The Role of Ethics in the Decision-Making Process of an Organization - Coursework Example

ROLE OF ETHICS IN THE DECISION MAKING PROCESSES OF AN ORGANIZATION By Institution: Date of submission: Instructor Introduction The process of determining what one considers right or wrong is ethics. Right and wrong are subjective concepts, and they may vary according to moral climate, culture and the circumstances of an individual (Gordon & Habley, 2000). Principles of ethics offer the basics for various concepts of work, organizations and business, which broaden individual, as well as corporate priorities. At every part of the organizational level, there is always a part of decision-making involved. For example, times are gone when a manager could assume that they were right in every decision they made. Strong decision making and business ethics help organizations to select best business opportunities. Ethics influences the decisions that the management in the organizations makes, be it on industrial relations or when it comes to dealing with suppliers. Ethics also have an influence on the human resource management and employee commitment. This paper, therefore, discusses the role of ethics in the decision-making process of an organization. Ethics guides the managers in ensuring the employees are committed to their duties. Therefore, it contributes to employee commitment. With ethics, employees are more willing to make sacrifices for an organization if they know that their prospect is tied to that of a company (Jaworski and Kohli, 1993). Employees are more likely to take care of an organization if the organization is dedicated to taking care of its employees. Factors that can support the development of an ethical culture for employees include the lack of improper conduct, a harmless working environment, competitive salaries and the fulfillment of all contractual obligations toward employees. Moreover, an ethics and compliance program can support values and appropriate conduct. Social programs, which may improve the ethical culture, range from work–family programs and stock ownership plans to community service. An organization that is committed to the goodwill and respect for its employees enhances the employees’ support of its objectives. Moreover, it also increases the employees’ loyalty towards an organization because they spend a considerable amount of their time working at the organization. For the sake of both productivity and teamwork, it is essential that employees both within and between departments throughout the organization share a common vision of trust. The influence of higher levels of trust is greatest on relationships within departments or work groups, but trust is a significant factor in relationships between departments as well. Consequently, programs, which create a work environment that is trustworthy, make individuals more willing to rely and act on the decisions and actions of their co-workers. In such a work environment, employees can reasonably expect to be treated with full respect and consideration by their co-workers and superiors. Trusting relationships between upper management and managers and their subordinates contribute to greater decision-making efficiencies. Ethics also plays a greater role in deciding the suppliers the organization can work with. Managers should choose a supplier in such a way that it does not make the company appear unethical in the eyes of its customers and other stakeholders. An organization and its suppliers are both associates and competitors. They are associates because the quality of the parts of the suppliers affects the company’s product quality, as their businesses are connected. They are competitors because the buyer wants a discounted price, products which are of better quality and quicker service while the supplier wants the highest value and income it can get. An organization confronts several ethical issues in its supplier relationships. Therefore, with ethics, an organization will ask itself several questions before agreeing to do business with a particular supplier. For instance, organizations may ask themselves whether it is ethical to purchase goods from foreign suppliers who employ child labor, pay substandard wages or have sweatshop working conditions in their facilities (Sims, 2003). Ethics plays a role in profit decision-making process. The relative power of the two parties (an organization and its suppliers) can be extremely influential in determining industry profitability (Pettinger, 2000). One situation where the presumption of the need for loyalty is particularly strong is where a single buyer represents a significant proportion of the supplier’s total business and hence effectively keeping them in the business. In an era of long-term partnership supplying, this is not exactly an unusual situation, but clearly creates a situation ripe for exploitation, and might place a heftier responsibility on the purchasing company. Ethics ensures that there is no preferential treatment to any suppliers (Rudelius, Erickson, and Bakula, 1973). For example, it is unacceptable for a firm to give valued supplier information about its competitors’ quotations so that the supplier can have a better chance of offering the best quotation. This interjects conflict of interest into the supply relationship since the interests of the purchasing officer diverges from the interest of the company. Ethics plays a role in the human resource management in an organization. This is because of growing size and power of corporations, which have sales turnover more than the economic size of some developing social and professional advocacy groups, which pressurize them to hold accountable actions. With ethics, managers will ensure that the human resource is effectively managed within the stipulated ethical codes. It is now widely held that organizations have a social and an ethical obligation to enhance people’s living condition. This will improve the internal cohesion and help to build confidence in their relations with their internal and external stakeholders. Notably, human resource management is an instrument of morality, which is viewed from two perspectives, that is, micro and macro. The micro-level perspective, right from recruitment to separation of employees, human judgment, and decisions are involved. The macro level involves the ethical scrutiny of human resource management as a system. The concerned groups may comprise of shareholders, employees, customers, lenders, suppliers, and society. Hence, ethics in human resource management involves fundamentally the moral choices made by the employees, managers and the organization itself (Nankervis, Compton & Baird, 2002). An organization is also guided by ethics when it comes to recruitment and selection. The criteria for recruitment and selection include employee’s cognitive moral development, personality traits associated with normative receptivity and workforce diversity (Stone, 2002). An organization is morally obligated to attract socially responsible employees, especially if a company’s reputation for social performance attracts employees who care about social responsibilities. To capitalize on this possibility, hiring processes should reinforce employees’ receptivity to stakeholder concerns. Ethics also plays a role when it comes to employee’s performance. An Organization should not rely on performance objectives defined solely by financial criteria, but they should consider focusing on financial goals. Performance appraisal system would encourage employees to attend to both financial and social objectives. A balanced scorecard that measures and assesses employee performance in both areas accomplishes this (Kaplan and Norton, 2001). Because the objectives are specific to the firm, it will be ideal for external stakeholders to help design them (Mathis and Jackson, 2003). Broadly speaking, employees are required to adopt an external orientation of search and discover which formal appraisal system encourages. Since performance-based pay is an important element of effective employee management, organizations should reward employees for their behaviors consistently (Mathis and Jackson, 2003). The monetary incentives operate at two levels; incentives tied to some measure of stakeholder satisfaction to specific employees and incentives that promote social goals applied to the whole business unit. A cautionary note is that organizations should utilize performance-based pay with moderations, as the danger is that setting employees against one another may be counter-productive to the endeavors at social responsibility (Baron and Kreps, 1999). Finally, it would be consistent with logic to supplement monetary with non-monetary incentives, especially since there is a reason to believe that employees with higher levels of moral development have transcended reward seeking as a sole motivation. An organization should make sure that its relations with workers and the management are effective. The relationship includes establishing of industrial peace, protecting the interest of workers and management, preventing industrial disputes, and raising production capacity. It is through ethics that the aforementioned relationship can thrive in an organization. Moreover, the establishment of industrial democracy, creating full employment situations, lowering rates of labor turnover and absenteeism are the objectives of industrial relations. Industrial growth and industrial peace both depend heavily on ethics. These relations arise as a result of employment of employees in an organization. Basically, they are between two parties; labor class and employer class but the state also plays an important role in regulating these relations. Worker class and labor unions have an important role in establishing industrial relations. It pays attention to the individual qualities of the laborers, such as their cultural level, educational level, ability, skill and interest in work. In the organization, laborers are represented by trade unions, which protect their economic and social interests and put pressure on the employers to accede to their demands. Ordinarily, trade unions are affiliated to one political party or the other, which are responsible, powerful and cooperative with the management and play a significant role in establishing healthy industrial relations (Mathis and Jackson, 2003). Ethics also influences the management in industries to have well-knit organizations in different industries. This organizations fight with the government and trade unions for their interests and participate in different commissions which are constituted by the government to foster good industrial relations. Economic development of the country depends largely on industrial peace hence it is the responsibility of the government to maintain industrial peace. This is through legislative measures like fair wages, hours of work, conditions of work and bonuses. The establishment of good industrial relations is the joint responsibility of the workers management and the government. If there is a complete harmony of the viewpoint and approach of all the three concerned parties, the industrial relations will be cordial and comforting (Sims, 2003). Business ethics has become an area of strategic importance for all, and a lot of stress has been given on its implementation and the role of the human resource department is critical to success of the same. The human resource department has been identified in most organizations as the custodian of ethics. For effective implementation of ethics, it is important that the code of conduct in the organization be drawn up properly. Their reasons for paying attention to the code are that doing so will help create a strong ethical culture and promote a positive image. Ethics codes must be carefully written and tailored to individual companies’ philosophies. To improve ethics in business, one has to understand how individuals make ethical decisions in an organizational environment. Within the context of an organizational workgroup, few individuals have the freedom to decide ethical issues independent of organizational pressure (Ferrell, Fraedrich, and Ferrell, 2010). Conclusion To be ethically prosperous, it is important to comprehend and admire how values affect the environment socially. It is perceived that institutions establish rules of ethical behaviour, which relate to their practice. Ethics, therefore, plays several roles in the decision-making process. With ethics, managers can ensure that the employees are committed to their duties. It is believed that employees are more willing to take care of an organization if the company is dedicated to taking care of its employees. Ethics also affects the decision making of an organization when deciding the suppliers to work with. A company should choose a supplier that does not make it appear unethical in the eyes of its customers and consumers. Ethics ensures that there is no giving of preferential treatment to any suppliers. References Jaworski, B. and Kohli, A 1993, Market orientation. Cambridge, Mass.: Marketing Science Institute. Retrieved from Baron, J. and Kreps, D 1999, Strategic human resources. New York: John Wiley. Ferrell, O., Fraedrich, J. and Ferrell, L 2010, Business ethics. Mason, OH: South-Western Cengage Learning. Gordon, V. and Habley, W 2000, Academic advising. San Francisco: Jossey-Bass. Levin, M. and Cellini, R 2008, Building an Ethical Supply Chain. Retrieved from Kaplan, R. and Norton, D 2001, The strategy-focused organization. Boston, Mass.: Harvard Business School Press. Mathis, R. and Jackson, J 2003, Human resource management. Mason, Ohio: Thomson/South- western. Nankervis, A., Compton, R. and Baird, M 2002, Strategic human resource management. South Melbourne: Nelson. Rudelius, W., Erickson, W. and Bakula, W 1973, An introduction to contemporary business. New York: Harcourt Brace Jovanovich. Sims, R 2003, Ethics and corporate social responsibility. Westport, Conn.: Praeger. Stone, R 2002, Human resource management. Milton, Qld.: Wiley Australia. Pettinger, R 2000, The future of industrial relations. London: Continuum. Read More