Ethical Corporate Culture and Kohlberg's Six Stages of Moral Development - Case Study Example

MORAL DEVELOPMENT KOHLBERG’S SIX STAGES OF MORAL DEVELOPMENT The concept of Kohlberg’s moral development is explained in 3 levels and each level is classified into two stages. STAGE 1: “Wrong or immoral actions are determined by punishments” Example: Punctuality is considered as an important aspect in the performance evaluation of an employee. Employee that comes late to the office is considered as a wrong action and employee gets punishment on such actions. Generally, salary deduction is the punishment for late timings. Here the salary deduction is indicating that coming late is considered as an immoral action in the company. STAGE 2: “Right actions are determined by rewards” Example: According to the Kohlberg’s view, rewards are the justification of employee’s good performance in the company. Sales employee in the company is rewarded with extra benefits when he or she makes more than sales target. In this case, extra benefits are the rewards for efficient performance. STAGE 3: “Good behavior is the reflection of good intentions” Example: Employee realizes that drinking alcohol in the office during the lunch timings is an immoral action because it decreases the efficiency and productivity at the workplace. Employee’s positive concerned behavior towards the work efficiency is the justification of his/her good intentions for the company. STAGE 4: Compliance to authority, Significance of “doing one’s duty” Example: Human resource employee is against the firing of production labor but he/she decided not to protest in the company without the permission of management. The sense of obedience to authority of HR employee is justifying that he/she is maintaining social order. STAGE 5: “Recognizing that rules can be changed in order to adapt differences in moral and legal rights” Example: Sometimes it can be seen that organizations perform activities like tax evasion, so the employee realizes that this should be change and organization should pay taxes to government to encourage the application of equal distribution of wealth in the country. STAGE 6: “Considering every Individual’s view based on conscience regarding any moral decision” Example: A person refuses to obey the law of the society which treats a major portion of the population as second-class citizens. DEVELOPMENT OF ETHICAL CORPORATE CULTURE BY MANAGERS WITH THE HELP OF KOHLBERG’S SIX STAGES OF MORAL DEVELOPMENT: Kohlberg’s model of moral development can be applied as a base for the organization ethics. Managers can employ this model to set the ethical standards. The evaluation and assessment of the employee’s performance in the ethical context can be conducted by taking the model as a base or standard for performance evaluation. The ethical behavior of employee of his/her entire career can be appraised by comparing its practices with the model. Example: The application of model by manger in the organization to develop ethical corporate culture is explained below. Pre-conventional: An organization can set punishment of salary deduction for the employees that come late in the office. This will avoid the late comings in the office. (Stage 1) An organization can use incentives as rewards to motivate all the employees in the organization for giving efficient performance. (Stage 2) Conventional: The organization is required to give training to its employees for developing good behavior with others at the workplace. The mangers should guide the employees to avoid the practices that would negatively affect on other employees. (Stage 3) An organization needs to give the orientation of organizational policies and procedures to all the employees for maintaining the social order in the organization. (Stage 4) Post conventional: An organization should keep its character keen in the eyes of employees. Actions of an organization that are legally correct develop a positive image of the organization among its employees. (Stage 5) An organization should follow the principles of corporate social responsibility. This would allow the organization to avoid the legal regulations. This action of management will justify the responsible attitude of organization towards the society. (Stage 6) Part C: Explanation Ethics are the moral right actions that define right or wrong. But the question is what is morally right and what is morally wrong. The act which is generating a negative impact on any entity is considered as a morally wrong action. The morally right action is defined as the actions that have positive impact on others. At different places, actions can be considered as morally correct and the same actions can be considered as morally wrong. The context of every place designs the guidelines of ethical standards. For example, business ethics is for business activities, family ethics is for relationships, social ethics are responsibilities towards the betterment of society, etc. The example of business ethics is taken to discuss the significance of ethics implementation in the organization. This situation can be understood by considering the role of an accountant in the firm. Accountant has the responsibility to balance and maintain the accounts for the company. Sometimes the accountant is required to show some under invoicing to avoid the burden of taxes and tariffs. This activity balances the company’s account and shows high revenues and profits but this is not ethically right because the government spend those taxes for the welfare of the poor people to balance the wealth in the country’s economy. Therefore in such a situation, the accountant needs to analyze that which action will give the benefit to the maximum people and select the right action for the sake of the majority. PHILOSOPHERS’ APPROACHES TO ETHICS HELP WITH DOING THE RIGHT THING KENT PHILOSOPHY In Kent’s view morality cannot be measured by the universal principles. It is based on experience of the human. Moral principles are developed from what the situation demands for. The required response derives the morality in that particular situation. ARISTOTLE PHILOSOPHY This theory is based on the understanding of the actions that are morally right not just because of it is benefiting own self, but actually it should be based on the consideration of what is the right course of action to do that particular practice. For example, John and Martin are brothers and Chris is their neighbor. Martin theft gold watch from Chris’s house and ask his brother John to sell it and pay the house rent otherwise their families will be displaced from home, then what will be morally right action for John. The morally right action according to Aristotle in this situation is to return back the watch to Chris and apologize for the unethical practice or crime and find some other way to pay the rent. JEREMY BENTHAM PHILOSOPHY In Jeremy Bentham view, the morally right action is the one that will produce the greatest amount of happiness or benefit for the greatest number of people. Or in other words the morally right action will be evaluated on the basis of its impact only on the majority. DISAGREEMENT WITH JEREMY BENTHAM PHILOSOPHY The philosophy of Jeremy Bentham about the morality cannot be acceptable because it only talks about the majority and completely neglects the minority. Happiness of the greatest number of people only represents the majority. The objection in this philosophy can be made by applying this philosophy on the following case: CASE: Four people are travelling on a boat in the sea and they have lost the map or direction and are not sure where the destination is. All four are boys and they are hungry for the last 5 days because of scarcity of food. The fourth boy is a younger one with age about 17-18 years and other three are above 25 years. The three elders decided to kill the younger boy to eat the human meal. Now according to the theory of Jeremy Bentham, this action will be considered right because it is saving the life of three elder boys which are the majority and only affecting the minority which is the killing of fourth boy. In this situation, the killing of fourth boy and eating his meal is considered as morally right action according the philosopher. This is the reason why this philosophy is considered as a failure in this situation to justify the injustice with minority (The fourth boy in the case). Killing of human with the reason of eating his meal cannot be a morally right action at any cost. People should find the way that will also protect the minorities from harm and danger. DEBATE ON IT WAS BETTER TO DO GOOD THAN TO FEEL GOOD To do well is more important than to feel good, because sometimes it is important to work for the sake of humanity and put the feelings aside in a particular situation. For example, Black Americans protested for their rights in America. The protest was to eliminate the discrimination and to give equal rights to them. During the protest there were several Black Americans that were killed but they did not setback. The deaths of innocent people were generating very bad feelings in the hearts of Black Americans and the whole world as well but they were fighting for the right cause so at that time they were only concerned with do good and not to feel good. CORPORATE SOCIAL RESPONSIBILITY MILTON FRIEDMAN In the view of Milton Friedman, the primary responsibility of the firm is to maximize the revenue of shareholders and should overcome all the obstacles that can create a bad impact on the firm’s image. The practices that can become obstacles include: injustice with employees in giving salaries and wages, maintaining high prices that is unaffordable for the needy people or even ignoring the importance of environmental safety. In Milton Friedman view it is the responsibility of the executive level managers of the firm to operate in the country without making any deception or fraud. ARCHIE CARROLL The Model of Archie Carroll is based on four segments that comprise economical responsibilities, legal responsibilities, ethical responsibilities and discretionary responsibilities. Economic responsibilities: Firms are required to maximize the earning of shareholders. This will be possible if the firm produces goods and services that can contribute in the economy and that can fulfill the demands of people. Legal responsibility: Firms are required to strictly follow the laws and regulations that are imposed by the government for business practices. Ethical responsibilities: The firms have the responsibility to operate with ethical standards in the society for the sake of humanity. Ethical standards are derived from humanitarian values in mind. These activities include: appropriate overtime payment for working extra hours, etc. Discretionary responsibilities: Firm takes on these responsibilities are over and above the ethical considerations. These responsibilities include charity runs and the development of day-care centers in the office. COMPARISON OF THE TWO: Milton Friedman and Archie Carroll have the same perspective for economic and legal responsibilities. These responsibilities are affectionately known as “Must-Do’s” and “Have-To” in the view of both of them. Archie Carroll further talks about social responsibilities of the firm. In his view social responsibility should be the considerable factor for all the firms. Social responsibility is further divided into two categories that are ethical responsibilities and discretionary responsibilities. Archie Carroll has clearly defined both the social responsibilities in his own context and differentiated it completely. Therefore the theory of Archie Carroll develops a better understanding of the role of organization in the context of social responsibility. CORPORATE CITIZENSHIP CHARACTERISTICS OF BOARD OF DIRECTORS 1- Ethical Business Behavior Connects in fair and sincere business activities in its association with stakeholders of the company. All employees should be treated with high standards of behavior. Workout ethical mistakes of the senior managers and board levels 2- Stakeholder Commitment Endeavor to run the corporation for the advantage of all stakeholders. Starts and connects in real conversation with stakeholders. Values and apply conversation into practices. 3- Community & Environmental Commitment Community: Promotes a mutual relationship between the community and corporation. Spend in the society in which corporation functions. Environmental commitment: Show a loyalty to the environmental concerns. Show an assurance to sustainable development in the country. 4- Consumers & Employees Consumer: Compliments the consumer rights. Provide quality goods and services. Present honest and helpful information to the consumer. Employees: Gives family-friendly job surroundings to employees. Employ in responsible human-resource management of the company. Gives a fair compensation and wage structure for all the employees. Take on clear and flexible communication with company employees. Make spending in employee training and development programs. 5- Investors & Suppliers Investors: Make every effort for an aggressive return on investment. Suppliers: Take on fair practices in trading with suppliers of the company. RATIONALE Good corporate citizens struggle to carry out all company dealings in an ethical way, make considerable efforts to stabilize the requirements of all stakeholders, whereas working to safe and protect the environment of city from harms. All the characteristics of corporate citizenship helps to built a responsible and trustworthy image of the company towards the customers, partners and society. CORPORATE GOVERNANCE ROLE OF BOARD OF DIRECTORS Several responsibilities are undertaken by the board of directors of the corporation. The responsibilities are discussed below: 1- Selection of board members and the evaluation of the board members performance along with the performance assessment of board committees and individual directors. 2- The selection, monitoring, and evaluation of senior management of the company. 3- Assurance of appropriateness of the succession planning of management. 4- Appraisal and monitoring the implementation of strategic plans of management. 5- Monitoring and evaluation of significant corporate actions. 6- Review and approval for the operating plans and budget of the company. 7- Monitoring and evaluation of the corporate performance by comparing the strategic plans with actual achievements. 8- Evaluation of ethical standards and legal obedience programs of the company. 9- Monitoring and evaluation of the relationship with the employees, shareholders and the community in which the company is operating. 10- Supervise the management of enterprise risk. JUSTIFICATION OF MOST EFFECTIVE ROLE The most important role of board of directors or the corporate governance is the evaluation of ethical standards and legal obedience programs of the company. It is very important to evaluate the ethical role and legal compliance of the organization to maintain a trustworthy or loyal image of organization in the society. Corporate social responsibility is considered an important concept in evaluating the performance of organization. MAJOR LESSON FOR FUTURE EXECUTIVES The first two parts of Premier has identified different lessons that can be learnt and taken as advice by the future executives. Premier has focused on the leadership and the importance of governance in an organization and how the governance can be helpful at different stages of the organization. However the first two parts of Premier has solely focused on the corporate governance and the responsibilities of the board of directors. In the first two parts of Premier; there are different lessons to be learnt. One of the most important lessons that the future executives must learn is to understand the responsibilities of the board of directors and include them in decision making and strategy formulation. Future executives will be a part of board of directors and as being a member of board of director, future executive will be responsible to not only develop short term strategy but also look to formulate long term strategies. Similarly, it is important to involve other board of directors in the process of strategy development as it will allow all the members of board of directors to be get involved and it will result in formulating a better strategy. DIFFERENCE OF MANAGEMENT AND GOVERNANCE The governance has a different role than management. The difference is stated below: Governance Management It is the exercise of plenary leadership It is the exercise of company and operational leadership Governance gives or setup the direction for the company Management organizes and conducts the business authorizations by the direction Directors are not delegating the authorities among the employees individually. Managers delegate the decision-making authority among the employees It controls the activities of group for the benefit of the whole The actions taken by the company to lead the business in a positive direction Directors evaluate the performance of overall organization from all the aspects Mangers evaluate the performance of organization by divisions Read More