Understanding Ethics and the Legal Environment


Business culture today is about affective management; knowing how to delegate the organization's decisions from top to bottom. This is vital for employees to understand what a company stands for and how as an employee they are suppose to conduct themselves through the decisions they make. A child emulates their behavior from their parent, so too does the employee from their employer. Ethics can be a gray line in business. The larger the corporation the blurrier that line can be come. The more people involved, the more personal opinions and experiences are used to draw on. For most people, right and wrong usually do not change, but it is the gray area that is the focus of the discussion. In many cases people act by what they have been taught or by experiences in their life. Seeing the diversity in the global marketplace and the fact that more and more employees at all levels are being empowered to make decisions, it's critical that companies offer a straight forward code of ethics to reinforce company expectations. In both cases The Energy Cooperative and The Clean Power Company both are in crucial times of their business cycle. They are facing some interesting ethical and legal decisions. There can be large negative recourse from the decisions made. Ethically bad decisions can affect profits, investor relations, employment, community perception and company morale. Legally bad choices could result in hefty fines and penalties, ecological problems and even jail time.

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The Energy Cooperative

The culture of a company drives the ethics as to which way a company will fair in the market place. These ethics are generally developed by the director and owners of corporations. The decisions of senior management or directors can make or break the organization. When looking at a nonprofit board member they must participate for the good of the organization and not for any type of personal reward. Directors of a non-profit must realize that the career path is not the way to personal gain or wealth and in many ways the job is selfless and not personally financial rewarding. As a non-profit organization The Energy Cooperation is focused on educating the public in the area of energy information about technologies and advancement in the industry, as well as providing a format for discussion for companies who are about alternative energy. The Energy Cooperative is an organization that is revered by both the general public and people in the field of energy. It is important that the directors of the corporation are in place for the right reason, which is to make the world a better place by addressing certain problems. The board of directors usually are the driving force behind the culture for all the volunteers, donors, and those who benefit from the programs or services of the organization, so ethical actions start with them. They have an obligation to protect the organization from anything that could be detrimental to the reputation, or anything that can be perceived as being less than above board. A step in the right direction is that the board of directors is made up of people that are self-employed consultants with no allegiances to any particular company.

For a nonprofit to be successful they need to develop and enforce a comprehensive ethics policy. When the by-laws of the corporation are written and developed so too should ethical standards be established. Non-profit corporations are technically owned by the people who belong to them not the directors. All decisions should reflect that from the most basic decisions to organizational operations. Everyone involved in the nonprofit should have no problem explaining why and what they do in the organization to anyone including other members and the community as a whole. Most nonprofits have pretty standard policies in place. The difference from one to the next is how well the policies are applied and adhered to. To make a business successful, ethics must be a main priority, even when the rules cause some discomfort.

The question for The Energy Cooperative has to do with the directors using their titles when calling on customers in the industries for their personal business. The issue here is of miscommunication and misrepresentation .There is the potential for misunderstanding who is actually initiating the business contact, the person or the organization. These directors are consultants outside of the non-profit, which means they are normally dealing with people in the industry. Some of these people may be members of the organization. Starting the conversation by mentioning their position with The Energy Cooperative, may cause the potential clients to perceive that they are doing business with the organization directly and not just with the consultant and their personal business. Working as a consultant with the very people who are part of the organization may create a bias. This raises an ethical concern. Under a utilitarian analysis, the end justifies the means based on the greatest benefit for the greatest good. When the consultant is talking to potential clients he should not mention his ties with the nonprofit, in case any problems arose, the nonprofit wouldn't want to have their name involved, so those actions would be for the greater good for everyone. Energy and technology companies have an interest in an organization that is unbiased and not focused on any particular company or technology. The nonprofit board of directors has a social and ethical responsibility to satisfy these interests; they must avoid any situation that could put this in jeopardy, otherwise failure is eminent.

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One of the primary reasons to develop an organization like The Energy Conservation is to provide an honest forum for people to voice what is happening in the industry. Representing the organization outside of this purpose can cause people to be reluctant in how they express themselves. Failure of the directors to recognize the interests of the various stakeholders can greatly impact the outcome of the decision. Comingling the personal and professional gains can always create bias in a situation.

A corporation's reputation is the beginning and the end of their affect and vision in society. A company with a poor reputation generally will fail; especially if it is a non-profit. If the directors call on people from the organization personally and something goes wrong that person will always refer it back to the non-profit. Representing one's self as a director of the non-profit can cause harm to the organization and its membership. The members may question how this person became a director if the personal business they do is not in line with the policies and bylaws of the non-profit. The only gain is to the director and therefore should not be acted upon. For the organization to truly stay unbiased it would be in the best interest of The Energy Cooperative not to pursue this. Under an ethical perspective this does benefit the greater good. The only people possibly being rewarded are the directors of the board. The non-profit should also look into how the rules and regulation of the organization are written. If this is a gray area then it should be rectified, so it does not come up later when new members are appointed to the board.

The Clean Power Company

The Clean Power Company a Cincinnati, Ohio based company has been part of the Cincinnati community for over 5 years. They have recently realized that in order to stay a strong and healthy company, they need to move their operation to the Dominican Republic. The move will cause mass layoffs in Ohio, which will negatively impact the community. The bad news for the Dominican Republic is that there will be negative environmental impacts and the good news is they will have more community support (i.e. building a new school).

The legal implication that Clean Power will have to deal with is the Workers Adjustment and Relocation Notification (WARN) Act. The act requires a 60 day notice be given to employees before location closures. Failure to comply with this law can cause the company to pay out employees 60 days worth of pay and benefits. The company is also seeking to bring some of these workers from the United States to the Dominican Republic. These employees will need to understand the financial and legal requirements to work in another country. Clean Power also will need to be educated on the plant population and how it will impact the area. They will need to find out what local laws will be violated if any by building the plant.

The company will also need to address the ethical concerns of the move. After 5 years of operation in Ohio, the company has become a vital part of the community. Although, the company plans to build a school in the Dominican Republic, they need to consider their corporate social responsibility in Cincinnati. The stakeholders that this move will affect are the employees in Ohio that receive income from the work they do for Clean Power to support their families. These families have developed a certain life style which will now be ripped out from under them. This can be devastating to them as well as all the stores and corporation that rely on these people.

The Chavon River is a beautiful area in the Dominican Republic and the new facility will impact the river. The Clean Power Company will have new stakeholders in the Dominican Republic, which include workers, community, government, the environment. The potential affect on the new environment can be negative or positive depending on how Clean Power decides to conduct business. These stakeholder groups will benefit from the corporation's success and can be hurt by their failures. The construction of the plant will need roads, septic systems, electric, and sewer outlets. Teltac Corporation who they are purchasing the land from stated that it should be fine to run the sewage into the river. In John Locke's theory of rights, he proposed that all people are born with certain rights. For instance, in this case, the people of this region have the right to have clean water, and an uncontaminated environment. By dumping the raw sewage, they will infringe on those rights and be acting unethically, even if they may not be violating any laws. The Clean Power Company needs to be committed to reducing its direct impact on the environment by actively managing waste, emissions, and their consumption of natural resources. They must be aware of the role they can play in promoting environmental awareness amongst their stakeholders, contributing to improve the understanding of global environmental risks, and commit to support the fight against climate change and other environmental protection efforts. Managers who protect their corporation will be knowledgeable about the laws that govern environmental issues, and they must also use ethical principles and standards to guide their decision-making. Not using the proper tactics in this arena can cause the company hefty consequences much more harmful than lower profits or lawsuits; they can lead to environmental affect on human kind.

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The Clean Power Company should first create a new job training fund for the people who will be losing their jobs. This would have a positive influence on the lives that would be disturbed by the exit of the company overseas. Secondly, they should seek out the proper equipment that would preserve the environment in the Dominican Republic. If this means that the sewer system will have to be rerouted to another location then this is what ethical decision Clean Power will have to do. Rather than dumping the raw sewage into the river, routing the water it to another location will preserve the life that the river feeds. Finally, Clean Power should not only build a school in the Dominican Republic but design the building to be a multipurpose build. This could help the children in the community and also house other community events.


Business ethics affect every part of a business, from the profit margin to the daily levels of productivity. A firm's most important responsibility is to make a profit, but while doing so they will need to understand the laws that govern the land, use ethical judgment, and be a good corporate citizen through support of their local community. A good ethical code will align the employees with the company, while maintaining a good reputation. Profits do not have to be an opponent of business ethics.  There is nothing that says a company must choose between people or money.  The total corporate social responsibility of business entails the simultaneous fulfillment of a corporation's economic, legal, ethical, and philanthropic responsibilities.