This project report is prepared for study and evaluate the theories, clear the uncertainties and as a guide to proper understanding of ethical behavior in business and business management to confiscate misrepresentations and poor knowledge. The report starts with main topic which is ethics with moving to sub concepts such as business ethics and ethics in management providing a thorough understanding about the sub concepts to give a better understanding at the later more complex parts of the study. The whole report is based on the main problem title Why is it necessary to focus on developing an ethical approach to managing organizations?
The report explains the importance of the ethics to the organization, the theories and the concepts of the ethics in management and when managing a business and then the all important practical knowledge about the ethical behaviors in managing using practical examples from the business organizations in the world. After providing the practical knowledge the report will then turn in to study the success stories and the impact it has for the business organization's success and at the same time to find out the reasons behind the failures in business ethics. After that the report will be focused on the ethical leadership and the ethical decision making procedures with discussing the concepts in their areas. And finally the report ends with a conclusion for the study and the whole reports content by elaborating main points with pros and cons of the concept.
Earth is the birth place of the humankind and the only place that could pronounce as the home for the every human being. This statement has a deep and an important hidden factor it to consider as valid because it has a safe and life friendly atmosphere to live people in harmony. Even though the people have neglected this idea the base of this friendly condition to exist for another long time is the effort that people put with their formed procedure and rules to protect the ethics and ethical behaviors within the societies, countries and to establish in new and old all individuals in this world.
These ethics are trusted and followed by the societies and nations with the help of their native religions and with elders and religious leaders, though there are instances where still anomaly ties might exist. When consider about the society and as an individual, both parties cannot be separated though the responsibilities and the well being of the families and societies are kept with the individualistic approach and communal approach. When an irregularity happened the finger might be straightly point into the individual person. But the real proper solution could be build up to the situation by focusing on to the entire picture with the factors and other individuals affecting to the decision making of the selected person, thus the ethical behavior and the responsibility of the whole parties have to be dealt with to control and bring back to the correct path.
Organization is a group of people or a community work as a team to achieve a common goal. The ethics are highly valued within the organization for achieving its purpose. Ethics are the base which holds to gather the organization as a community. It improvises the original objectives and goals to enhance to achieve bigger targets. The foundation of the ethical procedures ignites the organization to achieve significant progress for the desired future positions. The individuals and organization past and present performances are explored within the ethical environment and provided with new realistic goals and targets to enhance the scope of the organization dominance and thrive the capabilities and capacity of the individuals to achieve success. At the same time the ethics plays a vital role in maintaining organizations peace with in the work in staff and management to make a proper understanding of the both parties rights and obligation and responsibilities.
Organizational culture and ethics
Organizational culture is the practices, values, norms, assumptions and tangible artifact that exist within the organization which help a person to identify. These are the configurations which builds the personality of the organization. Culture of an organization cannot be explained definitely thus the first impressions and the sense you get when you inside the organization with the experience is more appropriate and ideal way to study the culture of an organization. Organization culture functions as a system inside of the organization.
Importance of focusing on organizational ethics
There have been situations in the past where scandals have occurred due to the unethical behaviors of the leaders of organizations such as Enron, WorldCom. An organization which holds into business ethics is vital for the business but the leader or the businessman should be ethical to maintain the standards of the organization. Maintaining the business ethics does not mean the sacrificing the profits of the organization for the welfare of the society and other businesses, the goal of achieving profits should be a main target as it would be to the all competitors in the business.
Ethical behavior in business should be always encouraged in the business as it would be a example for the other businesses and they will also determined to keep their ethical behavior in a high position. In inside of the organizations the ethical behavior of the leadership in managing the employees will encourage the subordinates to work ethically and thus they will always provide a better service for the customers with their previous experience in the good ethical behavior.
Concepts of Organizational ethics
The Radical Humanist Paradigm and ethics
The radical humanist paradigm explains that the actuality is created by the society and it is occurring as a continuous process. It provides the critiques of the current situation. It illustrates the society against or opposed to human beings or human values. In addition to that it perceives the society as instruments. So when considering about this paradigm it has given more priority for achieving the tasks and no matter how it achieve. Under this paradigm humans consider as machines so what they do is important than how they do it. So it is clearly states that ethical behavior of the people or organizations is totally ignored by the theory. The values, customs, traditions, beliefs and responsibilities of the organizations and people will not be considered. So this paradigm discourages the companies and people who have ethical behavior and who have given more priority to enhance the society.
The functionalist paradigm and ethics
The functionalist paradigm spotlights on the incorporation of the society and how the sets of people's lives can be developed. Further it concerns the prototypes that bright the entire society. According to the paradigm society is functioning based on mutual trust, moral values and ethical behavior. Participative working will create established firm society that appreciates the equality. Conflicts and unethical practices will not be accepted in the society and society consists of several groups that have similar goals, beliefs and attitudes. According to the paradigm, society mixes together through effective communication. So importance of the ethics and importance of the ethical behavior and social responsibility can be explained well using the functionalist paradigm. It is clear that there is a positive connection with ethical behavior and above mentioned paradigm. Further it encourages implementing ethical business practices in order to enhance the society and human
Stakeholder theory and ethics
The stake holder theory explains about the organizational management and business ethics that discuss the morals and values which need to manage the organization. Also it recognizes and models the stakeholders of the organization. Stake holders are the groups that own the company so the company has bonded to accomplish their needs before accomplishing other's needs and value should be increased. According to this model organization considers only the needs and wishes of investors, employees, suppliers and customers.
This theory is based on two principles and according to those theories company and its managers responsible for the effects of their actions and company and managers should not violate others rights. When considering about the brief idea of the theory it is clear that organizations should follow code of ethics and management should concern highly about the ethical practices and organization need to pay their more attention on the CSR activities. Further company should treat all the stake holders equally and fairly, company should avoid the unethical business practices and other operational activities which harmful to existence of the human beings as well as to the nature and society.
Organizational ethical behavior -example: GlaxoSmithKline
Even though the Glaxo Smith Kline Company could attain successful financial growth they were unable to up hold positive image because company has not given more concern for the corporate social responsibility and they have not executed the ethical organizational behavior strategy. With the development of the global business most of the companies started to think corporate social responsibility further society and media highly concerned about the business ethics. Therefore it was very difficult for Glaxo Smith Kline Company to survive in the business without paying their attention to above mentioned elements. Company was totally transformed in to new business which makes ethical business decisions, operations and which concerns social development and environmental sustainability. Currently company offers latest medicines which use to minimize the effect of HIV/AIDS to developing countries with lowest cost and nonprofit basis. Company also under takes educational programs in the developing countries in order to educate about dangerous illness particularly HIV/AIDS and cancer. Now GSK Company has increased the capacity of corporate social responsibility programs and it provides personal sanitation education in least developed countries and they offer valuable social services in order to enhance the living standards of the developing countries. Apart from that company has started a project in Africa in order to minimize the threat of Malaria and they have donated huge sum of money to Aeris Global TB Vaccine Foundation to produce new vaccine which can react against Malaria. Also company has started joint projects with the WHO to find reasonable solutions to prevent widespread diseases.
As a result of the new transformations of the Glaxo Smith Kline Company, they were rated as a best ethical company both in the pharmaceutical sector and across all sectors. This is one of the best achievements that the company has received so far and pharmaceutical companies very rarely regard as most ethical and responsible organizations. Company's current success is good example for other local and international companies as well and they have proved that by being ethical, organizations can gain expected success.
Unethical organizational behavior - Example: the Coca Cola Company
Coca Cola Company is one of the best selling beverages companies in the world and it has extended its businesses worldwide. As a result of their success and as a result of their utmost contribution towards the world economy most of Coca Cola's unethical business practices have been ignored by the general public. Yet as a result of the protests and civil organizations' activities against the company reveals the truth. Coca Cola Company was established in May 1886 and since its inception they have used significant amount of drugs in order to make unique recipe and the drink consists of 60mg of cocaine which comes from the coca leaves. Even though the cocaine is harmful to human body company use it with their products in order creates addiction towards the product. This was a total crime and unethical practice of the company so legal issues were brought against Coca-Cola and they had to avoid cocaine but as a substitution company decided to use caffeine which is also well known as an addictive ingredient.
Apart from that company was sued for misleading labeling process in 2006. Company had included fake details about the drink which mislead the consumers. This is one of the unethical business practices of the Coca Cola Company. In 2001 company was accused for violating human rights of the employees who work in bottling plants in Columbia. Company has offered very poor and unsafe working environment also they were paid very low wages. The worst part of the above story was company was suspected for kidnappings and killing of union members who tried to win their demands and rights by using the paramilitary death squads.
This is a good example for the unethical business practices of the organizations and it is not accepted by the whole society.
Organization that have achieved sustainable development through ethical conduct - Example: Amway Direct Sales Company
Most of the businesses exist to make profits but maximizing the profits should not be the only purpose of the any business but it should be more ethical. With the development of the global business practices and concepts organizations are keen on producing the products that not harmful to human beings and environmental friendly and harmless new technologies are being used to make such products. In addition to that organizations avoid the misleading advertising practices and employees and consumers are treated fairly and honestly. Organizations can gain more advantages by practicing ethical behavior. Now it is time to demonstrate the advantages of being an ethical organization. So I have used the direct selling company which was established in UK as an example.
Amway is very famous huge global direct sales enterprise which own by few families of UK and it manufactures and distributes more than 450 consumer products. This company has become leading icon as a organization that follows organizational social responsibilities, that have implemented social and ethical programs around the world, that have action plans to be a good corporate citizen and as a organization that support people to enhance their living standards.
Amway's vision is "helping people live better lives" so by keeping their vision in mind company helps to poor children around the world particularly to access to education and medicine.
Amway Company perform major role in the societies it functions. They have implemented global business strategy for producing, distributing, and marketing the product over the local boundaries. In order to be strength for above mentioned strategies and gain positive image for the organization it has created another strategy for promoting corporate social responsibility of the company in globally. The policy include helping to charities, always acting in a ethical way and honest way.
By establishing ethical policies organization expects to build up loyalty and pride towards their products, enhance Amway's reputation as a caring organization, make a real difference to human lives, conducts social campaigns that support the business and social aims of the company, to builds trust and respect in Amway brands and to establish corporate social responsibility as a high priority.
As an ethical business organization Amway contributes to societies in several ways such as creating employees' job security, providing harmless goods that value for consumer's money and conducting community conducting projects.
The company has created business ethics that can guide the behavior of the company and its supporting roles. As a result of the ethical company they have to fallow rules and regulations of the different countries that they functions without violating them and they need to protect the consumers by providing safety goods which meet the quality standards and satisfaction levels of the customers. This directly helps and encourages ethical selling process of the organization.
Amway operates in highly competitive business environment and they have found perfect competitive advantages performing a positive participation in the society and paying their more attention on environmental protection programs. As a result of concerning above mentioned facts society believes that the organization is very ethical and it helps to upgrade its image as a more accountable organization.
This is how the Amway Company attains many business advantages by being an ethical business organization. This example will be good model to follow because if any other business can function such way it is easy to enhance their business reputation, it is easy to improve the customer base and loyalty and it is easy to increase customer satisfaction and finally any organization can maximize the profits by presenting harmless goods.
Outcomes of the unethical behavior
Consumers of the modern business world have good understanding about the behavior of the organizations and new trends of the market. Further education levels of the consumers are very high compared to resent past. So when the organizations behave in unethical manner, consumers quickly react to such situations. Most probably reactions will be negative. Unethical behavior of the organization very badly effects to themselves in several ways such as company will lose the public trust, organizational reputation will destroy, efficiency and productivity will decline, management might do many faults and frauds, profits of the organization will decline significantly and organization has to face various types of legal issues. Therefore organizations need to think twice about the way they need to perform their businesses. If the organizations have to deal with above mentioned matters it is very difficult for them to survive and compete in the highly volatile market. So the best thing is to follow business ethics and practices in order to achieve the organizational goals and gain competitive business advantages.
The ethical leadership has identified as the identification of core value and living to achieve it in all the parts of your life in the motive of having the common good. This leadership has been further explained with using the model known as the 4-V model.
This concept which was founded by Dr.Bill Grace states that it is concept which connects the inner values and beliefs with the external behaviors and actions for the common good try to achieve by the organizations. The leadership is the ability to guide the human and physical resources to achieve a common goal. Thus the leaders should be visionary about the future and should set goals to other to achieve with limited resources to fulfill the needs and wants for their full potential.
The importance is to first identify the inner values within the person's self and put maximum commitment to them to achieve the more difficult and common by integrating them with the other values.
Vision is a way which could define the position of the future of the organization or an individual. It is an ability to frame the actions for the future to achieve better result.
Voice is the method or the words which use to convince others to the visionary goals in the future to motivate them to work to achieve them.
The vision is tested through service when converting to the value. The act of providing value to the other in a service the potential vision is judged through the service.
Polis is a word which use for politics. When the leadership is putting the vision into the words before the public it is considered as politics.
As the voice turn into values the constant changes in the work procedures could move the voice as the leaders need to change the work procedures and actions to make sure that their current activities are align with the voice and vision.
Importance of ethical decision making
Ethical decision making is a collection of few actions. First it is necessary to look and understand the question in a moral perspective. Then it is important to consider the relevant facts. Finally decision should be made by thinking the outcome. When making the decision given guidelines, business ethics should be taken in to consideration and decision should be legal and it should be morally acceptable solution.
Ethical decision making is very important in order to keep the quality standards of the organization, to attain optimistic commercial reputation and to gain corporate success. With the increment of competitiveness of the market organizations have to be more responsible about business practices and in order to gain advantages businesses need to implement strategies which meet ethical codes of conducts and principles. So in order to apply the ethical business strategies managers should need to make ethical decision making. And organizations should avoid unethical decision making which leads to considerable financial and reputation loss.
This business essay critically discussed the importance of developing an ethical business practice in order to manage the organizations. With rapid development of the global business competitiveness has gone up and organizations have to implement effective and efficient action plans, rules and regulations, and strategies in order to survive in the market and achieve advantages in the long run. Therefore since the past some of the organizations have been utilizing unethical business practices such as presenting low quality products, offering harmful products, and misleading the consumers by using counterfeit advertising.
But with the time people have become more educated and their range of intelligence has gone up as a result of the rapid technological and scientific developments. So it is very difficult to mislead modern consumers and they quickly react to changes of the business environment. Now organizations have to work rigidly in order to capture considerable market share. It is very hard to retain the customers because large amount of substitutions can be seen in the market. As an influence of the above mentioned reasons, organizations that have unethical business practices cannot conduct their business for a long. Further there is huge concern for the ethical behavior and now organizations have started to work following codes of conducts and business ethics. Apart from that with the development of the marketing corporate social responsibility of the business organizations have gone up. Modern organizations have to contribute to the enhancement of the society and environment.
So modern organizations have to conduct ethical practices and ethical approach is needed to manage organizations. The organizations that have above mentioned qualities can attain competitive advantages and their reputation will increase finally they can achieve higher profits by offering high quality and harmless products which can satisfy human needs.