Corporate Ethics - Assignment Example

Corporate Ethics The of ethics in corporate America involves determining the right to take in the interest of increased profitability and not the interests for the welfare of society or respect for the laws that govern it. Though there are a few exceptions that prove the rule, the vast majority of corporate executives in America serve only their insatiable appetite for wealth without regard for the wellbeing of others, even those within their own corporation. Recent corporate scandals of epic proportions have illuminated this scandalous and unforgivable state of affairs. The self-serving goals of corporate America has created a value system not only separate but in opposition to that of society. The end result justifies any means by which to achieve it including the destruction of the environment as well as the financial gouging of customers and employees. This discussion examines the rationale behind corporate crimes against individuals and humanity along with possible solutions by which to stem this seemingly growing disparity of definitions between corporate and social ethics. Corporate piracy became a news item in the 1980’s when the term ‘hostile takeover’ became a part of everyday language. During this time and extending into the 1990’s, other corporate excesses including the revelations of excessive salaries for top management and substantial employee layoffs became so commonplace it was hardly worthy of news reports. These patterns of somewhat acceptable extremes culminated in contemptibly deceptive excesses which inevitably toppled corporate giants such as WorldCom, Enron, Tyco and Arthur Anderson among others in the 2000’s. Bernard Ebbers, former CEO of WorldCom, is currently serving a 25-year term in prison for the part he played the $11-billion accounting fraud which caused the downfall of his company which is MCI today. Ebbers testified that he had nothing to do with the fraud but had retired two months prior to its collapse at about the same time the company was posting a nearly $4 billion profit. Soon after his departure, this hefty profit was shown to be a paperwork deception (“Bernard Ebbers”, 2005). Former Enron executives Kenneth Lay, Jeffrey Skilling and Andrew Fastow were found culpable of conspiracy in the most high profile of the cases involving corporate fraud. In 2001, the energy company filed for bankruptcy with debts totaling $31 billion which, among other ramifications, left thousands without a job, benefits or a pension fund which was squandered by the company executives. Ex-CEO Skilling was sentenced to 24 years following his conviction on several felony counts including insider trading, conspiracy and fraud. Fastow, Enron’s chief finance officer, received a six year sentence in Federal prison for engineering the conspiracy. He falsified the corporate accounting records while, at the same time, feathered his own nest but was given a lighter sentence because he testified against Skilling and Lay. The founder of Enron, Lay, was found guilty but died in July of this year prior to his sentencing. He was facing a 45-year prison term (Hays, 2006). Instances of corporate corruption have been prevalent throughout American history and recently have become increasingly high-dollar, widespread and well publicized. This has led to discussions concerning business ethics in many arenas ranging from the members of congress to philosophers, economists, educators and employees of large corporations. Many have philosophized as to the root causes of why corporations have not followed one of several accepted societal approaches to ethical behavior. For example, the Utilitarian Approach is a seemingly reasonable method to conduct business as it attempts to find a balance between doing the most good for the company’s bottom line while being mindful of the consequences by ensuring its actions produces the least amount of harm to consumers, the environment, shareholders and employees. Another ethical business approach involves focusing on human rights above all other concerns. Showing concern for employees’ fundamental need to be treated with dignity, according to this approach, is not simply a tactic so as to motivate the employee to produce more. The ability of employees to freely choose their life path, to not be lied to, feel safe on the job and to not have their rights to privacy infringed upon are at the core of the Rights Approach. Analogous to this concept is the Fairness Approach which is concerned with justice within the corporate environment. The more an employee produces, the more they are paid, for example. The inflated salaries of corporate executives is indefensible according to this approach. The ethical approach that favors the common good suggests that a corporation’s actions should benefit, ultimately, all of a community or society. Of course the definition of common good is arguable. Some take the position that a clean environment, safe working conditions, fair pay, human dignity concerns, etc. are paramount while others would argue that stimulating the economy best serves the common good and should therefore be held above human concerns (Velasquez et al, 2006). Though the alarms regarding the lack of corporate ethical behavior have been loudly sounded for several years and several positive steps have been taken in the form of corporate policies outlining proper conduct within an organization, advancements in educational efforts for business students and increased philanthropic activities by businesses and attitudes toward ethical practices in the minds of the powerful still seem not to have altered much. One cannot point to the surface efforts of a corporation as evidence of ethical conduct permeating throughout the entire organization, especially at the highest levels where the decisions are made and the beans counted. Enron was on the ‘100 Best Companies to Work for in America’ for three years, accepted six awards for environmental efforts and boasted of its strict company policies concerning the protection of human rights, safeguarding the environment and its no tolerance stance on corporate corruption. Obviously, corporate policies are not the answer to curbing corruption unless the question becomes how corruption can be publicly acknowledged and the company put on the mask of righteousness while those at the top steal billions of dollars. Its all goes back to the question, who knows what lurks in the hearts of men? It is minds that must change, additional policies or the strengthening of current corporate laws will do little to solve the problem. What must be understood are the reasons why corporations are locked into the single-minded philosophy of increasing profits at any and all costs. Those in management positions can be well educated in the importance of ethical behavior, companies can develop codes of ethics and environmental concerns can be the priority of every action. One should not assume, though, that these measures alone will influence managers, however well intentioned, to choose the common good of the community approach in every situation while at the same time under enormous pressures to attain their corporation’s financial objectives. Strengthening existing laws, it would seem, would have little effect on reducing the number of incidents or magnitude of corporate crime as long prison sentences have provided little deterrent thus far. The insider trading scandals of the 1980’s and 1990’s sent white-collar criminals to jail but the problems only escalated. If legislation is the answer, it must be directed to address the fundamental ethical questions inherent within a capitalist system. An economy grows in a capitalist society thus improves living conditions for the people of that society. Until the recent corruption scandals of such immense proportions surfaced, the acceptance that the common good produced by the system outweighed ethical considerations was somewhat justifiable and these unethical actions were widely tolerated. New laws for government employees could be a model for corporations to follow. A reward system based on both bottom-line performance coupled with the attainment of ethical behavior standards could be instituted for example. If a person did their job well while striving to ensure fairness and honesty within the department they are assigned while displaying sensitivity to the community’s needs, they would receive bonuses. This method would eventually affect change in the thinking process of management personnel exponentially. The bonus could be simply retaining the position once this mind-set had become more commonplace. The implementation of this bonus system would take more oversight hours from upper management and necessitate the development of specific ethical standards to fit individual job assignments. The objectives must be made explicit, the incentives substantial and continuing evaluations conducted for this method to be effective. The effort, however, would at least be a step in the right direction and no less effective than what has been tried up until now such as laws based on punishing those caught after the damage has been done. The ethical bonus system is instead directed at the root of the problem. The ideal would be to establish and maintain a culture that is motivated by profits yet does not accept less than ethical conduct. Holding personnel accountable for ethical as well as financial successes would make great inroads in curbing unethical corporate behaviors but along with this must come greater transparency at all levels of management and a better system of checks and balances throughout the organization. Leadership is the key to ethical behavioral successes in corporations and though no tactic can assure this outcome based on any defined timeline, a proactive solution such as this will create ever-narrowing parameters for corporate ethical practices (Bataille, 2003). To do what is right and good can be embedded deeper into society as it is the inclination of people to do just that. It’s the justifications for deviance which must be modified. If unethical acts by executives of corporations is generally expected and widely tolerated by society, then this type of behavior can be easier justified by someone that has the opportunity to benefit from their unethical actions. Taking away the tolerance of a society, the mind-set, the ability to justify poor ethical choices diminishes even when the opportunity presents itself. During the past couple of decades, corporate scandals of the highest magnitude have shocked us all and been the focal point of many debates on many levels of the corporate, governmental, academic and public spectrum. History has repeated itself enough times recently and a society interested in healing a capitalist system that has served it so well should enact measures that would stop the seemingly endless cycle of corruption within corporations. Government employees may or may not provide the best first-step examples for implementing an ethics-based reward system as the ethics of those in the upper-level areas of government is highly questionable at best. However, if the leaders of the country cannot lead by example, it is only the fault of the citizenry that elected them to office. When the people decide they want a moral, decent and ethical society, then maybe they will refocus their efforts. Instead of imposing their morality on individuals in the form of disallowing gay marriages, for example, society should consider uniting in an effort to demand that government and corporation officials act in a moral an ethical manner. The prognosis looks dim however. If history has taught us anything, it is that we don’t learn from history. References Bataille, Julie Green. (October 6, 2003). “New Report Provides Innovative Approach to Managing Organizational Ethics.” Georgetown University Office of Communications. Accessed December 6, 2006 from “Bernard Ebbers Given 25-year Prison Sentence.” (July 13, 2005). Canadian Broadcasting Corporation. Accessed December 6, 2006 from Hays, Kristen. (December 2, 2006). “A Dramatic Shift for Skilling.” Houston Chronicle. Accessed December 6, 2006 from Velasquez, Manuel; Moberg, Dennis; Meyer, Michael J.; Shanks, Thomas; McLean, Margaret R.; DeCosse, David; Andre, Claire; & Hanson, Kirk O. (2006). “A Framework for Thinking Ethically.” Issues in Ethics. Markkula Center for Applied Ethics. El Camino Real, Santa Clara, CA: Santa Clara University. Accessed December 6, 2006 from Read More