Home Depot Company - Ethics and Social Responsibility - Essay Example

Number: Lecturer: Home Depot Company Ethics and Social responsibility Ethics is an amorphous term with no specific limits in determining if a person is behaving in an ethical manner. It is relative depending on the many factors that an individual has grown up to know or learned. Ethical behavior in one community could be considered otherwise in another; being unethical or does not stand ethical tests. Defining ethical behavior, then, means that a set of character that conforms to a society’s accepted principles of either right or wrong. To an organization, unethical behavior that which is violating the organizational norms about right or wrong. Business organizations are formed and nurtured by individuals; therefore, the norms are a reflection of the character patterns of the proprietors. The acts of a defiant worker will result, depending on his/her target, lead to either productivity loss, sabotage property, show no respect for others or anti-social to colleagues. Out of the society’s desire to have and regulate ethical behaviors, jurisdictions have developed and enacted into law ethical guidelines that inform decisions. Unethical behaviors have been defined in federal law to include invasion of privacy, theft, embezzlement, fraud, price fixing and incomplete disclosures. All organizations are bound by the rules intended not only to punish, but to encourage companies to prevent violations (Zschietzschmann 25). There are three influences in ethical decision-making; intensity, moral development and ethical principles. Ethical intensity is the degree of concern people hold about ethical issues encompassing magnitude of consequences, social consensus, probability of effect, temporal immediacy, proximity of effect and concentration of effect. Ethical principles are a sum-total of long-term interests, personal virtue, religious injunctions, government regulations, utilitarian benefits, individual rights and distributive justice in guiding the process of decision-making. In enforcing and preserving ethical behavior, a company must have code of ethics that all employees must abide by whether inside or outside the workplace. The code of ethics informs, from the onset, how employees are hired to ensure that the employee personal interest conforms to that of the organization. Ethics are further transmitted through continuous training as the law is not static. When faced with an ethical issue to decide, individual needs to identify the problem as a first step. The next step is to identify the extent of the effect it causes followed by why it came to happen. One has to explore the available options to solve the problem before settling on the best, through which to inform one’s actions (Zschietzschmann 65). In creating an excellent ethical climate, an organization’s culture is very important. The management should be in the forefront and committed in enforcing the ethics program. Whistle blowing should be encouraged. This is because organizations have social responsibilities to both shareholders and other stakeholders. To shareholders, the company must make maximum profits, but to stakeholders, it has a responsibility for long-term survival. There are two sets of stakeholders; primary and secondary. Primary includes shareholders, local community, employees, customers, suppliers, and government. Secondary includes media, special interest groups, and trade associations. As it tries to be ethical, the home depot (organization) will be meeting its economic, legal, discretionary and ethical responsibilities. The ways, in which an organization strategically includes reacting, defending, accommodating or proactively. It is worth noting that there is no tradeoff between social responsibility and economic performance. It does pay to be socially responsible, but it does not guarantee profits (Zschietzschmann 122). Planning and decision making Planning in an organization gives a sense of direction. It intensifies effort, persistence, direction and creates tasks strategy. However, planning impedes change and prevents or slows adaptation; planners can be detached from the reality and a false sense of certainty. A working plan goes through the following stages; goals are set, commitment is developed, effective action plans are then put in place, progress is tracked to ensure goals are achieved and finally some level of flexibility should be allowed. The goals must be smart; they should be specific, attainable, measurable, realistic and timely. In developing commitment to goals, they must be made collectively with the input of all staff members in a public forum. Effective action plans has to have the how, who, what and when framework in order to be accomplished. Tracking progress means that feedback and evaluating mechanism is put in place, to ensure that both short and long term goals are being met. Lastly, flexibility allows the organization to keep options open. Resources (time and money) should be set aside for this purpose (Poister 57). A top-down planning process can be adapted by an home depot. Strategic plans are made with clear intention to reduce competition and how better to serve customers. It is followed by a statement of purpose for its existence. The purpose will then be defined with specific objectives which permeate through the organization to have a unity of purpose. Finally, plans are subdivided into department-specific plans with clear guidelines, procedures, policies and rules and regulations on how to attain. The plans receive budget vote-heads. Other modes of planning can be adopted which have different approaches from top-down. They are tactical planning and/or management by objectives (MBO). MBO is a management technique often used to develop and implement tactical plans. This approach was developed by Peter Drucker. Its steps include discussing all possible goals. The goals that are challenging, attainable and consistent with company’s overall goals are then selected. All those involved jointly develop tactical plans leading to tactical goals and objectives accomplishment. The last step is to meet regularly to review progress. It is imperative that a company adopts a rational decision-making approach where all alternatives are systematically defined, evaluated and optimal solutions are chosen. In a rational decision-making situation, the problem is defined, the decision criterion is identified, the criterion is weighed, alternative courses of action are then generated, each alternative is evaluated, and finally the optimal decision is computed. In defining a problem, the current state is evaluated against a desired state. Decision criterion is the standards used to guide judgment and decisions. Weighing criteria involve absolute and relative comparison. In generating alternative courses of action, all alternatives are put on the table. Each alternative is then evaluated against each criterion in order to reach an optimal decision. This method assumes that there is problem clarity, well-known options, there are clear preferences, constant preferences, no constraints, and that there will be a maximum pay off. This model assumes optimal solution as decision makers maximize decisions, but in practice, resources are limited making it practically impossible to maximize decisions (Poister 98). Planning and decision making are subject to some biases which affect the outcome results. They include overconfidence, anchoring to an initial condition, confirmation where one seeks endorsement only, availability heuristic, representative heuristic, escalation of commitment, randomness error and lack of hindsight. However, group decision making has both advantages and disadvantages. Its advantages include viewing of problems from multiple perspectives, more information, generate more alternatives and overall commitment in implementing solutions. The disadvantages are mob-thinking, it takes considerable time, domination by a few, no personal accountability and illusion of unanimity. In order to have a fruitful decision-making process, brainstorming must come beforehand. It is a non-formal way where ideas are generated. The ideas are accepted in any form they come which can be used to come up with even more ideas with the advantage that criticism is not allowed. Intuitive decision making should not be allowed as it is a less fruitful endeavor as it has limited information. This is because it has little precedence, high uncertainty levels, limited facts, hard to predict variables, time constraints, unclear sense of direction, several plausible alternatives and analytical data are of little use. In any decision making process, conflicts are bound to occur. It is, therefore, imperative for the team to have a conflict-resolution mechanism in place to avert failure of the group to deliver its mandate. There are two forms of conflicts; C-type (cognitive) and A-type (affective). C-type focuses on the problem and issue-related differences in opinion. Conflicts in this situation are examined, compared, and the differences are reconciled to come up with an agreement on the best possible solution. A-type focuses on the emotional reaction during disagreements. If this is not handled fairly well, hostility, cynicism, anger, distrust, resentment and apathy will set in, thereby, affecting the operations of the group. In C-type group resolution, the team begins with quiet session, followed by each member sharing one idea at a time. The next step is to discuss the pros and cons of each idea before being independently ranked based on its merits. The final leg is the selection of the idea with the highest average rank (Poister 195). Organizational strategy For an organization to be competitive in the market, it has to have strategies that set it apart from the competition. It has to be providing a greater value to customers than the competition. Resources within the control of the company create the sort of value that is desired by customers and would make them loyal. Such resources include capabilities, assets, employee time, information, processes and knowledge within the control of the organization. If other firms cannot duplicate the value offered to the customer, then it is sustainable. These resources, therefore, must be valuable, non-substitutable, rare, and imperfectly imitable (Heracleous 165). Strategy Formulation vs. Strategy Implementation Strategy Formulation (SF) Strategy Implementation (SI) Positioning forces before the action Managing forces during the action Requires few people to coordinate Requires many people to coordinate. Focus on effectiveness Focus on efficiency Primarily intellectual Primarily operational Requires good intuitive and analytical skills Requires special motivation and leadership skills In the home depot, there are issues which are central to strategy implementation. They include; developing a strategy-supportive culture, allocation of resources, matching managers to strategy, restructuring and engineering, devising policies, adapting production/operation processes, establishing annual objectives, revising reward and incentive plans, linking performance and pay strategies, managing resistance to change, downsizing and furloughing as need arise and developing an effective human resource function. There are three steps in the strategy-making process. The first step is the assessment of the need for strategic change in order to avoid competitive inertia and looking for strategic dissonance. The second step is conducting the situational analysis where both the internal and external environment is analyzed through SWOT analysis. An organizational growth depends on SWOT analysis in which the internal environment is evaluated to find strengths and weaknesses and the outside environment to find opportunities and threats. The last step is choosing the strategic alternatives to either pursue risk-avoiding strategies or risk-seeking strategies. Risk-avoiding strategies aims to protect the existing competitive advantage and risk-seeking strategies further extend or create sustainable competitive strategy from the current comfort zone (Heracleous 157). There are several forms of strategies that a company can adopt. i) Corporate level strategy-answers the role of the company’s existence currently or what should be in. ii) Portfolio strategy-minimizes risk by diversifying investment among various/product lines. iii) Grand strategy-broad plans to help the organization achieve its strategic goals, for example, growth, stability, retrenchment to realize cuts in operation costs and recovery thereafter. iv) Industry-level strategy-how to compete in the industry. In the industry, there are forces which have to be collectively tackled in order to remain competitive. They include character of rivalry, bargaining power of buyers, suppliers, new entrant’s threat and competing products and services. v) Positioning strategies-product differentiation, cost leadership and focus in differentiation and cost leadership. vi) Adaptive strategy-defending, reacting, prospecting, and analyzing. Defenders deal in a fixed market with a narrow range of products, reactors change to changes in the external environment; prospectors continuously try to find any new things out there while analyzers blend defending and prospecting to get into the market when it is ripe. For two firms to be said to be in competition, they must be offering similar products/services. Each must, therefore, adopt either defensive or offensive strategy in action or reaction to the competitor’s actions. They must be operating in a common market or using similar resources. Therefore, strategic move in such a situation is to either attack to reduce rival’s market share/profits or respond by countering a rival’s attack, in order to defend or improve market share/profit (Heracleous 125). Works Cited Heracleous, Loizos. Strategy and Organization: Realizing Strategic Management. Cambridge: Cambridge University Press, 2003. Print. Poister, Theodore H. Strategic planning and decision making in state departments of transportation. New York: Transportation Research Board, 2004. Print. Zschietzschmann, Petra. Ethics and social responsibility. Munich: Grin Verlag, 2006. Print. Read More