CHAPTER 6 ORGANIZATIONAL ETHICS company profit).
However, there is a particular set of ethical issues that may
occur in the financial department. For example, Barclays PLC was accused of
CORPORATE CULTURE ETHICAL CLIMATES fraud and The Royal Bank of Scotland scandal. Self-regulation is the best path
to ethical compliance.
Corporate culture: A blend of ideas, customs, traditional practices, company
values, and shared meanings. To help define normal behavior for everyone 3) Marketing Ethics
who works in a company.
Marketing refer to advertising, distributing, and selling products or services.
Ethical climate: The unspoken understanding among employees of what is Issues in marketing ethics emphasize honesty and transparency in advertising.
and is not acceptable behavior based on the expected standards and norms. For example, Outcome Health misled its customers. This means that they were
providing false information in their advertising or marketing efforts. By doing
(ChtGPT: environment within an organization that shapes how employees so, they may have misled people into believing something that wasn't true. This
perceive and interpret ethical issues and behaviors. It represents the collective could impact the trust of customers.
understanding among employees about what is considered right or wrong,
appropriate or inappropriate in terms of conduct and decision-making.) INFORMATION OF TECHNOLOGY ETHICS
THE COMPONENTS OF ETHICAL CLIMATES 1) Invasions of privacy: refers to unauthorized access to personal data or
sharing private information without consent.
2) The collection and storage of, and access to, personal and business
Ethical Criteria Focus of Individu Organization Society information: This challenge pertains to how organizations handle and protect
al Person the personal and business data they collect from individuals.
3) Confidentiality of electronic mail communication: This challenge
focuses on maintaining the privacy and confidentiality of emails. ensuring that
email communication is not accessed without proper authorization.
Egoism (self-centered Self-interest Company interest Economic efficiency 4) Copyright protection regarding software, music, and intellectual
approach)
property: This challenge involves respecting and protecting the rights of
creators and owners of software, music, and other forms of intellectual property.
Benevolence (concern Friendship Team interest Social responsibility
for others approach) It requires obtaining proper permissions and licenses to use copyrighted
material.
5) Cyberbullying: it refers to the act of using technology that harms others.
Principle (integrity Personal morality Company rules and Laws and professional co
approach) procedures des
This challenge involves preventing online bullying behavior, promoting
respectful and ethical online interactions, and creating safe digital
environments.
Egoism: prioritize promoting company profit and striving for growth at all SUPPLY CHAIN ETHICS
costs
Supply Chain: production and operations functions needed to create a product
Benevolence: Approach ethics issues with benevolence, it emphasizes friendly or service. Issues in supply chain ethics emphasize integrity, value, and loyalty
relations with its employees, team plays, and cooperation for the in business dealings. The Institute for Supply Management (ISM) has
company’s benefit. established principles and standards for its members to follow. These include :
: recommend a socially responsible course of action.
1) Be responsible: Take ownership and fulfill commitments in a reliable and
Principle: Often interact with public and government regulators trustworthy way.
2) Protect confidentiality: Safeguard sensitive information, respecting privacy
and preventing unauthorized disclosure.
BUSINESS ETHICS ACROSS ORGANIZATIONAL FUNCTION 3) Follow the law: Adhere to legal requirements and regulations in supply
management practices.
Not all ethical issues in business are the same. Because business operations are 4) Avoid impropriety: Act with honesty, integrity, and fairness, refraining from
highly specialized, ethics issues can appear in any of the major functional areas improper or unethical behavior.
of a business firm.
TWO ETHICS APPROACHES
Eg: let's say a company has a sales department whose main goal is to increase
profits by closing deals with clients. In this department, there may be pressures 1) Compliance-based approach:
to meet sales targets, which could potentially lead to unethical behavior such
as misleading customers or making false promises. -Seeks to avoid legal sanctions: prevent legal penalties or punishments. It
focuses on following rules and regulations to stay on the right side of the law
Below is an example of functional areas and avoid getting into legal trouble.
-Emphasizes the threat of detection and punishment: that means if individuals
or organizations don't follow the rules, there is a risk of being discovered and
facing punishment.
2) Integrity-based approach:
1)Accounting ethics
- -Promotes acting with integrity and conducting business with honesty and
fairness: this refers to the importance of individuals and organizations acting
The accounting function is a critically important component of every business
firm. According to the law, financial records must be audited by a certified in an honest and fair manner.
professional accounting firm. Honesty, integrity, transparency, and accuracy
are the fundamental requirements of the accounting function, and the impact - Combines concern for law with employee responsibility: focus on following
can be serious for organizations when these values are absent. Accounting the laws with the responsibility of individual employees. It recognizes that
often faced a conflict of interest such as Conflict with self-interest (of the employees have a role in upholding ethical standards and ensuring legal
accounting firm) which conflict with their obligation to the company (the client) compliance within the organization.
and the interests of others (shareholders and the public).
ETHICS PROGRAM AND POLICIES
2) Financial ethics
1) ETHICS POLICIES AND CODE:
The financial department is responsible to manage the firm’s assets and raising
capital. For example, by issuing stocks (selling ownership shares of the -It is a written set of rules used to guide managers and employees when they
company to investors- investors have the right and receive dividends from encounter an ethical dilemma.
Eg: in Japan, most policies were a mixture of legal compliance and a statement - Sending top business executives to jails
of the company’s value and mission. That means companies not only focus on
meeting legal requirements but also emphasize their own principles and goals Bribe-taking are more likely occur in countries with low income per capita,
in their policies. low salaries for government officials and less income variation
(3M = big company that makes many different products) 3M code of conduct
principle:
1. Be Good. Obey the law and 3M's Code of Conduct.
2. Be Honest. Act with uncompromising honesty and integrity.
3. Be Fair. Play by the rules, whether working with the government, customers,
or suppliers.
4. Be Loyal. Protect 3M's interests, assets, and information.
5. Be Accurate. Keep complete and accurate business records.
6. Be Respectful. Respect one another and our social and physical environment
around the world.
2) Ethical leadership
Ethical leadership means that leaders of an organization demonstrate
appropriate behavior through their own actions and relationships with others.
It refers to leading by example and setting a positive tone for ethical behavior
within the organization.
Eg : the CEO of a company consistently acts with integrity and honesty in their
interactions with employees, customers, and stakeholders. By consistently
demonstrating these ethical behaviors, the CEO sets a positive example for the
rest of the organization, inspiring others to act ethically and fostering a culture
of integrity throughout the company.
3) Ethics Reporting Mechanisms:
It is often called a hotline. A program that enables employees, customers, or
suppliers to report an ethical concern directly to someone in authority in an
organization. The purpose of this reporting system is :
a. To provide interpretations of proper ethical behavior.
b. To create avenues for reporting unethical conduct.
c. To provide information-sharing tools for employees and stakeholders.
eg: McDonald's faced many complaints and lawsuits from workers alleging
sexual harassment. To address the issue, the company took several steps. They
partnered with an organization called RAIN to combat sexual violence, and
implemented a new policy to better communicate employee rights and
complaint procedures.
2) Ethics and compliance officers:
Refer to a manager designated by an organization to investigate breaches of
ethical conduct, spread awareness of ethical guidelines, and generally promote
ethical conduct at work. Ethics and compliance officers annually review the
company code of conduct. Technology is also utilized by ethics officers to
monitor employee compliance with ethical policies and procedures. This helps
ensure that employees are following the organization's ethical standards and
guidelines.
3) Ethics training program
Another step companies can take to build ethical safeguards is offers employee
ethics training. It is a program developed by businesses to further reinforce
their ethical expectations for their employees. This is the most expensive and
time-consuming element of an ethics program. Small and medium businesses
are more likely to offer training in alignment with regulatory guidelines. In
contrast, larger businesses usually conduct regular ethics training.
Organizations can gain benefits by doing this program such as improving
employee morale, improving ethics and compliance issue, and improving the
trust of leadership.
ETHICS IN THE GLOBAL ECONOMY
Doing business in a global context brings up a host of complex ethical
challenges. An example of unethical activity is bribery. Bribery is a
questionable or unjust payment often to a government official to ensure or
facilitate a business transaction.
The harmful effect of bribery:
- Million-dollar losses
- Drop in company’s market share price
