which will not be economical to the company.
c) It would be very unethical on the part of the employees as it raises differences between the managerial and the operational level of production because manages want no variance but the production do being variances which operational employees do not escape.
Thus, it would not be correct to ask the managers to keep the variances to nil or set up the performance standards at the higher level because it is unethical for the operation or production department to perform under such conditions.