C3: Organizational Ethics

Question 1

BE is separated from general subject of ethics because

Answer 1

• 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

Question 2

Organizational culture

Answer 2

• The values, beliefs and norms that all the employees in the organization share.

Question 3

The culture in organization can be defined as

Answer 3

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

Question 4

Value chain

Answer 4

Key functional inputs that an organization provides in the transformation of raw materials into a delivered product/service

Question 5

Key functions of Value Chain:

RMMSC

Answer 5

• R&D
• Manufacturing
• Marketing & Advertising
• Sales
• Customer service

Question 6

Supporting of functional are the line functions

HFIM

Answer 6

• Human Resource Management
• Finance
• Information System (IT or IS)
• Management

Question 7

Human Resource Management (HRM)

Answer 7

Coordinates the recruitment, training and development of personnel for all aspects of the organization

Question 8

Finance

Answer 8

Internal, external accounting personnel, & external auditors who are called upon to certify the accuracy of a company’s financial statements

Question 9

Information System

Answer 9

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

Question 10

Management

Answer 10

the supervisory roles that oversees all operations functions

Question 11

Primary activities in Value Chain (SODSSP)

Answer 11

• Supply chain management
• Operations
• Distribution
• Sales and marketing
• Service
• Profit margin

Question 12

Support activities of Supply Chain

P,H,G

Answer 12

• Product R&D, Technology and Systems Development
• Human Resource Management
• General Administration

Question 13

Ethical Challenges by Organizational Function

Answer 13

1. Ethics in R&D
2. Ethics in Manufacturing
3. Ethics in Marketing

Question 14

Ethics Challenges in R&D

Answer 14

• 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.

Question 15

Ethics Challenges in Manufacturing

Answer 15

• 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?

Question 16

Ethical Challenges in Marketing

Answer 16

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)

Question 17

Ethical Challenges in HR

Answer 17

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

Question 18

Ethics in Finance can be divided in 3 functions

Answer 18

Financial transactions
accounting
auditing

Question 19

Financial transactions

Answer 19

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

Question 20

Accounting function

Answer 20

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)

Question 21

Auditing function

Answer 21

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.

Question 22

Ethical Challenges in Finance

Answer 22

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

Question 23

GAAP

Answer 23

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

Question 24

Ethical challenges in GAAP

Answer 24

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

Question 25

The position HR Dept. should be at the center of co’ codes of ethics

Answer 25

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

Question 26

Why HRs should be at the center of any corporate codes of ethics

Answer 26

1. HR must help ensure that ethics is a top organizational priority
2. HR must ensure that the leadership selection and development processes include an ethics component
3. HR is responsible for ensuring that the right programs and policies are in place
4. HR must stay abreast of ethics issues (and in the changing legislation and sentencing guidelines for unethical conduct)

Question 27

Conflicts of interest

Answer 27

a situation in which one relationship or obligation places you in direct conflict with an existing relationship/obligation

Question 28

Example 1:

Answer 28

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

Question 29

Example 2:

Answer 29

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

Question 30

how to address conflicts

Answer 30

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