Questions:
1. Which is the national advertising division’s most important stakeholder, businesses or consumers?
2. Do you believe the BBB can be truly impartial given its financial dependence on business?
3. What actions would you take to ensure an ethical misconduct disaster such as the pay-for-pay scheme does not happen again?
Within the United States, the National Marketing Division, Better Business Bureau is quite renowned as a self-regulatory trade association. The key objective of this association is developing an environment where all buyers as well as sellers grow mutual trust. The organization is one of the most effective watchdog groups that introduces a famous scheme called “pay for play.” Here in the scheme, rating A is given to individuals for paying membership fees (Fischer, 2004). Rating F is given to individuals as a penalty to those who do not pay. The rating shows that it would not be worth for the clients and may be identified as misleading. This is related to lack of honesty as well as trust, and that anyone may lodge complaints against the operations of Better Business Bureau. All operations of the organization are financed by the fees that business firms usually pay during enrolment (Ibrahim, Angelidis and Howard, 2006). Most ethical aspects arise on account of the financial influences within the rating framework. Thus, this report would analyze the ethical aspects as well as misconducts pursued by the organization Better Business Bureau (BBB), along with the impacts upon the organizational stakeholders. Besides, it would also recommend of mitigating unethical practices that often lead to negative outcomes of all stakeholders.
Stakeholders are the elements who get influenced whether directly or indirectly in positive or negative manner by organizational decisions. Stakeholders usually involve organizational employees, shareholders, employers, customers, government, suppliers, community, and ecosystem. For Better Business Bureau, commonly all renowned organizations have definite set of policy related to payment of membership fees for joining the association (Korhonen, 2003). This would be in order to generate advantages of increased rating within comparing with other businesses. It has been identified that the scheme of pay to play has a negative outcome upon the businesses. The unreliable procedure of rating of the firm confirms higher ratings to firms that pay fees and low ratings to the ones that have not paid. For non-accredited business, rating process is quite significant (Matten and Moon, 2004). The process of rating impacts the purchase decisions of the clients. The scheme has impacted upon the clients in selection of the accredited business instead of non-accredited ones. As a result, non-accredited firms lose their customers despite offering enhanced quality of products and services. This organization Better Business Bureau needs some business firms as joiners for providing improved services to customers. From evidences it is clear that the association may not successfully develop trust in absence of active participation from business firms. Thus, naturally business organizations are essential stakeholders of BBB.
As identified, BBB has formed a developed platform whereby customers may easily access the organizational website without paying any fees. The clients may check out all ratings of organizations accredited by BBB. It is important to note that clients usually rely on BBB more than that if the Federal Trade Commission. Organizations increasingly support BBB for enhancing their brand image as well as recognition. When clients do not attach adequate importance to BBB, the organizations would not invest anymore upon BBB. Thus, it may be said that clients are the most important stakeholders of Better Business Bureau.
Ethical considerations enable confirmation of the correctness or misdirection of specific firms that operates freely irrespective of the stakeholder liabilities. Market orientation may be thought as an important portion of marketing approaches (Matten and Moon, 2004). However, the roles and responsibilities of the clients within improvements of ethical activities and even in social obligation are yet dicey. Business organizations participate in competitive market, and thus market orientation as well as consumer focus are identified as key factors to determine performances of market activities. Excessive competition promotes business organizations for adopting unethical practices (Moore and Jie Wen, 2008). When BBB generates unjustified rating, clients often get misguided. They become more interested in paying for some items or services which a licensed business may provide as compensation for the paid amount to Better Business Bureau for increasing cost.
The key responsibility of the organization is to impart strengthening legal protection to clients. This would be supportive in developing mutual expectation. This also builds trust and help in dealing fairly. The model of Moral Management states that ethical code of conduct, legal orientation, and organizational objectives are key factors that contribute in maintaining ethical standards in case of customers. As per this model, management must emphasize upon achieving success by means of ethical practices. Thus, ethical leadership is very important. This approach supports organization in identifying most preferred direction of all organizational activities. This model emphasizes upon adopting ethical standards since this acts as an integral strategy, thereby ensuring organizational success. Ethical values are helpful in restructuring management and also providing opportunities to make effective decisions. Besides, these develop an effective system within the organizations (Moore and Jie Wen, 2008). The organization Better Business Bureau should stress on ethical issues to create a rating framework. Such an integrated method of BBB would support organization in choosing common point of references and impart better services. This manner would improve the rating system of BBB.
This organization has confronted some key controversial matters relating to its rating policies. Major concerns about ethics have impacted its reputation as well as recognition. A controversy started while a renowned restaurant named “Ritz Carlton Hotel” got F rating from BBB, though it never received complaints. All clients were quite confused since they could not make out how can such a famous restaurant gets poor rating like that (Schaefer, 2007). Later, it was identified that all organizations paying higher charges to the association received a higher rating. Also, companies not paying any charge to the association received poor ratings. This led to severe criticisms of Better Business Bureau. The concept of “pay for play” was quite fraudulent in nature that rates higher for money. This unethical practice of BBB was severely criticized. The customers were misguided thoroughly. This occurred at the Los Angeles branch of BBB. Thus, many firms lodged complaints against the unfair rating system.
Another concerning issue was identified with BBB. They were quite friendly with the business firms. When clients lodge complaints against the association, BBB asked clients to fill up some additional information within the complaint form (Shaw, 2008). Thus, these were sold to the organizations for helping them identify all their weaknesses to work upon those. Customers were quite upset with behavior of BBB. Besides this, it was also identified that the association was engaged in partnership with other firms to ensure profit for both. As per non-accredited organizations, BBB avoided the organizations that did not pay charges. It had completely ignored the ethical responsibilities. This had affected its reputation by lowering its value towards customers (Shi and Sun, 2014).
On analyzing important issues of BBB, it was identified that stakeholders need to be emphasized immensely by the association. Theory of stakeholders helps management of any firm to facilitate investigation for identifying best suited approach to fit organizations firmly in the environment. Also, it enables identification of work mechanisms that creates positive impacts upon the stakeholders. As per the theory of Freeman, avoiding stakeholders is an unethical practice and leads to negative impacts upon the firm (Trong Tuan, 2012). On other side, concept of corporate social responsibility identifies four major areas: economic, legal, social, and ethical responsibility. As per the theory, the firm must emphasize upon achieving profit by means of corporate activities in ethical manner. Certainly, BBB did not succeed in this matter.
Revenues for BBB are generated from fees of membership that are gathered from organizations interested in. The association does not receive any funds from governmental agencies. Again, the association also lags in the area of legal responsibilities. This would mean that organizations need to adhere to legal rules and regulations that BBB does not. This enables building of trust amidst customers and stakeholders. It failed to maintain any particular procedure of rules or regulations (Whelan, 2013). The branch of BBB had reduced personnel expenses that excluded any sort of rudiments which will allow the association to judge right complaints of businesses. Several firms have faced the consequences of decisions taken by unprofessional personnel.
Besides, factor of ethical responsibility that deals with incorporating right things ensure success of BBB. This reflects the cultural side of the firms. As per this theory, business must be perceived as societal citizen by BBB but it lacked transparency. Also, quality was a concern in case of BBB. This had created a lot of trust issue amidst the customers. The association had built a highly confusing rating system in its environment. Also, complaint system was defective in nature since clients could hardly read out issues. This led to enough confusion about its genuineness.
The key issues with the rating system “pay for play” framework of BBB is that of selling of membership. It forms an ethical misconduct on behalf of the association. To ensure that such misconduct is not repeated, the association must emphasize on four key factors – effectiveness, context, values, and leadership (Bures, 2014). Practicing ethical issues must be guided by definite values. Some employees of BBB had agreed to counteract the greedy acts and breaking of laws. Thus, understanding organizational ethics is very important.
Ethical considerations enable confirmation of the correctness or misdirection of specific firms that operates freely irrespective of the stakeholder liabilities. Market orientation may be thought as an important portion of marketing approaches. However, the roles and responsibilities of the clients within improvements of ethical activities and even in social obligation are yet dicey. Further, as perceived by leaders, all employees at BBB lacked in decision-making skills and leadership skills (Attig and Cleary, 2014). Business leaders need to be effective in their communication and managing skills for motivating others to pursue ethical standards. Some of the employees at BBB who have earlier broken the laws at the association were made to pay penalties for that. Although the association had followed increased idealistic beliefs as well as standards, it failed to support the company. So, following improved standards, giving rewards to the customers, and bestowing with penalties may help BBB in improving ethics. The association needs to ensure that it is thoroughly aware of all ethics related practices within BBB environment (Bures, 2014).
For preventing misconducts within BBB and assuring no existence of confusion amidst customers regarding the scheme of “pay for play”, it must adopt some key measures:
Conclusion:
As conclusion, reports describe all ethical matters faced by BBB on account of unethical system of rating. It states that the scheme of “pay for play” proved to be unethical for clients and businesses. For resolving these issues, it is necessary to understand the wants and objectives of the related stakeholders. The report also focuses on important stakeholders of NAD division, both customers that were indirect stakeholders and that of the businesses that were direct stakeholders (Shi and Sun, 2014). As a myth it is believed that BBB processes were impartial other than the scheme of pay for play that created discrimination amidst accredited as well as non-accredited business by means of collecting fees. It has been identified that the scheme of pay to play has a negative outcome upon the businesses (Whelan, 2013). The unreliable procedure of rating of the firm confirms higher ratings to firms that pay fees and low ratings to the ones that have not paid. For non-accredited business, rating process is quite significant. The process of rating impacts the purchase decisions of the clients (Attig and Cleary, 2014). The scheme has impacted upon the clients in selection of the accredited business instead of non-accredited ones. On other side, concept of corporate social responsibility identifies four major areas: economic, legal, social, and ethical responsibility. As per the theory, the firm must emphasize upon achieving profit by means of corporate activities in ethical manner. Certainly, BBB did not succeed in this matter. Also, quality was a concern in case of BBB. This had created a lot of trust issue amidst the customers. The association had built a highly confusing rating system in its environment. Also, complaint system was defective in nature since clients could hardly read out issues. This led to enough confusion about its genuineness.
References
Aßländer, M. (2011). Corporate Social Responsibility as Subsidiary Co-Responsibility: A Macroeconomic Perspective. Journal of Business Ethics, 99(1), pp.115-128.
Attig, N. and Cleary, S. (2014). Managerial Practices and Corporate Social Responsibility. Journal of Business Ethics.
Bures, O. (2014). Political Corporate Social Responsibility: Including High Politics?. Journal of Business Ethics.
Debeljak, J. and Krkac, K. (2008). Ethics and morality in business practice. Social Responsibility Journal, 4(1/2).
Fischer, J. (2004). Social Responsibility and Ethics: Clarifying the Concepts. Journal of Business Ethics, 52(4), pp.381-390.
Ibrahim, N., Angelidis, J. and Howard, D. (2006). Corporate Social Responsibility: A Comparative Analysis of Perceptions of Practicing Accountants and Accounting Students. Journal of Business Ethics, 66(2-3), pp.157-167.
Korhonen, J. (2003). On the Ethics of Corporate Social Responsibility – Considering the Paradigm of Industrial Metabolism. Journal of Business Ethics, 48(4), pp.301-315.
Matten, D. and Moon, J. (2004). Corporate Social Responsibility. Journal of Business Ethics, 54(4), pp.323-337.
Moore, S. and Jie Wen, J. (2008). Business ethics? A global comparative study on corporate sustainability approaches. Social Responsibility Journal, 4(1/2), pp.172-184.
Schaefer, B. (2007). Shareholders and Social Responsibility. Journal of Business Ethics, 81(2), pp.297-312.
Shaw, W. (2008). Marxism, Business Ethics, and Corporate Social Responsibility. Journal of Business Ethics, 84(4), pp.565-576.
Shi, G. and Sun, J. (2014). Corporate Bond Covenants and Social Responsibility Investment. Journal of Business Ethics.
Trong Tuan, L. (2012). The linkages among leadership, trust, and business ethics. Social Responsibility Journal, 8(1), pp.133-148.
Whelan, G. (2013). Political Corporate Social Responsibility: Some Clarifications. Business Ethics Journal Review, pp.63-68.
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