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When we talk about driving the organization towards SUCCeSS it is not any efferent from steering a car or vehicle in the right direction towards the required destination. That is why road maps and directions are developed and changed constantly so that the organizations and management are able to keep their business current and follow the latest trends and requirements as demanded by the external environmental factors that are constantly changing.
It is extremely important that on its way to growth and improvement, the organizational management must look out for any new developments like technological advancement, globalization, new regulations, ND laws or policies with regards to their business industry in order to maintain the performance and reputation of the business. On their way towards growth many leaders and management often ignore and forget the importance Of business ethics and corporate social responsibility.
These can play an important role in maintaining and improving the image and reputation of the organization in the eyes of stakeholders and customers whose satisfaction is of the utmost importance for a company’s success. The road to success today not only requires technical skills, information and experience but also depends upon business ethics.
Business ethics plays an important role and acts as the driving force and guide for the organization to meet its objectives and achieve and sustain success. The customer of today is well aware of the facts of how unethical business practices means unhealthy products and detrimental effects not only on the health of the business but also on the environment.
This has made it even more important for the organization to remain accountable and make their operations more transparent by providing the latest and current financial as well as market related data and information that will not only improve the operational efficiency RITE 3 of the organization, by helping it in making the right investment and other business related decisions, but will also improve its image and demand in the eyes of the consumers.
Subject and purpose This paper is written at the request Of the CEO and Executive Board to summarize the ideas behind ethical business practices, how those ideas enhance a business environment, how their use can enhance the reputation of a business, and the ways that running an ethical business leads to an efficient and effective business. Business ethics is quite possibly the most underrated aspect of managing and leading a business today. The concepts behind the ethical practices of a business are far reaching, and they affect everything that a business does.
Everyone working for a business must follow the ethical standards set forth by management in order to effectively carry out its mission. As the Director Of Ethical Standards it is my job to Stay current on how our business affects the global environment (ii. Our manufacturing processes, waste management, etc. ), our employees (ii. Our recycling programs, employee health programs, etc. ), and our customers (ii. The image we carry to the public through the viability Of our products on the market, and the way that our business effects positive change in the world around us).
It is my goal to ensure that everything we do as a company is environmentally sustainable, follows all applicable laws and regulations, and holds itself accountable to a higher standard of ethical practice than our competitors. Do this not only because it will help us to sustain our competitive advantage in an ever-growing market, but also because it is the right thing to do. In this paper I will specifically discuss Ethics and their effect n our economic efficiency, Organizational goodwill and how it helps create a Competitive advantage, and RITE 4 our Risk management and the Facilitation Of credit.
Ethics can effect our economic efficiency by instilling a sense Of pride in a job done correctly without shortcuts or harm to anyone involved. Each person takes responsibility for their actions and, in turn, gets the credit for their contribution to the effort as a whole. Organizational goodwill can help to create a competitive advantage through enhancing the performance of employees. An employee who feels valued and worthwhile will work happier ND more efficiently in the long run than one who feels unappreciated or abused.
Risk management directly leads to the facilitation of credit. By this, I mean that when our company applies for loans or any form of credit, the risk management plans that we have in place are the key determining factor in whether or not that credit is extended to us. If we, as a company, can not trust ourselves to make the right financial decisions then why should a lending institution trust us to make the right decisions with their money? As you all know, the efficiency and brand of a business are exactly what peps a business going.
A product that people want and a brand that speaks to them are extremely important aspects of the success of a business. But, in order to have stability and a good name on the market, both as a business with an outstanding product and a business that cares about its community, the ethics and social responsibility Of its employees is paramount. Those ethics, and their role in the landscape of business today, will be thoroughly discussed and explained throughout this paper.
Ethics refers to both the individual beliefs and values of a person and the standards and norms of vying in a society. They have been known to change and vary, as people belonging to different cultures and religions have different codes of ethics. The ethics of society is related to how an individual will react and follow the standards of decency commonly accepted by that society. On the other hand, individual ethics refers to RITE 5 the personal beliefs Of a person with regards to what he thinks is good or bad.
Business ethics encompasses both the societal and individual basis for defining business ethics. In other words, by business ethics we mean to take are of both individual and societal ethics (Nelson). For instance, our employees working in this organization must take responsibility for their own actions and work according to the code of ethics of their organization. They must also keep their personal actions consistent with what is morally right and wrong.
The management of this organization must take care of the society by taking appropriate measures and putting in place strict policies and a code of conduct so that all the employees and managers operate according to the guidelines and policies set down by the company. Our organization is acing ethical issues and dilemmas on an everyday basis, whether it is the selling of products or services, or the way we deal with both internal and external customers of the company. This tends to affect our ability to remain sustainable and successful in the industry and in the eyes Of the customers and shareholders.
Discussion Many organizations have been facing severe damages and failures in different parts of the world due to unethical business practices which not only harms the reputation of the organization in the eyes of stockholders and customers, but also damages the financial performance and operational efficiency of the business. Our businesses ethics and economic efficiency, organizational goodwill, and risk management and credit facility are the ideals that will lead us into a better market position both as a company and as professionals taking pride in doing things right.
Investors of today are more interested in dealing with and doing business deals with those leaders and management whom they can trust without putting their integrity and credibility at stake. Increased government regulations and corporate governance issues have put more pressure on our organization RITE 6 o take serious steps to implement ethical business operations. It must be the ultimate responsibility of every leader and senior manager here to act in the interest of our shareholders and customers.
Ethics and Economic Efficiency It has been suggested by Stirrer and primary, with the help Of their model Of economic efficiency, that business ethics is a natural part and way Of doing business in a successful manner and it automatically improves the efficiency of employees, employee morale and business operations in the long run (Biscuits et. Al, 1999). Their reference to business ethics in economic efficiency s evidence of the fact of how important ethics are and what role they can play in improving our own growth and development in the bigger picture of the economy of the country.
They further explain that for individuals or employees working in an organization, ethics refers to being fair and just and has been suggested to improve and enhance employee morale. Additionally, the implementation Of a better organizational framework with sound business ethics results in improved business functions and operations. John Stirrer has defined profit minimization as an important part of a behavioral objective that shows the direct and important relationship between ethics and success. He also suggests that economic efficiency can be attained and needs to be understood in the context of the behavioral model.
He explains that in order to understand the economic efficiency of an organization it is important to analyze it in the context of a standard measure of profit minimization which has been defined as “producing the right kind and the right amount of goods and services the consumer wants at the lowest possible cost within the legal mores of the community” (Stirrer ; Perineum, 1991). It is evident from the above mentioned definition that our organization can increase its efficiency and profitability in the long run.
If the concept and objective of our organization is to remain successful and improve then its business operations need to be analyzed and implemented in the context Of a behavioral model. Ethics should be RITE 7 deeply embedded in our policies and operations. If we can do this as a company then success and efficiency will automatically follow. He presented this with a need to focus on a perspective that is action oriented and promotes ethical decision making in business operations. It is extremely important to incorporate the ideology and concepts of business ethics into our own organizational culture and policies.
This is exactly what is required from good ethical governance which is expected beyond developing and creation of ethical policies. Good governance requires senior management to show a continuous commitment towards ethical improvement and acting in the interest of all the stakeholders such as customers, shareholders, suppliers etc. Organizational Goodwill and Competitive Advantage Authors suggest that business ethics not only improves the reputation and DOD will of the organization, but it also has other indirect benefits.
It helps in the reduction of cost of operations by making them more cost effective and efficient through increased productivity, performance and competitive advantage of the organization (Overshoot, 2001; Anderson, 1 999). Let has been suggested that the image and good will of an organization not only helps in securing and retaining customer loyalty, but also supports the hiring and maintaining Of some Of the best and professional human capital. Additionally, it helps in winning long-term acceptance in the society and community, thus aging its business sustainable.
Hiring the best employees and retaining them will automatically add to the operational efficiency of the organization, but the reputation of an organization is a great tool used for attracting the best of employees (Francis, 2001 When employees become a part of an organization such as ours they should be encouraged to undertake business practices that are legal and ethical. For example, avoiding involvement in any unethical act or prosecution can save our organization from not only losing its reputation but can also save the cost Of operations or transaction cost.
It revised us with guidelines on how to conduct daily business according to laws and RITE 8 rules on things like conducting bids, concluding contracts etc. If our employees do not follow these guidelines, it may result in an increased transaction cost or even legal issues. It has been suggested that organizations lose around SO percent of their customers in five years, 50 percent of the employees every four years, and 50 percent of the investors or shareholders every year showing that shareholder efficiency is largely dependent upon the reputation of the business.
Additionally, American organizations have been suggested to lose around 6 percent of their revenue due to employee fraud or other types of misconduct and unethical practices which show the amount of loss that the organization has to face if the employees do not follow a code of ethics or business ethics in their operations and functions (Business Ethics). Our organization can easily enhance its competitive advantage and improve productivity once business ethics becomes a permanent part Of organizational policies and culture since there is a considerable reduction in cost of supervision or monitoring.
This will directly improve the quality of our reduces and services. Many organizations have gone to extremes such as encouraging and promoting the implementation of similar business ethics and policies by their suppliers and only selecting suppliers who are socially responsible in their business operations. These ideas are important to maintaining the ethical composition that we should be known for. This also adds to the operational efficiency of the organization because we would be dealing with a few particular suppliers, and there is less cost Of monitoring and supervision.
Organizations such ours and our suppliers do not want any yep of interruptions in supply. For that purpose, business ethics should play an important role in not only improving the product quality but also enhancing our operational efficiency. Risk Management and Credit Facility When our organization applies for loans or any other type of credit from financial institutions it is the job of that institution to conduct and in depth analysis of our RITE 9 organization in terms of our financial strength and performance as a part of their due diligence process.
This is evaluated for the application Of risk management programs and how well our organization does in terms Of its internal controls and effective risk management. Strong internal control of our processes is only possible if we have strong business ethics and a code of conduct in place. Some authors suggest that strong ethical and social performance is related to a positive financial position (Haddock and Graves, 1 997; Francis and Armstrong 2000). On the other hand, fraud has been related to lack of business ethics and reduced credibility in the market (Cockerel and Armstrong, 1999).
Aggressive risk management programs are an important part of every business ethics program and they are important or getting required capital and credit when required. It also improves the business efficiency through effective risk management. Recommendation The first Step for us to create and incorporate an appropriate business ethics policy is to develop an effective code of ethics after taking into consideration the laws, regulations and other norms of business practices in our own industry as well as globally so that it is easier to improve business efficiency not only within the borders of the country but also across those borders.
Development of proper codes of ethics for both employees and management often proves to be of great help and support as in the case of Johnson ; Johnson when they faced one such ethical dilemma in 1982. Their Ethylene medicine was contaminated and poisoned which resulted in death of several people. Management acted immediately by following its code of ethics and removed every single package Of Ethylene Off the market shelves in North America.
Additionally, it also changed its packaging just to be on the safe side. These precautionary measures and taking the products off the shelves cost company around 1 00 million USED but it also showed that the company took extreme measures to safeguard the customers from any further damage RITE 10 or harm. I would also recommend the development of appropriate training and educational programs so that our employees are able to learn and behave in a more ethical manner that is morally correct and legal.
At times, simply writing down the code Of ethics is not enough, and employees need to be trained so that they can implement and undertake the required code of ethics in practical and real working situation when faced with an ethical issue or dilemma. The topics of these programs can range from the simplest unction’s such as using official hours for personal things to serious ethical problems such as fraud or theft (IAC, 2003). The executives and senior management of our organization must continuously change and adapt to the challenging external environment in order to remain competitive.
Incorporating the ethics of business into our own policies along with a code of conduct will help to make the business current and sustainable. Additionally, it is the main responsibility Of the executives and senior management here to lead by example. This means following the important notion of walking the elk which will lead towards successful implementation of ethics in our business model. Conclusion Business ethics have become one of the most important pillars and building blocks of every organizations success and efficiency.
Working on the basis of well-defined moral values and beliefs not only will make our organization sustainable and successful, but will also drive it towards success in a stable manner and makes it compatible with the regulations and laws across borders. When the entire world has transformed into a global village, business ethics will provide for a way of improving a business’s operations to only within the country but also in other countries. It will also provide a common ground or ethical language for understanding each others business RITE 11 processes and operations.
Developing a code of ethics, training and educational programs across the board for our employees, and executive and senior management taking charge and leading the way by staying current and adapting our own ethics code to the changing business world around us will be the core of ideals which will lead us to a very bright future. Many authors criticize that improving business ethics programs does not give immediate exults in terms of profitability, but has been suggested to improve the long term stability Of the organization and increased sustainability over a given period Of time.