External Reasons Why Managers Should Ensure Their Organizations Operate Ethically - Coursework Example

MANAGERS AND ORGANIZATIONAL ETHICS Student name: Institution: Date: Introduction The challenge faced by corporate institutions today is the ability to conduct business in an appropriate manner. Mistakes done by businesses can result in negative perceptions by the public and many legal battles. Decisions made by businesses and corporate institutions can be judged as legal, illegal, ethical or unethical, depending on their impacts on the society. Consequently, businesses are required to make decisions that improve the well- being of the societies in which they operate. At the core of organizational performance is efficient management. Management refers to the act of getting things done through people. Management is important in organizations and has for main components namely; planning, controlling, leading and organizing. Through this management functions, managers can ensure that they grow businesses and maintain them once they have achieved success at any level. Poor management can lead to loss of revenue and business failure in the long run. Ethics in business refers to the morals and values that determine acceptable behavior in business organizations. Ethics in businesses is determined by individuals, competitors, consumers, regulators, interest groups and the public. Many companies operate within codes of ethics either self –developed or universal. Businesses and organizations need to work within the required ethical codes of conduct to ensure that they minimize legal battles while ensuring profitability of the organization. Organizations are considered the causes of the problems in the society today hence the need for solving them. This is the essence of corporate social responsibility. Corporate social responsibility is defined as the business duty to maximize its positive impact and minimize its negative impacts on the society. With the increased levels of awareness among consumers, there is the need for organizations not only to make profits but also consider the social consequences of their activities. Important ethical and social responsibility concerns are part of the laws and regulations that enable the organizations to conform to the standards, values and the attitudes of the society. There is the need for managers to obey these laws. Business ethics and corporate social responsibility are compliance systems that make managers and organizations to act responsibly in the society. This paper assesses the need for managers to ensure that their organizations act ethically despite their approach to corporate social responsibility. Body Different organizations employ different approaches to corporate social responsibility. One of the approaches is philanthropy where an organization chooses to engage in the projects of the society. For instance, an organization may offer financial support to the community by offering grants to support community projects such as education of the vulnerable children. Additionally, organizations may offer money to create employment opportunities for youths within a given community. Another approach to corporate social responsibility that can be used by organizations is the shared value. Creating a shared value is important in ensuring the interdependence of the long-term business success and the balanced social systems. This can be achieved through investments in education, social welfare and healthcare. One advantage of using the shared value approach is that it creates an opportunity for the organization to build social value and long-term organizational growth. Moreover, the community approach can be used by organizations to achieve corporate social responsibility. In this approach, the organization supports the events and the programs of the local communities within which they work. This can help organizations in creating a positive brand and good rapport with the local community. External reasons why managers should ensure their organizations operate ethically One of the reasons why managers should ensure that their organizations operate ethically is building a good reputation. Reputation is regarded by organizations as an important asset. This is because it is difficult to rebuild once it is lost. Managers of organizations should ensure that they maintain the organizational promises to the local communities as a way of maintaining reputation. Organizations and businesses that fail to adhere to the ethical code of conduct while carrying out business risk losing their reputation. Unethical behavior can result in adverse consequences such as loss of confidence in the organization by the stakeholders, resulting in loss of profits and eventual business failure. On the contrary, an organization that strive to build and maintain good reputation increase stakeholders’ confidence and results in increased profits (Burrow and Kleindl, 2013). Another reason why managers should ensure that their organizations work in an ethical manner is to avoid litigation and penal systems. In the business environment, different situations may arise that may require critical decisions to be made. However, when the law does not provide the companies with a particular way to act, it is the responsibility of the managers to make such decisions. Where the law provides how companies should behave, managers should ensure that their companies work within the set regulations. The result of unethical behavior in any organization is illegal behavior followed by several legal battles in the courts. Unethical behavior such as piracy in the music industry or theft in the banking industry results in an increase in legal battles against the organization. Consequently, the organization spends time and resources in legal defense. This may lead to a reduction in the profits of the company. Additionally, the amount of time and resources spent on legal defense as a result of unethical conduct by an organization could, otherwise, be used in marketing and research or in other activities that add value to the company. Another reason why managers should ensure that their companies work ethically is environmental sustainability. In the business world, environmental sustainability involves reaching decisions that enhance protection of the natural world. To reduce their impacts on the environment, organizations strive to increase efficiency while reducing production costs, reducing risks and potential negative impacts caused by organizational operations. These ensure that the organizations provide a competitive advantage for attracting and maintaining customers. With the increased awareness of environmental issues today, customers tend to boycott products that are not manufactured in an ethical manner. Responsible sourcing of raw materials for instance, is an important environmental ethic that should be adhered to by the manufacturing companies to ensure sustainability both of the company and the earth’s resources. Companies can ignore the need for environmental protection in conducting their activities lose their reputation and hence business returns. Additionally, failure to adhere to environmental ethics by the organizations may call for legal procedures requiring the companies to bear the cost of their damage to the environment. It is therefore important for organization managers to understand that failure to adhere to environmental codes of conduct may hinder the long-term success of those organizations. Furthermore, managers should ensure that their companies perform their activities ethically to enjoy regulatory freedom. Ensuring that the ethical codes of conduct are strictly adhered to by organizations is an important way of avoiding regulations from governments and other regulatory bodies. As part of good corporate social behavior, managers of companies should ensure that their companies are self- regulated. Irresponsible behavior by organizations such as the irresponsible dumping of chemical wastes can result in serious health implications on the local communities around. Such irresponsible behavior can activate regulators. The result is enforcing strict regulations of the company. Regulatory responses have significant costs on organizations. Time and resources are directed to these regulations instead of engaging in other income generating activities. Good managers rely on self -regulatory programs with sound ethics. Internal Reasons why managers should ensure their organizations operate ethically Business ethics are not only important in ensuring that organizations perform well externally but also internally. Today, ethics in organizations is not a legal or moral obligation but a priority. There is the need for organization to abreast keep up with the increased technological advancements, competition from other products and services in the industry, opportunities and threats in the industries in which they operate and the effects of globalization. Ethics not only affects the organizational decision making processes but also the culture of the organization. There is, therefore, the need for managers to developing ways of assimilating ethics in the mission, vision, and values of their organizations. This results in the development of an ethical organizational culture where internal relationships between leaders and followers and external relationships with clients and customers are valued. Employee performance One of the reasons why mangers should ensure that ethics are adhered to within their organizations is increased teamwork and productivity. The development of an ethical culture within organizations is important in increasing productivity within organizations. This is because it plays a significant role in aligning the workers’ values to those of the organization. This can be achieved through dialogue that increases employee openness and integrity. When employees can align their values to those of the organizations in which they work, the result is increased productivity hence increased competitive advantage. Decision-making Managers should encourage good ethical conduct within their organizations to support decision making within the company. A company with an ethical culture ensure that all decisions are made on account of ethics. This increases accountability and transparency of the employers. Ethical cultures help organizations in making decisions especially during conflict resolution. Ethics can help managers in introducing changes I their organizations as well as enabling the staff to act consistently even during difficult times. Investor Confidence The other internal benefit of ensuring that companies operate ethically is investor confidence. Adherence to ethics in conducting businesses helps organizations to increase the confidence of the investors. Investors are important shareholders in organizations and managers should adhere to ethics when dealing with them. The main reason why people invest in organizations is to have good returns on their investments. Therefore, the lack of trust in an organization by the investors can result in the money being directed elsewhere hence the fall of the organization. The loss of investor confidence by an organization can result in the struggle by the company to gain trust from the investors, public and other shareholders. Profitability of the companies may be regained after several years and in worst cases, the organization might not recover. Managers should ensure that ethics are set and adhered to when dealing with investors for them to ensure continuity of their organizations. Partner Trust The other reason why managers should ensure that their organizations operate ethically is to gain trust from its partners. Partnership between organizations allow for cooperation in some activities while maintaining competition in others. However, for this to take place, there is the need for mutual trust between the partners. Ethical organization culture is important in enabling inter-organizational trust. Unethical conduct by any organization in a partnership can result in mistrust. Hence the organization cannot work together with other organizations. Additionally, trust must be developed among the workers within an organization for it to be extended to the partners. Customer Loyalty The other reason why managers should ensure that their organizations operate ethically is to gain the loyalty of the customers. One important advantage of organizational ethics is the ability to attract and maintain customers. If customers are treated badly by an organization, chances are that they will migrate to the competitors. However, if the customers are treated honestly and respectfully, chances are that they will be loyal to the company. Conclusion With reference to the above discussion, it is evident that ethics are important for the effective functioning of organizations. This is because ethics convey a range of advantages both to the organizations and the local communities in which they operate. Managers, being at the core of organizations’ operations, should ensure that ethics guide the operations of their organizations to ensure long-term sustainability of the organizations in all facets. References Burrow, J. L., & Kleindl, B. (2013). Business Management. Mason, US: Cengage Learning. Read More