Corporate Ethics, Governance and Social Responsibility - Term Paper Example

Corporate Ethics, Governance and Social Responsibility Table of Contents Overview 3 Company Profile 5 Complaints against the Company 6 Role of the Management at This Situation 9 9 Conclusion 11 References 13 Bibliography 15 Overview Ethics, Governance and Social Responsibilities are the vital issues for corporate to deal with in this modern era of globalization. To state about the implications, these three terms are inter-connected to each other. Corporate Governance, to be precise is a grouping of laws, rules and regulations, customs, and processes that in direct or indirect manner effect the operations of a corporation. In wider perspective it includes the rules and regulations related to both micro and macro economic environment in which a business runs. It basically considers the interest of employees, customers and the company’s goal overall. Therefore, it prescribes a certain amount of social responsibility that the corporate authorities should maintain according to their corporate governance. This can be termed as the corporation’s social responsibility. Today almost every company, despite their product category and revenue structure has certain social responsibilities towards the social environment in which they operate. Consequently, any form of violation to these responsibilities or immoral activities from the company is treated to be unethical. Therefore, ethics in corporate can be referred to the philosophy that a corporation perceives in order to carry out its social responsibilities. On the theoretical basis, ethics cannot be termed directly to be a science. Rather it is widely accepted to be a philosophy of certain leading forces which helps in achieving the desired goal or optimum success and sustain in that position for a longer period. And due to its nature business ethics do get vibrated by many variables, such as the leadership, strategies undertaken, micro and macro environment, cultural bases and individual characteristics. A proper ethical commitment can enhance customer’s satisfaction and trust on the product and result in an increase in brand loyalty which in turn will help the company earn profit and goodwill. Moreover, maintaining proper ethical codes in the internal environment of the workplace shall also prove to be beneficial for the employee satisfaction level and dependability. All these in turn will up-grade the ethical culture of the organization and thereafter create investor’s trust for the company. However, regardless of such importance in the business operations, corporate are often witnessed to welcome unethical activities in order to earn higher competency and profit. A number of issues for examples are misinforming financial outlook, discrimination based on gender, race, sex, religion or disability of a person and also using animals as testing objects for products (Sahdev & Et. Al., n.d.). From 1970s, after the worldwide acceptance of corporate ethics, governments of different economies have also taken the virtue at a notable extent by the enforcement of different laws and committees to decide and evaluate the performance of a corporation. But unfortunately regardless of such preliminary actions ethics are still violated by the companies which occur as a big corporate indignity within a short span of time. Such kind of incident to put into account took place with the most famous US Company Wal-Mart. There have been numerous complaints registered against the company on violating labor welfare, misleading customers’ perception, and other various issues. But the most highlighted and serious complaint of discrimination came from the end of employees as well as that of infringement of employee rights. Company Profile Walmart, initiated by Sam Walton, has been the name that not only Americans but also many other people all around the globe are fond of because of the low price dealings they offer. At present it is one of the leading retailers in the international market. Presently the company is serving its customers through approximately 8,700 retail outlets in 15 countries all around the world. The company’s data illustrates that it has earned a huge sum of $405 billion sales revenue in the current fiscal and employs over 2.1 million acquaintances registering itself as the leader rating at the top in the Fortune Magazine. Walmart is also known as the biggest private employer in the job market. The company has always been recorded to perform various activities as its involvement in CSR activities. For example, the company took part in charity giving for military support, education and hunger by donating food weighing over 100 million pounds to the US food banks in the last year. The company also took part in helping out the Chinese to recover from the earthquake disaster. Walmart stands to be the most renowned employers in the world (Walmart Stores, 2010). But keeping in mind the recent issues about the company’s lawsuits and its faulty operations, which is rather unethical proves all these glitters to be insignificant. The company has till date come across several small and big lawsuits against it by employees and even by customers and governments. Violating the ethics referred to the discrimination of employees and un-supported wage cut-off. Therefore, the company’s reputation becomes certainly questionable. A few lawsuits the company has recently recovered from are the case of Moore v. Wal-Mart Stores, Inc. and Klink v. Wal-Mart Stores, Inc. The company also has a civil case settled in California, and a settlement in the discrimination case under the EEOC Act, with Janice Smith (Walmart Stores, 2010). Complaints against the Company The complaints registered against Walmart are mostly based on misleading the customers as well as hampering the interest of its employees or the violation of labor welfare like the case of gender and wage discrimination among employees. The case of Janice Smith and other female employees related to the discrimination based on gender under the sexual harassment act EEOC titled as (Janice Smith) v. Wal-Mart Stores, Inc. is noteworthy in this context which was settled very recently in the current year. The case of Janice Smith was filed during the year of 2001 in the United States District Court. Janice was a former employee of Walmart and filed the complaint, grouping all the females who had suffered a discrimination based on their gender within the period of 1998 to 2005. The complaint of these employees were that in spite of possessing required eligibility and applying officially for the entry-level positions in the Walmart Center situated in London, the company had not taken any kind of action on that matter. The recent settlement ordered the company to pay the sufferers an amount of $12 million treating the complaint to be a kind of gender discrimination (Walmart Stores, 2010). Female candidates have also been recorded to be a victim of gender discrimination affecting their paid wages, i.e. the male employees of the same designation and qualification are paid more than female employees. In total, there are almost 70% of female employees working for the company, but only a handful of them are designated for the position of a manager, proving the fact that, Walmart despite of being one of the biggest employers of women fails to justify their rights as an employee (Scribd, n.d.). Not only there are matters like gender discriminations, but also the company has a number of wage and hour lawsuits. In the year 2008, the company settled 63 such kind of lawsuits against 42 retailers in different states, by an agreement to pay between the sums of $352 million to $640 million to the workers. The complaints were that the company had deliberately cheated these hourly wage workers by forcing them to work for extra hours without any overtime. Before 2008, the company had previously lost certain lawsuits on the same basis of the violation of federal labor laws by 2005 in California and in Pennsylvania by 2006. The company at that period was destined to pay another huge compensation of $172 million to the cases in California and $78 million to the cases in Pennsylvania (about law suits, 2008). Apart from all the above mentioned, there are many other lawsuits filed against the company for the unethical behavior carried out continuously. A notable reason why so many employees are being unethically treated is that the rules and regulations within the company regarding labor welfare have some clever pores in it. The company is designed to be a non-union organization which allows it to operate without third party interference, following an opened door guidelines for employees to go beyond the company’s management to register their complaint. This seems to be quite beneficial for the workers at a primary look but on a closer inspection, it reveals to have a minimum help to gift the employees. Comparatively, the company shall enjoy an important leverage according to the policy to terminate any kind of unwanted non-protested help. The company also does not permit the employees to meet with union delegates quite unethically violating the National Labor Relations Act (Scribd, n.d.). Another serious allegation that the company was sued for was on the basis of violating the child labor laws which was revealed by an internal audit held in the company after court’s order. There are a number of minor workers who were witnessed to work for late hours and even during school timings. The audit report also confirmed the issue that workers were forced to perform their duties at the time of lunch or break which led to 40 other lawsuits against the company (Greenhouse, 2004). A company along with its employees and customers should also be ethical to its competitors in the market. But Walmart unsurprisingly fails in that issue as well. The company had been sued in 1995 by a pharmacy company named American Drugs for predatory pricing. However, the end command was in favor of Walmart. There were further more cases filed against the company by Wisconsin Department of Agriculture, Trade, and Consumer Protection, Crest Foods and many others. But still the company seems to be unmoved, and continues with harmful price cuts (Scribd, n.d.). To put into account, the company has thousands of lawsuits filed against its unethical operations by employees, different legal communities, customers and even competitors. Notably, a reason for the company’s failure in Germany was that it was unable to keep up its promise to render products at a low cost to the customers who shopped from the store repeatedly. Moreover, there were allegations for neglecting the health care program for employees, and even certain environmental issues filed by the Environmental Protection Agency. Certainly, all these facts and figures convey the difficult and unstable situation of the company’s internal operations. This might be quite severe in the near future with a continued negligence to the matter. Role of the Management at This Situation The role of the company’s management at this position gains a prime importance to abolish these problems and regain an ethical outlook. The management should understand that these complaints may not look too severe for such a huge company like Walmart but is in fact harming the company more than any other political, economical, or technological vibrations can do. It is at the company’s core affecting its goodwill in the international market as well as hampering the internal working environment. With an increasing amount of compensations and a decreasing number of investments shall very soon lead the company to crisis. The unethical operations included in this context highly reflect the faults of enforced corporate governance by Walmart and therefore results in the lacunas to perform a level of corporate social responsibility. In order to prohibit all these problems to occur in the company again, the management should enforce some preliminary strategies in their course of action. The company should restructure its internal norms being specific to the point of discrimination, low wage, working hours, child labor and health care. Accordingly, the company should also take some strict actions against the employee irrespective of his/her position in the company if found violating the company’s rules as stated. But above all, what the company needs more is to build up a level of awareness among the employees, especially of higher designation, regarding the company’s rules for labor welfare and the importance of ethical behavior in the organization. Conversely the matter seems to be quite dubious that whether the company shall at last recover or not, because even after the court orders and audits to refine their operations in an ethical manner, the company has continued with their unethical workings. For instance, a very recent incident took place in one of the Walmart Stores in America; an announcement was made purportedly ordering the black customers to depart from the store, highlighting the race discrimination issue. Thus, raising the question that how much serious the company is about the matter of ethical behavior and their corporate social responsibility, being one of the leading retailers and biggest private employers in the world (Scribd, n.d.). Conclusion Hardly, at this present scenario a big company cannot be resistant from violating ethical issues. But the companies especially as huge as Walmart do compel a certain level of social responsibility and ethical behavior towards their employees and the society in which they exist. No wonder without a given specific definition and proper explanation, business entities today find the ethical part hard to manage keeping pace with their organizational goal. Due to this reason, many scientific approaches have been considered to make it easier for companies in maintaining the highest level of ethical behavior in their operation to attain their objective. There are laws directed by governments of all countries to disallow corporate from performing unethical behavior. There are even norms directed within the company in order to carry out their operations in an ethical manner and even Walmart is not excluded. The company also has an in-detailed and specific description regarding the responsibilities of management and code of ethics to justify the laws of labor welfare and other ethical norms. Despite all these, companies like Walmart have been repeatedly witnessed to carry on with unethical issues hampering the interests and values of employees within the corporation and competitors as well as that of customers in the external environment of the company. Certainly, there has to be certain reasons for such repeated violations occurring in the company in spite of having a leading role, huge revenue earnings and wide opportunities in the international market. The reason in the case of Walmart may be that management personnel were not enough aware about their responsibilities and had been repeatedly conducting unethical behavior in the working environment or it might be the greed to earn more profits avoiding a percentage of cost. And what the company does not have is a special branch or team for managing unethical issues within the company, to be highlighted as another reason for such frequent violations of ethical behavior. This is why there are almost every kind of ethical issues violated by the company’s strategy from child labor to sexual discrimination and even environmental hazards. To put into context, the importance of proper corporate governance is of significant concern. It not only helps in building up business opulence, but also contributes in enhancing the accountability of the corporation. However to maintain a significance level of business opulence there should be an appropriate teamwork, leadership and enterprise. There are different codes of ethics mentioned in different countries and different organizations. But what lies underneath is a similar interest to rationalize the corporate behaviors and the public interest in a wider view. References About Lawsuits, (2008). Wage and Hour Lawsuits against Wal-Mart Settled for over $350 Million. News and Information about Personal Injury Lawsuits. Retrieved Online on November 27, 2010 from http://www.aboutlawsuits.com/wage-and-hour-lawsuits-against-wal-mart-settled-2211/ Greenhouse, S., (2004). In-House Audit Says Wal-Mart Violated Labor Laws. The New York Times. Retrieved Online on November 27, 2010 from http://query.nytimes.com/gst/fullpage.html?res=9C0DE5DE1230F930A25752C0A9629C8B63 Sahdev, D. & Et. Al., (No Date). Corporate Unethical Practices: Strategies & Solutions. Punjab College of Technical Education. Retrieved Online on November 26, 2010 from http://conf.pcte.edu.in/IMCTWGB2010/ResearchPapers/Corporate%20Unethical%20Practices.pdf Scribd, (No Date). A Report on “Unethical Practices in an Organisation” (Wal-mart Stores Inc). Doc. Retrieved Online on November 27, 2010 from http://www.scribd.com/doc/42405057/Unethical-Practices-in-an-Org-Walmart Walmart Stores, (2010). About Us. Walmart Corporate. Retrieved Online on November 26, 2010 from http://walmartstores.com/aboutus/ Walmart Stores, (2010). Corporate Statement Regarding the Recent Settlement of an Employment Discrimination Lawsuit. Press Room. Retrieved Online on November 26, 2010 from http://walmartstores.com/pressroom/news/9677.aspx Bibliography Hurst, N. E., (2004) Corporate Ethics, Governance and Social Responsibility: Comparing European Business Practices to Those in the United States. Santa Clara University. Retrieved Online on November 26, 2010 from http://www.scu.edu/ethics/publications/submitted/hurst/comparitive_study.pdf Read More