Ethics And Governance: Business Organisations

Illustrating two Different Theories that Clarifies why Organisation Fail in Ethics Test

Discuss about the Ethics and Governance: Business Organisations.

Business organisations cannot only function by considering ethical principles and just the business rules. The managers and the corporate strategies are only the individuals who are responsible for putting different types of business ethics into practice that suits the framework of the particular business strategy. All the shareholders of a company have some desires on the investment they make along with proper growth and development of the organisation. It must be made sure that corporate official of an organisation always should develop some aligned principles for an executive management of the company just for the purpose of making sure that profit base of the organisation day by day gets strengthen (Bonn et al 2005).  The corporate ethics is a completely legal concept and it helps in protecting the rights and responsibilities of the staffs.  All in all business ethics and governance do provide maximum priority to the management of the organisation. Performing business activities beholding principles of corporate governance affect the stakeholders, employees, shareholders and the community at a large. The ethics within organisations mean principles and values that are needed to be followed by individuals working within the organisation to carry out the activities and make effective decisions in business. These are actually sets of principles which can guide the organisation towards the right kinds of activities and also ensure proper functioning of policies and making of good decisions for the success of the company. The ethical philosophical concepts are used by business organisations to conduct business in an effective manner and also create a good reputation of the company along with enhance the production level and improve the bottom level of the organisation in terms of business (Alles, 2009).

One of the theories that clarifies why organisations fail in the ethics test is the “involvement of different corporate psychopaths” who are mainly found to overstate different business problem overlooking the situation and less concerned about the fact that in overlooking the situation the business problem would rise up more rather than getting decreased.   Another theory suggests that leniency in running a business company also makes a company fail in ethics test. U.S president George W. Bust have clearly stated that in case there exist some worst staffs or manages who are not very much concerned about the business performance of a company, their suggestion might lead a company to failure in business (Bowie 2005).  Thus, Jeremy Moon in this context suggest that in order to make a company achieve success in the ethics test, it is important for the managers  see whether corporate social responsibility is properly invested and if it is still considered as just an expenditure then to transform it. Different ethical leaders should be made involved into business so that companies are able to experience the reality of workforce and bring up changes in the organisation in order to make it pass the ethics test (Birmingham & Doyle, 2009).

Demonstrating the Four Different Reasons as Stated by Moon that Illustrates Why Corporations at Times are Found to Behave Badly

The ethics are important within organisations and these are used by the leaders of the organisation to manage the performance of employees and raise their level of morale by developing a sense of trust and loyalty. The procedures set up by the leader must be acceptable by the employees working there. Due to the high ethical standards of the leader, the performance of workers would also improve, thereby making them perform to their potential and enhance the reputation and good image of the company within the financial market. Considering these ethical standards would improve the productivity of business as well as maintain ethical behaviour among workers and make them perform with honesty and integrity (Chadwick et al, 2014). The workers of the organisation use ethics to guide their behaviour and also follow the employee policies and procedures while trying to accomplish the goals and objectives of the organisation. The ethical employees could also meet the quality standards in their work, which would automatically influence the quality of products or services offered by the company. The culture present within the organisation must also be ethical so that the leaders of the organisation and employees adhere to various regulations , rules and codes of conducts. The managers of the organisation can maintain examine the behaviour and attitudes of employees and then create an ethical culture, with the help of rewarding the employees and also motivating all those workers who maintain high values and integrity which match the codes of ethics of the organisation.

Utilitarian theory is one of the theories where organisations fail in terms of ethics test as because the right course of action is not determined that could benefit the majority and serve the greater good of people.  Due to lack of maintaining the ethical policies and procedures, the organisation could fail to fulfil the needs and requirements of people  which would further hinder the innovation and managing risks in business (Nicol?escu, 2013). The ethics within organisation can help to create a good culture and also improve the morale of employees, thus resulting in employee retention and increasing organisational productivity. The cost of replacing the workers would decrease and the productivity would keep on increasing as well (Gottweis et al, 2008).

Jeremy Moon after carrying out a recent research and examination on the global financial crisis have been able to illustrate four different reasons which simply states why corporations are found to behave quite unusually or badly at times. As according to his statement the first reasons for which corporations behave badly is the poor alignments that exist between the different ways in which a business market is naturally fund to perform business activities and the ethical expectation of the common people from the corporations business (Christensen et al 2007). Also it might happen because sometimes it is found that consumers hold on the believe that if any company is required to function perfectly in the competitive business field then they should only opt for cheap products from the company. the second reason for which  corporation is often found to show negative behaviour is that leaders of the company when intending to start off with a business fails to step into the market unethically which makes them stay totally unaware of the legal rules and principles and this brings in more risk to the business. The third most significant reason that makes a corporation function quite unusually or make it behave badly is the failure of professionalism in two different fronts, this happens mainly because sometimes managers of a company are found to keep aside the employers handbook and professional development programs restricts the company to perform efficiently, while the other front is not settling up corporate social responsibility properly. The last reason is the failure of different regulatory administration which did not bring positive results to a corporations business (Crane et al 2007).

Moon further stated that few of the other reasons due to which company fail include ignoring the handbooks on ethics that were necessary to be studied by the workers of the organisation and also lack if professional development programs that were needed to be provided to the employees. Without understanding the corporate social responsibility, the managers could not bring good ethical outcomes which were needed to be implemented in business circumstances. Rather than keeping those idly, it would have been essential for studying those and understand the regulatory procedures which could bring good ethical outcomes. The rules and regulations that are set within the global tax environment are complex, as a result of which those are not properly understood by the workers, which lead to less productivity and unethical culture (Renneboog et al, 2008). The CSR should be considered by the leaders of the organisation as major form of investment that could not only improve the skills and ensure ethical decision making but also bring out the next generation leaders with time. Those individuals could be further provided with better training programs and also re-socialised as soon as they would experience the different phases of reality while working with others as a combined workforce. This would facilitate innovation and also improve the efficiency of the organisation, thereby ensuring maintenance of both ethical standards and also control he organisation with the help of corporate governance (Robertson et al, 2013).

Though the research ethics and corporate governance look like same, still there are few differences between those. While talking about the ethics in research, we know about the considerations and also the dilemmas which have been faced during the research. This can help to gain in depth analysis of research but also create a report on the findings and outcomes that are derived in the end. The governance of research means ensuring that the research quality is setting high standards through assurance and regulations followed. In order to make important decisions in business, the workers of the organisation should follow the regulatory procedures, comply to the needs and requirements of the organisation and ensure lawful and effective corporate behaviour. The ethics, frameworks of corporate governance and mechanisms are linked with the business programs as a result of which these can provide knowledge, analytical and decision making skills to identity and resolve the issues and problems faced (Sudlow et al, 2015). This would definitely help to maintain ethical standards and also make sure that incidents do not happen like the happened with Bangladeshi clothing factory, as stated in the case study.

From a personal perspective I would like to state some reasons for which a company at time is notice to behave quite strangely or even badly. Some of such reasons have been illustrated below:

Success gained by the company in all perspective- when organisational leaders or managers finds that they have gained success in business in all perspective then they develop a feeling of running business in their own will and does not consider the statements of other business leaders as important which simply makes other feel quite awkward and they simply state that the mangers of that particular company is behaving quite badly (Eon Rossouw et al 2010).  Professional ethics at times are notice to feel quite proud of themselves and they don’t intend to share their ideas with other which makes other feel that bad about their nature.

Perceived invincibility- leaders of the company are always habituated with the concept of achieving success and are also habituated with the different people who would implement their own whim.

Rationalisation- a company wherein the managers possess this thinking that he is the most prior person of the organisation cannot achieve success because staffs or other employees who are working in the company are not able to adjust oneself in such a professional situation where their thoughts does not have any value this simply makes an organisation fail in business because their does not exist cooperation among the workforce (Rossouw 2005).

From my opinion, one of the major reasons for which companies behave badly are the lack of providing the right shares and values to the shareholders who invest on the company. Often it becomes difficult for the company to deliver the right shareholder value by setting the overall corporate objective. This shows that the business has lost focus from the actual aim and purpose, which can go horribly wrong and make the business fail. The business organisation must generate good revenues in business and also generate good returns which could result in proper functioning of business. The thoughts of shareholders or investors could also be a problem when there would be lack of alignment between the motivation of shareholders and organisational aims and objectives (Alles, 2009). If the company do not ensure making the shareholders support the goals and objectives of the organisation, then also the company will not be able to innovate their products and also struggle to survive in the competitive business environment, as a happened with the clothing factory in business. The low quality products were being manufactured by low quality machines and other equipments and also due to lack of ethical standards, it collapsed and caused the death of many people, nearly 1000. Nowadays consumers want good quality products at cheap prices, which is not always possible, so there have been improper ways of marketing functioning and also ethical expectations which are often not fulfilled by the leaders of the organisation (Nicol?escu, 2013).

The leaders of organisations need to know about ethics in business and step up to the mark ethically, which would ensure performance by the workers to their potential and bring out favourable results. The companies also fail due to lack of democracy. The workers and suppliers care about the long term success of the company while if the shareholders do not have any interest to succeed in the long run, then there can be conflicts and misunderstanding, that is one of the major reasons due to which companies fail. The maximising of shareholders; return should be done along with focusing on the targets, which would lead to focus on the objective. If this is not done, then the company will be cutting corners, compliance failures and also carry out ways of misconduct, which will destroy the reputation and image of the company too (Renneboog et al, 2008). By maintaining ethics and also complying with the organisation rules, regulation and procedures, the companies would be able to overcome failures and also lead towards sustainable development.

Conclusion

Managers of a business company are considered as the prime decision makers of the organisation and they are also found to hold themselves accountable for the way a company is running the business and is affecting the stakeholders of the company. On the other hand corporate governance is estimated to be one kind of strict adherence over the business ethics of a company that helps in maintaining the business completely in a very professional level.  To maintain corporate governance of a company every corporate managers are entitled to carry out their primary responsibilities at the first concern (Ryan et al 2010).  Equally it is important for a company’s corporate managers to consider all the laws and legal principles while developing corporate rules so that it does it overlook the business strategy and make the company function in a just manner. Thus today for running a business successfully in the competitive business market it is important that managers of a company are able to perfectly manage working of their employees so that production range of the company is maintained (Sudlow et al, 2015).

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