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

Running head: CASE STUDY ANALYSIS OF PERSONAL AND ORGANIZATIONAL ETHICS AND VALUES BETWEEN FOR-PROFIT AND NOT-FOR-PROFIT ORGANIZATIONS Case Study Analysis of Personal and Organizational Ethics and Values between For-Profit and Not-for-Profit Organizations [Writer’s name] [Institution’s name Abstract This case study highlights the fact that Not-for-profit and For-Profit organization, both can be unethical in their conduct. It highlight how well known organizations indulge in unethical conduct for their own gain. Good ethics must be an important foundation of every business regardless of it’s nature, i.e. Not-for-profit or a For-profit organization. Thorough the case one may note that the Ethics of organization will be strong if the stakeholders and people involved have strong integrity. This case studies used in this paper is of Red Cross and Exxon Mobile it highlights the ethical problems of their conduct. A few solutions will be provided, and recommendations shall also be given at then end of the paper. Introduction Ethics is something extremely important in every thing one does. Personal interests and gain should be kept aside while regarding ethical practices. Business these are moving towards more ethic conduct, at time this conduct is even considered as corporate social responsibility. It may be noted that proprietors are more apprehensive regarding ethical business practices nowadays than in the past. At times companies with sound ethical business practices, may sol face many issues. Red Cross is a Not-for-profit business and ExxonMobil Corporation is a For-profit business. Red Cross like other Not-for-profit business faces many issues in raising sufficient funds to execute their strategies, apart from this the major issue they face is the misuse of funds. ExxonMobil Corporation faces numerous issues regarding promoting the use of fossil fuels, opposing Kyoto Protocol on climate change and not controlling control carbon dioxide (CO2) emissions the method they use for outsource their products. Thesis statement Both companies Red Cross and ExxonMobil Corporation face numerous ethical issues. However it may be noted that the difference is that Red Cross faces issues not regarding personal gains whereas ExxonMobil Corporation seems to sway way from the true meaning of ethics and uses it for personal gains. Background Both for-profit organizations and nonprofit organizations have a particular problem for ethics. For-profit business’s main function is to earn profit for its owners or shareholders, whereas a nonprofit organization is main function is provide services that may not be usually available (Bee & Buckley 2001). The Case Study for Nonprofit Organizations The Red Cross is a non profit organization; however the issue it faced was regarding the misuse of funds. When it was exposed about how it utilized the record donations which were donated to them for the 9/11 terrorist attacks. Donors thought that their donations may be given to victims and their families. The Red Cross, yet, kept more than half of the $564 million in donations which were collected for 9/11; they kept for other operations and future reserves. Even though this was a very old organizational practice, it was kept hidden by the origination. Donor anger forced an open confession and return of funds; however it showed that Red Cross was an unethical nonprofit organization. Issue discussed in the case Red Cross case study highlighted the fact that, no transparency was a very huge ethical issue which the organization faced. Ethical issues in non profit organization usually do involve the misconduct of funds. Transparency may nor may not have been much of an issue on the sheets if they would have donated the money ethically. Here one may even note that they do not consider corporate social responsibility as an important element in their misconduct. The fact that most nonprofit organizations indulge in this is that they do not have a source of earning profit their main function is to provide free services which are not available to the people who require it (Leanne &Greg 2011). Thus, in this sense they give more and earn less. Case study For-Profit Organizations ExxonMobil Corporation (ExxonMobil), the major publicly traded petroleum and petrochemical company in the world. It is not however ethically sound in it’s conduct during proclivity and the support Environmentalists disapprove of the company as it does not control carbon dioxide (CO2) emission during it’s operations of petroleum. ExxonMobil Corporation also supported the utilization of fossil fuels. The company was also disapproved of as if did not agree with the Kyoto Protocol on climate change. Issue Discussed In the Case The main issue here seems that ExxonMobil Corporation does not regard the health of others as import as it does it’s profits. It tends to undergo it’s operations in unethical manners which may effect the health. Alternative Promote Effective Financial Management Red Cross could have and can encourage ethical behavior and gain public trust by utilizing funds in a socially responsible manner. Due to incidents like the one mentioned in the Red Cross case in which reports of extreme overhead, unnecessary compensation, and financial misconduct, nonprofit organization have been under investigation. When ever doubt rises that a proportion of funds that may go to the management or maybe used for other expenditures the organization’s reports are carefully studied (Collins 2009). As Red Cross was rated as the top non profit organization it was easy for them to indulge in unethical acts. Thus, it may be noted that rating system should be replaced as it encourages the immoral performance measure, disrupts organizational main purpose, and promotes dishonest accounting practices (Collier& Esteban 2007). They must use a comprehensible and non-misleading means the to present the spent proportion of funds on administrative expenditure—information this how the organization can gain the trust of the public. As per Red Cross case study it may be noted that transparency is also essential in solicitation materials, grant tender, and donor contract. Organizations are unable to raise funds on due to mistaken postulation, or to violate public expectations by spending the funds elsewhere (Porter &Kramer 2 007). Furthermore, difference provided by donors between “overhead” and “cause” is on the whole faulty. It may be considered that the difference is a lie. All aid is being used for the cause, and the reality that nothing is being donated to the needy now results in doubt of the value it will create in the near future by denoting for infrastructure or fundraising. Punishing organizations for misconduct like the one in the Red Cross case may distort organizational priorities. It also may result in increase of aggressive program accounting, which distributes fundraising, management, and advertising operating expense to the cause and not to fulfill their own expenditures. Many studies have been carried out in which it was noted that many tax returns of nonprofit organizations find extensive infringement of standard accounting practices and tax policies, as well as categorization of accounting cost and proposal writing operating expense as expenditures for the cause (Schminke 2010) . To handle the above mentioned problem in the case, nonprofit it may be noted that Red Cross requires better institutional supervision, better public awareness, and more transparent and comprehensive accounting practices. Guaranteeing common standards for accounting as well as maintaining improved rating systems for organizational efficacy must be the main concern. ExxonMobil Corporation case alternative As per the ExxonMobil Corporation case study profit organizations which do not regard the importance of ethics and corporate social responsibility over high profits should use methods which are based on transparency and more accountability. It may be noted that in such cases companies usually on the advice of press agents and PR managers ignore such issue like the one in the case to save their expenses. However, if more transparent and proactive methods are utilized then all operations of such companies will have strong ethical conduct and policies. The fact that ExxonMobil Corporation was ignoring the value of ethical conduct in financial terms. Made it earn the most horrible environmental reputations, and even loose the trust of the public, which mostly is an important part of ethical conduct the corporate social responsibility however it was given to rank in profit making by Forbes. Here, it may be noted that companies with poor ethical conduct should not even be on the top 50 list. So that they realize that profit making does not mean ignoring the ethical conduct. The unethical conduct which damages the health of others should always be invested and transparent methods should be demanded. It may be noted that ethical conduct is not only important for profit businesses but also for non profit business (Salles 2011). The only way profit organizations can be made to implement ethical conduct is if they are continually investigated and the investigation be carried by an outside source. Problem solution As the need for ethical conduct changes overtime and different kinds of actions have to be implemented accordingly, a few scholars consider that future ethical conduct of a company means engaging its stakeholders in each and every process, a process of developing an improved and more ethical product Innovations as well as financial management by means of joint problem solving regarding product development or fantail management of donations (Salles 2011). If such a process is implemented then both organizations may be able to be ethical in their conduct (Peter 2009). Recommendations Many recommendations may be given for the Red Cross case. A few steps need to be implemented to ensure the ethical usage of funds. These include a careful assessment of mission, agreement, structure, responsibility, governance, employment, as well as the relationships between national and local branches as well as government organizations (Wotruba etal 2001). It must improve the level of financial management in order to gain trust. If the recommendations are implemented then it may result of a complete reform of the methods and strategies. Therefore it is important to highlight the fact that the reform of legislation may also be recommended in which downsizing the board of it’s unethical members and improving external governance. The Red Cross might lead the non profit organization in the right direction, however due to major internal blunders in their financial management no fix will be complete if a detailed study and constant work for reform is not carried out. This is due to the fact that a lot of minor changes also need to be made. The financial management is a mess and only through detailed assessment f the system can things be improved. Since the 9/11 financial mismanagement of funds a number of changes has taken place. It now double checks if the number of supplies needed are being provided to the victims or not and if the funds are being used for the cause its is donated for. However it still to work hard to improve it’s financial management. It may also be recommended that Red Cross should take strategic break through regarding how it managed the disaster funds for decades, the Red Cross needs to takes accountability and give its operations more ethical out look; they need to ethical not just for the people who donate but also for the victims. They will have to become more conscious and watchful regarding their expenses (Claus 2010). If the a Red Cross does not only act in response on stress from the donors and those involved in the process the they may never implement better finical system . Thus, the government should keep a double check on non profit organizations and their conduct. The Red Cross may have to reform its’ entire culture. O as per their website "Red Cross representatives need to be aware of their reputation for arrogance, bureaucracy, and insensitivity." This truly means that they are going towards a better and more ethical stance in their operations. This too still needs to be double checked Recommendations for ExxonMobil ExxonMobil due to before mentioned case study does not have a very strong environmental reputation, mainly because of its apparent lack of concern to the issue of global climate change and its constant utilization of fossil fuels but it is still the top most ranking most profitable corporation It may be pointed out then in Exxon’s case measure of their unethical conduct may have quite hard , it may also be noted that the company paid more attention on it’s return they get tax and duty deduction which may help them gain more profit then their investment . Thus, it is inarguably that if it sends the investment in improving the fossil fuel issue it may result in returns beyond anticipation for Exxon’s reputation, customer awareness and responsiveness as well as deregulation as the governments will strongly have faith in the company’s conduct and may think they are investing in communities betterment is one of the best recommendations as it may help in providing enhanced growth to the organization. Conclusion After evaluating both case studies, ExxonMobil and Red Cross it can be highlighted that both organizations need to heavily invest in ethical conduct wherever their operations so that they can recover their reputation the mentioned unethical incidents in the cases. Companies were involved in unethical misconduct, Red Cross should have not used the funds or other expenses and ExxonMobil should not have ignored the fossil fuel being used in their production. However, if both organizations implement the above given recommendations and follow the problem solution then they may be successful in improving their reputation. References Beu, Danielle and Buckley, Ronald M (2001).”The Hypothesize Relationship between Accountability and Ethical Behavior,” Journal of Business Ethics, 34(1), 57-73. Collier, J. and Esteban, R. 2007. ‘Corporate social responsibility and employee commitment.’ Business Ethics: A European Review, 16:1, 19-33. Collins, Denis (2009); Essentials of business ethics: creating an organization of high integrity and superior performance. Wiley Claus Strue Frederiksen (2010). The Relation between Policies Concerning Corporate Social Responsibility (Csr) and Philosophical Moral Theories – an Empirical Investigation. Journal of Business Ethics 93 (3). Leanne Morris, Greg Wood, (2011) "A model of organizational ethics education", European Business Review, Vol. 23 Iss: 3, pp.274 – 286 Porter, M. E. and Kramer, M. 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