Implementation of Strong Ethical Standards - Report Example

Introduction Organizations are generally concerned with managing their corporate reputation, which includes social and ethical values. There is a significant relationship between strong ethical culture and long-term profitability in the development process of an organization. Corporate reputation is generated, based on the perceptions of stakeholders. An organization’s image is significantly influenced with the reactions of stakeholders towards products and corporate actions. It has been observed that the creditors have special interest on the ability of the business to pay their interest and repay principal time within expected due date on the other hand stakeholders are interested in profitability, potential, stability and dividend policy of organizations. In order to hold the interest of stakeholders and creditors an organization must have strong ethical standards. Ethical standards help an organization to manage their employees at the same time the interests of employees are also preserved with the same ethical policies incorporated by the organizations. With the help of effective ethical standards; organizations can enhance their profitability. This research paper highlights some important factors that focus on the correlation between ethical standards and profitability of an organization. The paper includes analysis of the requirement for ethical values in an organization with the help of examples and evidences. Finally, the outcomes of the analysis are being discussed in the findings. The research paper supports the thesis statement. Thesis Statement “Implementation of strong ethical standards is a strategy for enhancing profitability and customer loyalty”. Analysis Implementation of strong ethical standards enhances the working culture of an organization. Corporate image is build up with the help of inferences about the company as employer, employee, community, consumer and corporate citizen. It is very important for the management of an organization to maintain fairness of work and employee-trust in an organization. Employees are the building blocks for organizations and without proper motivation work-culture of the organizations suffer greatly. Strong ethical standards develop the working potential of employees. Good ethics reduces the high-pressure, politicized work environment and non-communicative nature of employees. Good ethical culture in an organization lead to employee satisfaction and employees feel motivated towards their work. There are several organizations that do-not practice good ethical cultures and it degrades the quality and quantity of work, leaving the organization to suffer in long-term business (Ahmed 16). Non-implementation of ethical standards in organizations can only help businesses to obtain profit for a lower period of time. From the employees perspective ethical values are very important and its significance is greater on customer loyalty. Good ethical practices bridge the communication-gap between labors and management and it addresses the issues of the labors. Labors and management work together on the same platform, which builds a trust within the working environment and employees, feel motivated towards their work. It signifies that ethical values have positive significance in the development of an organization. Strong ethical values not only enhance the working atmosphere but also help in delivering maximum output. For example, it has been observed that employee satisfaction during high-pressure and hazardous work can reduce the chances of mishaps during productions. Development of trust leads to optimum performance of the employees because of the positive motivation obtained from the organizations. Thus ethical practices emphasize on employee satisfaction and it fuels profitability of the organizations. Positive corporate image can be obtained with the implementation of good ethical values in an organization and it can lead to higher profitability. The role of ethics is optimum in business and according to the Globe and mail Report 48% employees were found to be involved in illegal or unethical activities based on the report generated after surveying some companies of United States of America. Corporate image can be enhanced by motivating stakeholders with the performance and products of the company. Stakeholders and individuals get attracted to an organization after checking the quality of product and profit generated from that. From the business prospective stakeholders, consumers and employees must be given some benefits. The benefits given to the stakeholders and consumers can be discounts on shares and products or additional advantages. In case of employees the benefits can be performance bonuses and frequent Internal Job Postings. The benefits provided by the organizations will definitely help them to earn more profits by attracting the stakeholders required during their development prospective. The corporate organizations can gain customer loyalty against the benefits provided to them and employees would enhance their working ability and the quality of products. According to Gremler and Gwinner, good image of an organization leads to lower turnover of employees and it increases profitability of the organization. In the modern world many organizations have implemented retention policies and installed different departments for employee retentions (Fleming 79). It is significant that employees are the most important aspects for organizations and labors are responsible for completing each and every work in the time-frame provided to them. In a competitive market organizations try to hire experienced employees with more benefits and salaries. Organizations that loose employees during peak business periods are the worst sufferers. Hence the modern companies should have strong ethical standards in order to hold the trust of employees and provide them better working environment. This implementation will finally benefit the organization and profitability will not be hampered. According to the Business Ethics Survey, the modern companies are at the highest risk of conflicts driven by employees. There are many instances where it has been observed that actions are being taken by the management of an organization in favor of their employees. The organizations must follow ethical ways of employee handling because it would reduce the chances of conflicts and increase the productivity. Previously issues like sexual harassment, racial discrimination, and improper hiring practices were allowed on a huge scale and employees reacted against the industry’s leading both employers and employees to suffer. In the modern world such consequences are not entertained by the employees and most of the organizations have some ethical standard beyond which neither the employees nor the employers can act. However the traditional ethical standards have become basic needs for employees and they demand to be treated in a better way. The most important challenge for the modern companies is that there is huge competition in the job market and each and every organization aims to hire skilled workers with some experience. This factor has increased the demand of workers and reduced the demand of organizational lobbying. In order to increase profitability the organization must have better ethical standards and there should be transparency in the working method of management and the employees. Researchers believe that ethics codes can make huge difference in the corporate sectors. There are several elements that can help in successful making of an ethical policy. First of all organizations can incorporate Written Standards, which can be common for everyone working in the organization. Secondly, the organization can enforce training programs for their employees for proper understanding of company policies and the advantages of ethical values (Mitchell 81). This would help employees to motivate themselves during their work. The third element for organizations is to find an appropriate way through which employees can seek ethics-related advice. Employees should also be made responsible for their own actions as well as actions spotted in the premises of their organizations. Employees should report any security incident report and the management department should take immediate actions against any kind of Security incidents. During the performance of the employees the ethical conducts should be valued and they should be praised for their effort in the organization. These are some basic elements that can be incorporated by organizations in order to standardize the ethical values and enhance the profitability. After reviewing literature and hypothetical studies a research model has been proposed in favor of profitability. There are mainly four factors that are essential during the working process of organization. Physical Environment is the first ingredient that enhances the working culture of organizations. Employees should be allowed to work in their comfort zones, this factor can lead to high quality production. Corporate Identity is the second ingredient and it has great effect on the working atmosphere. Corporate identity signifies designation and employees should have proper designations based on their performance and experience. Reputation is the third ingredient and it has a direct impact on the mind of consumers and stakeholders regarding the corporate image of the organization. Consumers and stakeholders support companies holding good reputation hence it plays an important role in the model. The final ingredient is the service that is offered to the consumers. In the competitive market proper customer service is essential because it increases the trust of consumers on the company and its products. All the factors collaboratively impact the rise of profit and the factors can be enhanced by implementation of ethical standards (Cory 8). Employees should also be encouraged to give their unbiased feedbacks about the workspace during yearly surveys organized by the companies. This would help the higher level management take proper actions to address the issues faced by the employees and successfully complete the implementation of ethical standards. Findings Based on the evidences collected from the analysis, it is clear that ethical standards of an organization are directly proportional to its profitability. Ethical standards have great impact on the working environment and ability of workers. It is very essential to understand that ethical boundaries are not just limited to higher management level. Each and every person working in an organization is responsible for his actions as well as reporting others unethical actions to the higher level. The model described in the analysis can work successfully with the participation of every employee of an organization. There are some activities that might not be punishable on the legal grounds but it might hamper the working conditions of an organization and its people. Therefore corporate sectors must design their code of ethics for benefit of everyone working in an organization. From the example of the Globe and Mail Report it is clear that 48 percent of employees were indulged with criminal activities that occurred in their organization. The legal bodies penalize the organization and the employees involved in the crimes. This is a loss of capital and the moral value of organization also gets hampered due to such activities. The misconduct of legal activities reduces profitability of an organization. This proves that ethical standard is very important and it is directly related with the profitability of an organization. Most of the organizations believe that Customer Service Representatives can increase profitability. However, it is significant that long-term profits can only be improved with the implementation of ethical standards in a company’s business. Employees and individuals alone may not be efficient for optimizing the profit and quality of products; there are some values that can-not be ignored. Each and every employee has his own set of skills and art hence team-work is a common practice in the modern industries. In order to work together it is essential for organizations to implement ethical values and reduce the chances of conflicts between workers. Poor ethics can be become expensive for organizations. The Sarbanes-Oxley Act and Federal Sentencing Guidelines has brought forward some guidelines according to which companies should be responsible for any misconduct of employees while they are in office premises. According to the Act companies can also be imposed penalties in case of occurrence of any accident or sexual harassment. If a company is penalized for the actions of a company huge amount of capital is charged for the occurrence and in case of accidents companies are bound to pay money to the employee’s family (Goodpaster 8). In the past many incidents used to occur in organizations and companies were penalized for the incidents however in the modern world every organization has their own set of rule and regulations. For the benefit of the company and the employees they have also implemented ethical values in the organizations and it is mandatory for everyone to understand and follow the policies incorporated by the company. It is clear from this fact that profitability has a correlation with profitability of an organization because company’s profits and reputation might be at stake in case of unethical actions conducted in the office premises. Strong ethical standards are also beneficial for company owners because it reduces the chances of factory strikes or social-gathering against company decisions. Companies must address workers concerns under the organizational ethics. Temptation from organizations to stretch ethical behavior in revenue generation is a common practice in the society. There are many incidents that have occurred previously, such as outright lies about revenue to affect stock price by marketing officers of organizations. In such cases involved employees are penalized and company owners are warned. In order to prevent this type of occurrence organizations can establish and maintain firm stance on ethical marketing, selling, reporting and advertising. Capitals associated with the stock market are public capitals and they are tracked very minutely by government agencies. Organizations must implement ethical standards for their marketing managers in order to prevent such incidents. As discussed in the analysis, profitability is a factor that is largely affected because of unethical actions hence they should be tracked appropriately and organizations should impose highest level of ethical standards in order to protect employees and organizational interests. The level of trust a company solicits from customers is equal to the level of trust maintained within the company. If a company expects their customers to trust them then they should have complete trust within the teams of company and the management of the company must guide the employees internally with the help of ethical values. Conclusion From the outcomes generated from the analysis and findings, it is clear that organizational profitability and development is related to the enforcement of ethical values in the organization. Good ethics is beneficial for the working environment of companies. With the implementation of strong ethical standards employees become satisfied and they get motivation to perform well. It creates an environment where employees can out produce and outperform even during high-pressure situations. With the implementation of ethics in organizations job fairness is observable and workers enhance their quality of work, which enhances the profitability. Implementation of ethical standards is also important for managers because they would be able to guide employees against the restricted events and any misconduct that might lead to hazard. In the modern world the job market is very competitive for employees as well as organizations. Workers are very important for smooth running of an organization and ethical standards prevent workers from conducting strikes and also motivate them to work appropriately for high profitability of the organization. The hypothesis and research model mentioned in the analysis is the perfect example of maintaining ethical values in an organization and its uses for the benefit of employer and employees. It is also important to understand that the prime focus of a company is to gain the trust of its customers and stakeholders. In order to gain the trust of stakeholders a company must focus on the profit making aspects and in order to gain the trust of customers a company must focus on the quality of products and the reputation of their reputation in the market. Both the parameters can be achieved by implementing strong ethical standards in an organization. Hence, in support to the thesis statement it can be stated that implementation of strong ethical standards is a strategy for enhancing profitability and customer loyalty. Works Cited Ahmed, Mohammed. “Business students perception of ethics and moral judgment: a cross-cultural study”. Journal of business ethics 7.1 (2003): 16. Print. Cory, Jacques. Activist business ethics. Stamford: Cengage Learning, 2006. Print. Flemming, Jerry. Profit at any cost. London: Sage, 2003. Print. Goodpaster, Kevin. “Business ethics and stakeholder analysis”. Business ethics quarterly 9.2 (1991): 8. Print. Mitchell, Charles. A Short course in international business ethics. New York: Springer, 2009. Print. Read More