In today’s era, following business ethics have become much more important than earning sustainable profits. Ethics try to differentiate right or wrong even when the law fails. It is the ethical code of conduct, which prevents the organisation from harming the environment. The importance of ethics has become integral for the sustainable development of a business. Organisations controlled by the ethics and morals are profitable in long term and attain sustainable success.
Apart from importance, a manager has to overcome the ethical issues firstly by identifying the issues. Secondly, identifying the alternatives to solve an ethical problem and finally conducting an evaluation between the alternatives to select a course of action. Solving ethical problem becomes a bit easier when both the manager and employee are organisation centric. Few case studies that are related with the importance of ethics in business organisations are FIFA corruption scandal, and unfair dealing with the employees. On the other side, the report also has organisation that performs various CSR activities and has good image on the part of ethics.
Organisations form its own ethics committee to ensure whether adopting a new ethical trend and culture benefit the employees. Meanwhile, ethical behaviour is also a self-regulating behaviour that positively affects the well-being of the personal behaviour. Various moral philosophies define the use of ethics to an organisation more clearly. The utilitarianism theory helps to develop personal and organisational effectiveness. It also establishes strict rules and regulations to be followed by the employees in an organisation. The report in the later part provides review from the multiple perspectives on the contribution of ethics to the success of an organisation in the long-term.
According to Ardichvili and Jondle (2009), Business ethics are the moral principles that teach the way that how a business should behave. Acting in an ethical way means differentiating the act as what is right and wrong. According to Jardins and Joseph (2014), business ethics is defined as carrying business as per the moral standards. Ethics provide a structured form of moral principles and code of conduct. According to Rossouw and Vuuren (2017), ethical decisions have positive implications such as low regulation cost, high goodwill, high sales, more customers, and satisfied work force.
Company`s reputation is built by customer trust. Moreover, by following the right path to fulfil the right values a company gets reputation. Credibility is now considered as another advantage that can give economic value to company`s product as well as to company`s image. According to Chell et al. (2016), the credibility degree is dependent on how far the public perceives the activities of the company beneficial to the society.
Development of business can create long-term value from customers, employees, and investors. Apart from maximising revenue and profit margin, the shareholders expect the company to create its public reputation. Organisation attains credibility by giving considerable value to stakeholders, by offering non-adulterated goods and services, providing employment, fulfilling a social requirement and making the environment better.
According to Breslin (2018), when a company wants to raise extra capital, it should have a strong ethical base. It is important for shareholders to know that business is actively managing its ethics. Various transparent accounting practises win confidence in shareholders and encourage them to invest capital willingly. Investors may be reluctant to invest capital if they observe company working socially irresponsible.
According to Cooper (2017), an organisation always creates provisions for the risk and uncertainty to stabilise the success. Long-term growth comes from long-term ethical vision into the account of stakeholders. Low and long-term sustainable profits are better than uncertain and short-term profits. For example- Goldman Sachs Group. is an American multinational investment bank is attempting to earn a bonus on long-term value rather than the current performance. Fundamentally, most stakeholders have turned self-centred that increase the importance of ethics in business. If the moral interest of people is ethical it will encourage the people to drive changes through ethics. The importance of ethics has awaked the consumers. Moreover, social media is the major instrument in spreading unethical stories of the organisation. According to Weimer, and Vining (2017), Cost and risk reduction, limited resources and Anti-capital sentiment pressurise the long-term growth. After the goods are produced, the quality of the product was evaluated in an attempt to reduce the risk association and cost of customer complaints. High standard of ethics in an organisation helps them to build a sense of trust and loyalty among the customers that affects the company reputation in the eyes of customers.
According to carey (2018), operating a business in an ethical manner has become a moral obligation towards the society. A business earns from the community in form of profits and distributes it among the people belonging to society such as salary to a director, wages to employee and dividend to shareholder. The company has the responsibility to solve the social problems that have created by their operation. According to Weiss (2014), an organisation has a moral obligation towards various stakeholders, who have the right to claim, such as providing good quality products to customers. A business can build good social relations among the members, individuals, and organisations by following law obligations.
According to Vitez (2018), Business ethics is a tool to identify whether executive, director, and manager act in a responsible manner in different business situations. Decision-making requires a company to identify the ethical standards. As an organisation grows, more individuals entering as employees who do not have knowledge of the same ethical standards which previous individuals in the company have. The company may use expert insight or training and development methods. Therefore, company can involve employees for decision-making in ethics. Professional consultants are able to advise the way to implement a rigid ethical code of conduct for business operations.
Management issues that occur in solving various ethical dilemma are-
Conflicts of interest among the employees- Conflict occurs when the perception of two people differs to a major extent. These rivalries may involve jealousy and clashes. for example- diverting the customers in the favour of friend`s organisation, where the friend`s organisation is giving gift to the colleagues as inducement.
Taking credit for other`s work- Employees working together in a team to make new product development strategy and marketing campaigns. Not every employee contributes equally in developing the strategies. The whole team gets the reward for new ideas.
The ethical role of a manager is a combination of both a moral person as well as a moral manager. While solving the management issues a manager can easily overcome ethical dilemmas by following the below steps-
Identifying the ethical issues without judging- Firstly, a manager has to recognise and identify the existing ethical issues. One wrong deed by anyone in the management can affect the whole organisation. The affected parties can be shareholders, customers, suppliers, employees, and creditors (Martinez, and Wueste, 2016).
Identify an alternative course of action and discuss the situation with the subordinates- As per cause and effect relationship, every action has a reaction. The solution to every problem can be in more than one way. Identify the parties which are most affected by the ethical issue. Employees may be genuinely unknown to the problem`s reason or they may not be willing to know and solve the negative situation. Course of action complying ethical principle – Using ethical obligations to decide a course of action; a manager should have ethical skills to solve the prevailing issues.
Communication strategy involving ethics- Manager should ensure that employees know resources available to them. Moreover, what they need to achieve. The communication strategy ensures that employees should have the required information that they need in a particular time and in a current trend. Manager helps them by encouraging the employee communication regarding morals, values, standards, and code of conduct of the organisation. An organisation should appoint an ethics officer- most senior manager in the organisation who has retired from the company (Applied Corporate Governance, 2018).
The models of the business ethics include three principle components, which are expectations, perceptions, and evaluations. These components further include some other sub-components-
The models of ethics can be applied in an organisational context that can help to gain an understanding of the ethical success.
Focusing on building ethics committee and policies– The ethics committee looks organisation`s initiates for ethics and supervises the deeds of the ethics officers. The ethics committee has the final authority to check the environment by making new and revise policies. For example- if the ethical committee came to know the new pattern to encourage employees for goal setting and the related rewards. It is the responsibility of the ethics committee to establish the trend in the organisation. By making ethical managerial decisions, Managers can use a number of ways of moral obligation based on rights, duties, and justice (Hibbert, and Cunliffe, 2015).
For example-, Starbucks has no place as a good responder to its CSR activities because of its competitive business practices. However, the company is quite regular in resolving environmental problems. Starbucks saves water by reducing its use for the dipper. Starbucks offers a 10% discount to those who keep their used cups and return them to a company.
Ethical moral philosophy cannot only improve individual behaviour in the organisation but also these moralities will affect their personal life. Before committing wrong deeds, an employee will rethink because the employee is aware of what is wrong or right. Philosophies are the moral judgements and the value of decisions about what is right or wrong. Applying moral philosophy to business is not simple. Especially in an international market where the definition of right and wrong is different in a different culture (Mack, 2018).
Manager should conduct seminars, workshops to teach the employees what organisations expect. The Manager should give them an opportunity to apply the ethical teachings and standards to the given dynamic challenge and situation. For example- training enables the employees to identify the tricky situation with difficult goals ensuring that employees know what resources are available to raise and solve the ethical issue. After setting the ethical standards and providing ethical training, the probability of issues related to ethics can reduce but not eliminate fully (Managementstudyguide, 2018).
Leaders usually set the climate and standards. If the manager is trustworthy and they give honourable motivation to employees with a clear view of the goals, the probability of happening of unethical issues becomes rare. The most common example related to an ethical issue by leaders is the FIFA corruption scandal; the leaders were involved in the bribery. Reportedly, FIFA president Sepp Blatter was involved in the scandal. The marketing executives paid more than $150 million as a bribe to FIFA officials to allocate broadcasting rights (Yglesias, and Stromberg, 2015).
Each decision is made by knowing the effects of an ethical issue caused by an individual decision maker. Egoism has two different dimension- self-interest and organisational interest. While solving a problem, the manager undertakes a strict set of rules when facing a situation related to organisation-interest. For example- a company`s management decides to hire competitors finance manager and torture the manager to reveal and disclose the confidential information of the company. In this situation, the ego of the manager is organisation centric. However, it is a wrong deed. On the other side, meanwhile, if CEO wants the financial position to look as profitable as possible without considering the importance of rules and its effect on the business, the egoism empowers the organisation (Bazerman, and Sezer, 2016).
Most reliable theory, the theory of Utilitarianism states how far ethical practices are moral or good when it helps the people in the society (Trevino, and Nelson, 2016). For example- politicians may spend a lot of money on campaign ads. The politician must evaluate whether spending on the ads was beneficial or the money could have spent in some other way to benefit the people.
Organisational Culture- Organisation culture drives the member to produce better results together. There is a direct relationship between corporate culture and ethical code of conduct. There are some wrong and right deeds as per the culture of the organisation or leader define them. By focusing on employees and make them aware of the moral obligations, organisation encourage fair dealings with other business and outside the business (Pandey, and Rishi, 2016). Moral philosophy can help an organisation to promote and create a culture of loyalty, honesty, empathy, and ethical practices in employees. For example- the working condition of the organisation should be safe and secure. Work timing should be fair and reasonable. The organisation that do not hold rules and care for the employee rights can affect adversely affect the morale of employees (Eisenbeiss, Knippenberg, and Fahrbach, 2015).
Discipline- Apart from identifying right or wrong in helping the person, the theory of utilitarian also provides morals for punishment and justification where the criminal pay for the crimes. Utilitarian can apply to control employee who behaves outside the norms of the organisation (Houmanfar, Alavosius, Morford, Herbst, and Reimer, 2015). Positive reinforcement motivates the employees and to get rewards, promotions, bonuses, and incentives and put more efforts. For example- the manager explains the underperforming employee to foster the performance by following ethical standards. The three ethical theories are utilitarian, right, and virtue. The right ethical theory protects the society rights. Society rights are given the highest priority. Whereas, the utilitarian theory aims at decision making which should not harm anyone.
In developing personality effectiveness, ethics can help to make effective leaders. Good ethics generate necessary moral personality traits in a person (Waggoner, 2010). Continuously, various strategies are developing to fix what is right and how to fix the necessary traits in leadership.
The contradiction occurs when right action in the short run does not seem right in the end and the action that seems right for a group of people may not fulfil the broader interest of the organisation. For example- Mafia families may have strong ethical practices, but they do not fulfil a larger context in society. To overcome the regulatory and compliance failure, leaders should adopt new policies to accomplish its compliance requirement. Ethical leaders focus on how their decision and act influence others (Crews, 2015). Ethics affect the personal effectiveness-
The other example other than the Mafia family case, related to business ethics in an organisational context consist of Toshiba’s Accounting Scandal, Volkswagen cheated emission test, Exxon Mobil’s deliberate act to mislead people about the climatic change.
Conclusion
Ethical practices play an important role in creating long-term credibility in an organisation. Managers should create confidence in their stakeholders through ethics by providing the customers satisfaction rather than focusing on short and risky returns. Ethical organisations reduce their compliance cost by following the ethical rules timely. The manager has to be organisation-centred rather than self-centred. The work performed for the benefit of oneself without considering the negative impact on an organisational structure cannot promote long-term profit for an organisation. An organisation should make ethics committee with the manager who can make amend the required policies trending for employees, stakeholders and customers.
References
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