Historical Growth of Business Ethics - Assignment Example

Business Ethics Task Introduction Behaving in an ethical manner involves articulate ability to distinguish right from wrong before making the right choice from the two. Business ethics (Okoro et al 2014) on the other hand is the study of suitable business policies and practices concerning potentially controversial matters or questions, such as corporate governance, discrimination, insider trading, corporate social responsibilities and fiduciary obligations. Law always guides business ethics, whereas offering a fundamental framework that the business ought to go in accordance to, in order to win the public acceptance. Business experts claim that ethics is implemented to ensure that a particular required standard of trust is available between consumers and a range of forms of market participants with business. For instance, any portfolio manager is supposed to give equal consideration to family members’ portfolio and that of small individual investors. Basically, it is relatively less complicated to spot and identify unethical business practices. The rules run on the basic moral of the society, for example, companies and businesses should involve child labour, should avoid unauthorized use of copyrighted documentation and practices, they should also not participate in bribery among many other basic societal morals. Theoretical background and historical growth of business ethics Studies (Okoro et al. 2014) show that business ethics has advanced through time across different disciplines into a discipline that is currently one of the most topics in the current business field. To tackle the historical advancements and developments of business ethics, it is of great significance that we first look at the definition of the phrase business ethics in a global point of view. The global perspective puts it as the decision about what is good or bad in the organizational framework of planning as well as implementing what are business actions in the global business atmosphere. For instance, organization performance, personal or individual accomplishment in the place of work, social acceptance and recognition of peers and coworkers within the organization and responding to needs of relevant internal and external stakeholders. The primary aim of proactive ethical organization is to build up an ethical organizational culture. This greatly needs strategies, systems as well as procedures to see that the organization’s ethics and compliance plan is in place and effective operation with continuous assessment and development. Brief Business ethics history Business experts (Culver et al. 2013) broadly interpret business ethics as the moral reflection on commerce. They claim that the ethics may be as old as the trade itself. Therefore, if law is a bumpy guide to widely-held moral perception, the code of Hammurabi, lay down prices and tariffs and inconsiderate penalties for the non-compliance, evidences some of civilizations and earlier attempts to set up the moral contours of business activity. However, when perceived as a discrete, self-conscious scholastic discipline, business ethics is almost four decades old. Business experts’ groundbreaking research (Culver et al 2013) studies in the 1960s are taken as the earliest contributions to business ethics. Some experts also date academic business ethics to the 1970s, acknowledging Baumhart as the predecessor to a self-conscious scholastic business ethics. Norman Bowie, a prominent business ethicist, dates the fields first academic conference to 1974. Professional academic business ethicists (Culver et al 2013) address questions that play across the functional areas of business, hence raising recognition to various specialties in business ethics. (finance ethics, accounting, and marketing ethics. However, despite the wide range of all these questions, the greatest volume of academic literature and discussion is more closely focused on the large corporation whose ownership shares are traded on a public exchange. Ethical issues a business goes through Fundamental issue: According to Culver et al (2013) most important issues that any business organization must face are the integrity and trust. The basic understanding of integrity begins with the thought of conducting ones business activities with honesty and dedication to treating each customer fairly. Whenever customers have a perception that a company is not exhibiting a wavering commitment to ethical business rules, it is possible that a high level of trust will develop between the business company and the individual it intends to serve. Building a relationship on trust with customers is a great determination of the company’s success. Diversity Issues: Business experts (Culver et al 2013) say that according to HSBC, the world is diverse and rich place full of different interesting culture and individuals who should be treated with utmost respect and from whom we can learn a lot. Ethical reaction to diversity in business first begins with having a diverse workforce, putting into effect equal opportunities for training curriculum and is finally achieved when every worker is able to enjoy a respectful and effective workplace atmosphere that values their involvement. Maximizing each employee’s value and contribution is a significant element in any business. Decision-Making Issues: In accordance with Santa Clara University (Culver et al 2013), there is a framework that needs to be put in consideration for ethical decision-making issues and exploration of ethical dilemmas as well as getting to identify ethical course of action. The framework takes the following frame: “recognize the ethical issue, get the fact, evaluate substitute actions, make a decision and test to reflect on the results.” Any ethical decision making should aim at protecting the rights of employees and the customers, hence making sure that all business operations are just and protect the common good of the stakeholders. Compliance and Governance Issues: According to Culver et al (2013) all businesses are supposed to comply with the federal laws and other national or constitutional laws: environmental laws, both federal and state safety regulations, and all other applicable civil rights laws. Task 2 How the ethical values affect business behaviour Maintaining ethics builds loyalty with consumers. It is easy to exploit the consumers once. However, whenever consumers feel that they have undergone an unfair treatment, such as overcharging, they are most likely to stop any future business transaction with such a company. Good reputation helps a company create a more positive image in the marketplace, which is likely to bring more customers that are new. This can take place through word of mouth referral. On the converse, a bad reputation for unethical dealings only hurt the company’s chances of attracting new consumers or customers. This is even worse in this era of social networking. Customers with dissatisfaction can easily disseminate information about their bad experience with a particular business company. Business ethics also helps business managers retain good employees. Tello et al (2013) reports that individuals who are highly talented at all levels of organization levels always want a fair compensation for the dedication they put into their work. They always seek that career advancements should base on the quality and value of work they do for the company and not on favoritism. Therefore, companies that are fair and open to employees stand a better chance of retaining the highly talented individuals within their organization. Whenever employees have a perception that the compensation methodology is fair, they tend to be less productive that their full capacity. Business ethics also helps business managers and their companies to avoid legal problems. It is normal that business managers will at some point be tempted to cut corners trying to pursue profits. These can be, failing to comply with environmental regulations or even labour law, ignoring workers safety hazards or using substandard materials on a contract. The resultant punishments for these offenses are very severe. However, an ethical business company takes time to train the employees on the expectations on them. Ethical business companies try to avoid breaking of set regulation as they understand that breaking any law is the foundation of breaking profits in the business (Tello et al 2013). Therefore, ethical business managers avoid breaking the law. Some ethical stance affecting business internally and externally Business companies that are ethical ensure that every employer access the freedom for speech and innovation. To allow employees freedom of speech allows them to present their views whenever they are not content with a particular decision. This enhances communication and sense-making decision that all employees feel part of. This encourages productivity. Freedom of innovation allows workers to get out of their regular routine to do what can be more productive. Many companies have also been forced to be ethical for the fear of whistleblowers. Some companies do not just adhere to business ethics because they are ethical, but because they fear whistleblowers (Tello et al 2013). Whistleblowers are people who inform the law or regulatory authorities about a company or business that is taking part in either illegal activities or practices that are against human rights. Whistleblowing is an act that has been in existence from the past centuries, and it is still prevalent in business companies today. Whistleblowers are people who do good but in fear of being disclosed, they feel threatened. To encourage employees and protect public interests in disclosing the illegal or improper actions by the business companies and their managers, the Congress decided to enact the Whistleblower Protection Act in 1989. The act gives employees the opportunity to file a case against their employers or their companies if they feel that the employer is retaliating against their move to disclose the improper activities. These activities can take the form of accounting irregularities or violation of laws such as environmental protection laws (Tello et al 2013). Retaliatory actions may include, laying off an employee, cutting back employee’s workers, demotion, reducing the worker’s salary or moving the employee to another position that he is ineffective. Other actions that may negatively affect the employee’s present or future employment status or work atmosphere may also be considered as retaliatory acts against an employee. According to Tello et al (2013) make a moral relationship between an employer and employee healthy and lively, it is therefore important that an employer treat employees with great decency as employees also ensure that they stick to the company’s set regulations and work to maintain the company’s standards as the manager expects of them. Studies (Cagle et al 2008) on employees’ behaviour show that for a very long time have taken advantage of their employers since they are sure that while in desperate pursuit for profits, their employers will always end up messing up with the law and regulations. However, it is only fair that business managers will be equitable and just to employees if employees also stick to the set standards and regulations of the company. If only employees remain loyal to the processes and procedures of production, and perform their duties as expected of them. Task 3 Company as a moral agent In the recent years, (Cagle et al 2008) there has been a steady increase of interest in the companies and what the companies are giving back to the local communities around them. The recent study carried out by the Reputation Institute, a consultancy based in New York, reports that 73 percent of the consumers in the first 15 greatest markets in the world are only ready to advocate for companies they know have a positive stance on social responsibilities. Lately, even the banks and other business companies now understand the value of giving back to the society. They want the world to perceive them with a positive attitude; they want to be acknowledged for their charitable work in order to boost their brand. For instance, Microsoft Corporation gave a donation of over $100 million to more than 18,000 small non-profit enterprises all over the world. The corporation also launched a youth education initiative to help over a hundred million youths all over the world. All these charity work has done a lot in helping the company tie for top position in the Reputation Institute ranking of the most reputable companies in the world along with other companies like Google and BMW (Cagle et al 2008). It is difficult for consumers to access knowledge of what charitable claims that companies make mean. There are some various ways to go around this idea. First, it is important that consumers should confirm the company’s policies on corporate social responsibility, which always spell out the principles that the company follows, agendas and the plans it follows. All these can be accessed in the company websites. However, business experts (Culver et al 2013) have recently come up with ultimate strategies to judge a company’s ethical level. The criteria bases on a number of factors; first, one needs to look at measurement and strategy to understand the program structure and the metrics. One also needs to check on the leadership to see if the C-suite is incorporation. Third, the design in order to establish whether the corporate departments are taking part in program activities and direction or not. Community partnership is another factor to look at. This helps establish if the company is in true partnership with non-profits as well as other companies. Another factor to consider is the employee civic growth. It is of essences to understand if the company is encouraging personal growth and commitment of its employees. Finally, to know how ethical a business company is, it is important to check its transparency profile. If the company is sharing communication on its progress and its best practices with the public, then it is worth doing business with. Ethical values that business managers use to impress the staff and satisfy the in order to achieve business objectives `It is however important to remember that ethical issues are mainly to help and protect the interest of employees and the customers. This is where ethics starts and where its foundations lay. The main aspect of the foundation of business ethics in a business comprises of honesty, integrity, keeping promises, fairness, and loyalty According to Schmid et al (2013), honesty is a fundamental part of business ethics. It is important that everyone within a business environment stick to honesty in order to help have a complete honest business cycle. Business managers need to be honest in all the actions they involve in and all the communications they make. When individuals see a manager making honest decisions, they start to develop trust in such a business company. In business, people will always appreciate a person who can give them their word. An executive should present the fact the way they are instead of deceiving customers and other stakeholders. Loyalty is another aspect of fundamental business ethics. Business experts (Schmid et al (2013) report that business manager needs to be loyal to both the business company and to himself or herself, whereas at the same time working within a strong moral compass. Loyalty builds trust and shows that a manager has placed a great value on advancing the well-being of both the business company and his or her colleagues. However, the manager should never put loyalty above other principles, or even try to use loyalty as a justification for unethical acts. As much as loyalty ought to be among the greatest qualities to demonstrate, managers and employees are also supposed to make independent decisions and judgment. Fairness is also a significant aspect of the fundamental ethical issues in business. In all the actions that an ethical business manager does, there must be fairness and justness. Ethical executives do not exercise their authority for an unfair advantage or make use of indecent ways to acquire a competitive edge. Being an ethical business manager means that a manager has been committed to being fair in all decisions, treat all the employees equally and with tolerance as well as acceptance of diversity (Schmid et al (2013). Accountability is also an important ethical aspect of business. Any business managers who are ethical, hold themselves accountable. Such managers acknowledge and accept personal accountability for decisions undertaken and the results later. Studies (Schmid et al (2013) detail that an ethical manager will not just take this personally, but also will stand up and take accountability in front of all available members, colleagues, the company they lead, and even the community. All these standards help business managers to ensure that they are not only covered from any wrongdoing, but also impress and satisfy customers and staff hence building a strong bond of trust with all the business shareholders. Ethical managers use this as a foundation that can take their business companies to any level of success the company deserves to reach. Maintaining considerable high standard of ethics has a great value impact on the business and its behavior. Task 4 Research a current ethical issue affecting Primark Primark Textile company have been facing a number of ethical issues in the recent past. The company has been recently struggling to mend the holes revealed in its supply chain ethics and other activities. The company has been trying to save its reputation after more revelations that the company has been using illegal labour practices as well as poor working conditions for the employees. It came to the realization that the clothes were being made by companies in India using child labour. Therefore, the company has been undergoing some ethical issues that are affecting stakeholders. The workers are not being treated in a respectful manner. The workers determine the companies productivity and profitability hence should be treated with much care and concern (Rusell 2009). The clothing company has also been abusing human rights by exploiting children labour. The use of child labour is a great ethical issue that are enough to destroy a company completely. This means that the company has been maximizing profits at the expense of human life. With these issues at the public as well as the customers disposal, it is least likely that customers will want to relate with such a brand. To improve the ethics of their operations, Primark clothing company needs to start by cleaning its image in the publics eye. The company should start by releasing all the children workers and compensate them for the exploitation. The company should then apologize to the public, customers as well as the children who have been exploited. Additionally, the company needs to understand that the employees are the main stakeholders in a company. Employees have a common say about the companys future and the companys success. Therefore, they ought to be treated with respect, honor and given the best working condition. Anything less than this is against human rights and against employees rights (Rusell 2009). As an ethical investment consultant, I would advise my client that any code of ethics should aim at achieving the well-being of employees and the satisfaction of customers. However, topping the list of priority should be employees. Customers cannot be satisfied when employees are unhappy with their jobs and the working conditions they are under. It should then be clear that employees are the main stakeholders and need respect, trust, loyalty, and motivation. By motivating employees, they are likely to perform better hence a boom in productivity leading to an increase in profitability. Within this process, the customers will have been satisfied as motivated employees produce the best results (Rusell 2009). Conclusion Business ethics makes a distinction between companies. It is the difference in ethical level that makes a company better. If ethics helps distinguish between good and bad, then ethical companies maintain what is good. Research (Culver et al 2013) on business ethics are the suitable policies and practices concerning matters such as corporate governance, discrimination, and social responsibilities. Business ethics is basically the practices that aim at realizing maximum quality production at and protect the well fare of the employees as well as protecting the society. However, many companies today focus on business ethics with the thought of profitability alone. Business ethics needs to focus on the general cycle of production and to ensure every unit of production has equal attention and just treatment. Every unit of production includes the employees, the consumers, the products, the stakeholders and the laws. Employers should make sure that the employs are treated with much care, respect, and utmost fairness. On the other hand, employees should also need to respect the company’s regulation and treat their managers with an utmost respect. That way, the entire company can be said to be built upon a trust and loyalty foundation. Ethical business managers should also make sure that they produce quality products that meet the customers’ standards, while observing the business laws and conduct. Satisfying the customers’ needs is the key step to success in business. Stakeholders also need to be treated with respect as they determine the business future. With the current growing interest in the corporate ethics, companies are focusing on more than just ethics. According to the recent studies (Culver et al 2013) in business companies are, however, now trying to give back to the society. Many investors and stakeholders are now more concerned with the companies’ social responsibility. Bibliography Acevedo, A 2013, But, Is It Ethics? Common Misconceptions in Business Ethics Education, Journal Of Education For Business, 88, 2, pp. 63-69, Academic Search Premier, EBSCOhost, viewed 11 December 2014. 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