Suitable Ethical Code for the Client - Assignment Example

Business Ethics Name Institution Course Tutor Date Table of Contents Table of Contents 2 TASK 1 3 1.1 Explain the background and development of theoretical ethical approaches 3 1.2 Compare and contrast absolute and relative ethics 4 1.3 Explain the ethical issues which can affect the operational activities of a business 5 TASK 2 6 2.1. Explain how business objectives are affected by ethical considerations 6 2.2. Evaluate the implications for a business and its stakeholders to operate ethically 7 TASK 3 9 3.1. Assess the role of the company acting as moral agent 9 3.2. Mechanisms for achieving employee involvement and empowerment 10 TASK 4 11 4.1. Research a current ethical issues affecting Primark 11 4.2. How Primark could improve the ethics of their operations 12 4.3. Design a suitable ethical code for your client 12 TASK 1 1.1 Explain the background and development of theoretical ethical approaches The definition of the term ethics dates back to Plato and Aristotle. Ethics was derived from a Greek word, ethos, meaning character, conduct, and/or customs (Mahdavi 2009). It concerns what values and morals are considered right by individuals and society at large. Ethics help individuals and organizations to decide what is good and right or bad and wrong in any particular situation (Mahdavi 2009). The background and development of theoretical ethical approaches dates back in 1960s. During this period, there was increase in social unrest in the workplace as employees had poor relationship with management. Employees were more loyal to ideas than to their employers (PPT 2). As a result companies in this decade began to establish codes of conduct and value statements. It is during this period that the movement of social responsibility was established and business entities began to handle issues of ethics through personnel or legal departments. In 1970s, the ethical climate was characterised by increase in scandals by contractors and major industries. The level of unemployment became high and environmental concerns also increased. This period was characterised by increase in human rights issues, such as low wages, forced labour and unsafe practices (PPT 2). During this period, Ethics Resource Center (ERC) was established in 1977 and companies were required to comply with laws governing ethics. In the same year, Federal Corrupt Practices Act was passed. Consequently, ethics was made values centered in stead of being compliance oriented (PPT 2). The social contract between employees and employers was eventually redefined in 1980s. In order to avoid series of scandals, defense contractors were expected to conform to strict rules. Although health care ethics was insisted during this period, employees’ attitude about loyalty to their employers disappeared as corporations downsized (PPT 2). Ethical dilemmas include issues of transparency, deceptive advertising, financial fraud and bribes and illegal contracting practices. In 1980, ERC established the U.S. Code of Ethics for Government Service, and in 1985 it formed first office of business ethics at General Dynamics. Additionally, Defense Industry Initiative was developed and ombudsman positions were created in some companies, as well as False Claims Act focusing on government contracting came to live (PPT 2). The issues of business ethics became profound in 1990s as global expansion introduced new ethical problems. The concerns about bribes, child labour and environmental issues intensified. The emergency of the Internet increased the challenge of culture across borders. This period witnessed several developments in business ethics. The ERC established international business ethics centers while Federal Sentencing Guidelines was developed in 1991. In addition, Global Sullivan Principles were instituted in 1999 (PPT 2). Today, companies face more ethical dilemmas, such cyber crime, and loss of privacy, financial mismanagement, privacy issues and intellectual property theft. Some of the ethical issues are likely to be encountered by Primark. During this decade, anticorruption efforts are high and there are stronger ethical safeguards that control companies, such as Primark. There is more emphasis on corporate social responsibility and integrity management in organizations. 1.2 Compare and contrast absolute and relative ethics Absolute ethics is where an individual believes that certain actions or activities are always wrong or right despite the situation or consequences. On the other hand, relative ethics in where individuals focus more on outcomes and believe that certain actions or activities are either wrong or right based on particular situations (Scholl 2008). In ethical relativism, the ethical principles of an individual are defined by his or her personal opinions, traditions of the society, and the prevailing circumstances. Decisions made by absolutists are believed to be true always, in all places and all circumstances. As such their approach to issues is deontological (PPT 1). Therefore, according to absolute ethics, a wrong is a wrong, such as stealing, regardless of the situations Primark could use absolute ethics by expecting its suppliers to respect human rights and establish appropriate conditions of employment in their factories so that issues of human rights are not compromised at all. Compared with relative ethics, absolute ethics is easier to apply. Additionally, absolute ethics enable companies, such as Primark to base its Code of Conduct on the International Labour Organization’s (ILO) Code, since it provides universal code the company can use to measure every action they take against. Alternatively, relative ethics concerns judging things relative to the circumstances. According to this type of ethics, universally moral principles and objective truth does not exist. However, unlike absolute ethics, relative ethics is flexible and considers opinions of all people concerned and particular situations (Scholl 2008). Generally, relative ethics is focuses more on outcome. Additionally, the judgements from relative ethics are often subjective and influenced by individuals’ feelings, thoughts and opinions. As such, people’s perception of what is right and wrong will differ, which in one way or another is likely to hinder moral progress. Therefore, although both absolute and relative ethics concern what is right and wrong, the ways in which judgement is applied is very different. 1.3 Explain the ethical issues which can affect the operational activities of a business Business ethics involves identifying the moral principles by which business organizations can be evaluated, in relation to the impact they have on people and the environment. There are various ethical problems that can affect the operational activities of an organization, such as Primark. They include human resource issues, conflict of interest, customer confidence, individual ethical responsibilities, financial scandals, and environmental issues (Newell 2007). Human resources issues relate to treatment of existing and potential employees equitable and justly. Here, an organization may behave unethically by treating employees unfairly because of their sexuality, religion, gender, skin colour, and ethnic background among other dimensions. This may affect the reputation and performance of such an organization. Conflict of interest may arise in a business environment when certain persons or organizations are treated specially due to personal relationship with either the person or group making a decision (Newell 2007). For example, Primark could award one of its suppliers a lucrative contract because of paying the management team of the Primark a bribe, and not based on the quality of the proposal it presented. This may also affect the image of the company. Another ethical issue involve customer confidence. Sometimes companies may behave in ways does not show respect to customers or concern with the safety of the public. This could include use of deceptive advertisements about certain goods and services. This may occur when a company conceals negative data concerning safety and/or value of a particular product (Newell 2007). In addition, individual ethical responsibilities may involve how employees use company resources in a manner ethically acceptable. It is ethically wrong for employees to use organizational resources wrongly, such as making private phone calls at work, stealing company stationary, or submitting false expense claims. All these behaviours affect the effective operational activities of a business. Still, financial scandals may affect the reputation of a business if not controlled by people concerned. An organization, through its senior managers may involve in financial scandals through improper bookkeeping, or making the organization appear more financial profitable when it is not. As such, there would be an increase in stockholder value of the organization, and any person with stock gains directly, especially those manipulating the accounts. Such an act may affect employees, stockholders, the society and even people may lose their jobs (Newell 2007). On the issue of environment, organizational activities may have a negative impact on the environment, either in relation to their production activities, or in terms of disposal of used items, yet they do pay for the environmental costs they create. Companies, such as Primark need to engage in sustainable activity by meeting its present needs while promoting the ability of generations to come to meet their needs. TASK 2 2.1. Explain how business objectives are affected by ethical considerations There are a number of objectives Primark seeks to achieve from its business operations. First, it is interested in achieving increased profits and maintaining a sustainable business. However, to achieve this, Primark seeks to work in collaboration with its suppliers through its auditors. Additionally, the company wants to achieve increase in growth so as to help meet the primary objective. Still, Primark is dedicated to conduct its business as a responsible corporate citizen through Corporate Social Responsibility (CSR). Another objective for Primark is to respect human rights while doing business with it suppliers in 16 countries. Henry Ford postulated that a business that makes only money is a poor business (PPT 4). These sentiments apply to Primark as it is clear from the case study that the company is not only interested in making profits, but also focuses on the serving the interests of the entire society through the CSR initiative. CSR is defined as actions of an organization that are meant to achieve social benefit over and above profit optimization for its shareholders while satisfying all legal requirements (PPT 4). Primark has embraced ethical considerations which will help the company achieve primary objective of profitability and business sustainability. Through CSR, Primark will build confidence in its brand hence increasing the reputation of the business. Stakeholders are happy to associate with a business whose brand reputation is high. As such, they will support Primark to grow and make high profits. Earning profits is an economic foundation of social responsibility followed by compliance to law (Raza & Ramzan 2013), and these guide the business operations at Primark. Voluntary activities, such as training suppliers of code of ethics promote company’s good will. Primark is concerned about society and earning profits, this is why it invests voluntarily in CSR activities. As such, Primark is likely to win trust and respect of its customers, employees, and society, hence increase profits in the long run. In addition, Primark has relieved itself from the risk of losing consumers and the government and public taking action against its actions due to increased compliance to legal requirements. These are likely to affect the company’s profitability and sustainability. Primark is working diligently to improve the conditions of suppliers’ factories today and in future, in terms of hours worked and fair wages. This initiative shows that Primark is socially responsible in its supply chain. Generally, CSR will help ensure Primark economically survives to the future, which is its primary objective. 2.2. Evaluate the implications for a business and its stakeholders to operate ethically Behaving ethically has implications for both Primark and it stakeholders, such as stockholders, employees, customers, suppliers, competitors, government, creditors and community. Operating ethically implies that Primark has to focus not only on economic dimension of business operation, but also on social and environmental impact of the company (Newell 2007). It also implies that Primark has to comply with relevant legislation and codes of practice, such as UK law and UN Declaration on Human Rights. As a global company, Primark would be required to adhere to international ethical standards at minimum in order to be considered to be ethical in its business activities and undertakings. In addition, operating ethically would imply that Primark responds to ethical pressures both locally and internationally. Such ethical pressures include environmental conservation, ethical communication, ethical production, and fairness and honesty (Newell 2007). When Primark conducts its business operations ethically, it implies there will be an improvement in its reputation and relationship with stakeholders. Additionally, operating ethically has various implications for company’s stakeholders. For stockholders, they will experience growth in the value of company’s stock, which will translate into high dividend income received by stockholders (PPT 2). Employees would benefit from ethical practice, since they would have stable employment with fair pay, In addition, employees would work under a safe and comfortable environment unlike when the company operated unethically. Operating ethically also implies that customers would have a better buying experience and relationship with the selling company. Customers would be provided with products or services that are of high quality and match the value for their money. Additionally, consumers would buy safe and reliable products because ethical considerations would be followed in producing such products or services (PPT 2). Operating ethically has also implication for Primark’s suppliers. The company will have to pay its suppliers promptly for the goods they deliver to the company. In turn, suppliers would be forced to deliver on time orders placed by the company. As such, the relationship between Primark and its suppliers would drastically improve. The implication for the federal government to operate ethically is that it would not be in conflict with the company. This is because Primark will have adhered to relevant legislation and codes of practice that guide ethical business behaviour and conduct (PPT 2). Lastly, when the organization operates ethically, it implies that the community will experience economic growth and the local residents will get employment. The community would also enjoy clean and safe environment. Generally, ethically operations have positive implication for both business and its stakeholders as highlighted above. TASK 3 3.1. Assess the role of the company acting as moral agent A moral agent is a business firm that not only focuses on maximizing wealth, but also aims at generating more and better jobs as well as contributing toward more social cohesion (Grima 2004). Primark looks at it business activities in more than simply economic perspectives by considering externalities, such as the impact on the community and the impact on the environment in which it operates. Primark tries to develop best practice on work organization, social inclusion, equal opportunities and sustainable development. The way Primark conducts its business activities presents it as a moral agent. The Ethical Trade Initiative (ETI) auditing programme makes Primark to act as a moral agent. The company is more concerned with ethical sourcing because it believes it is for the better of its customers and the wider society. Thus, through the ETI auditing initiative, Primark is able work in partnership with other international companies, trade unions and non-governmental organizations (NGOs) to improve the lives of works in a global scene. Moral agency calls for this; being concerned with the welfare of other people and the society at large and not just making economic benefits. In relation to ETI auditing, Primark act as a moral agent by working closely with its suppliers to ensure that the acts are ethical. It even trains suppliers on ethical issues, such as child labour. This shows how Primark is dedicated to promoting moral behaviour in its supply chain. Independent audits and follow-up visits to suppliers by Primark are also meant to promote good working conditions at suppliers’ factories. This is one of the roles of the company in acting as a moral agent. Through independent audits, Primark ensures that suppliers’ factories have the right fire safety equipment, staff has necessary skills and knowledge on how to use them and workers receive their wages and benefits. Primark is also committed to equal opportunities employment for women, in an attempt to act as a moral agent. It achieves this by working with ethical partners, such as Nari Uddug Kendra (NUK), which supports the rights and health of women in the workplace who are often discriminated against. Generally, Primark’s actions are not self-centred, but have an outstanding impact on the lives of individuals and the society it operates. This is good practice for Primark and it will help it become sustainable over the long term. 3.2. Mechanisms for achieving employee involvement and empowerment Organizations that are successful use participative management and empower their employees to perform their best in the workplace. Employee involvement is where an organization gives employees the opportunity to participate in setting goals, making decisions, and solving problems in the workplace (Greasley et al 2008). Employee involvement and empowerment are ethical imperative and presents many benefits to the organization. One is that employees will readily accept the decision since they participated in making them. Additionally, diverse input results to high quality decision. It also helps to develop an environment of trust, hence improving employee performance. The fundamental requirement for Primark to achieve employee involvement and empowerment is to focus on continuous improvement of its processes that produce results rather than focusing on only results. Primark would need to develop and maintain more flexible organizational culture and structure, and new practices and make employees socialize with them. According to (Greasley et al 2008), continuous improvement in organizational processes and increasing employees’ productivity can be promoted by challenging employees and engaging them intellectually. Primark can make this possible by providing appropriate infrastructure to help employees prove their best and the company can also build in mechanisms for employees to use so as to draw from the environment. The leadership development programme by Primark is a step towards achieving employee involvement and empowerment. Training and development programs are important mechanisms through which Primark can socialize its employees to organizational values and ways of behaving ethically. The also indicate the desire by the company to achieve high level of employee involvement and commitment to increase employee welfare (Greasley et al 2008). Power shifts in the company is likely to cause increased aggression for parties. Thus, training and development programs are meant to address this problem and promote productive relationships between employees and management. TASK 4 4.1. Research a current ethical issues affecting Primark Primark focuses on conducting its business operations ethically, despite facing ethical problems that have ruined its reputation on an international scene. The problem of Primark started way back in 2005 when it awarded the lowest score on the Ethical Index based of criteria, such as doing business with oppressive regimes and rights of workers (Michelle 2011). In 2008, the BBC aired a documentary that displayed unethical practices by Primark suppliers in India. The features showed poor working conditions in factories in India and the presence of child labour (Michelle 2011). This being the worst of unethical practices in Primark’s supply chain, it attracted major concerns among customers, eventually leading to mass boycott and protests by the public. In addition, the documentary featured an Indian girl aged 11 years old sewing sequins on a shirt ordered by Primark, while in a refugee camp. This destroyed the reputation of Primark as a company that uses child labour. Although Primark responded to this incident by stopping all business with accused suppliers, it did not solve the ethical dilemmas of the company (Michelle 2011). Primark was later reported not to have improved the terms and conditions of employment in Bangladeshi factories that supply to the company, following the collapse of the factory. This was indicated in the report dubbed as ‘Fashion Victims II’ by same charity that revealed unethical business activities at Primark (Michelle 2011). The factories in Bangladeshi were reported to have poor working conditions and ridiculous pay for workers. Employees in suppliers to Primark worked for long hours that amount to 80 hours a week with poor compensation. Most factories that supplier Primark were reported not have implemented the lawful working hours in a week (Michelle 2011). These events have significantly destroyed the reputation of Primark. Despite Primark claiming to adhere to the ETI code of conduct and observing domestic and international laws, the consequences of its unethical conduct remained intense. Many consumers decided to boycott, or moved to Primark’s rivals when they heard that the company disregarded Business Ethics. It became difficult to change the opinions of customers in favour of Primark after the company encountered bad reputation. Primark was highly criticized by protest groups, charities, NGOs, and most importantly customers (Michelle 2011). 4.2. How Primark could improve the ethics of their operations According to Broni (2010), businesses need to adhere to business ethics in their day-to-day dealings with the world at large and in particular their stakeholders, such as employees and customers. As such good business ethics should be a part of every business, especially after experiencing a series of ethical dilemmas. In this case, Primark needs to take a new direction in ensuring that it improves ethics in its operations in order to meet it objectives in the long run. The company could decide to change its vision and culture to reflect it as a business entity that is responsible to act ethically. Primark should embrace the responsibility to act ethically as an opportunity to make a positive impact to all (Michelle 2011). Yes, Primark should commit itself to provide the best possible value for its customers, but it should not lose focus on the welfare of people who make their products. In addition, Primark should maintain CSR in its operations. It is only by behaving ethically that Primark will build and maintain a strong brand image and get customers to develop trust and confidence in its brand (The guardian 2013). Consequently, stakeholders and customers will benefit from Primark’s ethical conduct and will be happy to associate themselves with the company. Primark should also promote transparency in its operations and relationships with stakeholders. It needs to demonstrate commitment to ethical production through transparency (The guardian 2013). Primark should not have anything to hide in managing its relationships with suppliers in the 16 countries. Alternatively, the suppliers to Primark need to be transparent in their business operations. Transparency in both Primark and its suppliers will help the company retain good reputation and experience profitable growth. 4.3. Design a suitable ethical code for your client The ethical code of my client will comprise of dimensions such as, general employee conduct, conflicts of interest, and relationships with suppliers, organization communications, and privacy and confidentiality. It appears as follows. Company’s Code of Ethics The company and its employees must always abide by all applicable laws and regulations that govern the company’s business operations. The company does not allow any unethical activity by employees that would result to pubic criticism. General employee conduct The company expects it employees to behave in an ethical manner. Unethical behaviour, such as drinking, fighting, gambling and other unprofessional behaviours are strictly forbidden while on the job. Employees are prohibited from participating in sexual harassment, or act in a manner considered unethical, such as accessing restricted information and using inappropriate language. Conflicts of interest The company expects employees to do their job conscientiously, honestly, and in the best interest of the company. Employees are not allowed to use their positions for personal or private benefit. In case employees realize that their course of action is likely to make them be in conflict of interest with their employer, it should be communicated immediately to their supervisor. Relationship with Suppliers Employees must not, at any time, invest in, or obtain a financial interest for personal accounts in any of the company’s suppliers. Employees should also avoid providing goods or services to the suppliers if the act could crate the impression of manipulating their decisions in regard to performance of their duties. Organization Communications Employees are prohibited from making or participating in false communication of any type, whether external or internal. This includes but not limited to deceptive marketing practices, false advertising, or other representations that are misleading to the consumers and the general public. Privacy and Confidentiality Employees must effectively handle any personal and financial information about customers and suppliers in the course of their duty. These include protecting the physical security of such information, reducing internal access to information considered personal and acquire and use only the information required to facilitate the operation of the company’s activities. Reference List Broni, J. V. G, 2010. Ethical dimensions in the conduct of business: Business ethics, corporate social responsibility and the law. The" ethics in business" as a sense of business ethics. In International Conference on Applied Economics–ICOAE (p. 795). Greasley, K, Bryman, A, Dainty, A, Price, A, Naismith, N and Soetanto, R, 2008. Understanding empowerment from an employee perspective: what does it mean and do they want it?. Team Performance Management: An International Journal, vol. 14, no. 1 and 2, pp. 39-55. Mahdavi, I, 2009. International business ethics: strategies and responsibilities. Journal of Academic & Business Ethics, vol. 2, pp. 1-6. Michelle, M.L, 2011. Reacting to Bad Publicity over Sweat Shop Issue: The Case of Primark. Retrieved on April 30, 2015 from https://journalofinternationalmanagement.wordpress.com/2011/05/16/reacting-to-bad-publicity-over-sweat-shop-issue-the-case-of-primar Newell, S, 2007. Business Ethics. Journal:“QFINANCE. PowerPoint (PPT) 1, Understanding Ethics PowerPoint (PPT) 2, Defining Business Ethics PowerPoint (PPT) 4, Corporate Social Responsibility Raza, A and Ramzan, M, 2013. Determinants of Business Ethics on Multinational and Local Organizations. Journal of Business Studies Quarterly, vol. 4, no. 4. Scholl, R.W, 2008. Ethical decision making and moral behavior. University of Island, Kingston. The guardian, 2013. Primark: How ethical are your clothes? Retrieved on April 30, 2015 from http://www.theguardian.com/environment/2013/oct/06/ethical-high-street-clothes-primark Read More