Ethical Decision Making: Balanced Scorecard & Triple Bottom Line - Essay Example

Ethical Decision Making: Balanced Scorecard & Triple Bottom Line Introduction The nature of ethics in the corporate world is that it is a system through which an organization or entity can take responsibility of its actions and also differentiate between good and bad conduct. Ethics, by its nature, encompasses the moral views of the society as well as the legal elements of the society. Instituting the ethical framework is a major aspect of management and directorship. However, there is the need to measure and report on ethics in an organization. The purpose of this paper is to examine the Balanced Scorecard and the Triple Bottom Line as measures of evaluating and assessing ethics Balanced Scorecard The Balanced Scorecard (BSC) was introduced by Robert Kaplan and David Norton and it is a management tool that is used for to drive the agenda of a given organization[Smi11]The BSC translates the organization’s mission and strategy into a comprehensive set of performance measures[Arm131]. The BSC is to divide organizational perspectives across four linked perspectives: 1. Financial 2. Customer 3. Internal Business Process 4. Learning and Growth[Arm131] These four pointers are interlinked and they work to ensure that all the activities of an organization is stratified and evaluated on the basis of financial, customer and other internal procedural systems. This helps to promote ethical behavior because instead of the traditional approach of measuring a firm on the basis of only financial measures and indicators, BSC allows a firm to have a broader perspective and a greater view of the different aspects of a business. Having a responsible organization means that the organization is sensitive to the needs and desires of all of its stakeholders. These ensure that the financial objectives and desires are kept and measures so that the firm’s strategy and different activities are carried out in the best way and manner to achieve targets. Also, customer satisfaction is factored into the measurement process. This is internalized and measured in terms of processes and also, employee development. Ethics can therefore be integrated into the different activities and processes and they can be measured and evaluated. The BSC is good for ethics because there are internal structures that are put in place to measure the ethical activities of a firm at all levels and this can be integrated into the different levels of the firm. This is done on three levels: 1. Monitoring and communication tools in the organization; 2. Measurement systems and review; 3. Strategic management systems[Niv14] This means that an organization will first set up a system of measures that includes ethics. This will ensure that the organization will factor ethics into its fundamental targets and activities from the strategic level which includes the top-level management and the companywide plan and activities. Therefore, with this, the organization will be able to set up measurement measures under the BSC. This will guide the conduct of middle-classed managers and they will ensure that their targets for responsible stakeholder-oriented activities will be defined and limits for doing what is right and wrong can be put in a measurable framework that can be applied within the context of the four BSC targets. Finally, these will be presented to the organizational operational context and this will be assessed and evaluated in order to keep a major review of the changes that will occur in order to improve performance and correct activities that are not right. The most famous entity in America that uses the BSC is the US Navy, the City of Newark and the Atlantic Public School System. These entities get their management to use BSC measures to define the targets and framework for work in these organizations. And from there, they are measured within the scope of the BSC and the financial, customer, internal operations and strategic management systems are measured. They are translated per unit and applied to the respective departments to ensure ethical responsibility. Triple-Bottom Line The Triple Bottom Line (TBL) is a major tool that promotes responsible behavior amongst organizations and firms and this includes defining more comprehensive and more thorough approach to acting and passing judgments. This is because it requires firms to measure their outcome in a three-point framework that includes: 1. Financial; 2. Social and 3. Environmental components[Gue13] This implies that the focus on the firm’s activities is moved from just the shareholder view of maximizing profits. Rather, there is a focus on the improvement of results across all three areas and this makes the managers and directors responsible not only for financial targets but the long-term survival and growth of the firm[Gue13]. This is done by engaging the society within which it works and also taking into account the wider environment and the society in its activities[Lon11]. The fundamental end of the Triple Bottom Line is that it provides a framework through which a firm can promote operational sustainability and this is always meant to be done by integrating the long-term and broader stakeholder perspective and requirements. Hence, the firm sets up different targets and the management is required to integrate these fundamental values in every decision they take. Through this, the firm is likely to make decisions in a more comprehensive framework and the results are achieved. The Triple Bottom line is used by most mining companies in America and those that operate internationally. They create a universal model that is applied in different regions within which the organization mines. Hence, the TBL guides the actions and the decisions and they are to define an ethical scope based on the conditions and circumstances at hand in each of the region where they mine. The result is that they are able to get a flexible system to proactively define what ought to be done and they do it as and how it is supposed to be done and completed. Conclusion Ethics is closely related to meeting stakeholder needs and expectations. This implies that the top management of an organization will have to set up a system through which the values of the organization can be transposed to the stakeholders within the operation of the firm. Thus, the BSC is used to formulate four measures and standards – financial, customer, internal business process and learning and growth (employees). This helps to transpose targets into real standards that guide conducts. On the other hand, TBL provides the basis for a firm to define its values across a broader scope to include financial, social and environmental targets that are used to guide ethical decision-making. Bibliography Smi11: , (Smith, 2011), Arm131: , (Armstrong, 2013), Niv14: , (Niven, 2014), Gue13: , (Guenther & Vittori, 2013), Lon11: , (Longoni, 2011), Read More