The Role of Corporations - Essay Example

The Role of Corporations Introduction This paper aims to examine in detail the practical and ethical/social obligations to a corporation. Itwill then discuss the need to fulfill these obligations and as we move on to the end, it will explain in detail a step by step procedure which can be used by any organization to successfully resolve an ethical issue that arises. This procedure will have six basic steps and each step will be explained by referring it to a hypothetical ethical issue. In conclusion I will discuss what I would do if I had the power to make change in my hands. Practical, Ethical/Social Obligations Every organization has certain obligations. The main aim of an organization can be anything ranging from profit to gaining market share, but the way it achieves this goal matters a lot. There are certain responsibilities and obligations that the organization has towards various groups and situations. It may be impossible to discuss every ethical obligation to a corporation because there are so many. These range from production of bad goods like tobacco to treating the employees fairly. Mark Pastin in his book, 'The Hard Problems of Management: Gaining the Ethics Edge', has attempted to summarize this by providing four principles for that are necessary in order for an organization to be ethical. The organization must interact with all stakeholders without problems, so that these groups feel that they are a part of the organization. Secondly, the organization must be very critical about fairness. This implies to everyone involved in or with the organization. It must be fair to its employees, competitors, shareholders, clients etc. Everyone in this organization must be responsible for his own actions. Lastly, the organization must operate in a way which will ensure that its environment does not suffer. (Carter McNamara, 1997) Doug Wallace also gave six characteristics that are necessary for an organization in order for it to be ethical in its practices. His characteristics have a lot to do with integrity. Firstly, everyone in the organization must realize the importance of integrity and apply it in its practice. The top management must be responsible for creating this vision of integrity. Thirdly, this vision of integrity must be applied in the way every member of the organization is rewarded. Every policy and practice must be associated with integrity. Every management decision must also be made after considering the ethical dimension. Lastly, the stakeholders in the organization might have conflict of interest and an ethical organization must find a way to solve these conflicts with integrity. (Carter McNamara, 1997) The Need for Appropriate Actions Following a code of ethic will definitely have a positive effect on the organization. It gives a good impression of the organization where ethics and values are of the utmost importance. It gives employees the impression that the organization is serious about meeting ethical standards. This promotes values amongst them. According to the National Association of Social Workers, the purpose of code of ethics is to categorize the values of what their work is based on, it also uses its ethical standards to guide how the business should be carried out, it also guides those that are new to the profession, and lastly, it tells the public who to hold accountable. (NASW, 2008) Ethical management practice does not mean that the corporation will profit financially, because more than that, it will benefit in terms of honesty and fair dealing. Ethical management practice also increases productivity. The employees of a company are a very important part. When they start to believe that they are being treated fairly, they will be positively affected and hence, they will be motivated to increase productivity. It also positively affects how the suppliers, consumers, government and various other outside groups see the company. (Answers.com, 2008) The Optimal Ethical, Decision-Making Processes In order to for optimal decision-making, an organization must follow a predetermined step by step procedure which will analyze every situation of the problem at hand. Otherwise, the decision-making will be disorganized, unsystematic and eventually not very successful. The hypothetical ethical issue that will be used to explain the six steps of effective decision making is giving out unacceptable levels of air and water pollution during the production process by a corporation's factories. In order to effectively resolve the issue, the corporation needs to change its production processes so that its social cost is not that high and at the same time the corporation will benefit from it. The six ethical decision making steps are issue clarification, stakeholder analysis, values identification, issue resolution, addressing objections and finally, resolution implementation. Issue Clarification The first step in resolution of organizational ethics issue is properly defining the problem in detail. The definition must be clear, specific and based on the best available information. Then all the people who are getting affected by this issue must be identified. Once this is done, the consequences of this issue must be discussed in detail. Lastly, the importance of solving this issue must be evaluated so that it can be given a priority. (Michigan State University Extension, 1994) In our case, the issue at hand is pollution. The corporation's factories give out a lot of smoke in the atmosphere and also the rivers and canals around the factories are being contaminated by the dumping of chemical waste in them. Because of the rising problem of global warming, air pollution is an issue of great concern. The dumping of chemical waste in the river waters has resulted in no clean water for the housing societies in the locality. Those involved and who are affected include the people of the neighborhood, environmentalist, government and the society as a whole. Stakeholder Analysis Stakeholder Analysis is a process in which the Stakeholders are defined and their importance in the whole decision making process is evaluated. Stakeholders are all those groups that will affect and get affected by an organization's decisions. In order to resolve organizational ethics issue effectively, it is absolutely essential for an organization to win support from these groups. There are four steps to how this procedure could be carried out. First of all, the stakeholders must be identified. Secondly, you will prioritize them and next the organization will attempt to understand their most important stakeholders (MindTools, 2008). Lastly, all the support that we can get from these stakeholders will be assessed and ways to reduce opposition from some of them will also be considered. The stakeholders involved in our case will be the public, senior executives, press, government and non-government organizations, customers, prospective customers, and lastly trade unions. These stakeholders are prioritized according to the amount of interest and power they have on the organization. The stakeholders with high levels of power and interest must be managed closely and be kept satisfied and vice versa. Lastly, we will try to understand these stakeholders and how they feel about the decision and the ethical issue. This can be done with the help of interviews. Values identification The third step in the decision making process would be identification of the organizational values. These values set standards according to which every individual in the organization must behave. Examples could include honesty, professionalism, teamwork, etc. These values differentiate between the right from wrong, therefore only once we have identified these values, we will be able to resolve organizational issues ethically. (National Defense University, 2006) These values will help us decide whether the actions of the organization are against the organization's moral values. In our hypothetical situation, the organization will come together in order to identify its values. The possible values that could be identified in our case would be responsibility, accountability, and professionalism. The organization must realize its responsibility towards the society, be accountable for its actions and lastly be professional in the way they handle the issue at hand. Spreading of pollution by the organizations factories is unethical because it is against its ethical values. Issue Resolution This step includes compiling everything discussed in the first three steps to come up with a resolution which will resolve the issue. It will include a detailed solution which will cover all the aspects of the ethical issue. This step outlines the complete strategic plan of the organization. After considering the issue, the stakeholders and the moral values of the company, the next step is coming up with a resolution. The organization must firstly change its production process so that the pollution it is giving out can be limited. This will require a lot of capital. The Organization at this stage must decide on how this capital will raised. Another way of the getting rid of chemical waste that is dumped in rivers must be employed. Next, the organization should ensure that greener products are produced and recycled material should be used for packaging. It should involve the press, so that the community will know about this operation of the organization. Addressing objections The next step in decision making is one of the most difficult to handle as it involves understanding others. This step includes efficiently, powerfully, professionally and competently addressing objections to the resolution the organization has come up with. There are various groups that might object to this decision. It is the goal of the decision-makers to carefully listen and understand these objections and then addressing to them appropriately. This step is not over until the ones objecting are satisfied with the justification given to them. In our case, one important group that might object to this decision would be the senior executives or the investors who will have to provide capital for this new project. They might object because the capital required for this new project would be very high and they would want to be satisfied before they invest. These groups need to be assured that this project might cost a lot to the company, but in the long term, it will not only benefit the society but will also benefit the organization itself. Decreasing pollution will improve the brand image of the company which might increase its market share. Plus, in future, when the government will impose laws and taxes on giving out of pollution, the organization will benefit as they will be able to avoid it. They must be given confidence in their investment. Resolution Implementation After all the five steps, one very important step is resolution implementation. The decision must be implemented in order for it to be effective. The corporation officials can do so by arranging a meeting that will involve everyone working for the corporation. In this meeting, the resolution must be discussed with everyone in the organization. They must be told how the corporation plans on tackling the situation. Along with this, the importance of it must be emphasized. It must be made clear that it is important to follow these guidelines at all times, otherwise serious measures will be taken against those who breech it. Finally, workers must be monitored and supervised to know if the ethical standards are being met. At the same times, the effectiveness of the measures introduced must also be checked. The workers could be given feedback on how they are doing keeping up with it, good or bad. They must be appreciated and a reward system must be developed if they manage to follow them. This will motivate them to follow the instructions without supervision in future. An ethics performance evaluation should be developed. This will look at how the organization has behaved. This would enable the organization to examine whether its actions and decisions are consistent with its purpose and moral values. (Miriam Schulman, 2008) Conclusion An organization may have different aims but it is very important for every organization to be ethical in its practice. Why Because this organization is a part of the society and also because there are many benefits that's an organization gets by ethical practice. Ethical practice creates motivation in employees, and affects how the public and various other outside groups see the company. The question remains what is ethical practice. There are many criteria that make an organization ethical. An ethical organization is the one that ensures that everyone associated with the organization is treated fairly. In short, the organization must include integrity in every aspect of its practice. In order for an organization to be ethical, it must have a decision making process that keeps in mind the values of an organization. After all the discussion, the importance for an organization to meet ethical standards is very clear. Therefore, the organization must do all it takes to meet these standards before they make a decision. During decision making, an organization will greatly benefit if it follows a systematic procedure to develop these ethical standards. The optimal decision-making process that was outlined in the paper consists of sex basic steps. These steps include issue clarification, stakeholder analysis, values identification, issue resolution, addressing objections and finally, resolution implementation. If I had the power to change, I would ensure that no organization does business by breaking any kind of ethical issue, if not all of them, then at least those which can be avoided. I would ensure that every organization knows what its limits are and about its responsibilities towards the society. If I had the power to change, I would make sure that every organization would follow this step by step procedure during decision making because this leaves no room for any kind of errors in the whole complicated process of decision making. And once the organization has made a decision ethically, it can enjoy the benefit it gets out of it. References 1. Schulman, M. (2008) Incorporating Ethics into the Organization's Strategic Plan. Retrieved June 12, 2008, from Santa Clara University. Web site: http://www.scu.edu/ethics/practicing/focusareas/business/strategic-plan.html 2. Carter McNamara, (1997) Complete Guide to Ethics Management: An Ethics Toolkit for Managers. Retrieved June 12, 2008, from Free management Library Web site: http://www.managementhelp.org/ethics/ethxgde.htm#anchor35028 3. (1994). Issue Clarification Worksheet. Retrieved June 12, 2008, from Michigan State University Extension. Web site: http://web1.msue.msu.edu/msue/imp/modii/98920003.html 4. (2008). Stakeholder Analysis. Retrieved June 12, 2008, from MindTools. Web site: http://www.mindtools.com/pages/article/newPPM_07.htm 5. (2006). Strategic Leadership and Decision Making: Values and Ethics. Retrieved June 12, 2008, from National Defense University. Web site: http://www.au.af.mil/au/awc/awcgate/ndu/strat-ldr-dm/pt4ch15.html 6. (2008). Code of Ethics of the National Association of Social Workers. Retrieved June 12, 2008, from National Association of Social Workers. Web site: http://www.socialworkers.org/pubs/code/code.asp 7. (2008), Social Responsibility and Organizational Ethics. Retrieved June 12, 2008, from Answers.com Web site: http://www.answers.com/topic/social-responsibility-and-organizational-ethicscat=biz-fin Read More