Personal and Organizational Ethics and Values between For-Profit and Not-for-Profit Organizations - Case Study Example

? Case Study Analysis of Personal and Organizational Ethics and Values between For-Profit and Not-for-Profit Organizations s name] [Date] Executive summary Values and ethics in an organization determine the standards that are acceptable and help to construct behavior of an individual as per the organization requirements. If an organization whether it is a profit or nonprofit does not set its value and ethical standards then that kind of system increases the influence of individual value system within the organization. It is different from establishing the mission and goals and forming strategies. It is essential to frame living real values that would contribute to shaping the culture of an organization. There again has to be a uniformity in accepting the values by the people in the organization as the presence of different value system within the organization can create behavioral conflict between individuals (The Value of Organizational Values, n.d). The paper attempts to compare ethical issues with respect to profit and non profit organization. Every business organization needs to have some values and principles that would be the guiding principles while deciding on their strategies and morality of business work. Business can be from a profit making or nonprofit making organization. Both of these types of organizations can have certain ethical values that should be implemented to both its employees and the organization as a whole. Absence of ethical values can make the employees develop inappropriate thoughts and ideas and lead to fraud and corruption in the organization. While considering ethics in the organization there are two dimensions of approaching it (Brown, 2010). One is individualistic and the other is communal. Every dimension deals with different type of moral responsibility. In case of individual approach every person in the organization is responsible for his own behavior within the organization and so any change required in the behavior should be directed toward the person solely. In the communal approach every individual is considered to be part of a community and does not have any individual identity and every individual is responsible to some extent for the behavior of the others. If any changes are to be made in terms of the behavior it is to be directed towards the community as a whole. For this the behavior of the employees must be adjusted with the organizational culture. Influence of ethics in an organization Value and ethics of a particular organization can affect the four components of the structure of an organization. These four processes are – organizational structure, organizational process, ways of interaction among the employees and lastly the outcomes or results of the previous factors (The Broad Baker Group Ltd, n.d). Values go a long way towards deciding the culture and style of an organization. It becomes essential to have a smooth culture as it affects the behavior of the other stakeholders like the suppliers and customers in the organization. A model based on integrity, humility and compassion can help organizations in establishing their ethical standards (The Broad Baker Group Ltd, n.d). There are a few differences between profit making and nonprofit making organization in terms of the values and ethical behaviors of its employees. This arises because the basic structure of serving people with different purposes is different for the two organizations. Comparison between For-Profit making and Not-For-profit making organization - a personal perspective Over the past few years a lot of changes are happening within organizations in terms of setting their values and ethical standards. This can be both in the context of an individual or an entire organization. According to my personal perspective, every organization should have standards regarding their business values and ethics. For that the management must develop clear views of what it wishes to achieve and what it should avoid doing. This is to be decided before setting their objectives and targets. Proper realization of values and ethics always helps the organization as well as individual in business decision making. Most of the ethical decisions are easier to handle and to take established decisions of such nature, the individual or the management needs to have proper experience or exposure to it. It is difficult to teach ethics and values. It is the ability to distinguish between what is right and what is wrong. It is difficult to develop this realization and in a short time to implement it. Again, organization should keep a balance in maintaining strictness towards achieving business values and ethics. This can leave an improper or negative impact on the organization. Employees would feel that the organization is pressurizing them to adopt its culture (Ferrell, Fraedrich, & Ferrell, 2012, pp.429-431) . In recent years there have been many instances where cases of fraud and deception have been found in various issues related to activities of the company. This shows lack of ethical values within the organization. Many people believe that hiring good people make the organization a proper organization for its citizens. But personal values and ethics are part of the business ethics. It is not always possible to take a decision on behalf of an organization from a personal concern. Normally a business cannot set policies and rules on personal issues. It is the individual performance where individual value and ethic come into play. An organization should not only look for their business profits but also they have to maintain their corporate and social responsibility. An organization must give the society products and service, which can be used for the betterment of society. Earning money is essential to run any business and this justifies the point of making profit by offering its products and services to the people. Donation and charity by contributing a section of the earning to the welfare shows the quality of ethical standards an organization has developed. Ethical culture is strongly related with the profit because high value and ethics include employee commitment, investor’s loyalty and lastly customer satisfaction, which leads the organization to make profits (Ferrel, Fraedrich, & Ferrel, 2012, pp. 429-431). Profit making organization For a profit making organization the main aim is to earn profit (Tribe, 2011). The trade off position between profit and ethical values is referred to as short run profit (Kirton, 2004). This kind of profitability cannot sustain for long. Besides, long run profit is mainly dependent on the ethical behavior, which brings company’s goodwill among its stakeholders. Most of the employees take the monetary benefit as their major consideration. In profit making organizations, social responsibility and benefits are spread across their stakeholders. For instance, in this type of organization the employees are given certain benefits in terms of purchasing company shares, dividends paid to the company shareholders and many others. Timely delivery of goods and services at reasonable prices seems to be the most ethical thing for a profit making organization. Sometimes to earn extra incentives employees get so highly motivated that they do not bother to cheat others. These people are either their own colleagues or their customers. Sometimes shareholders expect more dividends from the organization in which they are investing (Kontes, 2011, p. 174). According to the profit making organizations they have a huge responsibility to provide monetary benefits to their shareholders. So when this responsibility is not fulfilled the shareholders get upset. Objective of earning more profit creates a huge pressure on management and for this reason employees from top to bottom level get pressurized, which can force them to react in an informal way by avoiding their social and corporate responsibilities. Microsoft- a business and ethical perspective Microsoft Corporation is a large profit making organization, headquartered in the U.S. This company has global annual sales of ten billions U.S. dollar. There are more than 60 thousands employees working within the organization. The company has its offices in over 85 countries (Richardson, 2003, p. 25). These companies run well because of the effective leadership qualities of Bill Gates. As a profit making organization Microsoft always look forward to serve people with better quality of products and services. For this they must have done proper research and develop their products as per the requirement of their customers. Bill Gates has donated his two books named Business @ the speed of thought and The Road Ahead to many institutions (Shelly, Cashman & Vermaat, 2004). These books give institutions an idea of implementing technology in education and skills development of the students. Every year Microsoft has been earning huge profits and also paying dividends to their share holders. They also give their employees an opportunity to purchase company shares. So it is a kind of opportunity for their employees to grow financially with the growth of the company. Sometimes to earn more companies divert their ways, which does not match with their ethical values. Microsoft has developed some strategies, which conflicts with their ethical values, such as bundling the Internet Explorer web browsing software with their operating system Windows 98 for making monopoly in the web browsing market and the main reason to provide this kind of promotion was to eliminate Netscape Communication from the competition. Another issue was that Microsoft was involved in cross promotional deal with internet providers to extend its monopoly within the market in web browsing segment (Levy, 2004, p. 227). They illegally prevented the personal computer makers from customizing the opening screen of the desktop, which showed the Microsoft logo. The above mentioned strategies show how a branded company can divert to unethical planning and means to eliminate their competitors from the market. Non Profit organization A nonprofit organization is established for the general benefit of the public. These organizations are usually made for some kind of charitable or educational purpose. A not-for-profit making organization is formed to accomplish a specific task and the money raised by the organization is absorbed within the organization and the only use of its money is to give the salaries to their employees and to fulfill their administrative needs. There are some differences among the pay structure of employees between not for profit and profit making organizations. In case of nonprofit organization the workers think that what they are providing is valuable for the society. Earning money is not the primary motto for most of the employees in a nonprofit organization. While working in a nonprofit making organization their moral values and ethics are set in a way to always look out for the benefit of the society. The managers of nonprofit organization are happy to sacrifice their high salaries. The importance of moral values and ethics while working is much more worthy than earning extra money for these people. But this attitude of people of having a great commitment towards their moral values somehow is not always good for the betterment of an organization or the society. Suppose a manager with high moral value and ethics always wants to make others think in his way because he might believe that the way in which he is thinking is the correct one. This can lead to conflicts as different people can have different values with respect to different works (Gallagher, 2010, p.22). In that case there is a chance for conflict within the organization. In a non profit organization, the idea is to produce employee satisfaction. The leaders try to provide a nice place for the employees to work and chances for development. It is important to impart fun and meaning to their work. Treatment needs to be just such that they can make it through difficult situations (Buchanan, 2011, p. 62). The salaries of the employees of nonprofit organizations are low, which creates a huge need for the availability of fund. Organization must give their employees monetary benefits because it can give them the extra source for motivation. It is like a give and take policy. Many nonprofit organizations for their commitment of serving people are always ready to serve but might not have utilized their organizations and performance of each of their individual employee. In case of nonprofit environment organizational performance is very difficult to measure while comparing it with the profit making organizations because profit making organization can measure their performance in terms of making profits but in nonprofit making organizations their performance can be measured by their contribution to their society. The moral and ethical values of any leader can influence both the type of organization. In case of nonprofit organization strong commitment towards value has negative impact too (Barrett, 2010). This feature limits the innovation within an organization. Also by strongly following the values and ethical commitment a person may develop fear and inhibitions and may not be able to express their opinion in front of the management due to the fear of rejections. Native American Heritage Association – an example Out of the several charitable institutions present in America, the Native American heritage association (NAHA) is one of it. The organization has been awarded with a four star rating recently (Native American heritage association, n.d). The organization which was founded in 1993 is dedicated towards the welfare and development of the native American countries who survive on reservations in south Dakota and Wyoming in America. The organization along with Lakota Sioux reservations has been serving the families and communities of Latin America since 1993. There are no facilities for the basic amenities of life as food, clothing, shelter and employment. According to reports, the mortality rate in these countries was 10 times above the national level. The people of these countries suffer from malnutrition as there is a continuous insecurity for food. 31% of the children there are obese because of poor nourishment. South Dakota where two of the poorest countries in America are situated has a large number of people suffering from diabetes. Evaluating, the moral responsibilities, NAHA is involved with providing food, clothing and other facilities to these people. NAHA receives donations in clothes, shoes, food, personal care items from people all over the United States at its office in Back Hawk. These are then transported to the people in Latin America. The association has also organized a cruise program called the Rock Legends Cruise II. The revenue earned from the cruise is also sent to people living on reservations in South Dakota for proving emergency assistance (Rock Legends Cruise II, n.d). From the point of view of the two dimensions on ethical expressions, NAHA is mostly a communal approach of ethical preservation. It was started by a single person named David G. Myers, but over the span of 18 years it acquired a communal dimension with many people joining it (NATIVE AMERICAN HERITAGE ASSOCIATION, n.d). To compare these two organizational ethical values, the difference in providing monetary benefit to the employees is very noticeable. Money is the tool, which motivates the organizational employees to work harder. It does not matter whether the employees are working for their organization or they are working for the betterment of their society. For the profit making organization employees are given various facilities as discussed above. But for nonprofit making organization employees do not get any extra monetary benefit except for the feeling of satisfaction for providing benefit for the society. However nonprofit organizations have huge availability of fund from different sources but their ethical values do not allow them to give extra money to their employees as an appreciation for their work. For nonprofit organizations strong commitment towards their ethics restrict them from restructuring their organizational values and ethics. But in case of profit making organization the management always welcomes the new ideas and thoughts of their employees. Moreover these ideas are utilized for the betterment of organization. Recommendation The profit and non profit making organizations can contribute for the betterment of the society by forming some measures that would benefit both its business goals and objectives as well as fulfill its corporate social responsibilities. It will not be easy to frame such measures as there are strike differences between the ethical concepts of business profit making and social responsibilities. But if the values of compassion, integrity and likewise are incorporated together with the business goals and objectives framing such measures would not be difficult. A few measures can be: a. Infuse the idea and spirit of social wellness in the employees. b. Maintain a fund in the organization on a yearly basis that would be used for public welfare. c. Encourage employees to donate and appreciate it by providing certificates or honors. d. Organize camps and tours and introduce the employees to the deprived areas. e. Lastly, formulate strategies on corporate social responsibilities as a part of the business plan. Conclusion The for-profit and not-for-profit organization can clearly be identified by their value and ethical norms. Profit making organization is motivated by profit. They only take monetary benefits as their serious consideration. But nonprofit making organizations always think of contributing to the society or a community. Community contribution can be done by many ways. It can be done by giving high quality education, helping the people who are in danger due to various natural calamity, terrorist attacks and accidents. Presently, the difference between the two sectors has been unclear. Because of corporate social responsibilities both the type of organization wishes to become community friendly. These days many businesses whether it is profit making or nonprofit organizations are becoming more concerned about their social responsibilities. Many not for profit making organizations are becoming entrepreneurial, taking new strategies and adopting other parameters to measure their domain of business. Not for profit and for profit organization have distinct difference among their mission due to the difference in values and ethics they consider for their business. It is very difficult to measure the effectiveness for nonprofit organization because of their social mission. Understanding the fundamental differences of their value and ethics is the major challenges for the experts of the board of members. References Barrett A. (2010), “Issues in Non Profit Ethics”, In, Agard, K.A. Leadership in Non Profit Organization, SAGE Brown, M. (2012), Ethics in Organizations, SCU, retrieved on June 30, 2011 from: http://www.scu.edu/ethics/ublications/iie/v2n1/ Buchanan, L. (2011) “Core values” Inc. 33. 5, 60-74, retrieved on June 30, 2012 from: http://web.ebscohost.com/ehost/detail?vid=10&hid=104&sid=d7376c3f-cbcf-41c2-b67e-e8e29e7b294d%40sessionmgr15&bdata=JnNpdGU9ZWhvc3QtbGl2ZQ%3d%3d#db=aph&AN=61409954 Carter, C. (2012), For Profit vs. Not-for-Profit Organization, Small Business, retrieved on June 30, 2011 from: http://smallbusiness.chron.com/profit-vs-not-for-profit-organization-4158.html Ferrell, O., C., Fraedrich, J., & Ferrell, (2012), Business Ethics: Ethical Decision Making & Cases. South-Western College Pub Gallagher, T. (2010), Integrating Faith Ethics in Business decision making, National Catholic Reporter, 46. 17, p. 22/22, retrieved on June 30, 2012 from: http://web.ebscohost.com/ehost/detail?vid=13&hid=107&sid=d7376c3f-cbcf-41c2-b67e-e8e29e7b294d%40sessionmgr15&bdata=JnNpdGU9ZWhvc3QtbGl2ZQ%3d%3d#db=aph&AN=51405982 Kirton, A. (2004), THE IMPORTANCE OF BUSINESS ETHICS, retrieved on June 30, 2011 from: http://jamaica-gleaner.com/gleaner/20040411/business/business1.html Kontes, P.W. (2011), The CEO, Strategy and Shareholder Value, John Wiley & Sons Levy, R.A. (2004) Shakedown, Cato Institute NATIVE AMERICAN HERITAGE ASSOCIATION (n.d.), retrieved on June 30, 2011 from: http://www.naha-inc.org/ Richardson, A. (2003), The Story of Microsoft, Black Rabbit Books. Rock Legends Cruise II (n.d.), retrieved on June 30, 2011 from: http://rocklegendscruise.com/ Shelly, G.B. Cashman, T.J. & M. Vermaat (2004), Discovering computers 2005, Course Technology Tribe, J. (2011), The Economics of Recreation, Leisure and Tourism. London: Routledge The Broad Baker Group, Ltd (n.d.), retrieved on June 30, 2011 from: http://www.broadbaker.com/Values-ethics.htm The Value of Organizational Values (n.d.), retrieved on June 30, 2011 from: http://www.teal.org.uk/mat/page6.htm Read More