Incorporating Ethics in HR Strategic Policies: of Automobile Inc - Case Study Example

Being Ethical and Socially Responsible is not Just the Right Thing for an Organization to do: It is a Critical Factor for Business Success while ensuring its Sustainability Executive Summary Ethics and corporate responsibility are currently the key drivers of competitive edge for corporate organization from around the world. They influence greatly on the firm’s reputation while also help in defining a working business models that will help the company to immensely perform even during unfavourable operating environments. A company that has strong ethical codes, good corporate governance, with corporate values and norms has the ability to sustain its operations in the long run. Automotive Inc. is a generic company that deals in company has r manufacturing and operating globally. The firm has succeeded successful in its business undertakings by incorporating ethics and CSR in its HR strategic policies. This report will discuss how Automobile Inc. has managed to incorporate these key components in its business models. The report will also give recommendations relevant for any company to incorporate in their business operations for them operate successfully. Table of Contents Executive Summary 1 Introduction 3 Incorporating Ethics in HR Strategic policies 4 Incorporating Corporate Social Responsibility (CSR) in HR Strategic Policies 7 Incorporating Values and Norms in the HR Strategic policies 10 Sustainability 12 Conclusion 13 Recommendations 14 References 14 Introduction Business firms and corporations that have incorporated ethics into their business strategies do not distinctly operate with a solo objective of making money (Hemingway, 2005). Ethics and good corporate citizenship are key determining factors that dictate the success or failure of any business organization (CIMA, 2010). They influence greatly on the firm’s reputation while also help in defining a working business model that will help the company to immensely perform even during unfavourable operating environments (Porter and Kramer, 2006). Different entities rely on firms for their well-being; suppliers, employees, customers, the local community and the society at large are the direct beneficiaries of company’s operations. The products and services produced or offered by the company are utilized by the mentioned entities. However, a company that does not adhered to ethics and corporate social responsibility is likely to negatively influence the environment in diverse ways (Hemingway and Maclagan, 2004). Companies founded on strong ethical policies that not only uphold the law but also add value to their brands have long-term prospects (Porter and Kramer, 2006). Further, firms with quality management information with regard to environment, social, and ethical performance; have the right tools for monitoring environmental and social impacts that company operations may cause (CIMA, 2010). Corporate communication and reporting particularly on sustainability must go beyond salaries and wages and implement the green agenda. Being ethical and socially responsible is not just the right thing for an organization to do: it is a critical factor for business success while ensuring its sustainability. This report discusses key strategic issues that must be addressed when preparing HR policies and plans. Using Automobile Inc. as the case study, ethical issues, Corporate Social Responsibility (CSR), Values and Sustainability will be discussed. Incorporating Ethics in HR Strategic policies Automobile Inc. is a successful multination company that deals in car making (Porter and Kramer, 2006). A cross examination of this company has solidly reveal that its business operations are ingrained and embedded on strong ethical values. Solid ethical codes drive organizational strategies, business models, and decision-making processes (CIMA, 2010). The company’s socially and environmentally ethical approach to business undertakings has ensured that the company has the ability to thrive and further become successful in the long run (Hemingway and Maclagan, 2004). Through their ethical strategies, they have protected their reputations, their licenses to operate globally and in different environments, they have natured relationship with partners, and also created the ability to recruit talents (Lyon, 2004). This company work cleverly avoiding corporate collapse, which comes because of fraud or litigation. Companies with a vision of sustaining their business operations in the end have developed their competitive edge through coming up with strong ethical strategies to govern their operations (CIMA, 2010). Automobile Inc. for instance, is a renowned car manufacturer across the globe; the company has continuously earned its success by adhering to ethical codes of practice, regulatory oversights while also initiating and enhancing public partnership (Porter and Kramer, 2006). Automobile Inc. knows that ethics in their policies is the key for success; the company understands clearly that its corporate interests must be in line with the society’s broader concerns (Hemingway and Maclagan, 2004). With regard to this, ethics is wholly embedded in the company’s decision-making process particularly in creating the long-term company strategies (Hemingway, 2005). As aforementioned, there is interdependence between the company and the society and hence all activities that the firm pursues in advancing its business operations must not contravene the norms of the society (Hemingway, 2005). The value chain for instance is the backbone of all business operations, and thus it is a vital framework that clearly reveals how business activities influences society (Porter and Kramer, 2006). To affirm this, taking procurement for instance, myopic managers in this department can engage themselves in bribery practices for short term self gains (Sharma, Sharma and Arti, 2009). Companies can also resort to cheap labour by employing children while not looking at the broader perspective of long-term sustainability (CIMA, 2010). The mentioned activities are unethical and can heavily cost the company like in the case of Enron (Hemingway and Maclagan, 2004). Consequently, the society will criticize the company’s practices and hence hurting it further; its products and services will be despised. For instance, it is much more than reputation issues: the cost of being corrupt and malicious in business is burdening. Automobile Inc. knew this from the onset and has established an ethical code of conduct that prohibits child labour and bribery. In accordance with this, the company has established a friendly relationship within its environment of operations by engaging in various corporate social practices that will be discussed in the next section (Porter and Kramer, 2006). In the same line of argument, company marketing operations is another critical department that must adhere to good societal practices (Porter and Kramer, 2006). Incorporating ethics in marketing and advertising decisions helps the company to thrive further (Hemingway, 2005). Truthful advertising techniques that prohibit advertising to children have been found acceptable across all world markets (CIMA, 2010). Consequently, pricing practices must be done honestly. Price discrimination among customers and anticompetitive pricing practices will automatically taint the company’s image in the market (Hemingway and Maclagan, 2004). With regard to this, the company will loose customers thus hurting its profits and its competitive advantage in the long run. Automobile Inc. understands the principle that, doing the right thing is not an afterthought; in accordance with this understanding, the company has incorporated ethics in its mainstream activities to make sure that it retains and maintains its competitive advantage. Ethics is centrally placed globally as a critical factor for creating a win-win situation (CIMA, 2010). Automobile Inc. has positioned itself as an ethical company by rejecting and not venturing into business that are regarded unethical by the society (Hemingway and Maclagan, 2004). For example, the company does not deal in arms trade, connected with oppressive governments, and money laundering practices (Hemingway, 2005). The company’s environmental policy was established on an understanding that environmental issues are economic issues and social justice issues (Jonker and Foster, 2002). Following this policy, the company listens to the public opinions in order to come up with a right business direction (Porter and Kramer, 2006). Through commitment to social corporate responsibility has elevated the company making it to earn green credentials in the eyes of the society (Hemingway and Maclagan, 2004). Similarly, Automobile Inc. policies advocate for green environment for instance, caring for the environment is among most of profitable things that the company advocate for (Hemingway, 2005). Indeed companies that pay attention to responsible business together with open communication have positive impact on sales, competitiveness while also sharing values with the society as it has been established by Automobile Inc. Incorporating Corporate Social Responsibility (CSR) in HR Strategic Policies Automobile Inc. is one company that is fully committed to environmental stewardship together with community involvement (Porter and Kramer, 2006). The ethical concerns explained above absolutely mandates any business organization to undertake its operations responsibly by balancing its needs in order for it to balance its interests, competing values and costs of doing business (CIMA, 2010). For instance, the company must weigh environmental benefits against social returns and /or against financial costs (Hemingway and Maclagan, 2004). However, the ethical and moral principles do not clearly define the guidelines for the firm on how to allocate its budget on philanthropic activities, investing in facility renewals, providing dividends to its shareholders or even coming up with innovations for competitiveness. In today’s business environment, firms are pressured in that each and every action they undertake must be responsible to all stakeholders concerned by their business operations (Hemingway, 2005). Following this explanation, it is imperative for businesses to have a holistic framework that will guide them to practice CSR strategically while also creating sustaining benefits. In order for any business firm to successfully come up with strategic CSR, creating CSR awareness within the company is paramount (Hemingway and Maclagan, 2004). Automobile Inc. stakeholders understand that the only way for the company to sustain and maintain its competitiveness, CSR is the only path to follow (CIMA, 2010). The company has developed and adopted an approach that takes precaution of environmental responsibility with the main objective of preventing environmental hurting activities. With such an approach, the company has managed to uphold its reputation (Hemingway, 2005). Additionally, the company implemented environmentally friendly technologies that not only helped it to gain a competitive advantage by promoting its image of environmental conservation, but also save a substantial percentage of its water and electricity charges (Porter and Kramer, 2006). The CEO of the Automobile Inc. caries the mantle of CSR awareness within the company, he is tasked with ensuring that company’s ethical norms and employees’ values in the workplace are upheld. In essence, CSR awareness is top-down where the top-level management awareness of CSR is key in integrating CSR into corporate strategy and implementation. Automobile Inc. has implemented a zero tolerance to child labour policy that has significantly ensured that no minors are employed at the company however cheap their wage may be (Hemingway and Maclagan, 2004). CSR is a companywide initiative that must be undertaken by all company departments. Automobile Inc. has a CSR team, which includes representatives from the top management, board of directors, together with volunteers from various units within the company (Hemingway, 2005). Members from the human resources, health and safety department, community relations, environmental services, legal affairs, marketing, finance and communication are included in this team (CIMA, 2010). This team work to help the company understand the implications of not being socially responsible while also encouraging employees at all levels to participate rather contribute ideas into the corporate CSR initiative (Hemingway and Maclagan, 2004). In this regard, at Automobile Inc. the CSR team determines guidelines and subsequent activities that each department must perform thus contributing to the achievement of the corporate CSR objectives (Porter and Kramer, 2006). This company’s CSR approach is phased into business conduct that focuses on both long-term and short-term priorities of the company in line with resource constraints (Hemingway, 2005). CSR assessment is vital in ensuring that the company’s current CSR activities are based on informed decisions. The CSR team mentioned above is tasked with intelligence information gathering in form of CSR assessment (CIMA, 2010). This helps Automobile Inc. to pursue effective CSR activities (Hemingway and Maclagan, 2004). This assessment gives the company a better understanding of the real problem on the ground, opportunities available and challenges that might be encountered. The analysis provides a thorough understanding of the situation while also reminding the company about the existing legal requirements. In accordance with this, CSR priorities are developed and undertaken with regard to the company policy (Hemingway, 2005). Automobile Inc. has a good CSR strategic plan that built, maintains and persistently strengthens its identity, its relationship with stakeholders while also expanding its market (Porter and Kramer, 2006). The CSR strategy is the roadmap for Automobile Inc. in propagating CSR initiatives by defining the direction and scope in the long run. This strategy has helped Automobile Inc. to use its resources within a defined environment thus helping it to meet market needs while also fulfilling stakeholder needs. This strategy translated the company values, and visions into commitments and guiding principles that spearhead its CSR practices (Hemingway and Maclagan, 2004). Automobile Inc. CSR framework has the ability to identify and deciding which social issues should and must be addressed. For instance, how the value chain, competitive factors and other generic issues and how they influence the company and the society at large are well defined (CIMA, 2010). The three CSR approaches, has helped the company in finding appropriate ways for reinforcing corporate success (Hemingway, 2005). This corporate social agenda is responsive to all stakeholders and has aided the company in garnering greater benefits for the company. The generic social impacts for instance has helped the company to implement good citizenship strategies and in creating responsive CSR strategies (Hemingway and Maclagan, 2004). The value chain social impacts; in this regard the company has developed a framework that mitigates any harm from the value chain activities. Accordingly, the company has transformed value chain activities to benefit the society while reinforcing CSR strategy at the same time. The company that continues strategic social contribution has earned it a competitive edge (Hemingway, 2005). Automobile Inc. is fully committed to CSR, for instance it has committed to conduct its business operations responsibly by addressing its environmental and socio-economical impacts (Porter and Kramer, 2006). These commitments provide a clear framework to employees with regard to how they should and must conduct themselves (CIMA, 2010). Nonetheless, the CSR commitment is used by the Automobile Inc. as a means through which it communicates the direction of its corporate social and environmental responsibility to customers and the society as a whole (Hemingway and Maclagan, 2004). Incorporating Values and Norms in the HR Strategic policies It is important to note that corporate values and norms play a critical role in a company and they are the ones that drive the company to actively embark on strategic CSR. Corporate norms and values guide behaviours and decisions within the company. Consequently, they anchor company’s efforts to meet its objectives, goals and visions (Hemingway and Maclagan, 2004). Company’s continuity relies primarily on CSR initiatives that are in accordance with its values, norms and mission of the company (CIMA, 2010). Automobile Inc. has a vision of becoming a responsible corporate citizen, which conducts sustainable business practices. The company’s core values are in line with CSR regarding it as an essential factor in its business operations (Porter and Kramer, 2006). The company is committed to environmental sustainability; with regard to this, its corporate values are directed to eco-friendly ways of managing its business (Hemingway and Maclagan, 2004). These eco-friendly values have shaped the manner in which design its cars sand election of their suppliers (Hemingway, 2005). Furthermore, Automotive Inc. has a corporate value for sustainable water use, which demands for responsible water use and conservation. These values have been incorporated into the long-term strategies and business operations. The company has a value-driven culture. Its organizational culture is strongly embedded on corporate values. In order for Automobile Inc. to maintain and integrate its corporate core values, it audits its corporate values, standards, and initiatives to ensure that its profiles uphold the five CSR aspects (CIMA, 2010). These aspects include social, corporate governance, environmental dimensions and impacts of company activities, the societal dialogue process, and corporate commitment to sustainability. This continued corporate values and CSR auditing has not only helped Automobile Inc. in identifying key values and CSR priorities, but also helped it in building trust, promoting cooperation among stakeholders and corporations, and identifying areas of commitment (Hemingway, 2005). Automobile Inc. have several programs in place that help in increasing its corporate value; for example, the health and safety control program for employees, the environmental management programs, community outreach initiatives, and employee educational advancement programs. These programs have shaped the company’s reputation and fully displaying the company current status and its approach to CSR (Porter and Kramer, 2006). Sustainability Companies with long-term view of their business strive to develop business strategies with long-term approach to business. Companies with myopic view tend to be driven by greed not taking into consideration philanthropic activities to improve their reputation (Hemingway and Maclagan, 2004). Companies with long term sustainable strategies plan a head integrating ethics and CSR successfully into their strategic policies (CIMA, 2010). In the same line of argument, they set up corporate cultures that seek to improve the company’s image and reputation (Hemingway, 2005). Strategies that transform dangers brought about by ethical challenges into corporate opportunities thus ensuring that the company remains operational in the long run must be developed. Automobile Inc. leadership understands the above mentioned factors and work around the clock to ensure that they provide sustainable foundation for the company (Porter and Kramer, 2006). Accordingly, they have full knowledge of opportunities and challenges brought about by climate change, corrosive effects of unethical behaviours like bribery and child labour (CIMA, 2010). In accordance with this recognition, the company has developed ethically sound HR strategies (Morimoto, Ash, and Hope, 2005). The dynamic leadership of Automobile Inc. has the ability to identify business prospects and problems a head and thus they set the right working environment across the organization to curb any mishaps. Value and culture changes at Automobile Inc. are critically analyzed by top management and board of directors (Hemingway, 2005). The management ensures that the company policy statement is anchored by business activities together with philanthropic activities (Porter and Kramer, 2006). By doing this, the middle level mangers and employees at large are able to understand that there is an authentic corporate commitment that must be adhered to for the company to sustain its corporate agenda (CIMA, 2010). Conclusion Ethics and good corporate citizenship are key determining factors that dictate the success or failure of any business organization. They influence greatly on the firm’s reputation while also help in defining a working business model that will help the company to immensely perform even during unfavourable operating environments. Failure to comply to good corporate governance automatically leads to corporate, social and environmental damage, which have negative impact on the firm’s long-term performance. Automobile Inc. from the above discussion is a company that has worked hard and adopted good ethical approach to its business undertakings and hence demonstrates ethical standards that are beyond reproach. In today’s business environment, firms are pressured in that each and every action they undertake must be responsible to all stakeholders concerned by their business operations. Firms with quality management information with regard to environment, social, and ethical performance; have right tools for monitoring environmental and social impacts that company operations may cause. Corporate communication and reporting particularly on corporate and environmental sustainability is key for any business organization to positively influence the society while also increasing the strategic returns for the business. Corporate values and norms play a critical role in a company and they are the ones that drive the company to actively embark on strategic CSR. Companies must incorporate values and norms in their HR strategies for them to be successful in the long run. Recommendations 1. Ethics, corporate values and norms must be fully embedded in corporate business models, HR organizational strategies and in decision making processes. 2. Top management and business leaders in any business corporation must display and demonstrate strong ethical conduct for their subordinates to emulate them. For instance, they are the ones who should as ethical role models for their juniors. 3. Corporate Governance structures should always comprise of individuals with skills appropriate for scrutinizing performance and strategy across ethical, environmental and social issues. References CIMA, 2010, Incorporating Ethics into Strategy: Developing Sustainable business models, Chartered Institute of Management Accountants Hemingway, CA & Maclagan, PW 2004, ‘Managers’ personal values as drivers of corporate social responsibility’, Journal of Business Ethics, vol. 50, no. 1, pp. 33-44. Hemingway, CA 2005, ‘Personal values as a catalyst for corporate social entrepreneurship’, Journal of Business Ethics, vol. 60, no. 3, pp. 233-249 Jonker, J and Foster D, 2002, ‘Stakeholder Excellence? Framing the Evolution and Complexity of a Stakeholder Perspective of the Firm’, Corporate Social Responsibility and Environmental Management, vol. 9, no. 4, pp. 187-195. Lyon, D 2004, ‘How can You Help Organizations Change to Meet the Corporate Responsibility Agenda?’ Corporate Social Responsibility and Environmental Management, vol. 11, no. 3, pp. 133-139. Morimoto, R, Ash, J., and Hope, C 2005 ‘Corporate Social Responsibility Audit: From Theory to Practice’, Journal of Business Ethics, vol. 62, no. 4, pp. 315-325 Porter, M and Kramer, MR 2006, ‘Strategy & Society: The link between competitive advantage and corporate social responsibility’, Harvard Business Review (December), pp. 1-15. Sharma, S, Sharma, J and Arti, D 2009, ‘Corporate social responsibility: The key role of human resource management’, Business Intelligence Journal, vol. 2, no. 1, pp. 205-213 Read More