MGT 216 Week 5 Learning Team Assignment Ethical Organization Profile
MGT 216 Week 5 Learning Team Assignment Ethical Organization Profile
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Date Created: 11/13/15
What is business ethics? There are many different definitions of business ethics. In general, the term is used to mean a form of applied ethics in which a system of ethics and morality is applied in the business world. The exact application of business ethics will differ from organization to organization, and place to place. Different organizations deal with different stakeholders, different clients and customers, and different dimensions of the work world, industry, and market. The way business ethics must be applied is determined by the nature, mission, purpose and goals of a given company. The universal purpose of business ethics is to ensure that companies treat their workers, partners, clients, and any other involved shareholders or stakeholders with ethical and moral integrity. Business ethics used to be taken for granted and assumed, almost as an extension of the personal ethics of those involved in the business. In more recent years, however, following different issues including the 2001 Enron scandal, individuals and businesses have focused more on analyzing and formalizing business ethics (cf WiseGeek, retrieved 2010). A Model Organization: Integral business ethics in terms of social issues, legal issues, and profit. Taking a fictitious restaurant food supply organization called The Ultimate Deal, as an organization that serves as a model of business ethics, the practical implications of business ethics can be explained. The Ultimate Deal, as a restaurant supply organization, deals with several different organizations and stakeholders. It has its clients – the restaurants. It also has its own suppliers – the butchers and farmers that work together with it. The organization has its own employees, and the executive board. It also has its main investors, and other minor shareholders. Ethics must be applied in the organizations dealings with all of these stakeholders. The organization must balance and merge honest business ethics with its other social and legal realities. Ultimately, the organization exists for profit. There are times when dealing unethically, lying, for example, about the quality of the meat sold in order to raise the price, will reap greater profit than the negative consequences – law suit and fine – of the unethical behavior. In a model organization of business ethics, such as The Ultimate Deal, the ethics must come first. Ethics should not be seen as a challenge to profit, but should be balanced with profit. Such an organization, instead of lying to one stakeholder, such as its customers, to make extra profit, can market itself in the name of business ethics, and gain the same profit and support from a legitimate source – integrity – rather than through dishonesty. At the same time, in order to balance ethics with the companies social responsibility to live up to its name and identity, its economic responsibility to make profit, and its legal responsibility to comply with existing laws, tax systems, etc., the organization should make sure it doesn’t over commit or aim to high. A company that commits or sells itself at a standard that cannot be met by its means places itself in a situation where it either faces social and economic failure because it can’t live up to what it has advertised, or it resorts to unethical business behavior. The Ultimate Deal is able to balance these issues by careful and selfanalysis, realistic projection, and honest advertising. Before committing to something or advertizing a certain quality of product for a certain price, the company reviews its budget and resources, weighs the amount of initial investment needed, and compares it with the expected profit. If the investment costs far more than the expected profit, the company doesn’t proceed with the plan. If, on the other hand, profit is expected to exceed investment, the company proceeds. It does not, however, over commit and advertise, but uses a pilot program, which can be controlled and monitored until the initiative is finetuned and proven to have worked. For example, if The Ultimate Deal thinks it will profit from selling higher quality steak at the same price as its current quality steak, it calculates the amount of money that will be lost by the investment, and compares it to the profit that will be reaped by an increase in customers and purchases. The profit outweighs the investment, so the organization puts out the offer in one city, for a limited time period. If it succeeds, it then extends the practice to all chains. If there is a loss, the company stops after one month. It has fulfilled its commitment to its customers and dealt ethically on all sides, while ensuring that the ethics and commitment doesn’t have a strong negative impact on the company’s ultimate goal, which is profit. The Ultimate Deal: A Code of Ethics The Ultimate Deal has a formal code of ethics that expresses the expectations and application of business ethics toward all stakeholders. The topics include legal ethics – the need to act honestly and ethically faced to legal matters including regulations, inspections, taxes, etc.; ethics in dealings toward investors, keeping them informed and involved; ethics toward customers, ensuring responsibility, reliability and coherence, providing what has been committed to; ethics toward the press in terms of advertising and press releases; ethics toward employees including rights and duties and ethics toward the executive officers, both in terms of how they should be treated and what their duties are. The code of ethics is distributed to all shareholders. Each category of shareholder (executive, employee, investor, customer…) receives a verbal explanation of the ethics that apply to them, and have the opportunity to voice any concerns or questions. Ethics applied to customers are also posted in the appropriate customer service and sales areas for public viewing. Decisions, in terms of whether or not to proceed with an initiative or project are made based on the code of ethics. Rewards are also determined based on ethics: financial raises, and awards such as employee of the month/year take the code of ethics into consideration as a major determining factor. The code is reviewed in employee evaluations and in the weekly managerial meetings (application of the code) and yearly or twice yearly evaluations of the mission statement (effectiveness and appropriateness of the code). Ethics are emphasized to recruits and trainees, who are required to thoroughly read the code of ethics prior to the second employment interview, and also receive specific training about ethics and its application during their orientation. Monitoring the code of ethics: employees and managers All employees, including managers, are expected to thoroughly know the code of ethics as one of the company’s main values and priorities. All employees of the different branches gather respectively for a monthly meeting that addresses not only the practical success of the institution, but also the ethical standing of the previous month, and the degree to which the employees and branch are identified to the mission and nature of the company, and form points to improve for the coming month. This gives the managers the opportunity to encourage and support the employees and to hear about any difficulties. The employees are also allowed to voice ethical problems to the manager in person at other times. Complaints are expected to be objective and not based on discrimination. As a result, while an employee may vocally express a difficulty to the manager, all complaints must also be filed in writing, using a supplied format. Managers, for their part, are expected to make all decision based on ethics. If spontaneous decisions, which are often required on site, are not in keeping with the business ethics code, employees should, in a respectful and objective manner, in writing, express this to the manager. If the situation is not remedied, the employees may file a complaint higher up. In major decision making processes, the managers need approval from a higher executive office. The written proposal format includes a space for analyzing the ethical dimension of the project. The manager does not just need to show that the project is not against ethics; he is expected to show in a constructive manner how the project/initiative supports and fosters the business ethics. The considerations taken into account for planning and policy making include financial ethics and openness, ethics toward the investors in terms of being coherent with the nature of the company that the investors agreed to, employment ethics such as fair wage, time off, fair rewards, no discrimination, etc., accurate advertising, and ethics toward the customers in terms of honesty, fiscal responsibility, punctuality, and fulfilling contracts and commitments made, even if it doesn’t make the profit expected. Conclusion: Business ethics is a dimension of all organizations. It can be complex, as it must be applied to all shareholders, but takes on different forms and commitments toward each of them. In order to assure the integrity of the company, and universal application of business ethics, each organization should have a written code of ethics and policies that are disseminated to all shareholders and the public. Employees and all people who represent the organization must be trained in how to apply ethics in their own role, and how to integrate ethics into the decision making process. The company should have policies in place that enable it to protect its ethics, without threatening its profit or identity. References WiseGeek. What Are Business Ethics? Retrieved March 5, 2010 from http://www.wisegeek.com/whatarebusinessethics.htm
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