Decision Making Management: Ethical in Organization - Example

Decision Making Management - Ethical in Organization Name Professor Institution Course Date Decision Making Management - Ethical in Organization How Ethics influences an organization’s decision making processes In the previous decade, ethics and decision making have drawn numerous public debate due to its obvious critical role in the sustainability of companies and their relationship with the society (Arjoon 2005, p.3). The headline in the recent years has depicted sad news of business ethics and even lack of it. Arjoon (2005, p.3) claims that some of the companies that have been in the limelight because of ethics and decision making include Enron, WorldCom, Merrill Lynch, Anderson, Enron, Qwest Communication and Computer Associates. Han, Poff & Zahir (2008, p.530) contend that corporate failure, unconvincing accounting practices, pollution, falling stock markets, corporate failure abuses is what some of the managerial decisions have led to, hence weakening the confidence of the investors. Such malpractices and lack of ethics have brought renewed focus on ethics and decision in companies. Therefore, this essay discusses how Ethics influences an organization’s decision making processes. Some of the issues that would be analyzed within this essay include location or development of property, suppliers, human Resource Management and industrial relations. Apple and One.Tel will be used as examples. Decision making has become a very critical factor for every organization over the years (O’Donohue & Wickham 2010, p.3). It is the type of decision which managers make that make or break an organization. While other companies like Emirates Airlines, Qantas, Wal-Mart and apple Inc., have been successful, others like Enron, One.Tel and WorldCom have collapsed due to bad decisions. Lack of ethics within the system of the organization is blamed for the collapse of many organizations. According to Johnson (2007), ethics is defined as a collection of principles and concepts which guide human in recognizing the behavior which right and one which is wrong. On the other hand, decision-making is described as a cognitive process leading to the selection of a course of action or a belief among numerous options (Fisher 2014). Over the years, ethics have been involved in business to help managers help them determine ethical principles needed to run a successful business and one which are not desirable. Decision making process is the platform where leaders make best approaches based on ethics or wrong decision which harms the organization (Fisher 2014). As a norm, business owners often set up their businesses or organization in a strategic place where they believe they can satisfy most of the customers. The decision to set up a business in a place is determined by the ethics which the society subscribes to. Therefore, the business owners must first conduct a research about the society and how they build structures. John (2007, p.41) posits that building a company in the right place help the company prevent conflict with the members of the society. For instance, one cannot set up a company in a water catchment area where the whole society depends for this precious commodity. If one business owner does, he or she will be inviting conflicts. In the late 1980s, arsenal football club’s fan base was rapidly growing while their stadium Highbury was getting smaller (Sam 2001). In 1989, disaster happened and fans died. This made the management to think of expanding the stadium (Sam 2001). Sam (2001) claims that this plan was met by protest from local residents since it recommended demolition of 25 houses in the neighborhood. Other structure in the neighborhood included waste processing factory and industrial estate meaning demolishing them would create joblessness. Arsenal club later abandoned the decision and bought the land elsewhere to build their current stadium the emirates. Others thought the decision was unethical since they believed Arsenal wanted to expand to increase profits while rendering other jobless. It can be argued that the Arsenal Club made a decision based on ethical principles and stopped a situation which could have put them in loggerheads with the society (Sam 2001). Setting a good ethical foundation within the organization sets a ground for which decision is made. For that reason, ethical principles offer the platform for different contemporary concepts for business that widens corporate and individual thinking far beyond conventional business objectives of making profits and enriching shareholders (Joanne 2009). Every stakeholder from suppliers is expected to make ethical decision-ethical right away when they want to supply raw materials or finished products. Ethical standards dictate supplying quality products and societal-accepted products. Similarly, suppliers as businessmen, making a decision to trade in counterfeits betray business ethics and principles of fair business. Today, most Chinese suppliers are likely to violate principle of fairness. Jayaraman (2009, p.54) asserts that China has a copycat culture called “Shanzhai” which plays an integral role in the Chinese society and is aligned to Confucian which encourages individual sharing hence promoting greater harmony. However, such culture is not good for foreign businesses in that it infringes their intellectual property rights (Belland 2008, p.43). The culture has seen business men duplicate all product models including shoes, clothing and electronics among others and sell them both locally and abroad. China is considered as the leading manufacturer of counterfeit goods globally (Jayaraman 2009, p.56). Even though ethics start with an organization, general view of the society influences it and forms the basis for which decisions are made. Using Chinese perspective, it is noticeable that the society has created a culture which violates business ethical practices. Jayaraman (2009, p.58) contends that the climate created encourages violation of law of intellectual property. Companies are also obliged to make ethical decisions to engage with suppliers based on the quality of their products and not outside this criterion. Belland (2008, p.45) argues that there are various occasions which such decisive factor has been ignored and companies have accepted gifts and bribes from suppliers to win tenders. Managers ought to understand that when they make unethical decision to supply tenders based on gift, rewards and corruption, and not based on merit, they are likely to get low quality or harmful suppliers. Apple suppliers have been blamed for supplying toxic chemical used for wiping Ipad screen (Frommer 2010). The company compensated the victims and terminated the supplier’s contract. According to Steven, Deguire & Lay (2005, p.46), ethics influences decision-making processes in the organization but only if the ethical standards are entrenched in organizational culture. Such standards can be defined in the ethical code of conduct or company code of ethics (Belland 2008, p.45). One of the companies which have tried to conform to their code of ethics is Apple Inc. In the recent years, the company was criticized for polluting the environment by carelessly disposing products and residue used in making smartphones. David (2011) claims that the company hired environmental experts to advise the company on environmental issues. In this perspective, Apple Inc became ethical to employees and the general society. This is because, it is the employees who are first affected by toxic substance when exposed to them. Later, the toxic substance pollutes the environment and affects the large society. For instance, 49 employees were poisoned by toxic chemical referred to as hexane which is used to clean the display screens of Ipad (David 2011). The event took place at Apple Inc contracted company Lainjian Technology Company in China (David 2011). Human resource management is another area in which decision-making needed to be influenced by ethical considerations. In fact, ethics need to be thought as heart of human resource function in the organization (Deckop 2006). Essentially, human resource management deals with hiring, training, analysis and retaining employees. In all these processes the HR department needs to hire the right people at the right time. Many might not know, but in big companies, Deckop (2006) posits that Human Resource Department is normally charged with implementing ethics within the company. This department has a role of issuing all employees with company code of ethics. It should also train on ethics; keep an eye on ethical issues and informing the organization on violation of ethical issues such as conflict of interest, dilemmas and unethical conducts. Ethics or lack of it affect decision-making on human resource management practices. Recruitment and hiring for example entails balancing sets of value-based decisive factor like knowledge, skills, reliability and experience. Geert (2009) Ethical principles of decision making in hiring hold that human resource manager should avoid inappropriate determining factors such as race, sexual; orientation, tribalism and gender. Ethics influence on decision making in HRM is embodied by organizational culture (Deckop 2006). When ethics is fostered in organizational culture, it shapes rational decision making and most of the results remain positive (Time Management Guide, 2005). The rational process of decision making depends heavily on quantitative analysis and logic. However, if the same organizational culture neglects culture, corruption, conflicts of interest manifest itself. One.Tel Company had a comprehensive code of ethics which could guide its decision making, but organizational culture inculcated by compensation model of the company leaned towards creating a culture where unethical principles was highly tolerated (Fusun & Oz 2008). Such culture made the directors, financial officer and accountant to collude and misappropriate company funds leading to its collapse. Therefore, HR managers needs to devise HRM policies, strategies and procedures which emphasize on how to attract, mold and retain an ethically intellectual workforce (O’Donohue & Wickham 2010, p.16). These strategies should also be able to positively strengthen the motivation to conduct themselves ethically and take up responsibility for environmental and social outcomes of their actions. Ethics also influences decision making in industrial relations. It is through that perspective that International Labor organizations (ILO) exist. ILO was formed to set standards which control labor market and industrial relations. Such ethical standards include wages, working conditions, and human rights. The international body demands companies must ensure the industrial decisions such as employment is influenced by ethical standards. Countries have set ethics acts which influence decision making. Fusun & Oz (2008) argue that weak or unmonitored acts are likely to allow the companies to thrive on making unethical decision. For instance, some companies have been criticized for neglecting ethical principles and spirit of corporate governance for financial gains. They have used child labor to satisfy their cheap labor needs, they pay low wages to reduce cost operations, and they have ensured employees work for long hour to make maximum profits (O’Donohue & Wickham 2010, p.7). For instance, Apple Inc has been accused of putting employees at risk due to poor working conditions at its contracted company in China, Foxconn corporations. The same company has also been condemned of violating human rights by paying workers low wage and subjecting them to long hours of working. For Instance, Foxconn had more than 200, 000 employees who worked and lived within the factory. These employees were working for 60 hours per week (Jenny && Pun 2013). From $100 that they were offered was supposed to cater for rent and food. In 2013, Apple Inc increased its employees in China by 25% and improved their working conditions (Jenny && Pun 2013, p.105). When such ethical aspects are practiced routinely, they become part of the organization and influence its HRM decisions. In conclusion, this essay has established that an ethical organization are build on infrastructure and culture which do more than just to describe ethical decision-making criterion on which individuals are expected to adhere. Ethical organization offers grounds on which to locate their company, how to recruit and hire employees, how to engage suppliers and how to engage employees. Similarly, ethical organizations set the conduct upon which employees are to conform whole positively reinforcing ethical decision-making means that minimizes ‘human error’. However, in the past, organizations have been struggling with the dilemma on whether to use ethics to influence their decision or to abandon and focus on maximizing shareholder profits. This holds that companies should not abandon an ethical decision, but rather infuse the ethical culture within the organization because it is critical in realizing a strong relationship with society. References Arjoon, S 2005, Corporate Governance: An Ethical Perspective, University of the West Indies, p.1-36. Belland, B.R, 2008, Understanding and Applying the Professional Code of Ethics, Career and Technical Education, Vol.52, No.1, pp.43-45. David, B 2011, Apple Cited as Adding to Pollution in China, New York Times. Deckop, J. R 2006, Human resource management ethics, Greenwich, CT, Information Age Publishing, Inc., Chapters 3, 4, 6 and 14. Fisher, A. B 2014, Interact System Model of Decision Emergence, London, McGraw-Hill. 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