Formal and Informal Ways of Managing Ethics - Essay Example

Formal and Informal Ways of Managing Ethics (Name) (University Affiliation) (Date) Formal and Informal Ways of Managing Ethics Over the past few years, there have been a lot of reported cases of business executives being fired or even facing lawsuit for dipping their hands in the ‘cookie jar’. This has left the shareholders, employees and the organization at large grappling with a tarnished reputation. Many managers are not sure what to do when they are presented with a situation that is wrong for the business but good for their own benefits. Some managers are tempted to reap big in a wrong way than do the right thing and wait to reap benefits patiently. Some executives are also not sure how to deal with their employees who are behaving unethically in the workplace. Through ethic programs, an organization is able to cultivate a strong productivity and teamwork. It aligns staff behavior with ethical values preferred by the managers. In most cases, there is a disparity between the values reflected by behavior in the work place and the preferred values. But having dialogue regarding values creates integrity, openness, and community which are important ingredients for building strong teams in the workplace. Moreover, ethical programs support employee growth as they help him/her to face reality, both positive and negative in the organization. Although most companies prohibit their employees from stealing, fraud, cheating, harassment and other forms of unethical behaviour, many companies do not have concrete policies to guide employees on steps they should take to report unethical conducts they have observed from other employees. As such, so many employees are choosing to do nothing when they observe unethical behaviour as the organization does not obligate them to report these cases and also, because they do not want to create ‘bad blood’ with their colleagues. For some organization, there is a culture of impunity that does not support business ethics even though policies have been put down in writing. Whichever the case, business ethics must start from the manager. As such, this essay will embark on identifying formal and informal ways that the manager can use to manage good ethics in their organizations and towards their stakeholders. The essay will also give a case example of an organization that has a manager who has created a business ethical culture using some of the strategies discussed. There are various ways that managers can manage ethics in their organization and towards other stakeholders. They can be either formal or informal. The first formal method is developing a code of ethics and a code of ethics. A code of ethics refers to a collection of practices and principles that a company aspires to live by. Business code of ethics is usually in conjunction with the organization’s mission statement and more specifically policies which give staff, vendors, partners, as well as the outsider an idea of what the company stands for and how they should duct themselves. It is beneficial to both the company and its stakeholders as it protects the interests of everyone. On the other hand, a code of conduct refers to a set of rules that outlines proper practices for or the responsibilities of a person, party or organization. It is issued by the board of directors and outlines specific behavior that is required or prohibited some actions. For instance, a code of conduct may forbid racial intimidation, sexual harassment, or other forms of discrimination. Therefore, codes of ethics are non-specific and designed to offer a set of values that enable individuals to make independent judgments on the best course of action while code of conduct require little judgment since you either obey or be punished (Gebler, n.d ). Many organizations heavily rely on the code of ethics and code of conduct to assess whether business relation actions are appropriate or inappropriate. In order to create and implement a good code of conduct, the following steps must be followed. To begin with the must be a commitment from the top management to support the development and implement the code of ethics. The top management should be committed to establish the code of conduct, approving budgets for development and implementing these conducts. The second step is preparing a policy document which contains values of a company, details of ethics program, management commitment, and the implementation and monitoring process. The policy document should be benchmarked against other companies policy documents and incorporate the legal requirement. The third step is approving the draft policy document by the top management, the board of directors and audit committee. Moreover, the management should obtain feedback from business users to assess whether they will face challenges when implementing the policy. The forth step is to develop an implementation strategy which is important in ensuring that the program is successful. The HR department should be involved at this stage as the will responsible for incorporating the code of ethics in appointment letters, deploying training, and developing a reward system for maintaining ethics. The fifth step is training and awareness. The organization should develop training programs to train employees and external stakeholders to build awareness on the new policy. The will ensure that the stakeholders will not resist the new policy since they will be well informed. The last step is to come up with hotlines and software to monitor complaints from stakeholders (Sonia, 2010). Developing workplace ethics is another formal strategy to creating an ethical culture in an organization. It refers to a moral philosophy created in a company that outlines what is expected of staff in a particular setting (Morgan, 2012). It applies to all members of a company and is used to assess what is the preferred way to behave in the work. Workplace ethics set the rules of conduct for all members in a particular organization which applies to everyone from the low level employees to upper management. These rules outlines what is expected from all members as well as when happens when someone violates these ethical code. By developing a workplace code of ethic the company will be value driven. When a company has set values that are well known and shared by all members, this is environment conducive for a value driven behavior. Since, all members in an organization know what is right and what is wrong; it encourages them to behavior in a way that is consistent with the set values. When an employee is treated fairly continually, it encourages him/her to treat other fairly too. Lastly, workplace ethics will assist in creating an equal playing field when it comes to staff conduct. Since all members of the organization knows what kind of behavior is considered acceptable and unacceptable, workers are in a position to point out when one of them behaving inappropriately. It also ensure that employees are treated with dignity and equally, and give them the courage to speak up when they feel that they are been treated in a manner that stray from the existing workplace code of ethics (Morgan, 2012). The other formal strategy that a manager can use to enhance ethics in the workplace is using Training and development in ethics. Training and development have become a very important for every organization as it becomes a important driver of profit. In the past, some of the topics organizations have trained in include diversity, communication, leadership and change management. However, in the globalization era, business ethics is become important as companies strive to comply with laws and determine what is right and wrong for its business. Creating booklets with code of codes and distributing it to employees then asking them to sign will not work. The organization need to take another step of training employees on the same. As such, training in ethics is becoming an essential to organization (Josephson, 2010). Ethics training is very important in creating a trustworthy working environment for all. Employee may have a general understanding of what right and wrong is. However, they may not understand well enough the legal implications of unethical behavior on the organizations and on themselves. Moreover, it is sometimes not clear the difference between unethical and illegal behaviour. As such, training on ethics ensures that employees are well informed on all issues they do not understand. To ensure that an ethics training program is effective, it must ensure that all employees all included starting from the top management to the subordinate employees. An ethics training program must be repeated as often as changes happen and allow for refresher training even if there are no changes. Finally, ethics training should be meaningful so that it creates sufficient understanding of the codes of conducts components (Pilley, 2011). Informal strategies of managing an ethical organization are not necessarily written but they go a long way in maintaining an ethical organization. One informal way of managing an ethical organization is creating an organizational culture that fosters ethical behaviour. Organization culture comprise of behaviour, norms and values of a company. Ethics on the other hand is more about moral values as regards to what is wrong and right. Ethics is also about behaviour, which is how an employee behaves when they are faced with an ethical dilemma. Developing an ethical culture takes more than just drafting value statement, creating a code of conduct and organizing training programs to ensure people understand the rules. It is more about creating an environment which naturally makes it easy for people to do the right things and at the same time makes it very difficult for employees to do wrong things. Maintaining an ethical culture is quite a challenge and it requires a lot of hard work by everyone in the organization. In order to create an ethical culture, the following four things need to be done (Josephson, 2010). First, there needs to be a lot of training and mentoring which will reinforce the positive ethical behaviour that the company wants. The second thing that needs to be done is to enforce whereby, employees who display the required ethical behaviour is praised which will encourage them to repeat the desired behavior. The third thing that the mangers need to do is to advocate for the desired culture. The desired values and behaviors should be displayed on notice boards, performance reviews and annual report to emphasize what the company stands for. The last and important thing that the manager needs to do is to model the desired culture. The manager has to lead by example for others to follow. An ethical culture must start from the top working to the bottom. Selection of new leaders should be carefully done to ensure that only leaders who fit in the ethical culture are picked this is because leaders are the ones in charge of fostering and ethical culture and as such, selecting bad leaders who do not value ethics will not be helpful to the organization. To maintain an ethical organization culture, the organizations needs to ensure that there is value orientation. This will ensure that all employees including the newcomers understand the company’s values which will act as a guide to their behaviour. The goal here is to create an ‘esprit de corps’ which will ensure that everyone is committed to maintaining an ethical culture (Josephson, 2010). Another informal way of managing ethics in organizations is encouraging everyone in the organization to be virtuous. This is as proposed by the virtue theory of ethics. This normative theory emphasizes more on the moral character of a person as opposed to laid down rules in determining whether an act is right or wrong. The virtue ethics emphasizes on three concepts namely wisdom, virtues and eudaimonism. The concept of Eudaimonism holds that the goal of living is to have a good life, be happy and ensure the wellbeing of others and that this goal is only achieved by living one’s life practicing “virtues” in all one does and exercising “practical wisdom is resolve dilemmas and issue that may arise. Virtues ethics is not only about deciding what is wrong or right but is as guidance as to what behaviour and characteristics a good person will exhibit. For organizations, it is better to build an organization of good people who are honest, respectful and responsible and are always looking to do good deeds as opposed to having a system full of laws and punishment to prevent people from doing bad (Mastin, 2008). Another way that a manager can manage ethical behavior in organizations and towards external stakeholders is by adopting the stakeholders’ theory. Stakeholders’ theory addresses values and moral in managing a company. Introduced by Freeman Edward, the theory describes who the stakeholders of an organization are and offer recommendations on how management can give due regards to these groups’ interest. These stakeholders includes; shareholders, employees, suppliers, customers, government bodies, financiers, trade association, competitors, and communities (Wicks, Parmar & Freeman, 2004). Managers should lead by example when it come ethical behaving and therefore, by implementing the stakeholders theory, they will create an ethical culture in an organization. According to Freeman Edward, managers should behave ethically when dealing with their stakeholders. For customers, they expect companies to offer quality products that meet the required standards. Offering sub-standard products to client or failing to disclose important information is unethical behavior. Therefore, the management should ensure that the company offers quality product to its clients. Although employees are factors of production, they are very special and unique as compared to other factors. In the globalization era ,companies have to invest in human capital to possess competitive advantage and as such, it is ethical for the management to treat employees with respect and pay them well for the work they have done. The management should ensure their employees are satisfied and comfortable in their job and should be offered equal opportunities to grow. For the financiers and supply, the management is expected to pay them in time and follow contracts to the letter. As for the government bodies, it’s expected that the management will ensure that they have followed the existing laws and pay correct taxes in time. Lastly, the surrounding community is very important for any company and, therefore, it’s expected that the company should engage them regularly. The operations of a company affect the surrounding community and, therefore, it has a moral responsibility to be a good corporate citizen and do the right thing. An organization should ensure it achieve its commercial success in a manner that respects ethical values and respects the community and the natural environment. The company should engage in corporate social responsibility that emphasizes community stewardship and environment (Kramer & Porter, 2006). For instance, the company should develop a good waste disposal system to ensure that the environment is protected. It can also offer employment opportunities to locals to empower them economically as well as sponsor children in the community in their education and upgrade the surrounding infrastructure. One case example of a company that has created an ethical culture is Ford Motor Company. Ethisphere Institute has named this company as one of the top 100 most ethical companies in the world six years in a row. In this list, Ford Motors was the only automobile company. Ethisphere Institute makes its nomination based on how well the honorees are able to promote and practice business ethics and their ability to exceed the minimum legal compliance as well as shape the industry the operate in through ensuring best practices. Ethisphere Institute indicated that some of the factors why Ford was in this top list for six straight years were because of its citizenship, communication and transparency. The institute further added that despite the global economic shock that hit economies in the world, Ford did not compromise its ethical commitment and it has continued to be a good ‘Corporate Citizen’. Moreover, Ford has remained to be morally strong and at the same time communicating to employees and the general public. Ford CSR has been implemented in all areas of business. For instance, the company innovated a eco technology that would reduce the amount of petrol their vehicles used while at the same time reduce the CO2 emissions. This has gone a long way in conserving the environment. The company has continued to source for renewable sources of energy so as to conserve the environment while establishing a vehicle recycling program to reduce environmental pollution. The company values it Human Resources as its greatest assets and as such, it has ensured that human rights are at the centre of its codes of ethics (Mich, 2015). From the above analysis, it can be concluded that ethics have become an integral part of today’s businesses. Managers play an important role in managing ethics in their organizations. Managers should combine both formal and informal strategies to manage ethics in an organization. To manage ethics, the senior management should develop a code of ethics, code of conduct, and a workplace ethics. These documents will offer a set of value that will enable employees to know what is appropriate and inappropriate and this make an organization to be value driven. In addition, managers can adopt the stakeholders’ theory to manage ethic. By using this theory the management should lead by example when it come ethical behaving and therefore, by implementing the stakeholders theory, they will create an ethical culture in an organization. Managing ethics is not only about developing a good set of codes of conduct. It requires that the organization conduct training programs to ensure that employees understand the importance of managing ethics in an organization. The manager should also foster a good organization culture that allows for everyone to be ethical. The manager should also foster an organization of virtuous people where people are driven to do what is good by their character and not by strict rules. One example of a company that has excelled so well in being ethical is Ford Motors. The company has been named among the top 100 most ethical companies for six years now. References Gebler , D. Business ethics and social responsibility Retrieved from http://managementhelp.org/businessethics/ Josephson, M. (2010,). Establishing an ethical environment: Education and training. Retrieved from http://josephsoninstitute.org/business/blog/2010/12/establishing-an-ethical-environment-education-and-training/ Josephson, M. (2010). Establishing an ethical environment: Inspiration. Retrieved from http://josephsoninstitute.org/business/blog/2010/12/establishing-an-ethical-environment-inspiration/ Josephson, M. (2010). Creating an ethical workplace culture: Hire for character, train for skills. Retrieved from http://josephsoninstitute.org/business/blog/2010/11/creating-an-ethical-workplace-culture/ Kramer, M., & Porter, M. (2006). Strategy and society: The link between competitive advantage and corporate social responsibility. Retrieved from https://hbr.org/2006/12/strategy-and-society-the-link-between-competitive-advantage-and-corporate-social-responsibility/ar/1 Mastin, L. (2008). Basic of philosophy. Retrieved from http://www.philosophybasics.com/branch_virtue_ethics.html Mich, D. (2015). Ford named a 2015 world’s most ethical company by ethisphere institute; only automaker to earn designation. Retrieved from https://media.ford.com/content/fordmedia/fna/us/en/news/2015/03/09/ford-named-a-2015-worlds-most-ethical-company-by-ethisphere.html Morgan, L. (2012). Reasons for workplace ethics. Retrieved from http://www.ehow.com/list_6318488_reasons-workplace-ethics.html Pilley, M. (2011). Effective methods of employee code of conduct training. Retrieved from http://www.brighthub.com/office/human-resources/articles/89300.aspx Sonia. (2010, July 25). Establishing a code of business ethics [Web log message]. Retrieved from https://soniajaspal.wordpress.com/2010/07/25/establishing-a-code-of-business-ethics/ Wicks, A., Parmar, B., & Freeman, E. (2004). Stakeholder theory and “the corporate objective revisited”. Retrieved from http://pubsonline.informs.org/doi/pdf/10.1287/orsc.1040.0066 Read More