“Corporate ethics” essay
Good businesses start with ethics, this means how one deals with employees, suppliers, stakeholders and consumers. As S.Truett Cathy founder of Chick-Fit-A (famed for never opening on Sundays) wrote “If we plant for days, we plant flowers, if we plant for years we plant trees. But if we plant for eternity we plant ideas and ideals in the lives of others”. In broad terms ethics covers conduct moral duty and obligation.
Concern in ethics has grew widely from the industrial revolution, in fact today Firms have ethic committees, associations based on Business ethics have been founded like EOA Ethics Officer Association and ANSI which benchmarks organisations for ethical conduct via the ISO certificates. There are two categories of ethics principles; one being the consequential principles which determines the rightness or wrongness of and action, and the non-consequential principles which concentrate on duties.
Managers must define, formulate and give life to organisations guiding values and to create the environment that supports sound ethical behaviour. To accomplish this one must establish a code of ethics and see that these are understood, and expose those that are violating them. A Code of Ethics holds; guidelines for behaviour at all levels, Basis for firing unethical individuals even if these didn’t violate the law, protect employees from market pressure and finally form a touchstone for appeals of employees through hierarchy.
The written code is easy to form yet hard to implement as happened to Enron which had a code that caused cultural gaps as it ended with arrogance and profits in view.
What to do to implement this code: Compliance training to alert people to the guidelines established, develop cognitive thinking to escape moral mazes. Examples of such programs are: Lockheed Martin which created a board game called “Dilberts Ethics challenge” or Pharmacia which developed an interactive software for its employees to train on answering ethical questions.
If no Ethics code is present the Businesses have the Laws as minimal requirements, but this are just the foundation and need further work.
All Companies have Social responsibility, which directly effects the environment around them as firms are open systems. Firms approach this concept in several ways: Resistance approach being the old method from the industrial age, the firms resist, delay or fight demands imposed on then by the society.
Reactive Approach, the Firm waits for the society to place its demand and then acts upon it.
Proactive approach being the most suitable, the Firms prepares for the society’s needs. This involves strategic philanthropy and financial goodwill creation. Example of this; General Electrics foundation donated $30 Million to College Bound programs to increase the rate of students applying for college in its areas, another example is Nike’s support for children’s after school sports programs.
Another responsibility is towards the stakeholders these being;
The owner(s), as these expect ethical, moral and legal conduct from their subordinates.
The employees, whom expect to have rights, responsibility from their employer towards them and sustaining their development.
The customers, theses expect to be treated fairly and respected since they are the bread that the firm must live upon.
The suppliers, mutual thrust must be developed, relations must strengthen so to enhance the supply chain.
Communities, government and environment. Especially the environment which has become a very hot issue today. Firms are producing green products not to harm the environment and create sustainable development (Like Dow’s $20 million attempt to cleanup its chemical wastes and Vodaphone which collects used batteries). In the end improving the standard of living of your customers by caring about their communities will improve their income and therefore improve your sales.
To instil proactive approach in the Company one must:
Involve top-level management commitment and support. Form Interfaces between Corporate and Business staff. Develop high degree of employee awareness and training. Form strong auditing programs. Establish responsibility for identifying and dealing with real environment problems.
Other types of approaches that involve the manager are:
Moral rights approach. Where life and safety of the employees and the customers are valued. Where there is truthfulness and privacy. And where freedom of speech and conscience is not abhorred.
Justice approach. Where distributive justice is applied, i.e. individuals who are similar are treated similarly, and those that differ are treated differently in proportion of their difference. Fairness principles are present, which support just organisations. And last is the natural duty principal which involves norms of the society (do not hurt others, respect your colleagues, etc.).
Finally the utilitarian approach which is the most basic, where the manager must achieve organisation’s goals at all cost, must be efficient in doing so and must not have conflicts of interest with these.
To succeed in ideals stated above the Firm must auto regulate itself. This is known as Corporate governance where within the firm exists committees which uphold the code of ethics and stop any “fat cat” from abusing. Also the government helps in the above by stating the laws. And the most influential regulator is the market itself, examples of such cases are; when Nike child labour was discovered the sales of shoes dropped rapidly or when Nestle was marketing its low quality milk powder in Africa the rest of the world objected by not buying its products. Other type of regulators are Social Auditors (like Harris-Fombrun Repution Quotient EQ) and of course ethical judgement from the manager.
To conclude the concept of this essay is that whatever firms do these will affect the society that they exist in. Therefore if the Corporations plough back some of their profits into the society, they will too gain from their actions in the long term. One must remember that we all live in a global village and everything will sooner or later affect us.
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