1- (a) Ethics is important in companies today. Discuss the factors that have encouraged businesses to be more ethical and give examples of ethical managerial behavior?
(b) ‘Whistle blowing policies are necessary requirement in ethical business today.’ Discuss this statement.
(a) Ethics is important in companies today and there are factors that have encourage the companies to behave ethically. They are;
- Legislations: Due to various legislations exists, the companies are force to behave in an ethical manner, such as employment act, consumer protection act. These legislations prohibit the exploitation of its employees and consumers. In other words the companies are expected to behave ethically in order to make them satisfy.
- Financial Loss: In today’s competitive business environment, the companies must reduce or minimize their costs in order to avoid a financial loss. For an example, wages, fuel and also it is equally essential for the companies to reduce the social costs such as environmental pollution.
- Pressure Groups: Pressure groups, such as NGO’s, CBO’s and various other community based organizations are likely to put pressure on the companies if the companies are not behaving ethically towards the community or the general public as whole. For an instance, Green Piece led a campaign against Shell for trying to dispose an oil platform by sinking into the North Atlantic Ocean.
- Consumers may boycott: Consumers are likely to boycott the organizations products if they are not behaving ethically or if the organizations are irresponsible towards consumers. For an instance, Nike products were boycotted in the western countries for using child labor in third world countries like Cambodia and Pakistan to produce their products.
- Demand for certain practice to follow by some of the entities, encourage the organizations to be careful on production process of their products. For an instance, the Body Shop produce environmental friendly products recycle the containers and they do not test on animals. Another example is Corporate banks do not lend loans to those who violate the human rights. In return this will give them a competitive advantage over their competitors.
Employees and managers are expected to behave ethically. Ethical considerations focus on individual managers behaving an honorable way. These are many management activities that a manager to behave in either in ethical or unethical manner. For an instance, if the performance of a subordinate is unsatisfactory and the ethical behavior of the manager would be to tell the subordinate and help him to improve. The unethical approach would be to let the situation deteriorate and finally laying of the employee. Another example is if a staff does something really good and innovative, the ethical approach is to encourage the staff and reward him. The unethical approach would be to taking credit from the effort made him.
(b) ‘Whistle blowing policies are necessary requirement in ethical business today.’ Discuss this statement.
Whistle blowing is an employee or a former employee reports illegal or perceived to be illegal activities going on his/her organization to the general public or to the government. In some cases, an internal wrong doing or perceived to be wrong reports to the employer by an employee. For an instance, fraud, health and safety violation, corruptions etc.
One famous whistle blower is Jeffery Wigand, who exposed the big tobacco scandal, revealing that executives of the companies knew that cigarette were addictive and approved the addition of carcinogenic ingredients to the cigarette.
Whistle blowers are likely to face punishments, such as termination, suspension, demotion, variation of wage and harsh harassment from the employees. For this reason legal protection for whistle blowing is essential and it may defer from country to country. In the United Kingdom, the Public Interest Disclosure Act 1998 protects whistle blower from victimization.
However, there are cases for and against the whistle blowing. Those who agree or support case for the whistle blowing argue that, the employees has moral duty not just his/her work and immediate boss, but also to the company and public at large. It is also said that, if a person sees a wrong, there may be other things happening which are unacceptable and it might be the tip of the ice-berg. If the unacceptable behavior is allowed, others will think that they also can get away with same thing. Many whistle blowers act in belief that the wrong doer’s colleague will be pleased to hear the information and will act on it. While some consider that conscience is far more essential than the job security and they will blow the whistle irrespective of personnel consequences. Sometimes whistle blowing is statuary responsibility and a good example is policy on health and safety at work.
Those who disagree or the case against believes that, employees should concentrate on doing their jobs and that the actions of others are nothing to do with them because the situation may be misinterpreted and what may be seen as a breach of contract may turn out to be perfectly legitimate. Some are reluctant to blow the whistle due to a ‘snitching’ mentality and it is considered bad to talk tales on others. They also argue that the actions of others are none of the concern of the employee. If there is something wrong, let others find it out for themselves.
2- Corporate Social Responsibility (CSR) is increasingly important and the stakeholder approach is popular.
(a) Explain what is meant by stakeholder approach to CSR?
Corporate Social Responsibility (CSR) is about how organizations carry out their business activities in an ethical way by ensuring that their actions do not harm the economy, society and environment. It is also essential not to violate human rights. The organizations are expected to be socially responsible or behave like a good citizen.
There are different views regarding whether the organizations should become socially responsible. One of the views is that stakeholder view, meaning that the organization have obligations to satisfy the need of all the stakeholders in its business processes. Stakeholders are individual or a group of people who are around affects due to the organizational activities. For an example, owners/shareholders, employees, customers, suppliers, competitors, Government and local community. Each of these groups has different objectives and the organization must make an attempt to satisfy each of these groups.
Organizations are expected to treat all its stakeholders ethically, such that customers should be given good value and safe products. Similarly, the employees will always demand for equal treatment and fairness and suppliers will also demand them to be paid on time in order to stay them with the business. It is obvious that the owners/shareholders will expect a good return on their investment. It is equally essential that the community should not be harmed.
However, Alternative view is one of the views on Corporate Social Responsibility and theorists such as Milton Friedman (1970) view that a business responsibility is to its shareholders. Under this view, activities that increase shareholders dividend should be encourage far more than anything else.
The subject of Corporate Social Responsibility (CSR) is much to criticism and it is divided into groups. People who support the case for CSR believe that an organization can benefit in multiple ways by operating the business short-term preference than a longer and broader perspective.
- Stakeholder theory: Businesses have a moral duties not only just obeying the law and serving the interest of its owners but rather they believe that the business have its moral responsibilities to its stakeholders.
- Enlighten self-interest: Customers, supplier, employees can be encouraged to be loyal to the organization by behaving ethically towards them. It also can help to retain them and ultimately it benefits the company.
- Government and charities do not have sufficient resources to meet all community needs. Therefore, if the firms do not help in these efforts, there is every possibility that these needs may not be fulfilled or delivered.
Friedman (1970) argued that the organization’s main purpose should be to maximize its profit and returns to its shareholders. If not it could be seen as unethical to consider the interests and rights of anyone else.
- Some firmly believe that the organization should obey the laws of the countries within which they operate and at the same time they do not believe that organization have no other obligation to society.
- Some argue that the tax paid by the businesses is used for the social purpose and thereby the businesses do not have any further role to play in it. And also the so called good work is taking care of government, NGO’s and charities. While others argue that CSR is just a cover in order to create a better company image.
Some examples of CSR program conducted by business are;
- Donations to charities
- Setting up educational facilities for children
- Promote healthy life styles along with its activities. (Example Dhiraagu broad band road race)
(b) If a company discovers a one – in – million possibility that a product might cause harm to a small proportion of its users, is it more ethical to withdraw the product and downsize the business with a loss of 200 jobs, including yours – or to set out replace the product within a year and keep employees in work?
Explain your answer.
Organizations, managers and employees face situation where difficult to come up with a decision. In such circumstances, most organizations make decision upon one of four basic beliefs. They are Denotology, which the organization has responsibility to act in ways that respect very fundamental rights of human being, Utilitarianism, businesses should serve the greater good of greater number. Teleology, which, the end justifies the means; irrespective of the damage that is caused to people on the way to utopia. Egoism, the moral behavior should be considered in terms of personnel self interest.
In this case even if there a minutest chance of harming a customer, I would advise the board of directors to withdraw the product and downsize the business laying off 200 employees including mine. Because, I firmly believe that the organizations should behave in an ethical manner towards its stakeholders. Suppose, if the company decides on opposite way and if I were that unlucky person who happened to suffer due to the unethical behavior of the company, what would be my feelings and reactions. Definitely, I would challenge legally and demand for compensations for the damages that have caused to me. Similarly, if it happens to someone else the reactions would be most probably same.
In such cases, the company has to spend a lot of money on legal issues, compensation if guilty proven and finally have to withdraw the product from the market. These will in return the company have to lay-off those 200 employees and redundancy payments should be made. Further, the company has to rebrand its product of have to hire a good public relations firm (PR firm) to reclaim their image.
Suppose if the company simply decided to withdraw the product and do all necessary things like paying redundancies to those employees that have laid-off. Then, the company is not likely to face such complications. In this case only the company has to think about is survival and they can convince the employees that there is no way other than laying-off them. By that time they could come up with a good PR policy and re-launch the product.
3- Your company has a strict code of ethics which follows the Institute of Business Ethics’ three principal guidelines:
(1) Transparency – DO I mind others knowing what I have decided?
(2) Effect – What is the impact of my decision on others?
(3) Fairness – Would those affected consider my decision to be fair?
You – as HR manager – here that your best friend, the Sales Manager, has agreed with a competitor to fix prices and stabilize market share so as to avoid otherwise inevitable redundancies.
(a) Bearing in mind these guidelines, outline what you would say to:
(i) Your best friend, the Sales Manager
As far as the company’s code of ethics is concerned, it is unethical to involve with other competitor to fix price and stabilize the market and it cannot be accepted. It is obvious that it is not his duty to bother, especially redundancy issues are something that the HR manager has to deal with. Further, it is very unhealthy to get involve fixing price with a competitor. Because the business expect fair completion from their rival competitors and it is unethical towards the stakeholders, such as consumers are left without a reasonable and competitive price. Ethical managerial behavior benefits the companies in many ways and he must face the consequences.
Therefore, I have no choice but to inform my superiors about the issue and the verdict would be theirs.
(ii) Your boss, the HR director
As HR manager, it is my duty and responsibility to deal with the company’s HR related issues. In this case, my best friend, the Sales Manager has committed a business sin by violating the company’s code of ethics. So I have no choice but to inform my boss about the wrongdoing and would recommend him not to compromise at all. Because he does that other staffs will feel that they also can get away with the similar attitudes and at the end there will be mercy for them. Also it can harm the business in many ways.
(iii) The employees you will dismiss if the matter is dealt with according to the company’s ethical code
Usually, laying-off employees are big and difficult decision to consider by HR professionals. But when a situation arises where you fear you cannot satisfy them by giving their salaries and allowances, and then there is no way other than laying-off them by giving them redundancy payments required by the legislation. Likewise, I as a HR manager, I will explain them the situation and will inform them by following all necessary procedures that there is no way but I have to take the difficult decision in order to survive the business.
4- Your Chief Executive is very interested in diversity and how it can promote organizational effectiveness. She wants the following information:
(a) Outline the main differences between equality at work and diversity.
Equal Employment Opportunity (EEO) is a concept that all individuals should be given equal treatment in all employment related activities, regardless of once faith, race, gender, and disability etc. In any society you will find certain groups of people are discriminated just for whom and which groups they are belongs to. These discriminatory actions are due to who they have to deal rather than a problem of a victim of the discrimination. In UK there is a legislation which prohibits the discrimination.
Diversity means feature of a mixed workforce that provides a wide range of abilities, experience, knowledge, and strengths due to its heterogeneity in age, background, ethnicity, physical abilities, political and religious beliefs, sex and other attributes. Often diversity can be a competent advantage for the organizations that provides equal opportunity and in facts this has led to more diversity movements.
(b) Describe the forms that diversity can take.
Diversity is differences among the people such as age, sex, race, different abilities, culture and work style etc. Often these differences are an advantage to the organization.
Most organizations today are trying to have some form of statement to integrate Equal Employment Opportunity and diversity. This is simply to make sure that equal and fair treatment is given to all the employees. Such policy includes, intention of not to discriminate anyone and effectively dealing with grievances arising from unfair treatment. In most organizations, these policies are given or make accessible to all employees.
Diversity management effort or program may include;
1- Diversity training: This is for managers and employees and the training may include awareness programs like legal implications of discriminations and cultural awareness to them understand difference in people and accept those differences.
2- Effort to break the glass: In an effort to find the best potential of the employees, the organizations may provide career rotation opportunities into sales, operations and marketing etc, and provide flexible-time and Tele-working.
3- Attract and retain the talents of older workers, organization may rehire retirees as part of time workers, independent consultants.
4- Make reasonable accommodation to hire disabled people: Organization may make reasonable accommodation in several areas. One is that they may eliminate architectural barriers that prohibit disabled people access to work areas or rest rooms. Another one is they may modify jobs, working area layout, work schedule or special equipment.
5- Managing religious diversity: Organization may have clear non-discriminatory policies on appearance of the person, while others have holiday swapping. For an example; Christian employees work during ramazan and muslim employees during Christian.
(c) Explain the benefits that promotion of diversity can bring to an organization.
Diversity management is full utilization of people with different backgrounds and experiences. Effective diversity management strategy has a positive effect on cost reduction, creativity, problem solving, and organizational flexibility.
The principles of diversity management is to establish a business strategy effectively managing a diverse workforce in order to create a positive working environment, promoting personnel and professional development, empowering all people to reach their full potential and removing the barriers that hinder their progress.
Potential benefits of an effective diversity management program can improve the organizational performance and it helps to prevent unlawful discrimination or harassments. This will in return improve the working relationship among the employees and helps to build a more effective work teams. It also helps to improve organizational problem solving capabilities and create an environment where the employees can learn how to tolerate difference among them.
Most organizations gives their utmost importance on customer care or customer relations, and they always make sure that the best possible employees are put in place. Likewise, an effective diversity management strategy helps to improve customer services.
Effective diversity management strategy helps to enhance the recruitment efforts. It gives you wider pool of talent for recruitment. For an example, in UK it is difficult to find technical savvy employees and Asians and Indians immigrants can be hired as they have the technical know-how. Most importantly effective diversity management gives a good image and helps to retain its employees and attract potential employees towards the organizations.
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