Marketing Professional Practice - Ethical Issues Facing Non-Profit Making Organizations - Literature review Example

Name: Instructor Course: Date: Marketing Professional Practice Ethical Issues Facing “Non-Profit Making Organizations” “Non-profit making organizations (NPO)” are business entities that do not allocate their surplus returns to their shareholders or owners. Instead, the returns are used to improve the society around which the organizations operate through sponsoring various projects. Surplus returns from non-profit organizations are exempted from tax by the internal revenue service. According to Yee (1), donations from individuals or organizations to non-profit organizations are tax deductible; therefore, NPOs must make full disclosure of their financial information. NPO’s are faced with many ethical issues that guide their activities, employee behavior and donors. Each NPO mandated by the council of nonprofits to draft its own appropriate code of ethics depending on its operations. However, several ethical practices are required of any NPO. One is confidentiality. NPOs deal with a large number of clients and donors whose identity and business engagement requires confidentiality. It is therefore important for NPOs to maintain a trustful relationship with its clients by adopting a confidentiality policy. According to Singh et.al (14), high degree of confidentiality ensures that valuable information is not exposed to unauthorized persons. According to Leben (5), organizations are required to treat their employees with utmost fairness, justice, and dignity. They are required to create a business environment that treats every individual equally and outlines duties and obligations concisely. Employees in such organizations should be evaluated in a known criterion that ensures fair treatment of every personnel. Employees should be involved in the formulation of personnel policies, which must be reviewed regularly. NPOs are also required to develop mechanisms that give rewards to best performing employees and develop incompetent ones. According to Hammer, Rooney, and Shana (12), NPO’s are faced with the ethical issue of dealing with conflicts of interest. This involves situations where board members or employees in the organization play two or more roles in the organization. The involvement in most cases involves some benefits to the person, relative, or partners in and outside the organizations. The practice of conflicts of interest is highly discouraged. Many NPOs develop explicit policies and measures that aim at reducing the practice. This is because the unethical practice has damaging effects on the image of the NPOs hence reducing public trust. According to Lloyd (2), the other ethical practice facing NPOs is compliance with laws and their codes of conduct. Among the laws that NPOs must comply with include those set by the Internal Revenues Service (IRS) and the code of ethics. In order to ensure compliance, board members, managers and employees responsibilities must be clearly explained. Duties and responsibilities should be tailored in a manner that enables them meet theirobjectives in accordance with the law governing them. NPOs are therefore required to comply with every set law with due diligence on their part. According to Adeh, NPO’s are required to remain honest at all times and ensure transparency. Transparency in this case refers to portraying the organizational needs, activities and their sources of funds open to the public. They are required to give a detailed analysis of their expenses and related spending. NPOs are required to make their financial statements readily available for public access and scrutiny as a show of transparency in their dealings. An external and independent body should regularly audit financial and income statements of NPOs. This is to ensure they reflect a true and fair view of the organization’s financial position. Case Study: Differences between working in a Non-Profit Organization And A Private Company Moving form a private company for instance Pepsi to non- profit organization can be a daunting task for any marketing manager. This is because the two types companies are different in terms of structure and organization. Before deciding on whether to move from a private company to an NPO, it is importance for one to note a few differences in the two working environments. The first difference between the two business environments is low pay in the NPO. According to Reeves (2), non-profit organizations offer low pay to their employees. Due to their limited financial resources, NPOs offer their employees below average salaries. A marketing manager’s position in a private company can be offering a higher annual pay than an NPO’s pay for the same position. Most rewards in non-profit organizations are non-monetary such as self-actualization. According Blaug, Amy, and Rohit (4), stress is everywhere. However, a person planning to join an NPO should be prepared to work in a frustrating and stressful working environment. Most NPOs operate in areas experiencing a myriad of hardships. Most workers of such organizations are volunteers who dedicate their careers to reaching out to others. It is therefore a common practice of NPOs to have incompetent personnel, limited resources, and low levels of technology. A person willing to shift to an NPO should be prepared to deal with frustrated workmates and deplorable working conditions. Most careers in NPOs are not progressive. It is difficult for new or even existing employees to advance their careers in an NPO as compared to others in a private company. According to De Vita and Fleming (1), there are many small non-profit organizations. The only way of advancing a career from in such a working environment is by moving from a small NPO to a larger one. The problem is the few large NPOs operate in major cities like Atlanta, Philadelphia, and Los Angeles. The marketing manager willing to move from Pepsi to an NPO should not expect to advance his career. A person transitioning from a private company to an NPO should be prepared to achieve fewer results in terms of performance. Performance in a private company is based on profits made but in an NPO, it is based on different activities. According to Nelson (10), activities in NPO’s include communication, consultation meetings, and confrontations, writing projects and making reports. Therefore, performance is measured in terms of accomplishing the purposes of the mission statement. It is difficult for an individual working in such an environment to make personal goalsleave alone achieve them. Therefore, an individual employee cannot be held accountable for the success or failure of an organizational project. The other difference between working for a private company and an NPO’s concerns financial security. According to Viravaidya and Hayssen (2), most NPO’s get their funding from grants and donations which are not certain. The other sources of funds include membership fees, contracts, and sponsorships. For this reason, their funds are unstable and vary from one financial period to another. Most employees who work for such organizations are uncertain about their future in the organization and that of the organization. It is impossible for one to predict the future of the organization in terms of its financial performance. This affects the morale of employees who are not motivated. Case study: Response to an Acquaintance Seeking To Join the Board According to Hoo and Leong (31), the chief executive officers (CEO) as employees of an organization have to conduct themselves in accordance code of conduct that governs the organization. The case study shows a problem facing the CEO who is likely to be torn between helping out his acquaintance and fulfilling his duties. The CEO has knowledge on the requirements of being a board member and the financial ability of the NPO. If I were the CEO of the organization, my first response to her would be that the current financial position of the organization could not allow the addition of a new member to the board. This is because hiring a new board member comes with increased overhead costs for example, new allowances, and increased salary. Given the small size of the organization and its limited funds, adding further costs would put the NPO in a risky financial state. According to Leka and Amanda (24), CEO’s and managers of any organization should work with the available resources and ensure they are properly utilized to reduce stress. Secondly, the policy of the organization provides that the composition of board members should not exceed a certain limit. I would inform her that presently, the number of board members is at its maximum. Therefore, adding another board member would contravene the laid down guidelines. According to the law project (1), managers of any organization should always comply with the organizational policy for the good of the organization. I would explain to her that my hands are tied and there is nothing I can do because I cannot contravene the set policies. If the policy would allow the appointment of a new member, I would gladly give it to her. I would later tell her that for one to qualify as a board member, one should possess certain skills and years of experience. According to Forbes and Milliken (489), board members should possess a specified minimum level of skills. I would inform her that board members are persons who have worked for the organization for long; therefore, they have a mass of knowledge about its affairs. Having worked for the organization for only a few years, she would not be eligible for a position as a board member. She would have to work in the organization for more years to qualify. The other response to her would be that board members compose of only the largest contributors to the NPO. Given their large contribution, they have an influence on how the funds should be utilized to meet the activities of the NPO. I would explain to her that due to her small donations, it would be impossible for the board members to approve her appointment. She would have to increase her contribution for her to be considered. However, I would let her know that the organization appreciates her small but generous contribution. Lastly, I would inform her that I am not the only appointing authority. In most NPOs, the appointing authority is the board members. The only assistance I could offer her is only suggesting her name to the board members. I would tell her that she would have to face the vetting board which I am not a member of hence there is no way that I would be of assistance to her. I would later assure her that she is still a valuable member of the organization and every board member values her current participation. Works Cited Adeh, Ignatius. Fostering Accountability in Zimbabwean Civil Society. The International Journal of Not-for-Profit Law, 6.3 (2004): 1-8. Blaug. Ricardo, Kenyon Amy and Lekhi Rohit. Stress at Work. 2007. Web. http://www.theworkfoundation.com/downloadpublication/report/69_69_stress_at_work.pdf De Vita, Carol J and Cory Fleming. Building Capacity in Nonprofit Organizations. Web. 5 Nov. 2013. http://www.urban.org/UploadedPDF/building_capacity.PDF Forbes, Daniel and Milliken Frances. Cognition and corporate governance: Understanding boards of directors as strategic decision-making groups. Acad Manage Rev., 24.3 (1999): 489-505. Print Hammer, Michael, Charlotte Rooney, and Warren Shana. Addressing accountability in NGO advocacyPractice, principles and prospects of self-regulation. Briefing paper number, 125 (2010): 1-30. Hoo, Quah and Leong, Shi. Ethics Code Awareness. Journal of Business Systems, Governance and Ethics, 5.2 (2010): 31-42. Print Leben, Steve and Tomkins Alan. Special Issue on Procedural Fairness. The Journal of the American Judges Association, 44.½ (2007-2008): 1-79. Leka, Stavroula and Griffiths Amanda. Workers, organization & Stress. (2003). Web. 5 Nov. 2013. http://www.who.int/occupational_health/publications/en/oehstress.pdf Lloyd, Robert and Lucy de las Casas. NGO Self-Regulation: Enforcing and Balancing Accountability. (n.d).Web. 5 Nov. 2013. http://www.oecd.org/dev/devcom/44251309.pdf Nelson, Jane. The Operation of Non-Governmental Organizations (NGOs) in a World of Corporate and Other Codes of Conduct. (2007). Web. 5 Nov. 2013. http://www.hks.harvard.edu/m-rcbg/CSRI/publications/workingpaper_34_nelson.pdf Reeves, Laura. Rewards at Work Inspiring Productive Employees Across Career Stages. (2010). Web. 5 Nov. 2013. http://www.encore.org/files/Crossing%20Generations%20Benefits.pdf Singh, Preeti, Singh Pranav, Park Insu, and JinKyu Lee. Information Sharing: A study of information attributes and their relative significance during catastrophic events. (n.d). Web. 5 Nov. 2013. http://wings.buffalo.edu/academic/department/som/isinterface/papers/IA%20_080917-1.pdf The law project. A Guide for Nonprofit Organizations: General Charitable Organization Compliance. (2011). Web. 5 Nov. 2013. http://www.illinoislegaladvocate.org/uploads/822802%20A%20Guide%20for%20Nonprofit%20Organizations%20-%20General%20Charitable%20Organization%20Compliance.pdf Viravaidya, Mechai and Jonathan Hayssen. Strategies to strengthen ngo capacity in resource Mobilization through business activities. (2001). Web. 5 Nov. 2013. https://www.unaids.org/en/media/unaids/contentassets/dataimport/publications/irc-pub06/jc579-strategies_ngo_en.pdf Yee, Betty T. Reporting Guidelines for Monetary and In-Kind Donations Received by Non Profit and Tax-Exempt Charitable Organizations. (n.d). Web.5 Nov. 2013. http://www.boe.ca.gov/members/yee/taxsrvs/files/in-kind_reporting_guide.pdf Read More