Business ethics is an essential contemporary topic in the leadership and management of people since it enables managers and leaders to carry out their roles within the confines of what is described by the organization as morally ethical (Crane, & Matten, 2016). It equips managers and leaders with pertinent skills which they require to ensure ethical behavior in every echelon of the organization. When organizational stakeholders such as the employees conduct themselves in an ethical manner, positive public image of the entire enterprise is enhanced (Trevino, & Nelson, 2016).
In this particular report, the potential risks that would affect the new PA in terms of its accountability, transparency of operation and employee ethical conduct will be analyzed. Besides, the report will develop an options assessment of how a suitable ethical standard relating to accountability, transparency and employee conduct is to be achieved by PA and monitored in practice. A critical evaluation and justification of the sort of leadership model and philosophy that would best support a sustainable ethical organisation will be done.
Earlier this year, Equifax Inc. (a credit-reporting firm) found itself in a very shameful corporate scandal whereby personal details of around 143 million of US clients had been exposed. Among the customers’ sensitive information which the Company leaked include credit card numbers, security numbers, birthdays, drivers’ license numbers, and addresses. Wells Fargo, also, in 2016 indulged in fraudulent activities wherein they created over 1.5 million counterfeit accounts and in the process produced half a million illegal credit card applications.
Pearson, (2017) states that organizations should undertake all activities within the stipulated confines of their business ethics. Clearly, in these two scandals, this was not the case. Both Equifax Inc. and Wells Fargo indulged in unethical activities which were risking critical details of customers who had entrusted their information to them. Apparently, after these scandals both firms exposed themselves in various risks which would affect their accountability, transparency, and employee ethical conduct.
In a similar manner, the new Procurement Agency (PA) is vulnerable to some risks in terms of its accountability, transparency of operation and employee ethical conduct. PA, for instance is susceptible to a number of purchasing risks in its procurement cycle. If the Agency indulges in any ethical scandals it will not be able to control the information concerning its purchase orders in a certain format like Excel for review purposes because it will be trying to hide some filthy information. Equifax, for instance after the aforementioned scandal could not relay its information for public use since it was attempting harder to hide its fraudulent activities.
Due to its inability to control its procurement information, the PA will not ensure a smooth process for every single order, case or follow up. In short, its accountability will be greatly hampered (Bolandifar, Kouvelis, & Zhang, 2016). Besides, the PA might in some cases fail to deliver the required materials promptly or on time. Again it may not be able to clear the suppliers’ invoices on time, something delay his/her money causing stopping further business with the PA. Such risks would occur in case the PA fails to observe set business ethics and thus negatively impact on its transparency of operations in the long run. Same case happened to Wells Fargo after the incident making many organizations and individuals to terminate their contracts with this company.
Deplorable employee ethical conduct will lead to occurrences like under-productivity, poor employee turnover, and inequality. These are some of the risks which befell Equifax and Wells Fargo after the two scandals. Due to their already tainted corporate image, the employee turnover was affected and the existing ones started to underperform in their respective business tasks.
Developing excellent ethical decisions involves a skilled understanding of ethical issues and a trained approach for investigating the ethical elements of a decision and taking into account the considerations that should affect our choice of a course of action (Bridges, 2018). Having a process for ethical decision-making is very crucial. Once practiced on a regular basis, the process emerges so decipherable that we work through it easily without conferring with the specific steps. The newer and complicated the ethical option we encounter, the more we have to depend on dialogue and discussion with other people about the dilemma. Only by vigilant examination of the predicament, helped by the views and dissimilar outlooks of others, can we make high-quality ethical choices in such circumstances.
This framework can be used to develop an options assessment of how a suitable ethical standard relating to accountability, transparency and employee conduct is to be achieved by PA and monitored in practice.
Recognize an Ethical Issue
Get the Facts
Assess Alternative Actions
Make a Decision and Test It
Act and Reflect on the Outcome
Democratic leadership model also known as shared or participative leadership can best support a sustainable ethical organisation. In this leadership model, group members are allowed to take a more participative role in the decision-making process (Smolovi? Jones, Smolovi? Jones, Winchester, & Grint, 2016). All people are given the chance to take part, freely exchange ideas, and discussion is encouraged. While the participative process tends to concentrate on group impartiality and the open flow of ideologies, the leader and manager of the PA will still be there to provide control and guidance. The democratic leader will be left with the responsibility of determining who is in the PA and who gets to contribute to the decisions that are being developed.
Wells Fargo can follow these steps as a change initiative towards remedying the unethical behaviour and preventing further fraudulent activities in their business.
1st step: Know Your Employees: The first step is taking time to get to know employees. This will help Wells Fargo to identify fraud perpetrators who often exhibit behavioural qualities that show the intention to execute fraud.
2nd step: Make workers aware/initiate a reporting system: consciousness influences all workers. Everybody within Wells Fargo has to be alert of the fraud risk policy including forms of scam and the repercussions linked with them. Employees who are preparing to carry out fraud will be aware that management is watching and shall optimistically be put off by this.
3rd step: Implement Internal Programs: Internal controls refer to the controls or plans employed to uphold a company’s assets, ascertain the reliability of its accounting records, and daunt and sense fraud and theft.
4th step: Hire Experts: Wells Fargo can hire some experts who can help them in initiating antifraud procedures and policies.
PA organization should work to ensure that all its policies reflect good ethical or moral principles. It is supposed to evade any activities which might leave the business enterprise in a business ethics scandal. Proper consultation before reaching to any final decision should be conducted to ascertain that every judgment the management makes is within the boundaries of corporate ethics or any prescribed code of conduct.
References
Bolandifar, E., Kouvelis, P. and Zhang, F., 2016. Delegation vs. control in supply chain procurement under competition. Production and Operations Management, 25(9), pp.1528-1541.
Bridges, E., 2018. Executive ethical decisions initiating organizational culture and values. Journal of Service Theory and Practice, 28(5), pp.576-608.
Crane, A. and Matten, D., 2016. Business ethics: Managing corporate citizenship and sustainability in the age of globalization. Oxford University Press.
Pearson, R., 2017. Business ethics as communication ethics: Public relations practice and the idea of dialogue. In Public relations theory (pp. 111-131). Routledge.
Smolovi? Jones, S., Smolovi? Jones, O., Winchester, N. and Grint, K., 2016. Putting the discourse to work: On outlining a praxis of democratic leadership development. Management Learning, 47(4), pp.424-442.
Trevino, L. K., & Nelson, K. A. (2016). Managing business ethics: Straight talk about how to do it right. John Wiley & Sons.
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