Ethics and Social Responsibility - Example

Ethics and Social Responsibility An Essay 5/21/2009 University’s Name Author’s Name Introduction Business organizations have always focussed on maximizing profit. The primary motive for the existence of a business has always been to generate more and more money for its shareholders. However, with internationalization and globalization, a lot of other factors have come into play which needs attention and to be managed for a business in order to operate healthy manner. This brings into view the concept of stakeholders also which include customers, employees, suppliers, etc. associated with the organization. Globalization has shifted the focus from merely monetary benefits to other aspects of organizational operation such as ethics and social responsibility. In this modern age of interdependence and globalization, the responsibility and accountability of organizations for moral duty towards its employees, customers and all others dealing directly or indirectly with the organization is of prime importance (Wild et al., 2002).Moral and ethical duties of a company towards its employees comprise of the fair treatment and labour practices along with a healthy and peaceful working environment to be provided to its employees. Towards its customers and society at large, a company has several social responsibilities such as quality products, fair advertisement, deliver what promised, use of good quality raw materials is keeping the view of healthy society in mind etc. These ethical and social responsibilities are seen to have contributed towards the overall goodwill of a company and thus, make it a more profitable one. Irresponsible companies cannot sustain and become profitable on the long run. Hence, a fabric of ethics, morality and social responsibility should be woven into the culture and corporate strategy of any organization that aims to become a global player. This context of the impact of organiational culture in determining the level of ethical and moral conduct within the organization is discussed in the following setions of the essay. The essay starts with defining and elaborating the definition of ethics and social responsibility more so in the business scenarios. The importance that these ethical conducts hold for the corporations has also been described. Human resouce management is one domain which directly controls or deals with the ethical forefront of any company and thus, it has been discussed as a special section in this essay. Finally, the role and intermixing of corporate strategy and organizational culture with the ethical outputs and inputs of various organizations along with their impact on the decision making patterns of these companies has been studied under separate topics in this essay. Ethics and Social Responsibility Ethics is a system of moral principles and a sense of right and wrong, and goodness and badness of actions and the motives and consequences of these actions (Steiner & Steiner, 1997). Social responsibility would refer to the application of ethics and ethical decisions to the society and commuity in which the company operates. Business ethics on the other hand is how these personal and individual moral guidelines apply to the objectives of a commercial firm. This is same as the ethics in general context with the application being specific to business situations and the responsibility of these decisions lie on the person who acts as an agent or representative of the company. Business ethics deals with three basic areas of moral decision making (Nash, 1990): Choices about what laws should be and whether to follow them Choices regarding social and economic issues out of the field of law Choices about self interest over a company’s interest To be considered ethical and socially responsible, businesspersons must draw their ideas ‘desirable behaviour’ from the same source as the society draws it. Society does not accept special or weaker ethical rules to business situations as thought to be applied by employees and employers. People in business are bound by same ethical principles that apply to others (Frederick et al., 1992). Businesses have long argued that it can be ‘amoral’, where capitalism provides moral justifications for following ‘Profit’ through a behaviour which is not purposefully ethical. The most common instances where businesses face ethical dishonesty are managers lying to employees, favouritism shown to relatives, taking credit for others’ work, receiving or offering bribery, stealing from company, unfair dismissal of an employee, leaking confidential information or trade secrets, using company property for personal use etc (Gordon et al., 1990). Certain other issues such as effects of information technology on the workforce, sexual harassment, invasion of privacy on the internet (Colvin, 2000) and so on also come into the umbrella od ethical and social issues concerning a business organization. Importance of ethics and social responsibility for Business Attention to ethics and social responsibility is essential for several reasons. First of all, it has been largely and popularly seen that ethics and profit do go together. A company which is motivaqted by ethical conduct is also profitable. Value driven companies are more likely to be successful in the long run, eventhough they might lose money in the short run due to investment into socially responsible and ethical practices. Actually, acting ethically and therefore also legally means preventing the expenditure of billions of dollars annually in lawsuits, settlements, and theft. Cost to business also comes in the form of weakening relationships, reputation damage, declining employee commitment and productivity and increasing absenteeism as well as employee turnover (KPMG Report). On the other hand, acting unethically can cost significant financial penalties for many corporations (Frooman, 1997). Secondly, an ethical and socially renowned company gains the respect of its employees and society and thus, carries the potential to attract and retain the best of talents in huge numbers which in return increases the competitiveness and efficiency of the company. The employees and managers of the company would be genuinely proud of being a part of an organization which conducts itself with dignity and integrity. The organizational ethics when perceived by employees as genuine create common goals, value and language. Neither a very great business strategy, nor a generous compensation policy and incentives can win employee credibility, but a perceived moral and social honesty can. This brings and develops a culture of morality, accountability and honesty within the enterprise making it a strong national as well as international player. Thirdly, an ethically and socially responsive company is honoured by even the outsiders like the customers, consumers, dealers and suppliers, who do have an intimate knowledge of its actual working. There will be a natural bias in favour of such a company’s products, services and other offerings such as issue of shares etc. due to its credibility in the market which makes it a value for Money Company. Good ethical and social value also helps companies make better decisions which are in the interest of the public, their employees, and the company’s own long term good, even though the decision making is slower. This is so because respect for ethics will compel the employer to take various aspects like economic, social and ethical into consideration while making decisions. Finally, it is a known fact that government, law and lawyers cannot do everything to protect the society but Ethics can. An ethically oriented management takes measures to prevent pollution and protect its workers’ health even before being asked to do so by law. Ethics, social responsibility and HRM A lot of HRM or human resource management activities involve ethical and socially questionable issues. These areas can be compensation management, performance appraisal, Employee treatment on basis on race, gender etc., job discrimination, privary issues, health and safety issues, restructuring and layoffs, and ethical workplace leadership. These areas can be discussed individually as under: Compensation management: It follows under the ethical decision view to see that a proper proportion of fixed and variable pay is structured. Too much focus on result based payments put a lot of pressure on employee to perform and can at times be inhuman. Also, the benefits and perquisites given to executives sometimes are very high as compared to the value added by them to the company (Ferris et al. 1998) and should be taken care of. Performance appraisal: The performance assessments are done based on observations and judgements. Thus ethics of the rator is very important in this case as he can bring in bias very easily into his recommendations. Employee treatment: It is the responsibility of an organization both towards the society and towards morality that it does not promote discrimination within it in terms of race, ethnicity, gender or disability. It is the duty of HR to monitor the norms and pratices of a corporation to ensure that it reflects society’s values. Job discrimination: Discriminations which occur on the basis of a particular group to which a person belongs to and not on individual meritand these decisions harm the people concerned with the decision. Privacy Issues: At a worplace, several conditions may arise which leads to a compromise of the privacy of certain employees. Certain socially sensitive aspects like AIDS testing, drug testing and genetic testing should not be made a big workplace hindrance for the person undergoing it. Also, cases where information technology (such as spy cameras) intrudes the private space of employees is an issue of concern. Health and safety issues: Certain special types of jobs such as mining of radioactive substances etc. have huge health hazards for those constantly working there. It is an ethical and social duty of the employers to provide such employees with sufficient health and safety equipments and instructions so as to avoid any damage to their health. Restructuring and layoffs: In difficult times, a company might have take strong decisions of terminating some strength of employees but it is a social obligation of the employer to consider all the other alternatives before doing so and to provide adequate and fair amount of compensation to the laid off employees. Ethical Workplace Leadership: A leader or a manager in an organization is the decision making authority and thus, his ethical behaviour needs to be studied too (Hitt, 1990). A leader can be a ‘manipulator’ who believes that ends justify means, a ‘bureaucratic’ who has pre-defined rules for everything, a ‘professional manager’ who works according to a socially correct guidelines and a ‘transforming leader’ who works on personal ethics. There are several cases of leaders and managers who have violated their legal and ethical responsibilities to shareholders and stakeholders. Due to inattention or inability they fail to see the ethical issues and are known to be under ‘ethical blindness’. These leaders do not follow what they preach and hence are ‘ethically mute’ i.e. lack ethical language or principles. Such leaders suffer from ‘ethical incoherence’ as they are unable to see the inconsistencies among the values they say and follow for instance, they might talk of value to responsibility but reward performance based on numbers. They have ‘ethical paralysis’ as they are unable to act on their values either from lack of knowledge or from fear of consequences of their actions. Also, these leaders have ‘ethical complacency’ as they believe they can never do anything wrong or unethical (Driscoll & Hoffman, 1999). Strategy, ethics and social responsibility Every organization has certain strategies to set the direction, goal and objective for the corporation and those working with it. However, only those strategies which have values such as honesty, passion, humility, practical outlook, fearlessness (Hamel, 2000) manage to continue over time. These strategy setting sessions can also be carried out in consultation or keeping in view the recommendation or preferences of its stakeholders such as consumers, employees, suppliers etc. The strategy also reflects and models activities which are valued or given priority to by the management and hence, is a mirror of management’s ethics, morality and social value. Organizational culture, ethics and social responsibility Organizational culture is a mixture of ideas, customs, traditional practices, company values and shared meanings that help define the behaviour of all those who work in the company. These cultures have tremendous influence on employee behaviour and therefore, all the “high ethics, high profit” firms like Motorola, 3M, Cadbury Schweppes, Apple etc.follow certain common principles. These principles have gradually become benchmarks of these ethically and socially responsible organizations. First, High ethics firms are at ease with various internal and external stakeholder groups. Second, High ethics firms are fair and emphasize the importance of other person’s interests as much as their own. Third, individuals take responsibilities for actions in high ethics companies. Finally, High ethics firm observe its activities as those with a purpose which associates it to the environment (Pastin, 1986). The employees of organization always follow certain unsaid and unwritten rules known as ‘ethical climate’ which are a part of every organizational culture and that which sets the ethical tone in a company. However, the culture of an organization also gives rise to certain written and well documented ‘code of ethics’ which are very company specific and have developed in the organization over a period of time through diligent practice. These codes are necessary but not sufficient means of managing moral conduct in companies (Somers, 2001). Some companies have a culture off ‘ethic committees’ which advice on establishing policies in new uncertain areas, ethical issues and look after the enforcement of ethical codes in the company’s day to day operations. These ethical committees also resolve issues related to ethics which concern the employees who have grievances and hence helps in internally solving the issue as aginst ‘whistle blowing’ which involves the disclosure of company’s unethical pactices to outsiders like the media. A culture of ‘ethics training programme is also seen in many companies which take ethics seriously, provide training in ethics to their managers and other employees and hence promote socially responsible behaviour. However, such programmes are most effective when conducted by company managers rather than by outside agencies as it creates leadership by example. Moreover, keeping abstract philosophical discussions away from the training discussions and focussing on the specifics of the work environment makes the training highly efficient. Ethics, social responsibility and decision making Every manager some or the other time, faces a dilemma over making a decision more so if it involves certain ethical or social aspect. A difference between facts and values has to be made before making the decision. Facts are the tangibles of ‘what is’ whereas, values are ‘what should ideally be’ and hence a decision to choose one of these or the best way to include a bit of both these has to be made by the manager involved in the decision making. Moreover, these decisions, some or the other way have an impact on the society and thus brings in the aspect of social responsibility of the corporate. Another major problems with such decisions are that although ‘what ideally should be’ is somewhat defined, the results or consequences of an action is unclear or unknown to a large extent. The impact of a particular action on the society can only be partially predicted before hand and a risk of a bad impact of a decision at the social level always exists no matter how thoughtfully the decision was taken. Also, the social standards vary or change with time and also with the geographical location. Ethical codes are not always universal and the understanding of ethical conduct may differ from one country to another and ethics in one may or may not have the same understanding of ethics in another country. There is no global consensus on what is morally questionable (Maynard, 2001). It becomes very difficult to solve ethical dilemmas involving global, cross cultural dimensions. Conclusion Ethics and social behaviour are norms and guidelines which define the permit boundaries set within the societies and in business contexts, the desirable effects of a company’s operations, existence, products, services etc. which benefit the society are categorized as business ethcs, morals and behavior. In the present context, a company which has a special corporate social responsibility identity is one which is considered good. Also it is ususally seen that such companies which are good on social acceptance level, perform good in terms of profitability also. This brings critics to argue whether profits are driven by social and ethical image of a company. This essay aims to highlight the several aspects of ethics and social responsibility and how does it merge with the different business conditions. Business strategies, business decisions and day to day funtional operations of a business such as HRM (huamn resource management) activities are finely linked and affected by ethics and social structure of a corporation. Different organizational cultures are also responsible for the development of ethical outlook of an organization’s leaders and managers. Thus, the importance of top management of a company to set up a strong culture of fairness, equity, honesty and credibility is seen in this essay. Ethical outlook of a company not only helps it with monetary benefits but several other positive impacts which have been illustrrated as the inportance of ethics and social responsibility in business. Although profit is largely driven by organization’s operational and managerial efficiencies; the contribution of goodwill earned by ethical and socially responsible conduct cannot be denied. It creates a bias in the minds of consumers, suppliers, dealers etc.to go for the products and offerings of a socially responsible and fair enterprise. Moreover, retention and attraction of talent employees which help in increasing the operational efficiency also indirectly assists in making the company a profitable one. Therefore, this essay is a comprehensive account of the impact, dynamics and working of ethics and social responsibility of an organization towards its internal as well as external stakeholders and the enormous benefits it brings to the company which directly or indirectly also contribute to enhancing their profit margin. Read More