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Business ethic is one of the biggest issues for any business or organisation especially for multinational companies. In last few decades it brought so many changes in business and gave the new sense to investor and companies. "American insurance group, in Clone parmalat, tyco and world.com have been involved to increase business unethical issues, behaviour and many questionable management practices" (reference?)". The executive of these companies have to face so many problems, and some scandals brought to CEOs in to the court on the behalf of these businesses unethical behaviour. The position of these CEOs had been changed who accused taking multimillion-dollar salaries, while misleading to investors and customers above the true condition of their companies. In this regard, the scandal of money increased near about $63 million at Enron, $107 million at world.com, but more detailed are unfolding, the extent of the fraud is estimated to be $500 billion. (Reference and quoting? From which line to which?)
With all these business unethical issues, government tried to restore confidence and a sense of central contract in the form of the Sarbanes-Oxley act of 2002, which requires from CEOs concerned certificates and other so many things, for certifying the financial statement of their organisation which must be true and accurate. Sarbanes presents a framework for the organisation including CEOs, employees and management to avoid these unethical issues for management for decision making. It supposes to reach right direction to do right things. Business ethics have been managed by the corporate offices in most of the organisations and they are responsible for maintaining the ethical reputation of their organisation. In this regard, the CEOs with the collaboration of HR department are responsible to make a framework or codes of ethics for their organisations.
The purpose of this course work is to explore the challenging world of business ethics and the examination of their work in any environment because business are providing products and services, wealth and creating employment. It judges the standard of ethical and legal issues faced by the organisation in prevailing environment. At the last part of this course work the functions and implications of HR professionals in CSR activities are taken into account, and it is also critically analysed that at what extend legal or ethical consideration are important. What is ethics?
Josephson institute of ethics describes that ethics are about how we meet the challenge of doing the right thing when that will cost more than we want to pay. (reference?)
How people try to live their life with regarding to right and wrong acts, it also judges the living standard of the people, and their behaviour to do right and wrong deeds. This is double impact of expectation, how can we treat people in society and what are their expectations, you have from the people toward you. How they can be seen or arrive the standard of right and wrong or good and bad behaviour, how they arrive in the definition of what the wrong and right factors, including how they raised, their religion, and the tradition and beliefs of their society.
The golden rule:
Do unto others as you would have them do unto you or treat others as you would like to be treated. (reference?)
Definition of business ethics:-
"Business ethics are the application of ethical standards to business behaviour". In business there are many people to reply the golden rule and the double impact, like stakeholder, customer, employees, suppliers, creditors. (reference?)
Business ethics are separate area from the general subject of ethics because there are two main reasons.
Stakeholders have vested interest in the ethical performance of an organisation.
It can be hit your personal value system and may clash with the ethical standard of the organisation's operating culture.
Value chain is the most important thing in this respect. And this can be seen that organisation provides in the transformation of raw material into a delivered product or service.
http://www.outsourcing.lt/images/mainpics/valuechain.jpgA value chain analysis is a rational and structured way of looking as a company's processes and cost (lasher, 1999)
Ethical issues can be found in many departments in an organisation.
Ethics In manufacturing:-
Manufacturing is a big challenge in any business, because managers always complains about designs and want more satisfaction with the products and services. You have to design best of your products and there is a problem with supply. You can give the best quality to alternative the supplies.
Ethics in marketing:-
After passing the design, the sample provides for manufacturing. Then it is sent in the market for marketing, it must be sold. The process of the market has been began and it is responsible for ensuring that the product reaches the hands of satisfied customer, then the marketing has different aspects to sell the things through news, TV, advertising and newspaper etc.
Ethics in HR:
HR is like a bridge between an organisation and employees. HR presents his best role between the contract and paperwork between the company and employees. HR ensures different aspect such as organisational priority, leadership and development process, right program and policies. It also plays the pivotal role in keeping the organisation on the right track of governmental legislative considerations.
Ethics in finance:
There are two types of ethical functions in finance, accounting and auditing function, in accounting function; it keeps the all finance transactions of company by documenting the money coming in and money going out. Means it keeps the balance and record of the credits and debits. It keeps the account and makes the balance sheet in the end of week, month, and year. But in auditing, it makes the certification of the company and finance statement as being accurate by an impartial third party.
The laws are made by government according to the nature of organisations. The legal code of conduct sets the policies and regulations for any organisations. The business-related policies provide the specific book or guidance. Corporation, business units, regional entities and divisions can accept the regional, governmental and local laws. It can be changed with the modification of the situation and environment of the society. It reflects the requirement of the local laws and regulations, or the social customs and characteristics of their business operation. Such local codes can include additional and specific standard.
Legal proceeding is mostly related with the acts of employees in any organisation. Employees must ignore the wrong activities that can involve its administration in any unlawful practices, including the employment of our administration or use of assets of company for illegal gain. It is very important for company to make legal proceeding and must properly protect and defend.
The use of company property is prohibited for personal use including labour, supplies, building and assets of the company. Employees only have responsibility to use the safe and make proper use of property only for company. To prevent the unauthorized use of property like confidential information copyrights, trademarks, logo as well as customers list.
If we want to see the ethical consideration of any organisation we will have to comprehend its social corporative responsibility strategy.
What Social Corporate Responsibility is:-C:\Users\asif\Desktop\businsoc.gif
According to Social corporate responsibility, business treats in society in two different aspects, social responsibility and corporate responsibility. Social responsibility treats social values, norms, laws and regulation within a society such as religious, social, economic and cultural aspects of society. It also explores the acts of companies that a company can perform within society. But on the other hand corporate responsibility supports their statement which a company draws for the responsibility or its role within a society in different circumstances. With the expansion of the globalisation in the world, social corporate responsibility of companies also are also expanding from last one and the half decades, so the pressure on the companies is increasing in the form of demands and better expectation of quality of the products and services. There is also great influence of the fast growing technology and the media and power of mass communication in a society and due to this change, there is great effects to stakeholders and their achievements of objects within an organisation. Mass media plays a great role to pick even little issues and presents these issues on global level.
In order to understand the role of CSR in real sense we will have to critically evaluate it, its function in a real life organisation will have to be observed, so for, this I have taken Macdonald and cited some ethical and legal issues faced by him.
MacDonald's is a worldwide multinational company that is operating in different nations with their legal consideration. Macdonald's publishes its social corporate responsibilities report at the start of the year and updates his every version of the booklet. The corporate social responsibility report of the corporate responsibility are only overviews and statements and do not give the firm metrics of the organisation that effects the society and environment. There is a need to take an overview and analysis of the report that MacDonald's statements in society that it has been solved in the next corporate reports.
McDonald's had celebrated its 50th anniversary on April 15th 2005,in these 50 years it got the best market shares and presents itself as a leader in the market of fast food. With the passage of time, it is growing fast as well as its revenue. The first McDonald's restaurant opened on April 15th 1955, in Des Plaines, Illinois by an entrepreneur called Ray Kroc. Kroc had been attracted by a limited menu hamburger stand that turned out high-quality fast food at low prices, run by a pair of brothers, Dick and Mac McDonald. McDonald's served more than 100 million hamburgers in the first three years and 'the 100th McDonalds restaurant opened in 1959' (Smith, 2003).due to his market strategy and it tactic to attract the people got the best marketing position and these strategies had been created by Kroc with the character of Ronald McDonald clown. The ads of McDonald's were so successful on and ads attract the people to come and treat within shops. MacDonald's is growing and getting success not in USA but on global level. Where it making its strong foots in world market, on the other hand it is facing different issues in the society. On some instance it is performing some ethical issues both internal and external. Obesity in the U.S. and other developed countries. overweight' (Walsh, 2003 a meal of a Big Mac and medium fries would provide you with '910 calories, as well as 46g of fat, 13g of which are saturated' (McDonald's.com, 2005). very month, 90 present of the children between 3 and 9 in America visit a McDonald's' (Schlosser, 2001). McDonald's has been criticised for exploiting children with advertising.. These marketing tactics contribute to the increasing unhealthy diet of many children.
Stakeholders in a corporation may not only be human because animals are also seen as an important As well as social ethical issues, corporations must also consider environmental ethics, which means treating natural resources not just as commodities, but as part of the ecological whole. It is important because it affects the image of the company and consumer's perceptions. For example, 'a Wall Street Journal poll in 1991 claimed that 53% of people avoided purchasing a product because of environmental concerns about a product or manufacturer' (Hawken, 2002). The most famous environmental issue is the suggestion that McDonald's has destroyed hundreds of acres of Brazilian rainforest to make way for large-scale cattle ranching and it impacts the global warming, as the rainforest is an essential mechanism for the absorption of Carbon Dioxide in the atmosphere.
McDonald's also 'annually produces over a million tons of packaging used for just a few minutes before being discarded' (McSpotlight.org: Environment, 2005). McDonald's uses almost all recycled packaging. 'McDonald's employs over 1 and a half million people worldwide, over half of them under 21 years old' (McSpotlight.org: McDonald's and Employment). McDonald's has adopted 'age differentials between adult and younger workers, meaning that they pay most of their employees less than the normal adult minimum wage' (Transport and General Workers Union, 2004
The function of HR department in CSR
The present study also involves to look at the function of human resource management professionals related to corporative social responsibility. Therefore the in this coursework a great deal of attention will be given on the increasing leading role of Human Resource Management in encouraging CSR activities. In the long term success of any organisation the combination of HR professionals with CSR activities can be achieved.
CSR in the true sense is responsible for its commitment to social obligations, and internalization throughout the organisational culture that stresses on the projection of the obligation towards the employees in the strategic implementation and internalization throughout the organizational culture which lays emphasis on the execution of the obligations towards the employees and involving them in responsible activities.
The top management has always been the most important actors in such activities and also the driving force in the area of CSR. The role of the HRM in CSR because its responsibility for encouraging sustainable practices that offer practically and theoretically is increasing day by day.
Different school of thought has stressed the acute importance for the proper implementation of Corporative Social Responsibility of HR and they have also pointed out the role HR is playing in the process of managing staff's expectations within the organisation. HR department is using the soft theory now a days which takes employees as living human beings rather then machines which is giving the air to good relationship between employees and organisation that is indirectly maximising the profit and brand image of the business among its stakeholders.
"Good relationships with employees also allows a company to gain additional benefits including improving their public image, increasing employee morale, and support from the community." (Zappala and Cronin. 2002).
CSR specificly deals with the importance of culture that how cultural diffrences effect the business at home and global level.how these diffrences could be maintained on a very positive level in business criteria.HR's focus is on human beings who are part of its organization's help HR to sort out this matter of human basic in an organization. HR department also find out that what tools and strategies to implement in an organization to get the best from the employees.
Therefore, the HR policies, its framework's formation of an organisational culture in the business management, produce awareness to obtain business goals in the best possible and ethical manner (Agrawal, 2007). Human Resource is in real sense has become socially responsible for sustaining in the organizational culture through the following ways:
By developing the formal sustainable practiced policy that involves the staff.
The corporative philosophy about Social Responsibility must be brought to attention while the orientation programme of new recruit the top management's responsibility towards corporative social responsibility is significant which should clearly be expressed to underpin the right kind of attitude towards business.
HR department should keep employees updated via mails, regular newsletters useful instruments that help HR professionals to keep employees agile about the organization's socially responsible steps
Human resource management should design the Performance Management System in such a manner that it measures the socially responsible initiatives taken by employees.
HR department should also provide the training facilities to its employees in order to fill the CSR culture in them because it has become essential for employees to learn and practice CSR activities."
Manager should be empowered so that they can make decision that would be helpful in executing social responsibility at local level and Clear reporting and review mechanisms should be used in order to improve the focus and effectiveness of Corporative social responsibility.
An e-learning course for its employees should be fabricated around the Department of Trade and Industry and corporative social responsibility Competency framework.
HR department should be careful in the area of Equal opportunities, diversity management, whistle blowing, redundancy, and human rights because human right protection i.e. denial or prevention of social or legal rights of workers are major issues addressed in Corporative social responsibility.
Last but not the least, human resource management should prepare the Social Reports or Sustainability Reports in order to highlight organization's commitment to social or sustainable practices.
To what extend ethical or legal considerations are important:-
If we do the analytical evaluation of the above passages we will come to know that both legal and social consideration are equally important because if an organisation or business will not take ethical or legal consideration seriously it will not only end up in the court but also will lose its respect in the eyes of its stakeholders the above examples of MacDonald and the ethical and legal issues faced by it shows the importance of ethical and legal considerations in a business. The ethical issuses that tend to be considered not more important than legal has equally been become important for achieving victory over the competitors in present time.
The emerging value of CSR now is setting an organization apart from its competitors. The noticeable and incorporeal benefits that are associated with organization are enormous. A powerful instrument such as corporative social responsibility is enhancing the brand image and r of the business but also it is leading to improve the sales and customer loyalty, with the collaboration of HR department and CSR organisation's ability to attract and retain employees.
Last but not the least the CSR of an organisation has become an integrant part of the strategy of any organisation in the present era and business climate, the role of different types of media, technology, the interest of the stakeholders has been playing immerse role in shaping organisational cultures, Dr. Milton Friedman was in the view that business does not have any social responsibility towards its stockholders, the only responsibility a business or organisation has is should be toward shareholder or the owner of the organisation, but as the globalisation prevails in the world the theory of Friedman criticised by many intellectual scholars, they maintained that the companies not only have legal responsibilities but also corporative responsibilities and social responsibilities towards their stakeholder. The role of HR department has become fundamental for keeping the organisations safe from the breach of the legal and social considerations. And the CSR activities in collaboration of HR department are playing the core role of a coordinator for building up the relationship with its stakeholders. Therefore, strong and committed organisational culture protected by skilled HR department can achieve maximum success by developing profitability, the morale of employees, customer satisfaction, legal compliance and approval from society for existence by using the right CSR Policy.