C3: Organizational Ethics Flashcards
BE is separated from general subject of ethics because
- Stakeholders have vested interest in the ethical performance of an organization
- One may be placed in a situation where s/he personal value system may clash with the ethical value standards of org’s operating culture
Organizational culture
- The values, beliefs and norms that all the employees in the organization share.
The culture in organization can be defined as
sum of all the policies and procedures (written & informal) from each of the functional departments in the organization in addition to the policies and procedures that are established
Value chain
Key functional inputs that an organization provides in the transformation of raw materials into a delivered product/service
Key functions of Value Chain:
RMMSC
- R&D
- Manufacturing
- Marketing & Advertising
- Sales
- Customer service
Supporting of functional are the line functions
HFIM
- Human Resource Management
- Finance
- Information System (IT or IS)
- Management
Human Resource Management (HRM)
Coordinates the recruitment, training and development of personnel for all aspects of the organization
Finance
Internal, external accounting personnel, & external auditors who are called upon to certify the accuracy of a company’s financial statements
Information System
maintain the technology backbone of the organization - data transfer and security, email communications, internal and external websites as well as the individual hardware and software needs that are specific to the organization & its line of business
Management
the supervisory roles that oversees all operations functions
Primary activities in Value Chain (SODSSP)
- Supply chain management
- Operations
- Distribution
- Sales and marketing
- Service
- Profit margin
Support activities of Supply Chain
P,H,G
- Product R&D, Technology and Systems Development
- Human Resource Management
- General Administration
Ethical Challenges by Organizational Function
- Ethics in R&D
- Ethics in Manufacturing
- Ethics in Marketing
Ethics Challenges in R&D
- R&D carries the burden of developing products/services that are sufficiently better, faster or cheaper than the competition to give the company a leading position in the market.
- market pressure often prompt instructions from senior management to lower costs/or escalate deadlines that can prevent the designers and engineers from doing all the quality testing they would normally want to do.
Ethics Challenges in Manufacturing
- People in the manufacturing face the same challenge: do we build the best quality product and price it accordingly or do we build a product that meets a price point that is lower than our competition, even if it means a using poorer-quality materials?
Ethical Challenges in Marketing
is more directly aligned to the debate between the universal ethics and utilitarianism.
- Do you build a product that customers really need and focus your marketing message on showing customers how that product meet their needs (universal) or do you build a product that you think you can sell at a healthy profit and offer gainful employment to your workers and then focus your marketing message on convincing customers to but a product that may not need (utilitarianism)
Ethical Challenges in HR
Potential dilemma at every step of the life cycle of an employee’s contract with an organization (from recruitment to departure from company)
- HR carries the responsibility of corporate compliance to all prevailing employment legislation
- any evidence of discrimination., harassment, poor working conditions and or failure to offer equal employment opportunities presents a significant risk for the company.
HR must combat managers willing to bend the rules to meet their department goals in keeping the company in compliance
Ethics in Finance can be divided in 3 functions
Financial transactions
accounting
auditing
Financial transactions
Process flow of money through an organization is handled
- involve receiving money from customers and using that money to pay employees, suppliers and other creditors with hopefully enough to make profit
Accounting function
keeps track of all company’s financial transactions by documenting the money coming in (credits) and money going out (debits) and balancing the accounts at the end of the period (daily, weekly, monthly, quarterly, annually)
Auditing function
The certification of an organization’s financial statements, or “books” as being accurate by an impartial third-party professional.
An organization can be large enough to have internal auditors on staff as well as using external professionals - typically certified professional accountants and auditing specialists.
Ethical Challenges in Finance
Whether it is fraudulent financial transactions, poor accounting practices or insufficient auditing procedures, poor financial management has featured in every major financial scandals
Investors trust companies to generate a reasonable return. Check and balance are stipulated under GAAP. to ensure the corporate funds are managed correctly
Cases such as Enron has shown check and balances are often modified, overruled, or ignored completely
GAAP
The generally accepted accounting principles that govern the accounting profession - not a set of law and established legal precedents but a set of standard operating procedures within the profession
Ethical challenges in GAAP
These standards are accepted as standard operating standard, within the industry but like any operating standard, they are open to interpretation and abuse
the taxation rates that you are expected to pay on generated may be very clear but the exact process by which you arrive at that profit figure is far from clear and places considerable pressure on accountants to manage the expectations of their clients
The position HR Dept. should be at the center of co’ codes of ethics
HR professionals see their direct involvement in every aspect of employee-er relationship as acting as the corporate conscience of org in many ways
if the right people are hired in the first place, then many other problems are avoided down the road.
when organizations fail to plan ahead for vacancies and promotions, the pressure to hire someone who was needed yesterday can lead to the gradual relaxation of what may be clearly established codes of ethics
Why HRs should be at the center of any corporate codes of ethics
- HR must help ensure that ethics is a top organizational priority
- HR must ensure that the leadership selection and development processes include an ethics component
- HR is responsible for ensuring that the right programs and policies are in place
- HR must stay abreast of ethics issues (and in the changing legislation and sentencing guidelines for unethical conduct)
Conflicts of interest
a situation in which one relationship or obligation places you in direct conflict with an existing relationship/obligation
Example 1:
Selling a product that has the potential to be harmful to the environment
- McD’s promotion of a new healthier menu while continuing to sell its most unhealthy but best-selling Big Mac places conflicts of interest
Example 2:
Selling a product that has the potential to be harmful to the environment also carries a conflict of interest
McD’s have changed their packaging to move away from clamshell boxes for their burgers
how to address conflicts
One thing in common:
the decisions had to come from the top of the organization whether they were prompted to by internal strategic policy decisions or aggressive campaigns by customers
