Business Ethics In Financial Institutions - Essay Example

? Business Ethics in Financial s Business Ethics in Financial s Business ethics are professional of ethics that examine the principles behind good governance, which are mostly based on moral and ethical principles. It is through business ethics that all business operations are undertaken for the overall good of the organization, and all that it stands for in society. When it comes down to the financial sector, countless individuals believe that business ethics get thrown out the window, because everyone is in it for the money. However, this assumption may not be entirely true. Corporate bodies are out to ensure that they make as much money as they possibly can, but in doing so, must consider both the legal and ethical customs that surround that business. Corporate heads have responsibilities, both to the law and society, to uphold certain moral grounds when it comes to their business dealings (Huevel et al., 2009). This paper will examine the relevance of business ethics, and why it is crucial to uphold these principles, especially in this ever-growing business world. One common view of business that is being used in modern times is the display of corporate social responsibility. This is at the cost or expense of profits, or any other objectives the organization/firm has set out to attain. Business ethics require that corporations have the ability to be responsible to the society in which they are present, as a means of reducing the damage or impact they might have that is considered negative. The financial sector is one field that is not, and may never be free from ethical related burdens (Huevel et al., 2009). In the past, critics have been fast to question the moral standing of most of the executives in top corporations once there was a financial crisis in the horizon. Tax, dividend and investment policies, and even debt and equity are among some of the areas which may be looked at as having the most problems. This is especially when it comes to the morality of those who handle these areas. In the financial sector, managers and organization heads are concerned with the ethical issues that surround their operations. It is vital to do so because unethical behavior in this sector certainly leads to legal risks and criminal prosecution. There is also damage to the business, as well as the employees and consumers who rely on that organization for their livelihood (Fisman & Miguel, 2008). Business ethics have become part of an organization’s foundation. Presently, managers are now well-prepared to deal with and handle situations that come about as a result of moral issues and principles that are part of the financial sector. During the course of everyday life, everybody; consumers to executives, may be affected by business ethics. It is this line of thinking that makes business ethics a crucial element in the handling of everyday business. The code of ethics in every financial sector demands honesty, integrity, and transparency (Huevel et al., 2009). Business ethics are crucial in communicating the core values that are tantamount in the growth and development of society and organizations. Dealing with numbers on a large scale, especially in large corporations, there is always pressure to perform. This may make individuals to try and engage in some unscrupulous activities just to please the organization and stakeholders of the organization. Business ethics, in this case, steps in to ensure that members of an organization have what it takes to handle the pressure and protect the organization’s integrity, and at the same time, offer transparency to the internal and external members of the organization. In truth, business ethics may act as an outside source of guidance, even as there is pressure to perform from every angle in the business spectrum. Ethics may also act as boundaries when it comes to the organization’s culture. When dealing with finances, it becomes rather tricky to always be on the right track. This means that it is a daunting task to protect investors or stakeholders from losses. Members of the organization, especially CEOs, have their work cut out for them especially when there are targets to meet and objectives to attain. Ethical principles run loose in such scenarios. This is because it becomes difficult to monitor the activities of such executives who may only be interested in keeping the numbers of the organization on the rise to satisfy the desires of stakeholders (Fisman & Miguel, 2008). A case in point would be Enron, where the organizational culture was corrupted just so that the organization’s numbers could keep rising. In an age where capitalism is the order of the day, it may be particularly easy for organizations and firms to get lost in the greed and insatiability of increasing their profits, regardless of the consequences. The lack of a moral code makes the executives involved have the liberty to do whatever they want (make moral compromises), especially when there is the presence of pressure from all the investing bodies. Making moral compromises can be detrimental to the growth of an organization (Boldrin & Levine, 2008). This is because other firms might find out and engage in the same compromises leading to a culture of greed and moral corruption. The lack of clear and unblemished ethical perspectives leads to the creation of knee-jerk responses, especially when it comes to financial decision-making. The financial sector and all those who believe in it are, therefore, left to falter in their faith. Another importance of the business ethics concept in organizations is the creation of employment. The recent crises that have rocked some of the economic giants in the world have led to the selection, recruitment, and employment of ethics officers in most organizations. Their employment is a means of reducing some of the negative publicity that most organizations are receiving, especially from members of society. It is their task and duty to enforce the organization’s culture, especially when it comes down to ethical behavior. They are also given the task of monitoring business operations that are concerned with the monetary aspect of the organization. This is because this sector is more susceptible to issues and constant challenges when it comes to organizational performance (Weiss, 2009). Business ethics also assist in the formulation of company policies, which relate to the conduct of all members of the organization. These policies act as guides as they contain specific requirements and identify the organization’s expectations of the employees throughout the working process. The presence of these policies leads to greater awareness of the ethical conduct that is required by most firms (Bodlrin & Levine, 2008). This leads to a better awareness of the benefits and advantages of having moral principles in everyday business dealings. The environmental factors that surround an organization can also be monitored to ensure that unethical conditions are reduced. A case in point would be the over-competitive nature that people in the organization are exposed to that may lead to unethical behavior. Monitoring such an environment could be of benefit to the growth of ethical standards in the organizations. In conclusion, if firms or organizations are keen on operating a certain way, it is crucial for them to write down moral codes. They need to follow these principles and rules so that they can protect the integrity and honesty of the financial sector. Money is not evil. Rather, it is something that is used to run commercial activities between individuals and organizations. It should not be the cause of all the squabbles and disagreements that are seen on most financial fronts in the world. It may be alright to make a lot of money provided individuals (executives) conform to the rules and regulations of the law and society (Weiss, 2009). The disconnection between a firm’s code of ethics and its activities needs to be bridged. This makes it easier to handle the organization’s members, society, and stakeholders as they strive to conquer the international business market. References Boldrin, M., & Levine, D. K. (2008). Against intellectual monopoly. Cambridge: Cambridge University Press. Fisman, R., & Miguel, E. (2008). Economic gangsters: Corruption, violence, and the poverty of nations. Princeton: Princeton University Press. Huevel, K., et al. (2009). Meltdown: How greed and corruption shattered our financial system and how we can recover. New York: Nation Books. Weiss, J. W. (2009). Business ethics: A stakeholder and issues management approach with cases (5th ed.). Mason, OH: South-Western Cengage Learning. Read More