An Ethical Audit of Siemens Corporation - Case Study Example

The place of work is a location in which human being spend a large portion of their time on a weekly basis. People send 33% of their of a typical five day work week, thus it is important that the work atmosphere motivates and inspires a person since the emotional and general well being of a person is dependent on it. Along with the workplace environment it is also of relevance that the company one works for has a belief system align with the best interest of society and follow an exemplary corporate responsibility strategy. I would d be proud to work for a company that donates money to help fight illiteracy, on the other extremely embarrassed to work for a firm like Enron which was involved in immoral and fraudulent accounting scandal in 2001. A company corporate culture is the behavior, acts, belief system, general work place atmosphere, customs and tradition of a company is its corporate culture (Shermerhorn) This paper is an ethical audit of a company doing business in the 21st century that was previously involved in actions that were unethical. The company showcased in this report is Siemens Corporation. Siemens is a multinational corporation dedicated to products and services associated with technological innovation, climate protection, electrical and electrical engineering solution which has been in business for over 150 years. The company owns 50,750 patents, thus the goodwill of the company derived from intellectual company is high. The company has gone through some problems in the past and the new administration wants to improve the company image and eliminate unethical behavior from occurring at Siemens. During 2006 and 2007 authorities uncovered a fraudulent scheme involving Siemens Corporation in which company officials of the subsidiary in Germany birded officials in other organizations in order to obtain million dollars worth of revenue from contracts. One of the specific incidents of the fraudulent scheme was between Siemens official in Germany and SpA (Enel), an Italian Energy Company (Icmrindia). This particular case in May 2007 and led to a company wide investigation since this case was preceded by another bribery case in which the firm bribed a small German Union, IG Metall, to gain support for its corporate policies (Icmrindia). One case could be an isolated incidence, but the recurrence of the unethical sign is warning sign something and the problem requires immediate attention. The professional responsible for the corporate image and public relation of a firm is the person with the most power in an organization, the Chief Executive Officer (CEO) (Nikolai, et al.). Since this person is responsible for the behavior its representative and the corporate culture, the executive has to respond when irregularities occur. The CEO of Siemens did not adequate handle the situation when the first incidence occur by implementing measures to ensure these types of incidence do not repeat themselves to avoid public embracement. The CEO as well as the Chairman of the board paid the price for their incompetence and were both fired. No evidence has been found of them been involved in the bribery scheme, but firing them was the right decision since they were two powerful key players whose job description includes implementing proper corporate governance to prevent unethical acts from occurring. Corporate governance is (Kotler). When the first scandal occurred the company executives were in need of a system to audit the company for unethical behavior. An ethical audit is a type of internal or external investigation that sweeps all the organization systems to spot any unethical fraudulent activity within a particular firm. It becomes at times very difficult to keep track of the behavior occurring in a company in organization have operation spread across the world composed of thousands of employees. One of the most important aspect of an organization that allows executives to keep track of its oversees operation and have information and data to implement certain control measures and provides the ability to obtain real time company data is a company’s information system. An information system is the tool that interconnects all company subsidiary and allows storage of company data in a virtual system that allows the different terminals connected to the red to access a database that contains all the data. This system is one of a key source of information that will allow the ethical auditor to perform their job. One of the areas of the company that the ethical auditor must covered is the information associated with a company’s financial performance. This is a business function in which one the business aspects which is the area with the highest business risk for unethical behavior. The ethical auditor can perform an audit in which the financial information of the company is studied. The emphasis should be on the process the employees of the firm are performing. The accounting staff should be interviewed individually to obtain a general idea of the character of the staff working in the department. The ethical audit should then move to the general staff of the company. If the company is very large a way to learn the personality and mentality of the workers of a particular company and determine is the company is susceptible of unethical acts is to utilize primary research. The most appropriate technique that should be utilize is submit all employees to an online questionnaire in multiple choice format with question associated with ethical dilemmas and solution that are ethical, unethical, ambiguous or not relevant to the case. This questionnaire can be between 10 and 30 question to be answer in an hour. The method of submission of the questionnaires to the participants can be an online questionnaire to be answer by the participants in the company’s computer a different predetermined dates during working hours. The entire process of having all employees can be coordinated a span of time of one to three weeks. The third group to target are the marketing people of the company. The behavior of the marketing people is extremely important since they are the ones that send the company message to the general audience, the customer base. The audit in market can consist of evaluating the all the marketing campaigns of the firm during the last three years to analyze if the advertising of the company is following ethical standards. A non ethical advertising message could be insulting the product of another company in order to make your product look good. Another place where unethical incidents occur is in the R&D department. Pharmaceutical companies have been involved in the past in unethical inhuman experiments in order to learn more about certain diseases. A quick overview of the R&D practices can help prevent a company from performing unethical research. The final step of the ethical audit model is an hour long personal interview with the CEO of the company. Some of the questions that should be included as part of the audit are illustrated below: 1. What are the different control measures that are in place in each of the different company departments? 2. If an employee is involved in any of type of unethical act, does the company have any protocols in place to deal with the situation 3. Do the employees have an employee manual that has been discussed with them? Did the company provide its employees a copy of the manual free of charge? 4. Does the company have a code of conduct and do the employees have a copy of them which they received free of charge? 5. Has the company ever been involved in any type of fraudulent incident, if so how did you react to the occurrence? 6. What would you do If you started a business negotiation in a foreign country, but in order to land a contract you would have to perform an act that is legal in the country you are doing this business while it is consider an illegal act in the company home country? 7. Have you ever fired an employee based on the fact the person committed an unethical act? 8. How many times does the company audit its financial numbers? 9. Do the employees of the company receive any training associated with ethical conduct? 10. What are the corporate responsibility goals of the company 11. Does the company recycle; Does it use renewable energy? The motivation of the executives of the company of getting involved in a bribery scenario were based on financial reasons since the small payoffs to officials translated in a stream of income that would increase the value of the company. A very important reality these ignorant workers forgot is that once the improper behavior came to the public light this act would have long term detrimental effect in the image of the company that will induce customer to switch to the competition since may customer will be repulse by such an act. A firm generating one billion dollars in revenue in a year could easily lose one to two percent in revenue due to unethical behavior scandals. A two percent loss in revenue of a billion dollars is $20,000,000. It is better to build value over time and increase a company brand value and shareholder value to adapting a strategy to ensure unethical behavior is not part of the company’s language and a strong corporate responsibility strategy is used to help the local communities around the company as well as the international clientele. In the future the effects of unethical acts on the business performance of a company will be much harsher for company that thinks they can cheat the system and abuse others. This is no longer an acceptable business option and corporate responsibility has become a legitimate business strategy that serves the dual purpose of helping the community and increasing shareholders wealth (Hirschey). Work Cited Page Kotler, P. (2003). Marketing Management (11th). New York: Prentice Hall. Hirshey, M. Economics for Managers. India: Thomson SouthWest Inmrmidia.org. 2008. “The Bribary Scandal at Siemens AG” 6 March 2008.” Shermerhorm, J.R., Hunt, J., Osborn, R. (2003). Organization Behavior (8th ed.). New York: John Wiley and Sons Siemens.com. 2008. “About Us”. 1 March 2008. Read More