10. Ethical Diversity, Ethical Behaviour & Dealing with Unethical Behaviour Flashcards
What is Ethical Diversity?
- Theory of ethical universalism has some relevance, however ethical behaviour or standards are often not universal.
- What constitutes ethical behaviour or standards can vary greatly between countries, regions, industries, organisations & individuals.
- Relates closely to the theories of ethical relativism and the integrated social contracts theory.
How does Hofstede’s studies relate to ethical diversity?
Hofstede’s studies on national culture suggest many differences between nations which have developed over time and have s direct impact on the way people think, behave and the way they build relationships & conduct purchasing and business transactions
What are the counter arguments that suggest global influences are eroding some of the national differences?
There is a suggestion that;
1. Impact of internet
2. IT
3. Social Networking
4. Global Fashions
5. Eating Habits (Mcdonalisation)
6. Social Trends
Are eroding some of the national differences
However it could also be argued that;
1. Despite globalisation, national trends are increasing e.g through growth in nationalism & independence in countries and regions
What is stakeholder complexity for a loss adjuster?
- Operate in a supply chain
- Look to satisfy expectations & interest of Insurer, clients & claimants
- Looking for settlement outcome that is perceived fair & equitable for all parties
- Often in a conflictual and emotional situation where loss or damage is involved.
How is ethical diversity & stakeholder complexity problematic in some cases?
- Problematic for organisations operating on a global or transactional scale
- Dealing with different stakeholders with different interests, can lead to stakeholder conflict.
Reasons for Ethical Behaviour in Business - Moral case?
- Organisations should be and should be seen to be, acting within ethical norms.
- Strong relevance to the image, reputation and status of the business.
Reasons for Ethical Behaviour in Business - Business case?
Good moral, ethical status or reputation can positively impact on customer and consumer perception of a product or service, on business relationships, gaining & retaining key clients and contracts and suppliers.
Actual or perceived unethical behaviour or misconduct can have the following negative impacts:
- Loss of business, customers - NWOM
- Damage to other key stakeholder relationships (Tiger Woods lost $22 million in sponsorship & endorsements, knock on effect on Nike & Gatorade)
- Penalties - face government or regulatory fines & pay out affected customers
- Imprisonment for executives (EG Enron)
- Professional body fines (CILA)
- Legal claims or lawsuits - civil damages or negligence
- Internal costs to company; eg legal reps, HR Costs inclu retraining loss of key staff.
- Negative media focus or attention
What are the drivers of unethical behaviours in companies?
- Weak management - no control or clear leadership
- Faulty oversight by directors or senior management EG; TNC staff phone tapping, execs of company didn’t know about illegal activity, faulty oversight by directors of the company.
- Pursuit of self interest or personal gain - where directors or senior managers put their own interests before company they are employed by.
- Short termism - companies or employees focus on short term gain rather than long term benefit or development.
How can organisations deal with unethical behaviour?
- Culture
- Values
- Recruitment
- Training policies
- Staff capability
- Conflict of interest
- Manage client relationships
- Clear communication of good practice
- Principals and professional conduct
- Develop means of deterring and discouraging unethical behaviour; penalties and sanctions for breach of warranty or professional conduct
What factors can help an organisation become more ethical and ensure ethical practice in the loss adjusting industry?
- Clear view of areas of potential ethical issues & risks
- Awareness of potential ethical differences & stakeholder conflicts
- Manage expectations of key parties
- Dealing as equitably as possible with conflicts of interest
- Establish clear routes of internal communication & reporting structures
- Practise communication and openness with clients & claimants within the bounds of confidentiality
- Provide clear evidence of internal critical self examination or internal audit of ethical practice
- Abide by CILA
- Training
What factors should you have in mind to build ethical behaviour within a firm?
- Clear view on ethical issues
- Being aware of different ethical issues and risks
- Clear values
- Managing expectations
- Clearly understood policies & claims management, dealing w conflict of interest & maintaining confidentiality
- Internal communications & reporting structures
- Training
- Demonstrate ethical leadership & principles
