Ethical Situation in Business - Essay Example

Ethical Situation in Business Table of Contents Table of Contents 2 0 Organizational Culture and Importance of Ethics 3 2.0 Developing of Ethics 4 2.1 Commitment to Clients 4 2.2 Commitment to Fiscal Integrity 5 2.3 Commitment to Profession and Public 6 3.0 Ethics Training Program 6 4.0 Monitor, Audit, and Report Misconduct 7 5.0 Review and Improve the Ethics Program 8 References 10 1.0 Organizational Culture and Importance of Ethics Nonprofit organization or even general companies hire external management consultants in order to help them to sort out business related problems. Many of the management consultants give importance on building ethical culture within their organization before suggesting any prescription to clients. Building ethical culture is important for the following reasons. Study shows that employees prefer to work for an ethical organization while they believe working for an unethical organization makes an individual employee as ‘bad’ person in the society. Companies need to emphasize on ethics in order to satisfy their employee pool and use existing human resource pool in to fillip growth (Trevino & Nelson, 2010, p. 194). Code of ethics helps the company to build sustainable image in front of their stakeholders. Unethical business practice creates negative image in front of shareholders and government of the country. In the extreme case of unethical behaviors like fraud, bankruptcy, misrepresentation of company asset or any kind of forgery government takes legal action against the company. Legal action against the company not only hurts market reputation of the company but negatively affects shareholder’s interest. In the given situation companies of USA has designed ethical assistance lines for employees to report ethical concern or ask question about companies business pattern in order to create a transparent ethical environment in the organization. The following diagram will show propensity of employee to report unethical business practice of the company (Ferrell, Fraedrich, & Ferrell, 2009, p. 222). National (USA) Percentage of Employees Reporting Unethical Business Practice by the Company (Source: Ferrell, Fraedrich, & Ferrell, 2009, p. 222) 2.0 Developing Code of Ethics 2.1 Commitment to Clients The company will serve its clients with utmost competence, integrity, objectivity, professionalism and independence. Employees will provide realistic expectation about the benefits of service to the clients. Misrepresenting benefits of consulting service to clients is prohibited. The company will only accept projects for which they have the requisite knowledge, expertise and experience to accomplish task successfully. The company will engage only those employees who have the requisite expertise and knowledge to complete the project in accordance to demand of clients. The company must worked with clients regarding objective of the assignment, work plan, time schedule to finish the project and fee structure prior accepting any consulting engagement. Employees of the company will take care of the confidential client information and must not disclose any of the information in public without taking formal permission from clients. Disclosing client information to their competitor’s is strictly prohibited and employees practicing such unethical transaction will be under legal jurisdiction of Federal Government. Employees will try to influence clients to take wrong decision in order to achieve personal prosperity. Employees should not continue any consulting assignment against personal integrity and honesty. Employees should not contact human resource pool of inactive or active clients for personal reason during the assignment time period. 2.2 Commitment to Fiscal Integrity The company will charge fees from clients in accordance to predetermined terms mentioned in the agreement. Employees and the company will not accept any kind of bribe, remuneration, commission or any kind of fringe benefit from third party connected to clients without taking prior permission from clients. The company will disclose such kind of monetary offer from third party to clients as soon as possible. 2.3 Commitment to Profession and Public Employees will report to higher authorities about malpractice, illegal engagement or unethical behavior of other employees and employees have the right to question higher authority about any kind of unethical business practice. Employees should respect the rights of consulting company and consulting colleagues. Employees should not use proprietary information, transactional data or research methodology without taking permission from higher authority. Employees need to show respect to his/her profession with utmost integrity and maintain professional relationship with clients. The company will not use deceptive advertising to promote their service in order to create misrepresentation about their capabilities in the mind of clients. The company will report to the Institute of Management Consultants of the country for any kind of violation of Code of Ethics (ImcUsa, 2012). 3.0 Ethics Training Program The company will prioritize compliance risk in accordance to their potentiality recommended by industry peers. The company will prioritize issues like professionalism, business ethics, client information confidentiality, taking project as per capability of Code of Ethics in the training program. They need to collaborate with IMC and Certified Management Consultants of the country in order to take their advice on ethical issues. The company will provide a knowledge session about ethical judgment philosophy and company’s code of ethics to employees. Case studies related to industry practice on ethical malpractice and ethics standard will be provided to employees to understand depth of the issue. The company will clearly mention expected ethical behavior to employees. The company will encourage employees to develop personal integrity to show respect to their profession while work shop, special classes and degree program on ethics for employees might help the company in afore mentioned situation. The company will conduct weekly training classes for employees where they are asked to act ethically to a real life problem. This process will mitigate distance between theoretical concept of ethics and real life business scenario (Knouse & Giacalone, 1997). 4.0 Monitor, Audit, and Report Misconduct The company has already established clearly mentioned code of ethics for employees while twenty weeks long rigorous training session on business ethics are designed for employees to assimilate concept related to code of ethics. Performance appraisal process should be linked with ethical behavior of individual employee. Human resource departments should design performance indicators such as keeping confidentiality of client, successful completion of projects in accordance to demand of clients to monitor ethical behavior of employees HR enablers like employee re skilling can be uses to fillip the ethics auditing process. Employee’s behavior must be monitored, recorded and analyzed to fulfill the purpose of ethical audit. Collaborative participation and continuous surveillance process should be used to audit ethical performance of employees. The management should encourage employees to report higher authorities about malpractice, illegal engagement or unethical behavior of other employees while organization will keep utmost confidentiality in reporting process and protect interest of whistle blowers. The organization should synchronize ethical environment in the existing work culture. Disciplinary policy should design proper punishment system (suspension from work, monetary fine, discontinue salary or at worse termination) for unethical behavior. Employees should be warned on the occasion they failed to report unethical business practice by his/her colleagues. 5.0 Review and Improve the Ethics Program The company should give importance on creating strategic map for ethics auditing purpose. Inclusion of non financial elements like human resource management will only explores one dimensions of the problem while organization needs to implement financial elements in auditing process (Rendtorff, 2009, p. 363). The company should use balance score card measure ethical performance of employees. Annual performance of the employee can be measured by using balance score card. Integration of balance scorecard and seven steps HR Scorecard will help the company to monitor compliance of code of ethics properly. Internal cultural perspective should be designed to encourage employees to perform ethically. The mentioned recommendation will not only help employees to earn respect from clients but establish themselves as dignified person in the society also. References Ferrell, O. C., Fraedrich, J., & Ferrell, L. (2009). Business ethics: Ethical decision making and cases. Stamford, Connecticut: Cengage Learning. ImcUsa. (2012). IMC USA code of ethics. Retrieved from http://www.imcusa.org/?page=ethicscode. Knouse, S. B., & Giacalone, R. A. (1997). Six components of successful ethical training. Retrieved from http://www.instituteforethicalawareness.org/img/pdf_files/The%20six%20components%20of%20successful%20ethics%20training.pdf. Rendtorff , J. D. (2009). Responsibility, ethics and legitimacy of corporations. Copenhagen: Copenhagen Business School Press.  Trevino, L. K., & Nelson, K. A. (2010). Managing business ethics. Hoboken, New Jersey: John Wiley & Sons. Read More