Acknowledgement
All praise and blessing are due to the creator of mankind and all that exists, for His blessings,
and guidance at every stage of my life. For the successful completion of this assignment, I
needed the help and guidelines of some respected person, who deserves my greatest gratitude.
The completion of this assignment gives me much pleasure. I wish to thank the officials and
other staff members of ESOFT who rendered their help during the period of my study.
Thank you.
Yours’s sincerely,
M. U. M. USAM
HND Business Management
M. U. M. Usam – JD63240
Business ethics
1
Executive Summary
Business ethics in an organization is to establish codes of conduct with the respected and
positive attitude for employees. The Caux Round Table Principles, Organization of Economic
Co-operation and Development Guidelines for Multinational Enterprises and United Nations
Global Impact can be entirely used to explain and analysis the importance of business ethics
in the workplace. The ethical problems including gender diversity, sexual harassment, age
discrimination and racial discrimination, lack of communication and lack of corporate social
responsibility would be discussed and analyzed in the academic essay.
Business ethics is the study of conflict, conflict between economics and values, between
competition, commerce, and capitalism and between morality, integrity and responsibility.
All of these are being experienced in Zimbabwe today as the country grapples with its
tyrannical and dictatorial government.
Ethics relates to the science of morals, or a system of principles and rules of conduct and very
broadly the whole field of moral social science, incorporating political social science, law and
jurisdiction. Robert Mugabe repeatedly demonstrates that he and his government have no
respect for humanity or the principles to make a moral U-turn to salvage the country from the
brink of disaster.
M. U. M. Usam – JD63240
Business ethics
2
Table of Contents
Acknowledgement ................................................................................................................... 1
Executive Summary................................................................................................................. 2
Task 01 .................................................................................................................................... 6
1.1.Explain the background and development of early theories of ethics using various realworld examples ........................................................................................................................ 6
1.2.Using different examples understand the relevant absolute and relative ethics and compare
and contrast them. .................................................................................................................... 9
1.3.Select an organization of your choice and identify the ethical issues there. Explain the
consequences that the organization might face with conducting day to day operations. ...... 11
TASK 02 ................................................................................................................................ 16
2.1.Explain, how business objectives in a selected organization can be affected by ethical
considerations ........................................................................................................................ 16
2.2.Evaluate how the stakeholders of a business such as the organization you selected should
operate ethically and the implications of operating ethically. ............................................... 18
TASK 03 ................................................................................................................................ 21
3.1.Asses
the moral
obligations
of the organization that
you have selected
............................................................................................................................................... 21
M. U. M. Usam – JD63240
Business ethics
3
3.2.Analyze how the organization can develop a mechanism to encourage the employees to
use business ethics and the ways in which they can be involved and empowered by the
employer ................................................................................................................................ 25
TASK 04 ................................................................................................................................ 32
4.1.Select an organization and research about a current ethical issue prevailing in the
organization. .......................................................................................................................... 32
4.2.Report how the businesses can align their practices with the business ethics and report the
ways in which the organization you have selected can improve the quality and meet the
objective while maintaining a good employer/employee relationship .................................. 40
4.3.Design a suitable ethical code to follow by the employees and employers related to the
ethical issue identified in the task 4.1 .................................................................................... 53
Conclusion ............................................................................................................................. 65
Reference ............................................................................................................................... 66
Gantt chart ............................................................................................................................. 69
M. U. M. Usam – JD63240
Business ethics
4
Table of Figures
Figure 39 ................................................................................................................................ 69
M. U. M. Usam – JD63240
Business ethics
5
Task 01
1.1.
Explain the background and development of early theories of ethics
using various real-world examples
Business ethics is the attitude and ways in which a business is formed and the way in which
a business deal with the world. Many businesses behave in divert or different ways depend
on the way it’s formed by the owners of the business. Business ethics can be described as
principle and standard that is guiding behavior of people in the business. Many businesses
have different reputation depends on the ways in which they are formed some business have
bad reputation while some have bad reputation. Some businesses are formed for money
making venture while some are formed because they want to make money and at the same
time want to give its customers maximum satisfaction. The way in which a business is formed
brings about ethical behavior. Ethics is a set of moral principles that a business should follow
and values that a business should embraced in order for a business to be successful. Most
business should have a code of ethics in order for the business to have a principle guiding the
business so that the business can be flourishing.
Crane A and Matten D (2004) defined business ethics as the study of business activities and
decisions where issues of wrong and right are addressed.
ETHICS:
Ethics in a business all about value society, value for other and value for self so that there can
be fairness in the society and things can be done appropriately and smoothly in our
environment. Ethics is all about the ways in which people behave in our society.
M. U. M. Usam – JD63240
Business ethics
6
TYPES OF BUSINESS ETHICS:
•
MORAL OBJECTIVISM:
This can be described as what is morally wrong or right in term of the behavioral attitude of
a person. These are fact that and this is not individual physical facts, or what we feel or assume
to be morally fact. Moral objectivism is very easy to express, it is either good or bad and
moral objectivism can be said to be non-consequentiality.
•
MORAL RELATIVISM:
What is morally wrong or right depends on what individual belief and it vary from one person
to another and also from one culture to another and it can be link to the society cultural belief
and its belief that different people have different background which can be linked to our
individual moral belief and culture. The general belief is that it is wrong to say that one culture
or belief of individual is superior to another culture. We can base what is right or wrong on
what individual belief and environment which we have our self also contribute to what will
belief.
•
CONSEQUENTIALISM:
This is the theories which result into the consequences of a particular action which has a valid
and moral judgment about the action. Moral judgment about the action must have evidence
and must be valid. The consequentialism can be described as an act that tell us whether the
consequence of a behavior is morally or ethically right and it can also be right or wrong. The
judgment about consequentialism should be significant.
•
DEONTOLOGY:
This is a Greek word which means deno, which mean duty and the logos, means science. It
focuses on moral rules and duties. In order for us to make moral choice, we have to know our
moral duties and how we can adjust to those duties. If we obey our duties, we are doing
M. U. M. Usam – JD63240
Business ethics
7
morally things and if we fail to follow our duties, we are doing immoral things. In deontology
our duties, rules and obligation are according to God wishes.
•
PRINCIPILISM:
This is ethics that focuses on medical healthcare. This as to do with ethical issues relating to
health care provider who are in charge of health care of individual or group of people.
Principilism focuses on moral principles namely autonomy, beneficence, non-maleficence
and justice.
In conclusion ethics is all about moral principle which is ruling what is right or wrong in
human being conduct whether the principle governing right or wrong is accepted by
individual or groups in our society. Some business activities that human being engage in
might be lawful and unlawful which will also be unethical to human being, for example
Selling a good that the cost of manufacturing is low wages to developing countries will be
regard as unethical also using animal as experimenting can also be unethical.
M. U. M. Usam – JD63240
Business ethics
8
1.2.
Using different examples understand the relevant absolute and
relative ethics and compare and contrast them.
The concept of absolute and relative ethics:
Ethical theories depend on what is right and wrong and the end result of the action. Doing
what is right is obeying your duties and the rule that guide a business. Ethical behavior of
people doing business is very important in our society. Our moral belief about life changes
over time. There is different kind of people in the world coming from different ethnics group
which moral belief and culture is different, therefore people’s belief and thinking to things
happening in our society now is different. Some belief in the existence of religion others do
not belief in religion. Some belief that abortion should be encouraged in our society other feel
it is taking of human life. In some part of the world some beliefs in circumcision of women
while other feel it is barbaric and immoral. Therefore, ethical belief has to do with our culture,
society and belief we all have because of our religion and background.
ABSOLUTE ETHICS:
The belief that there is only one truth and code of conduct which people generally belief in,
which everyone obeys and is the truth and everyone must obey it and people must be aware
of it.
RELATIVE ETHICS:
The belief of relative ethics is based on the fact that there is only single moral standard which
applies to all human being. The moral ideas and belief of human being differ from one another
and also people belief in different part of the world is also different from one another which
show that there is no stable moral standard in the world.
M. U. M. Usam – JD63240
Business ethics
9
The difference between absolute and relative ethics is stated below:
ABSOLUTE ETHICS:
•
The general belief is that there is a universal moral standard.
•
There is different between what is right and wrong.
RELATIVE ETHICS:
•
Relative ethics say there is no universal moral standard in the world.
•
The relatives’ ethics says there is no difference between what is right and what is
wrong.
M. U. M. Usam – JD63240
Business ethics
10
1.3.
Select an organization of your choice and identify the ethical issues
there. Explain the consequences that the organization might face
with conducting day to day operations.
Ethical issues which can affect the operational activities of a business:
The ethical issues that can affect a business operational activity of a business today in our
society can be describe as what is a happening in today’s business. How the business is
operating if the business is operating ethically or not, business ethic in an organization is the
responsibility of the leader and follower in an organization.
The following are some of the management ethic in an organization:
•
EMPLOYMENT LAW.
•
EQUAL OPPORTUNITY
•
EMPLOYMENT REGULATION
•
DIVERSITY
EMPLOYMENY LAW:
This has to do with employment of employees, the minimum wages that workers will be paid,
working hours which will be made known to the employees when they are employed, also
the employment terms and conditions must be obeyed. Laws that are governing employment
in our various organizations which is quite different from one another organization to another
organization depend on the policies and the ways in which the organization is structured.
Some organization are flexible and the working conditions and how they treat their employees
is based on the policies adopted by the organization, they make sure that the environment in
which their employees operate is safe and accident free and the make sure employees undergo
training on health and safety so that they do not risk their lives in case there is danger at work,
they make sure they let them know the implication of risks and danger at work which are
some of the things organizations should let their employees know before they start working.
M. U. M. Usam – JD63240
Business ethics
11
The case of BP oil producer one of the world largest oil producers in the world. It was found
out that the three was lapse in safety of lives at the refinery by the US Chemical Safety and
Hazard Investigation Board. It was noted that the company was endangering its employee’s
safety by cost cutting. It was also noted that BP was spending money on project instead of
spending money on safety of lives of its employees. The issues are that the management of
BP did not take safety of its employees as their priority and also the management of BP did
not understand the safety culture within the organization. Employment law can affect a
business and it might even make a business to collapse therefore it is necessary that we should
apply business ethics in organization while dealing with employment and employees within
the organization to make the policies and structure of the organization work in line with the
aims and objectives.
EQUAL OPPORTUNITY:
Equal opportunity should be given to all in the society without discrimination of age, color,
sex, or ethics or where the person should have come from, everybody should be given equal
opportunity to in the society. In some organization they do not want to employ female because
they believe that they will not work according to the rules and regulation of the organization,
they believe that they will always want to be on leave while they are pregnant or take
maternity leave which might not be good for the organization because they think while they
are supposed to be at work they will be on leave which will be a setback for the organization.
This apply to the day to day running in business, there should be ethical behaviors in the ways
employees treat its workers, customers and all stakeholders in a business, a business that
apply ethics in the business makes the business to be successful and a business should be
responsible for its employees, customers, society and supplier so that there will be mutual
understanding between all the stakeholders which mean the business is being run ethically,
running a business ethically mean providing all the requirement that a business need to
flourish which makes the business to grow and be productive because employee are being
treated nice, by paying the minimum requirement of wages to employees and also providing
a health and safe environment for its customers and given equal opportunities to all the
employees without being bias and promotion should be given to employees when due, these
M. U. M. Usam – JD63240
Business ethics
12
all ethics a business should provide for all stakeholders in a business in order to consider the
business to be ethics.
The belief of other is that they have the right and they should be given the opportunity and
privilege, this are some of the ethics in a business, if the organization and stakeholders can
understand today business organization and our society, things will work well there will not
be discrimination or whatsoever in our society, everybody will have equal opportunity and
things will work well for us all in our environment.
If people are not given equal opportunity in a workplace it can affect the operational activities
of the business because most of the workers will not be happy and diligent at work because
they know they are not been treat with fairness and justice at work so therefore they will have
nonchalant attitude to work and they will not want to work with seriousness because they
know they are not been treated with equal opportunity. These are the ethical issues that need
to be addressed in an organization so that there will be equal opportunity to all no matter the
age, sex, religion or color.
EMPLOYMENT REGULATION:
This are the laws governing employment related issues which might happen to employees in
an organization. For instance, transfer of employment contracts and how employee are been
protected during transfer of contract and takeovers of a contract from another organization to
another. There should be fairness and employees should be treated with justice especially
when a company is winding up, the employer should pay a reasonable amount of money to
the employee, which shows that they have business ethics in discharging their duties by
treating their employees in a good manner. This issue is affecting the business organization
today, and a lot of big organization has good employment regulation for their employees
because they want the offer the best for their employees because they knew people are aware
of their rights and duties so they will not want to take their employees for granted they always
give them the best and provide a conducive environment for them to work. They are made
sure they pay their employees good working conditions and good salaries so that they too can
work since they are been paid for the services they render. Both parties in a business should
show ethical behavior in a business so that the business can be productive and successful,
M. U. M. Usam – JD63240
Business ethics
13
they should be sincere in all their dealings and they should work hand in hand so that the aims
and objectives of establishing the business can be achieved by all the stakeholders.
DIVERSITY:
This is made up of different people from different national origin and nationality. The
employer must understand that different people come from different background and culture
therefore the employers must not discriminate or bias in any form, the employer must treat
its employees the same way and make the working environment conducive and safe at all
time. When employer treat all its employee the same way and give them equal opportunity
both people with disabilities and others with different religion or belief, the working
environment will be conducive and the performance of each employee will be effective and
the business performance of the organization will be positive and productive and the
organization business performance can be termed ethical because the organization is behavior
is good towards its employees.
The following are some of the ethical issues of the selected organization:
•
TREATMENT OF CUSTOMERS:
An organization should treat its customers with good customer’s service and provide an
enabling and safe environment for its customers. Organization should provide after sales
service and offer its customers and show ethical behavior towards its customers at all
time. It will allow a good customers relationship between the customers and the
organization.
•
TREATMENT OF EMPLOYEES:
They should treat its employees with fairness in all its dealing by provide an enabling
environment, give promotion to employee at when due, they should also provide training
and recruitment should be done without bias or sentiment, these are some of the ethical
M. U. M. Usam – JD63240
Business ethics
14
behavior that should be adopted by an organization in order to show employees that the
organization support issues regarding corporate social responsibilities.
•
WORKING CONDITION:
An organization should provide an enabling and conducive environment for its customers,
employers, suppliers, distributors and also other stakeholders so that there would be safe and
accident free environment at all time. This will show how an organization values its
customers, suppliers and other stakeholders. It is the social responsibilities of an organization
to show that they provide a conducive environment and protect the image of all its
stakeholders by promoting unfair trade, good working conditions.
•
CORPORATE BEHAVIOUR:
An organization must be ethical when dealing with other organization and people they are
doing business with in order to protect their image and have a good dealing with other
organization which will have a positive effect on the organization as a whole. Organization
that has a good dealing with all its stakeholders will always progress and have a good
understand with its stakeholders and the work force. If an organization follows business ethics
the business will be profitable and meet the desire of its stakeholders.
M. U. M. Usam – JD63240
Business ethics
15
TASK 02
2.1.
Explain, how business objectives in a selected organization can be
affected by ethical considerations
Ethical considerations help a business to achieve its aims and objectives of the business.
Ethical considerations is very important in a business when business are done ethically the
business will be profitable and meet the expectation of its stakeholders. For instance, a good
example is child labor in some cloth retailer in the United Kingdom where the production
plant is in Asia, the workers are paid below the minimum wages and also subject to poor
working conditions. This is noted to be unethical to business and to workers who are being
paid below the minimum wages because according to the labor law, all workers must be paid
minimum wage and when workers are paid below the minimum wages it is termed to be
unfair.
Abraham Maslow in his hierarchy of needs theory said the environment can affect our
thinking if we are not careful about our environment and our thinking and attitude in our
environment. If a business is considered to be business ethic, that business should focuses on
the ethical consideration like Profitability’s and meeting the stakeholder’s expectation,
therefore the business will be termed to be ethical. If a business follows ethics it will achieve
the business objective and the business will be successful.
The following are the business objectives:
•
PROFITABILITY:
The aims and objectives of every business is to make profit although some organization are
formed for charity purpose but most business are formed because they want to make profit
and meet the demand of its customers at all time.
M. U. M. Usam – JD63240
Business ethics
16
•
ETHICAL AND SOCIAL RESPONSIBILITY:
The purpose of every business objective is based on the belief and how to make its
environment friendly to customers and safe. Some business also belief to take care or provide
for the less privilege in our society especially the disabled who need special care, for instance
in the UK the government provide special disable toilet for all the disable and they can make
use of the toilet in all the public places.
•
MEET THE STAKEHOLDERS EXPECTATION:
Every business is formed by people who are responsible for the affairs and who has interest
in all the activities of the organization. There are various stakeholders who are part of the
success and management of every business in an organization. For examples, customers,
suppliers, employees, shareholders and communities are all stakeholders in an organization
who contribute to all the activities in an organization. The aims of every business are to meet
the expectation of all the stakeholders because they are part of the decision maker and they
contribute to the success of the business.
•
SALE GROWTH:
The aims of most business are to increase its sales. Expand and open more branches and make
names because there are so many organizations that are competing with one another so most
organization want to offer the best customers service to all its customers and offer good
customers satisfaction to all its customers all time because of strive market competition.
M. U. M. Usam – JD63240
Business ethics
17
2.2.
Evaluate how the stakeholders of a business such as the organization
you selected should operate ethically and the implications of
operating ethically.
Business cannot operate without the stakeholders they contribute immensely to development
of an organization. They contribute to the development of a business and they take active
roles in the development of the business and they ensure they contribute their own quota to
the development of the business. There are various stakeholders in an organization. The
following are various stakeholders in an organization.
The following are the implication of a business that is done properly and what happened if all
the stakeholders do things ethically:
MARKETPLACE ADVANTAGES:
A business that is done in a manner that is appropriate and follow the business ethics by
conducting itself in a good and reputable ways has the advantages of taken over the
marketplace and dominating the market environment and be the major player in the industry.
The organization will be known and well recognize by all. Most people will want to do
business with any organization that abide by the business ethics especially organization that
cater for all its stakeholders and give them maximum satisfaction in all its dealing. The
organization will have value and most of the stakeholders will always want to do business
with such organization because they know they have good business ethics. Both the
organization and the stakeholders always work hand in hand if the stakeholders to comply
with the rules and regulation led down by the organization both parties achieve positive result
and improvement in various areas especially within the organization.
INVESTMENT AND GROWTH:
When business is done properly both the organization and the stakeholders are affected
because the business will grow and also many people will want to invest into the business
and also the business will be known in the market and therefore there is possibility for
M. U. M. Usam – JD63240
Business ethics
18
expansion which will make the organization to be well known and be the major player in the
industry.
EMPLOYEES PERFORMANCE:
This will lead to employees’ performance in term of productivity and also it will result into
cordial relationship between the employees and all the stakeholders with an organization.
Business ethics give morals in an organization because employees know that their rights and
safety are well protected which will make them to perform better and work together with
other members of the organization as a team in order to have positive result.
DEVELOPMENT:
When business is done properly by an organization and the organization ensure business
ethics is practice within the organization, both the organization and the stakeholders work
together to ensure things are done properly there will be development in the organization
which will result development of the organization. If the stakeholders contribute effectively
to the development of an organization there will be development, and the moral of the
company will be built and also increase the productivity of the organization.
BUSINESS GOAL:
It helps the organization to achieve common goal, organization and stakeholders’ practice
ethical value which help to achieve common goal. The organization and the stakeholder’s
practice ethical value which enable a business to done ethically which has positive impact on
the organization a whole because the business is able achieve its aims and objectives since
the organization and its stakeholders plays their roles very well for the success of the
organization in order to achieve common goals.
M. U. M. Usam – JD63240
Business ethics
19
The following are the negative effect of operating a business unethically in the society
BAD REPUTATION:
The organization will be known to have a bad reputation since the general public will be
aware that they are not doing business ethically which will have a negative impact on the
organization. For instance, the issue of BP, the lapses about the organization was made known
to the whole world because it fails to operate its business ethically, they did not make adequate
provision for the safety of lives of its employees.
The made the organization to have a bad reputation. An organization that is not doing business
ethically will always have a bad reputation because this will have a negative effect on its
employees and the organization as a whole.
LOW CUSTOMERS:
A business that has a bad reputation and will have a negative effect on the business, the
business will lose some of its potential customers and sales will drop which can result into
closing up of the business since they are not operating ethically. Most people will not want to
do business with the organization and also this will have the stakeholders since they are part
of the organization. They will not be able to make the money they have invested into the
business since the sales of the business is affected especially the shareholders who have
invested their capital into the business. They will not be able to make the capital that they
have invested into the business and the business might turn out to be a failure. These are some
of the negative effect of a business not operating ethically in the society.
M. U. M. Usam – JD63240
Business ethics
20
TASK 03
3.1.
Asses the moral obligations of the organization that you have selected
Pizza Hut
Pizza Hut has built an integrated executive-level structure and process to assess, guide and
oversee Pizza Hut’s worldwide activities. The company is engaged in a number of internal
and external stakeholders along the way and will continue to engage additional stakeholders
as the company moves forward in the journey.
Pizza Hut will continue to refine their structure as needed, as well as the ways in which Pizza
Hut measures progress against the objectives, to enhance their capabilities and effectiveness.
According to the Organization Chart of the company, there is Restaurant Support Centre
under which comes a department like HR, Marketing, Finance and Property and Field
Operations, which runs the restaurants.
Role of Human Resource
The Human Resource department deals with the management within the organization. There
are number of responsibilities that the HR department has to deal with. At first, the HR
department of Pizza Hut is responsible for hiring members of staff which will involve
attracting more employees, assigning them their positions and ensuring that the employees
will perform the task. HR department of Pizza Hut is also responsible for organizing the
people in entire company and also sets the day to day goals for the organization.
Delegation process at Pizza Hut comprises of 3 steps, which are listed below.
The first step that Pizza Hut HR managers focus is on assigning specific duties to the
individuals. The duties are assigned according to the posts that an employee is designated and
while assigning duties division of labor is always given consideration.
M. U. M. Usam – JD63240
Business ethics
21
In second step, the HR managers grant appropriate authority to the sub-ordinates or in other
words, few powers of command are given to them. The subordinates are allowed to do only
what the HR manager allows them to do.
In last step, HR managers create obligations for the sub-ordinates to perform and complete
the assigned task. The assigned task is also allocated a time span in which it has to be
completed. The one who performs well is rewarded at the end of the task.
WAGES AND INCENTIVES
Employees at Pizza hut are given fair and market-compatible salaries. Employees are
motivated by rewards. When they show good performance, they are given cash rewards, free
meals and are deployed on hot tables, where customers prefer to sit. To increase staff’s
productivity, the workload is proportional to the incentives provided. At pizza Hut, the top
management believes that incentives are a great source of encouragement for the employees.
When employees are given bonuses and extra benefits, they feel valued and hence work more
effectively.
PERSONAL GROWTH
Staff members are sent abroad for further training. They are also paid for their higher
education if it is relevant and can add value to the organization. In-house training sessions are
also organized for the staff members to develop their skills. The staff also sees their career
path and growth within the organization and they also put all their energies in making
organization possible to achieve its targets because goals achieved by the organization will
eventually result in the individual growth of the staff as well.
FLEXTIME
Flextime is a work schedule which allows the employee to select the working hours according
to his convenience. With this new concept, employees now are not bound to work at typical
9 to 5 timings. When employees work at their own selected timings, they put in more efforts
M. U. M. Usam – JD63240
Business ethics
22
so the productivity increases. At Pizza hut, employees can choose their shift i.e. they can
decide whether they want to work in afternoon shift or evening shift. Since restaurants cannot
afford to be understaffed, there must be certain number of employees in both the shifts.
CORPORATE SOCIAL RESPONSIBILITY
At Pizza Hut, they take great care of the social responsibilities. The company is playing its
due role in education, environment, health and other social sectors.
Yum! Brands, the proud owner of Pizza Hut has very recently raised nearly $ 20.0 million
during the World Hunger Relief campaign. They also provided eight million meals to the
hungry people of the world.
Yum! Brands has also established a foundation, through which many philanthropic works are
undertaken, ensuring that their contribution to educational, health and other social areas reap
fruits and improvements are witnessed in these sectors.
Yum! A brand has also contributed to help halt the spread of HIV/AIDS in the developing
world. It has supported the efforts for poverty alleviation and has given huge donation for the
same.
The managers of Pizza Hut have also directed their efforts towards environment. An upmost
care is taken to preserve the environment by using those stuffs which do not produce green
gases and which do not cause damages to the ozone layer.
Apart from environment sustainability, other area where Yum! Brands has worked is health
sector. Being in food business, it puts extra responsibility on them to ensure that maximum
number of people have got access to hygienic and quality food.
Giving back to the community, where Pizza Hut operates, is one of the most followed policies
of all franchisees of Yum! Brands. They ensure that economic activities are generated and
more job opportunities are created in the areas of their businesses.
In Pakistan, the Pizza Hut restaurants have supported the noble cause of philanthropy and
have allowed many institutions like SIUT, Edhi Centre to keep their charity boxes in the
M. U. M. Usam – JD63240
Business ethics
23
outlets. These restaurants also collected a substantial donation for flood affected people of
Sindh.
M. U. M. Usam – JD63240
Business ethics
24
3.2.
Analyze how the organization can develop a mechanism to encourage
the employees to use business ethics and the ways in which they can
be involved and empowered by the employer
In such a competitive environment, the organizations have to continuously provide quality
products, better services and need to bring innovation to stay in the business and generate
profits. To conduct such activities, efficient and empowered employees are essential (Bowen
and Lawer, 1992; Fulford and Enz, 1995; Bowen and Lawler, 1995).
In the past, the authority was not delegated to the employees and it centered on the managers
who were responsible for making all the decisions in the interest of the organizations. This
had limited the creativity to show up since the employees were not able to express or share
their ideas. Empowerment in the recent years has been considered as the most important factor
that contributes to the success of the organization. The creative energy and potentials of
employees benefits the shareholders, suppliers and customers as well (Gandz 1990;
Appelbaum, Hébert, Leroux, 1999).
Empowerment means delegation of decision-making authority when there is a need to take
action which is important for both the managers and employees. Following are the main
reasons for practicing empowerment in the organization:
•
It provides fast solutions to business problems
•
It provides growth opportunities for employees
•
It helps in lowering organizational cost
Employees benefit from empowerment because they have more responsibility in their jobs.
Employee empowerment increases the level of employee involvement and therefore creates
a deeper sense of satisfaction and higher levels of motivation. The style of management is
changing as the managers are now being considered as the coach, advisors or facilitators. The
decision making has been shifted down to the lowest level of the organization.
M. U. M. Usam – JD63240
Business ethics
25
According to Rob and Margret brown, 'empowerment' isn't just a matter of delegating job
authority to the job-holders. It means that 'everyone can take action to enhance his or her
work, either in personal or organizational terms. Instead of the traditional bureaucracy, with
its emphasis on control, standardization and obedience, Brown-blessed empowerment can
only thrive in the liberated surround of innovation, flexibility, commitment, zero defects and
continuous improvement.
Effectiveness of Employee Empowerment:
Employee Empowerment can only be effective when management clearly defines the
achievable goals and accountability standards. The management should provide employees
with the resources such as time, money, training and relevant and factual information which
is supported by the upper and lower management.
The benefits of empowerment can be substantial for the organization but it doesn’t come
without costs. If this approach is not properly implemented, it can cause many problems such
as bad decisions taken by the employees who are not well-trained, conflict arising between
team members reducing the team innovativeness and performance of the employees
(Henderson and Lee; Davenport) and high training costs to successfully operate in the
empowered environment.
There are also numerous benefits that are associated with empowerment such as enhanced
creativity resulting in increased performance, making cross functional teams of diverse work
group for sharing and developing innovative ideas and increased customer service quality by
letting them solving the customer problems on their own without waiting for the managerial
approval (Shrednick et al, 2005).
Hence, we can assume that empowerment is a skill and can be learned. Effective management
teams must have a firm grasp on the latest business techniques as well as an understanding of
the importance of human potential and high self-esteem. Empowerment is a total commitment
to doing business in a productive and positive manner.
The famous researcher John R. Drew proposed Seven Steps to Empowerment. According to
him empowerment can be achieved by creating champions, involving people in planning the
M. U. M. Usam – JD63240
Business ethics
26
change, creating team leaders, educating the workforce, changing the support system,
practicing consensus decision making and involving people in strategic and tactical planning.
A lot of research has been conducted on empowerment in the last decade to fully understand
its impact on the performance of employees and how it effects the organization as a whole.
An organization must understand its compatibility with the organization system since its
effect varies from organization to organization. The approach is dependent on the
organizational structure, its system, its culture, skilled workforce and the attitude of top
management toward the “change”.
Before the organizations move to the empowerment approach, they must critically analyze
what empowerment basically is and how it’s different from the traditional approach.
Empowerment encourages information sharing with front-line workers, rewards based on
organizational performance, employee training, and employee involvement in management
decision making (Bowen and Lawler).
Most of the researches indicate that the empowerment must be nurtured and supported by the
other factors which trigger its effect and produces positive results for the organization such
as Autonomy, creativity, level of communication between managers and employees,
competency and high self-esteem.
Theories and practices of empowerment:
There has been a lack of theoretical and empirical work being done on practices of
empowerment. The term empowerment being used in the business organizations is not clearly
defined since it is difficult to understand what the writer is referring to when he uses the term
empowerment.
Broadly there are two main approaches that are widely used to understand the concept.
Following Conger and Kanungo(1988) and Thomas and Velthouse (1990), spreitzer (1992)
refers to these as a psychological and relational perspectives.
M. U. M. Usam – JD63240
Business ethics
27
Psychological perspective on employee empowerment:
The first approach to study empowerment focuses on the concept that empowerment depends
on the perception of employees. If they believe that they are empowered, then they will tend
to work with more autonomy ( Spreitzer 1992). Conger and Kanungo(1988), and Thomas and
Velthouse(1990) and spreitzer (1992) imply that an employee is psychologically empowered
when(a) he/she finds meaning in his/her role involvement (b) feels efficacious with his/her
ability and capacity to perform (c ) has a sense of determination to achieve a desired outcome
with his/her role and (d) believes that he/she has control over desired outcomes meaning they
have an impact on the large environment.
The relational perspective of empowerment:
The second approach focuses on the concept that how sharing of power is affected by the
organizational structures and its cultures. It deals with the organizational structure and culture
that it should be designed in such a way that creates an environment to facilitate the
empowerment of its members (Bowen and Lawler 1992, Byham and Cox 1998, Jaffe and
Scott 1991).
Apart from these approaches, different theories on empowerment were presented by different
theorists having opposite view points. Some theorists argue that there should be a relatively
uniform understanding of empowerment and they were in the favor of implementing
standardized programs (Rumelt 1974; Denhardt 1984; Wallace 1992; Balk, 1996). On the
contrary, other theorists were of the view that empowerment is individually, contextually and
variably defined (Zimmerman 1995; Quinn and Spreitzer 1997; Foster-Fishman et al. 1998).
These researchers think that there exists a wide range of empowerment varying from person
to person even in the same work setting, although both the viewpoints were in favor of
empowerment.
Each viewpoint is based on the same assumption that employees value empowerment and by
exercising empowerment, they can give better outcomes, increased efficiency and
performance, increased job satisfaction, and consistent ethical behavior.
M. U. M. Usam – JD63240
Business ethics
28
Company can deduce that Employees exercising empowerment show better output results
than those with less autonomy or freedom to make decisions. Although empowerment is a
long complex process that needs understanding, commitment and support from all levels of
management to make it work.
Many large companies such as General Electric, Intel, Ford, Saturn, Scandinavian Airline
Systems, Harley-Davidson, NCR, Goodyear, and Conrail (Robbins, 1996) have included
empowerment in their company programs so that their employees exercise it and bring
innovation and escort to success in the future.
Disadvantages of Participative decision making
When participative management takes place in setting a team goal or build effective team
relation, it can cause many disadvantages. It can start to various aspects from social pressures
to conform and also in various cases group domination, where an employee takes control over
the group and made everyone to follow whatever that employees’ standpoints are. With new,
different and creative ideas coming from many team members, time can be an issue as well.
The meeting may end and the purpose of effective team building and ideas generation go
unheard. Negative impact outcomes of participative management are usually for the
organization resultants in high costs, inefficiency in terms of productivity, and incompetence
(Debruin, 2007).
Therefore, manager should realize that participative management is not only for handling
problems but employees should respect the manager who is making the authority there and
responsible to make decision where ever necessary. For a manager it is good to be in charge
make choice and take the responsibility but whenever there is disciplinary action is needed
participative management does not work there. When managers take their jobs as an
opportunity rather than considering it as a responsibility Managers fail to bring participative
management at work. It is simply delegating and shifting the responsibility and sometimes
managers fail to understand the concept, another reason that participative decision making
fails in the organizations. Participation management should be linked tor should be used an
effective tool in achieving goals and targets and solve alone itself is nothing. This is a
M. U. M. Usam – JD63240
Business ethics
29
misconception inviting employees to the meeting and committee for a successful participative
management. It is only be successful when employees are implemented and accepted if not
implemented then Managers should be given choices and alternative to make employees so
feel committed towards the organization.
Advantages of Participative Decision making
The number of benefits can be attained by using Participative decision-making approach in
all the level of organization. Participative management gives a sense of pride and motivates
employees and also creates a sense of ownership in the organization to increase productivity
in result to achieve their goals (Crandall and Parnell, 1994).
Employees who are empowered to participate in the decisions of the organization make an
employee feel that the employees are equally part of a team with a common goal, and it
heightened the sense of creative fulfillment and self-esteem (Crandall and Parnell, 1994).
Managers who exercised a participative approach find that employees are more receptive to
change than in circumstances in which many have no voice. Participation approach keeps
employees up to date of upcoming occasion and events so they must be responsive of potential
changes (Kearney and Hays, 1994). Changes are implemented more effectively when
employees have input and make contributions to decisions (Akel and Siegel, 1988).
Participation gives a wider view to the employee of the organization. In order to become an
effective managers or top executive certain attributes are required such as development
opportunities, training information sharing, rewards, growth, from all these attributes
employees can acquire the conceptual skills in order to become effective an employee, which
also helps in increasing the commitment of employees to the company and the decisions
members make (Lam, Chen, and Schaubroeck, 2002).
Although (Wagner, 1994) the two important benefits of participative decision making are
Creativity and innovation. Through which the employees from a diverse group are allowed
to have input into decisions (Kearney and Hays, 1994). However, the organization gets
benefits from the synergy which comes for a broad choice of options. Instead of just managers
M. U. M. Usam – JD63240
Business ethics
30
or executives, when all employees of the organization are given the opportunity to participate,
the chances are increased of a wider view given by the employees, and also a valid and unique
idea was suggested (Debruin, 2007).
Most researchers seem to agree that participative decision-making is inherently desirable,
although some argue that its impact on performance may be positive but infinitesimal,
nonexistent, or even negative under certain conditions (Ledford and Lawler, 1994).
M. U. M. Usam – JD63240
Business ethics
31
TASK 04
4.1.
Select an organization and research about a current ethical issue
prevailing in the organization.
The advantages of ethical behavior include:
Higher revenues – demand from positive consumer support. This will also lead to improved
brand and business awareness and recognition. If the business in running in an ethical manner,
it would also lead to better employee motivation and recruitment. And finally, the business
will grow because of new sources of finance.
But sometimes the situation is difficult and there are some ethical issues faced. It can be
difficult to decide as to what is right and what is wrong.
Certain examples are:
Use of child labor and forced labor: It is against the law to use children for work or to employ
someone to work for you against his or her will. They might need the money but it is unethical.
Even if the child or his parents agree and provide their consent, it is unethical and illegal to
use child labor and do forced labor.
Production in sweatshops is also unethical. Sweatshop is a factory or production place where
the working environment considered to be unacceptably difficult or dangerous.
Employee Working Conditions: employers must be aware of the safety of their work
environment and must make sure that they pay their employees adequately. An employee
should take ethics into consideration while giving a very difficult task or asking an employee
to stay for long hours outside the working times.
Violation of the basic rights of workers: All workers have the basic rights. Everyone is entitled
to a break when they have worked continuously for long hours. Even if there is a deadline to
meet or there is lot of work to be completed, we must ensure that the basic rights are provided
to all the workers.
M. U. M. Usam – JD63240
Business ethics
32
Ignoring health, safety and environmental standards: Sometimes due to financial restraints
the employer is not able to cater for the health and safety and it doesn’t meet the required
standards. There is no excuse for this type of behavior. This would be considered unethical.
Employee behavior: This can be a matter of debate. Should an employer allow his employees
to read their personal emails at work? If the employee makes any complaint of harassment at
work, how will the manager deal with it? These are few examples of ethical issues regarding
employee behavior.
Supplier/Customer Relations: must consider whether it is ethical to do business with other
business workers who have unethical practices.
ETHICS DILEMMAS FACING BY KFC
KFC is among the most popular fast food brands in the world. Started out in the fifties, KFC
now boasts of operating, franchising, and serving a worldwide chain of around 11,000 fast
food restaurants that prepare, package and sell a menu of ready to eat foods. However, despite
of the established brand of KFC Corporation and contrary to its previous achievements; it
seems that there is a need for the management to redefine its image.
Provide Greasy Unhealthy Food
The growing and bustling population of today is obviously different from the population of
the previous decades in terms of health and nutritional attitudes and behaviors. People today
are more concerned with their health and figures than ever before. Obviously, the reason for
this increased awareness is because of the fact that information is everywhere and every
reports and research about nutrition seem to link fast foods with the growing number of
obesities. Being one of the most popular fast food restaurants and with millions of people
patronizing the products and foods offered by the company, it is important the company
adheres to ethical standards specifically in terms of providing healthy foods. However, it has
been observed that KFC is using oil which contains Tran's fatty acids and contain in
M. U. M. Usam – JD63240
Business ethics
33
monosodium glutamate, which is MSG. This is noted to increase cholesterol and even
increased the risk of having heart disease and obesity. As authorities discovered this, the case
was being carried over by the consumer group Centre for Science in the Public Interest and
told the company to use healthier cooking products than the one they are using.
Gram for gram, they are believed to be twice as damaging as saturated fat. The Nutrition
Action Health letter, published by the Centre for Science in the Public Interest (CSPI),
reported in 1997 that in clinical studies Tran's fat raised people's blood cholesterol about as
much as saturated fat did. Because trans-fatty acids are not listed on food labels, they are
invisible to consumers. With the negative effect of this to the people, KFC has been faced
with problems in terms of following business ethics and finding ways to find solutions to
these kinds of issue.
Protests by PETA
KFC is the world's largest chicken fast-food chain in the world with more than 9900 stores at
an average annual consumption of nearly 800 million chickens in all over the world. In order
to reduce costs, KFC chicken suppliers kept the chickens in overcrowded cages and given
drug to urging their growth so that they are usually too heavy and can't even walk. In year
2003, PETA organization (Association of Ethical Treatment of Animals) found a video
exposing KFC supplier abuse chickens by cruel trick and this immediately aroused public
attention. In the video can see the staff do anything to abuse the chicken, they often cut off
their wings, slamming them to the wall, punched them as sandbags, kicked them as football.
At slaughter, the chicken' throats are slit and dropped into tanks of scalding-hot water while
they are still conscious. They abuse the chickens alive to death and then gave to outlet frying
as delicious fried chicken serve all around the world.
In this case, the PETA organization has been called upon to KFC must immediately stop this
cruel chicken farming, with the requirement.: to improve the living conditions of chickens to
expand their activities in space, for example, cages set within the "room" and separators, so
that rearing environment closer to the wild, natural environment and so forth, have been
reared chickens have the most basic living conditions. But the real solution is consumers
M. U. M. Usam – JD63240
Business ethics
34
should take actions to support the way to get all the animals from being inhumane and even
standing on a healthy position, one can also choose to become a vegetarian to improve health,
meanwhile more positive action to reduce the number of animals are subjected to inhumane
treatment.
Advertisement Mislead
Nowadays, advertising communication play a importance role in our society. As we all know,
fast food is high fat and calorie food, cellulose content is low, long-term consumption will
lead to obesity, endangering the liver and other organs healthy. But fast-food ads never
mentioned these issues, always promoted eating fast food is a modern lifestyle and
fashionable, the food is fresh and tasty, nutrition and health. This is a food culture and lifestyle
misleading from advertising, especially to young people and children.
In 2003 autumn, KFC played "health card" at TV ad, saying that Kentucky Fried Chicken
"has the human body the necessary carbohydrates, is a daily non-integral part of the menu."
This ad exaggerated the Kentucky Fried Chicken features, many people discontent into this
broadcast, the U.S. Federal Trade Commission specifically to this investigation. Under
pressure from all sides, soon KFC Company takes off this advertisement. In this year July,
ASA (Advertising Standards Authority), found that the U.S. KFC have an ad misleading
consumer think that the fresh chicken is on daily basis delivered to every KFC outlet, this
suspected of misleading to consumers. Advertising content shows a young chef side of a
chicken sprinkled with flour, says: "I want to cook the most delicious food, secret is using the
correct materials, like this fresh chicken". Ad adds the narration: "Kentucky Fried Chicken,
fresh meat. Every store, Every day." But the ASA found that KFC chicken are delivered to
each store three times per week, it was decided shall not broadcast the ad, unless modified.
SOLUTION
There is no doubt that business ethics plays a more and more important role in modern
economy. The right thing to do isn't always clear in business (1990). Thus, the company needs
some common principles to guide the behaviors. It is much easier for a company with good
moral conducts to build its reputation and win respect from all aspects of a society. KFC has
M. U. M. Usam – JD63240
Business ethics
35
already gained the reputation of a fast food that continuously provides greasy unhealthy food,
so it needs to do something about and shift its positive image back.
Provide Healthy Product
The traditional ethical stance of the company is to prevent actual problems on health and
nutrition. However, there is an obvious lack for long term plans that will also maintain these
developments even in years to come. KFC Company should realize that their does not only
have a responsibility to their current customers but to future generations as well. The scope
of responsibility as cited in this discussion should include the provision of respect for others,
honest and pure intentions as well as protection from harm. The management of KFC should
be responsible in maintaining that healthy and nutritional foods which future generations will
need as well so as to survive. Nowadays, people are more concerned with their health and
figures than ever before. Obviously, the reason for this increased awareness is because of the
fact that information is everywhere and every reports and research about nutrition seem to
link fast foods with the growing number of obesities. In this case, KFC should start research
on healthier ingredient like offering roaster chicken instead of fried chicken and provide low
fat, low calories product to consumer. For example, McDonald's recently have announced
that they will use organic milk to product the coffee and chocolate in future. As consumers
increasingly concerned about the source of food, McDonald's also had to be improved for
their own ingredient in order to increase the turnover. McDonald's (UK) director Steve
Easterbrook said, British consumers increasingly focusing on the quality of food sources and
the realm of ethics, which has led to Britain's organic dairy products has been greatly
welcomed, so we also decided to provide our customers changes in the quality of milk.
At the same time, we also hope that through this change, can increase the level of consumption
of organic milk, organic dairy products market, contribute to the development. Well-known
dairy company Arla is a McDonald's milk supplier, said the organic milk market development
more and more powerful, and we are very pleased to see McDonald's fast food industry to
lead the transition to organic dairy products. Other than that, in 2008 McDonald's launches a
new "cooked in a canola oil blend' symbol to the packaging of menu items cooked in oil to
help inform customers that these products are cooked in a blend of canola and sunflower oil
M. U. M. Usam – JD63240
Business ethics
36
which is virtually trans-fat free and less than 10 per cent saturated fat. In March, McDonald's
introduced a new range of seared, 100 per cent chicken breast fillet products, providing a
skinless, lower-fat alternative to deep fried chicken. Hence, KFC should develop and
providing healthy product by using alternative oils which do not contains Tran's fatty acids
and reducing the amount of MSG increasing the amount of protein in the process.
This will convey a message to the consumers and let them know that KFC's chicken will
maintain its taste without use great amount of MSG and oils which can contains Tran's fatty
acids and will not harm to the consumer's body. By changing of the menu and the ingredient
of cooking, this may rebuild their image and reputation from public because image plays the
important roles in company in order to survive in future. In the selflessness theory of the
Seven Principles of Public Life issued by the International Federation of Accountants (IFAC)
state that the holder of public office should act personally in term of public interest not only
gain benefit to themselves. Therefore, KFC should not only promote their new product, they
should also put themselves in the shoe of their customers by understanding their requirements
and responsible to make sure that the products are not harming the consumer's healthy
lifestyle.
Responsibility to Animal Welfare
With economic development and social progress, people towards animal's attitude have a
series of changes. As result, some countries come up with animal welfare laws and
regulations. In addition, with the improvement of living standards in developed countries on
food safety and health have become increasingly stringent requirements, the WTO also
requires on this. PETA advocates to promote animal welfare, the main purpose is to have
better human beings, in a reasonable and humane use of animals at the same time taking into
account the welfare of animals that live to be comfortable and not painful death. Some studies
show that in dirty and dense environment, pigs, chickens, ducks and other animals, their
immunity will be greatly reduced and it is easy to fall ill, thus causing animal diseases. If an
animal suddenly suffering in terror state, it will secret a large quality of adrenal and it will
affecting the quality of the meat and these hormones may have hazardous on human health.
M. U. M. Usam – JD63240
Business ethics
37
After exposing the video of inhumane slaughter of chickens, PETA has been keep open
condemnation on the KFC. KFC company should pay enough attention on this case,
continuous improvement of the chicken breeding method and it living environment. This is
the only way to ensure the chicken welfare, otherwise KFC will be facing enormous obstacles
from public. Besides that, KFC should make a commitment to require supplier farms to take
measures to improve animal breeding environment, not forced feeding, not cruelty to animals
and reduce suffer as much as possible when slaughtering process, or they will stop purchasing
from them. PETA organization had proposed in change of using poison gas to slaughter
chickens, this can reduce the pain of death to zero and reduce the contact between handlers,
and would not effect on the quality of meat. Thus, KFC company should consider this propose
and do their best to implement it in future. To support the view, deontological theory explains
that it is a moral duty for individual to make the right decision determined not by its
consequences but by obligation and commitments.
Improve Public Relationship
TV media has an important impact on people to their moral values, self-awareness, and
values. Advertising can influence people's attitudes change and affecting people's consumer
attitudes and values. Therefore, if the information of ads is no false it will cause a negative
impact on the socio cultural. Young people and children are important consumer group for
KFC, many parents concerned about KFC food contained in the low nutrition and highcalorie, worried that will cause children's bad eating habits and nutritional imbalance caused
by such issues. In fact, the media has a huge influence, if used properly will be able to play a
significant positive effect. KFC should development of many more healthy, low calorie meals
and other nutrition and health portfolio selection, and should clearly marked on the number
of calories, nutrients, energy and nutrient density and the consumption of different age groups.
So that, KFC can advocacy the healthy diet and exercise ideas in their ads, indicating the
nutritional information, educating parents a correct idea and providing children the correct
healthy diet knowledge. KFC company can also partnership with other public relation
company holding a long-term, large-scale, cross-media public relations activities to advocacy
the concept of the importance of health, encouraging of healthy eating and regular exercise
M. U. M. Usam – JD63240
Business ethics
38
habits, and provide a testing of body fat index (BMI) to public and also pay attention to the
needs of disadvantage ethnic communities. Besides, by promote healthier eating habits to the
public, it will win back consumers’ confidence and increasing its publicity with a more
favorable corporate image. According to Mike Roberts, McDonald's president and chief
operations officer, he said that, "There is nothing more important to McDonald's than building
customer trust and loyalty around the world". Furthermore, the ethical theory of moral
relativism which can applies to people who believe that an act is right if approves by the social
group in which person belong.
M. U. M. Usam – JD63240
Business ethics
39
4.2.
Report how the businesses can align their practices with the business
ethics and report the ways in which the organization you have selected
can improve the quality and meet the objective while maintaining a good
employer/employee relationship
Economic Responsibilities
According to Samson & Daft (2005, p.170), a company is in business to make money by
producing goods and services that society wants. Profits have to be a goal of any business in
order to survive because, when business fails, it impacts everyone.
This economic responsibility got translated into notion of profit maximization view.
According to Frideman (1970), “There is one and only social responsibility of business: to
use its resources and energy in activities designed to increase its profit, as long as it stays
within the rules of the game.” However purely profit maximizing view is no longer accepted
an adequate criterion of performance in many countries (Samson & Daft, 2005, p.170).
Sophi Tranchell, managing director of Divine Chocolate Ltd says: “The present situation has
shown us that the purely profit motivated business model hasn’t worked and it never worked.”
Therefore, only economic responsibility could lead companies into trouble.
Legal Responsibilities
Legal responsibility defines what society considers important with respect to appropriate
corporate behavior. Therefore, business are expected to comply with the laws and regulations
imposed by local council, state and federal government, and their regulatory bodies. So,
organization that breaks the laws and regulations are poor performers (Carroll, 1991).
Ethical Responsibilities
According to Samson & Daft (2005, p.171), ethical responsibilities include behaviors that are
not necessarily codified into laws and may not serve the organizations direct economic
M. U. M. Usam – JD63240
Business ethics
40
interest. Ethical responsibilities embody those standards, norms, or expectations that reflect
a concern for what consumer, employees, shareholders, and the community regard as fair,
just, or in keeping with the respect or protection of stakeholders’ moral rights (Carroll, 1991)
Since, business ethics is rising across the world, many companies realize that in order to
succeed they need to earn respect and confidence of their customers, employees and society
and also they know, they are accountable for their actions, as demand grows for higher
standards of CSR.
Discretionary Responsibilities
Discretionary responsibility is purely voluntary and guided by organizations desired to make
social contributions not mandated by economics, law or ethics. This includes actively
engaging in acts or programs to promote human welfare or goodwill (Samson & Daft 2005,
p.171). The differentiating feature between discretionary and ethical responsibilities is that
the former are not expected in an ethical or moral sense. Society desire firms to contribute
their money, facilities and employees but they do not regard the firms as unethical if they do
not provide the desired level. Therefore, this is more discretionary or voluntary on the part of
business even though there is always the societal expectation that business provide it (Carroll,
1991).
Corporate Responses towards Social Demands
When organizations face, with a specific social issue, they tend to respond. To respond social
issues, management scholars have developed a scale of responses that organization use
(Carroll & Gatewood, 1981). Actions can be Obstructive, Defensive, Accommodative or
Proactive as show in Exhibit 3.1.
M. U. M. Usam – JD63240
Business ethics
41
Corporate Responses to Social demands
Obstructive Responses
It is one of the four ways a management may choose to respond to social issues. According
to Samson & Daft (2005, p.172), obstructive response means a response to social demands in
which the organization denies responsibility, claims that evidence of wrongdoing is
misleading or distorted and place obstacles to delay the investigation. For example, Tobacco
Industry in the USA was accused of using obstructive actions by hiding their research
indicating possible health hazards of smoking (Perter & Kramar, 2006).
Defensive Responses
An organization that adopts a defensive response admits to some errors of omission or
commission. The company defends itself but is not obstructive. Defensive managers believe
that these happen, but they are nobody’s fault (Samson & Daft, 2005, p.172). For example,
Sanlu, chain’s biggest milk powder manufacture sold milk powder produced with industrial
chemicals (melamine) and resulted six infant deaths. But, Sanlu claimed that it was an
industrial accident (Macartney, 2008)
Accommodative Responses
Organization’s acceptance of its responsibility to the society and take steps to solve social
problems caused by its activities. Firms that adopt this action try to meet economic, legal and
ethical responsibilities. Exxon’s decision to clean up the oil spill in Prince William Sound,
Alaska, after an enormous public and political pressure and boycotting of its products. This
was an example of accommodative responses (Samson, & Daft 2005, p.172).
Proactive Responses
A proactive response means that an organization takes the lead in social issues. The
organizations seek to learn what the public interest is and respond without persuasion or
pressure from the stakeholders. They take discretionary responsibilities to enhance
M. U. M. Usam – JD63240
Business ethics
42
community welfare (Samson & Daft, 2005, p.173). The chairman of Villa company (largest
private company in the Maldives), has announced that Villa Company will help to set up
Computer labs at schools to educate more students in computer and IT knowledge and also
Google organization was created to find ways to fight climate change, poverty and emerging
diseases and Google makes high-profile environmental efforts to be a carbon- neutral
company (Lomax, 2009).
Stakeholders
An organizational stakeholder is any group within or outside the organization that has a stake
in the organization’s performance. Each stakeholder has a different interest in the
organization. Today, all the organizations take a serious effort to satisfy their stakeholders
because, businesses are affected by the environment in which they operate and they come into
regular contact with employees, investors, owners, suppliers, customers, government, the
community and special interest groups and also decision made by a business affect one or
more of these stakeholders (Ssmson & Daft, 2005, p.165).
Employees
Employees are the heart of the organization. Organizations should believe in the dignity of
every employee and should take the employees interests seriously. Employees expect fair
pay, good working conditions that respect each employee’s health and dignity, listen their
suggestions, ideas and compliant and avoid discrimination. Employees who are satisfied with
their organization’s commitment are likely to be more positive and productive (Goessl, n.d.).
According to Viskorich (2009), Starbucks Company (world largest coffeehouse company)
holds its employees in very high standard and Starbucks employees have 82% of job
satisfaction rate compared with industry average of 50%.
Customers
Customers are the most important people for organization. They are the resource upon which
the success of the business depends. So, organization should meet customers’ expectations.
M. U. M. Usam – JD63240
Business ethics
43
Customers expect the highest quality product with their requirement, more choices, health
and the safety of product etc. For an example Apple Company provide high quality product
to their customers and received top honors among computer manufacture for customers
satisfaction (Perter & Kramer 2006).
Owners, Investors and Suppliers
One of the most important parts of business is to meet their owners/ investors expectation.
It’s not a big secret that people invest their money to get fair and competitive return on their
investment (Grant, 2007). In order to get fair and competitive return, they expect managerial
effectiveness and efficiency in using resources.
Organization relationship with suppliers is based on mutual understandings and respect and
they seek fairness and truthfulness in all business activities and also they expect their payment
on time in accordance with agreed terms of trade (Grant, 2007).
Government
As stated by Werther & Chandler (2006), organizations are expected to behave scrupulously,
ethically and responsibly. There are laws, rules and regulations to protect the employees,
customers, community and even the environment. The government is committed these laws
for oblivious reasons. Therefore, government expects from the organizations to compliance
with laws, rules and regulations and other environmental protection requirements.
The Community
Today, business does not live in a vacuum. The citizen and groups that populate its geographic
operation area are essential to its operation. As a result, the community has certain expectation
like peace, security, safety, good natural and physical environment and etc (Cohn, n.d.). To
demonstrate this responsibility Starbucks announced (2009), “100% Starbucks cups will be
reusable or recyclable and they will contribute one million community service hours per
year”.
M. U. M. Usam – JD63240
Business ethics
44
Special Interest Groups
The Special Interest Group is a community with a particular interest in a specific technical
area. Special Interest Groups include, trade associations, political action committees,
professional associations. They expect organization decisions to support their particular area
of interest. An example of such group is the “Global Compact”, launched in 1999 by the
United Nations, the Global Compact is a coalition of large trade unions, environmental and
human rights groups, brought together to share the dialogue on CSR ( Viskorich, 2009).
5.0 Social Responsibility Management Goes Beyond Economic Responsibility
According to Val Carter, Director of Aramank: “Most companies these days expect to have a
CSR policy. It could make the difference between winning and losing business.” So, the
success of every business is dependent upon, how they deal with CSR. Let’s look at some
good businesses that go beyond economic responsibility.
The Kellogg Company (world leading producer of cereal and convenience foods), is a good
example of how CSR has been practiced by a modern company for an over hundred years. Its
CSR activities have contributed to this success. The founder of Kellogg, Will Keith Kellogg
said, “Invest my money in people” and legacy continues to guide the company and its people.
It further claims that “Social responsibility is a way of life at Kellogg” (Asogu, 2007).
Microsoft (biggest software company), works closely with international organizations such
as the World Food Programs and save the Children programs and Bill Gates, founder of
Microsoft and a major philanthropist launched his idea of “wealthier people serve poorer
people as well.” (Viskorich, 2009)
IBM is the largest and most profitable computer company. According to IBM CSR report
(2008), IBM supports its employees in becoming volunteers and provides them with IBM
technology tools to be used by non-profit community organizations and schools.
From the above examples, it’s also clear that the business success and relationship with CSR.
Therefore, it is not a surprise that the socially responsible management goes beyond the
economic responsibility.
M. U. M. Usam – JD63240
Business ethics
45
McDonald's business ethics
In each and every country, McDonalds has thrived to develop a menu that fits the tastes and
culture of the people in those countries. This has made McDonalds unique in its delivery of
fine and quality fast food products. Its CSR strategies have helped it to identify the needs of
the people within these destinations and develop fast food solutions that best fits their needs.
McDonalds is thus mindful of its customers' diverse needs.
In addition, McDonalds strives to promote healthy diets that benefit its customer. Research
reveals that fast food products are not good for the health, especially for the heart as well as
the liver. However, McDonalds disputes this by developing and making fast food products
that are free from cholesterol, fat that causes cardiac diseases.
The firm has also won several awards in environment conservation and employment
sensitivity. McDonalds has no gender inequality whilst employing its staff from the regions
where it has expanded. The company hopes to have trained and retrained all its employees in
their respective fields by the end of 2012 (May, Cheney and Roper, p.32). According to an
employee at the fast food restaurant in Europe, McDonalds is perhaps the best employer and
always listens to the needs and demands of the staff; "the employment environment is one to
die for."
Factors and Discussion
This section will identify the various CSR strategies that McDonalds has implemented in the
past, present and the future of these strategies. The factors are identifying in the ensuing
paragraphs. Values
McDonald's core values are all aimed at promoting the Corporate Social Responsibility of the
firm. This is achieved through giving value to the customers, the supply chain as well as the
other business partners with whom McDonalds does business. McDonalds indeed
acknowledges the fact that its customers are the reason behind its success and existence.
Therefore, the customers are very much valued within the company. The company thus strives
to create a warm and welcoming environment for its customers.
M. U. M. Usam – JD63240
Business ethics
46
Secondly, McDonalds values its employees and states that it is committed towards the career
growth and development of its employees through a comprehensive training plan. This is
perhaps the greatest CSR that McDonalds has. McDonalds believes in empowering and
valuing the employees for increased commitment from them and their continued success.
McDonalds also maintains high business ethics and thus conducts its business with high
ethical standards (Fisher and Lovell, p.33). The company conducts its business with high
integrity, honesty and fairness for all its customers and suppliers.
McDonalds also values the community in which it operates and strives to give back to the
society through sponsoring various community initiatives such as education. McDonalds
believes in making the world a better place (Johnson and Turner, p.112).
McDonalds being a public company values doing profitable business with all its stakeholders.
The company therefore lays much emphasis on profitable business while enforcing its
business ethics across all its subsidiaries. This is achieved through maintaining high ethical
standards.
McDonalds always strives to excel in whatever field it undertakes to operate in. constant
improvement is achieved within the company through continued training and innovation.
Thus, McDonalds has grown to become the world's largest fast food chain of restaurants
through its commitment towards achieving its CSR as well as maintaining good business
ethics. According to Richardson (p.16), McDonalds has achieved much success through its
good will initiatives worldwide, hence many customers identify with the positive side of the
company.
Sustainable supply chain
McDonald's suppliers are required to adhere to the strict Code of Conduct which enhances
the supply chain ensuring that the fast food giant gets the best quality products as raw material
for preparing the fast food restaurants. The firm values its supply chain in such a manner that
there is no way a poor-quality product can access the firm's production unit.
In addition, there are checks and balances to ensure that only the best raw materials are used
to prepare fast food products. These checks and balances often involve empowering the
M. U. M. Usam – JD63240
Business ethics
47
suppliers to supply quality products through training programs. In 2007, McDonalds
established a strong supply chain department which ensures that the quality standards for its
suppliers are continuously met by the suppliers (Hanekamp, p.14). The complexity of the
supply chain requires that McDonalds maintains an effective communication amongst its
suppliers in order to solve and avert problems at an early stage.
McDonalds always purchases its products from suppliers who only comply with the
established code of conduct thus ensuring continued quality standards adherence (Gitman and
McDaniel, p.34). Furthermore, McDonalds always strives to promote a supply chain that is
positively supporting the environment. Thus, the supply chain of the fast food giant usually
has no adverse effect on the environment.
McDonalds therefore supports an environment-friendly supply chain. The supply chain also
aims at promoting a positive economic impact on the suppliers and the immediate
beneficiaries. According to Crowther and Rayman-Bacchus (p.42), an effective supply chain
is one where suppliers receive timely information that will enable them be able to succeed in
supplying the best products for the fast food giant.
Andersen (p.24) suggests that McDonalds requires improving efficiency of its supply chain
and reducing the bottleneck so that the Small and Medium Enterprises within countries where
McDonalds operates may be able to benefit from the existence of McDonalds.
Nutrition and wellbeing
McDonalds is always committed to the wellbeing of its customers through producing fast
food products that have no adverse health effects on the customers. The company follows the
strict advice of its nutrition experts. There have been concerns about obesity that McDonalds
has taken seriously and strived to avoid producing fast food products that may lead to obesity
among its customers.
Moreover, McDonalds also promoted doing exercises as part of the health promotion program
that it started in 1998 (Ferrel, Ferrell and Fraedrich, p.18). Exercising is an imperative activity
that McDonalds acknowledges could reduce the health effects of fast foods. Nutrition experts
M. U. M. Usam – JD63240
Business ethics
48
also advice that eating fast food products is not harmful to one's health for as long as they do
enough exercises.
McDonalds encourages customer to make quality choices regarding its fast food products that
will benefit their health. The firm discourages eating for the sake of it and insists on
supporting healthy living (Rendtorff, p.142). McDonalds continues to develop high quality
and a well-balanced diet that serves the needs of its customers comprehensively. The firm has
also developed a wide range of choices to enable its customers to choose from, thus increase
customer satisfaction.
The firm through its nutritionist has developed consumer-friendly nutrition information that
enable the customers to gain useful knowledge regarding the fast food products that the firm
sells across all its restaurants. This helps the consumers to make an independent choice
regarding which fast food product to purchase. Today, a lot of the consumer choices are
driven by the nutrition that McDonalds provides its consumers with.
McDonalds has strived to improve the communication that it has with its customers,
especially children thus encouraging them to make wise nutrition choices. According to
Hartman and DesJardins (p.76), McDonalds established the Global Advisory Council (GAC)
which works in collaboration with the international teams to source for expert advice
regarding nutrition and wellbeing.
Environmental responsibility
According to Kotler and Lee (p.19), McDonalds has won the Energy Star Partner of the Year
award which is usually awarded by the Environmental Protection Agency (EPA). McDonalds
has been recognized for its massive efforts in reducing greenhouse emissions. The firm is
sensitive to the environment and concerned more about the global warming. This has
promoted the firm to save on energy and thus avert carbon emissions.
McDonalds takes its social responsibility concerning the environment seriously. The firm
established its very own Global Environment Commitment (Houk and Williams, p.134). The
company has continued to focus on improving its commitment towards the environment. As
far as McDonalds CSR regarding the environment is concerned, the fast food giant has in the
M. U. M. Usam – JD63240
Business ethics
49
past and present focused on three main areas namely; energy efficiency, sustainable
packaging and waste management as well as green restaurant design. McDonalds has sort to
use more energy efficient strategies such as the use of natural gas in the fast food restaurants.
McDonalds continues to seek ways of increasing energy efficiency. Furthermore, the fast
food giant also seeks to reduce the impact of its operations on the environmental impact.
In addition, McDonalds continues to explore ways in which it can package the consumer's
product in packages that are easy to recycle and reuse. Malachowski (p.27) reveals that the
company banned the use of plastics in packaging the fast food products. The firm continues
to use paper-based packages though it is in a bid to look for an environmentally friendly
package. The firm has been criticized for using paper-based packages in the wake of the
global warming panic. Paper comes from trees and thus by using the paper-based packages,
McDonalds may have been going against the environmental preservation requirements.
Trevino and Nelson (p.47) reveal that McDonalds has an environmental department which
attends the green house conferences in Geneva annually. These officials are in charge of
ensuring that McDonalds continues to comply with the environmental laws of various
countries where it is established.
Most of the restaurants belonging to McDonalds have adopted the green restaurant design
which helps in saving energy. This has given McDonalds the opportunity to participate in the
reduction of carbon emission through investing in energy efficient buildings. Most of the
restaurants belonging to McDonalds have an open space which allows plenty of light to enter
into the building thus saving the use of electricity during the day.
McDonald's CSR supports the conservation of the environment through reduction of carbon
emission as well as the green restaurant designs.
Employment experience
McDonalds has a policy within all its subsidiaries and fast food restaurants worldwide of
giving its employees a priority over all other things. The firm indeed identifies that employees
are core in the company's success. McDonalds has in the past devised training programs
M. U. M. Usam – JD63240
Business ethics
50
aimed at employee development. Moreover, the firm empowers its employees to take up new
challenges in the fast food market.
Furthermore, McDonalds supports human rights which forms part of it global business
conduct. Respect to life and the preservation of human dignity has enabled the company to
excel in its core relationship with its employees as well as customers and business partners.
This has enabled McDonalds to grow through its appreciation of human life and dignity, an
area where many other companies have failed.
Employee's rights are a priority at McDonalds. McDonalds has developed a strategy that
allows the employees relative freedom in working with the firm. There are three aspects of
the employee priority virtues that McDonalds has identifies namely respect, commitment
growth and talent enhancement (Hoffman, p.114). McDonalds has created a culture where
every employee is respected and valued globally. In addition, McDonalds is committed
towards realizing quality employees through comprehensive training programs and staff
development strategies.
McDonalds identifies young talented graduates and employees then as graduate trainees thus
ensuring that it acquires the right caliber of future employees. These young graduates are
drawn from various hospitality colleges and universities across the globe. According to
Mullerat and Brennan (p.22), McDonalds always strives to deliver quality employee training
to its employees. Moreover, its employment policy is not biased against one kind of gender.
There is an open approach towards those employed at McDonalds.
Every employee is thus a priority at McDonalds since the firm realized that its workforce
holds the key to its valued success. This CSR involving valuing and respecting employees
has enabled McDonalds to improve its service provision to its clientele.
Community responsibility
For ages, McDonalds has been supporting the Olympic Games through feeding program
aimed at feeding the athletics. McDonalds is also involved in various charities and also
supports education in the developing countries where it has its franchises and fast food
M. U. M. Usam – JD63240
Business ethics
51
restaurants. As part of its bid to return back to the society, McDonalds has sponsored several
children programs involving eradication of illiteracy and poverty.
McDonalds also sponsors a number of events worldwide including the Olympic Games and
walks. Over the past calamities, McDonalds has been involved in disaster response where it
has supported the victims of such disasters. Just recently during the Haiti disaster, McDonalds
moved in to donate a handsome amount towards the rebuilding of the destroyed country.
According to Morris, Willey and Sachdev (p.54), McDonalds has also supported various
community-based programs such as sponsoring the education of poor children in India and
Asia.
McDonalds has been able to achieve high success through its identification of the elements
that make it succeed most. These elements include its employees, customers and the suppliers.
McDonalds values its employees and has various training programs to support their bid
towards an excellent service provision. The company draws its success mostly from its
employees. McDonalds also hires quality and highly valuable employee's thus ensuring
continued success for the company.
M. U. M. Usam – JD63240
Business ethics
52
4.3.
Design a suitable ethical code to follow by the employees and
employers related to the ethical issue identified in the task 4.1
A code of ethics forms a part of formal statement showing the value of the organization on
the ethical and social issues. In other words, these act as general principles about the beliefs
of organization related to the matters like employees, quality and the environment. Below are
the codes of ethics of the publicly held companies.
Wal-Mart: - the code of ethics of the Wal-Mart comprises of the integrity and honesty as core
values that are non- negotiable. Following are the major points under the code of ethics of the
company:
Open-door policy, better relations with Supplier, Accounting and computer standards,
disclosure of Information, no policy of discrimination, proper use of the property, assets and
the facilities of the company. Apart from this, it also includes provisions for the Health and
safety, environment, inappropriate behavior and Harassment (Wal-Mart, code of ethics,
2007).
Wal-Mart de Mexico also comprises of the location of corporate compliance responsible for
the communication of the policies related to ethical behavior that governs the company.
Starbucks: - Starbucks conducts its business operations in a volatile and competitive businessenvironment. The organization is committed to its core values and principles in order to
comply with the laws of ethical conduct (Kazmi, 2002). Starbucks Standards of Business
Conduct present a brief outline of the ethical and legal standards followed by the organization
on a regular basis.
Code of ethics for Starbucks is a part of the bigger strategy of industry monitoring. Starbucks
is greatly concerned with the ethics of environmental and social responsibility. As it is
depended on the products of agriculture, Starbucks is especially worried about the bad effects
of the threat caused by global warming.
In concern to the environment, the company has been given many environmental awards and
is a member of about twenty-five socially-responsible investment funds (Corporate Ethics
and Accountability, 2008).
M. U. M. Usam – JD63240
Business ethics
53
Starbucks regularly undertakes an investigation of various kinds of possible violation of its
principles, standards, the Financial Code of Ethics and reports under the Procedures
(Corporate Ethics and Accountability, 2008). This ensures that all the departments
functioning under the organization are working in a proper manner and conducting business
in a fair and transparent manner (Starbucks-Standards of Business Conduct, 2008).
It takes several steps to ensure that all the work-processes and business practices follow the
ethical guidelines of the organization. According to the ethics program, the Chief Compliance
Officer is assigned with the responsibility of enforcing the principles and standards framed
by the organization. At the same time, the Law and Corporate Affairs department advises the
Audit and Compliance Committee of the Board of Directors regarding the matters concerning
with this policy.
It also follows a “Policy on Communicating Complaints and Concerns to the Company and
the Board,” which regulates the process of submitting complaints and the procedures for
addressing those (Starbucks-Standards of Business Conduct, 2008). The organization makes
these procedures available on its website along with a helpline for the Standards of Business
Conduct. In order to take prompt & appropriate corrective actions for the procedures, the nonemployee Director, Audit and Compliance Committee, the Board committee or the Chief
Compliance Officer committees are set up.
Microsoft: - Microsoft's code of ethics is reflected in the Finance's mission that includes the
encouragement of professional conduct in the carrying out of financial management globally.
In corporate governance, important role is played by the Microsoft's Chief Executive Officer
(CEO), Chief Financial Officer (CFO), Corporate Controller and other employees (Ball &
McCulloch, 1982). The company makes sure that interests of all the stakeholders are suitably
protected, balanced and conserved. This Finance Code of Professional Conduct substantiates
principles that are supposed to be adhered. These ethical business principles cover rules
related to the responsibility of individuals, peers, Microsoft employees, public and other
stakeholders. Greater responsibility of abiding to the rules lies with the CEO, CFO, and
employees. Any violations in these codes of Professional Conduct might result in the
disciplinary action, which might vary up to the termination of the employment. The code of
ethics includes the honesty and integrity, avoiding conflicts of interest in their personal and
M. U. M. Usam – JD63240
Business ethics
54
professional relationships and providing correct, complete, fair and relevant information to
the stakeholders and complying with the regulations and the rules of the state, federal,
provincial, and local governments. Last but not the least, the other factors in the code of ethics
are acting in good faith and proactively promoting ethical behavior (Cherunilam, 2005).
Adequacy of the code
The code of the ethics is adequate in the star bucks and Microsoft but inadequate in case of
the Wal-Mart. As the Wal-Mart follows very stringent and strictest policies and buyers are
not offered with the coffee from suppliers (Wal-Mart, code of ethics, 2007). They have very
indifferent attitude towards the employees and follow the practices of gender bias and
discrimination law is not followed by the company. On the other hand, star bucks and
Microsoft take proper care of their stake holders. Both of them regularly undertake an
investigation of various kinds of possible violation of their principles, standards, the Financial
Code of Ethics and reports under the Procedures (Corporate Ethics and Accountability, 2008).
This ensures that all the departments functioning under the organization are working in a
proper manner and conducting business in a fair and transparent manner.
Business and Cultural challenges
A well-planned, voluntary and cost-effective code of ethics promotes the growth of the
companies and prepares them to face the challenges while expanding globally. In star buck,
Microsoft and Wal-Mart, the code of ethics is well defined and include honesty and integrity,
avoiding conflicts of interest in their personal and professional relationships and providing
correct, complete, fair, objective, relevant information to the stakeholders and complying with
the regulations and the rules of the state, federal, provincial, and local governments. All these
are the prerequisites to establish a business globally. Company following such codes gains
easy acceptance in other country (where it wants to start its business) from the people and the
local authorities.
M. U. M. Usam – JD63240
Business ethics
55
Conducting Business Globally
Starbucks' code of ethics provides a good example in conducting a business globally, as
proper care is being taken from the execution to the implementation of the code of ethics. It
takes care of the interest of its stake holders along with the concern for the environment.
Therefore, it can successfully conduct its business globally (Kazmi, 2002).
Microsoft works for the interest of its stake holders and also for their health and safety. It
would be better for the company if it includes certain policies for the environmental
protection.
Wal-Mart on other hand has quite strict policies under the code of ethics. This might create
problem in expanding its business globally. It should not leave any loop hole in the
formulation and implementation of the code of ethics. It should establish committee that looks
after the implementation of the policies, so that the employees can feel free to raise their
grievances (Gogoi, 2007, June13).
Ethical Organization Achieve Superior Performance in long run
Organizations of high integrity achieve superior performance because they can attract and
retain high-quality employees, customers, suppliers, and investors according to Denis (2009).
Organizations take time and effort to create high integrity. It is because human beings are not
morally perfect. Without ethical employees, customers, suppliers, and investors, organization
cannot achieve high integrity and superior performance. Although unethical organization can
make profit in short term, it cannot be a long run
Ethical Organization Competitive Advantages
Within the culture of trust between management and employee, the ethical organization
performs competitive advantages than others according to Denis (2009). An ethical corporate
organization attracts the high-quality employees and leads all management staff and
employees to a higher level of satisfaction and a sense of loyalty as Stewart (2006) stated. For
the similar salary level, those job candidates will choose those ethical corporate organizations
M. U. M. Usam – JD63240
Business ethics
56
rather than those unethical organizations. Of course, someone will choose those unethical
organization if the salary and benefits are substantially higher according to Bob (1999).
Competitive Advantages of Being Ethical and Trustworthy
•
Attract and retain higher quality employees
•
Attract and retain higher quality customers
•
Attract and retain higher quality suppliers
•
Attract and retain higher quality investors
•
Earn goodwill with community members and government officials
•
Achieve greater efficiency and decision making, based on more reliable
information from stakeholders
•
Achieve higher product quality
•
Need less employee supervision
Ethics Challenge
Ethics should permeate all aspects of organizational operations as Dennis (2009) stated.
Unfortunately, due to human nature and inappropriate management control systems, many
organizations are ethically challenged. An ideal ethical situation is one in which a person has
good motives and the act results in good consequences. The most unethical situation is one
where a person has had motives and the act results in bad consequences as Robert (1999)
stated.
M. U. M. Usam – JD63240
Business ethics
57
Hiring Ethical Staff
When an organization employs someone, that individual brings to work not only unique job
skills, but also his or her ethics. Denis (2009) stated that hiring just one employee with an
unethical value system can corrupt an organization. Efforts to maximize ethical behavior and
minimize unethical behavior at work must begin during the hiring process.
Discrimination Ordinance
Unlawful discrimination can be apparent on the front end of the hiring process as San (1996)
pointed out, wherein members of protected classes are intentionally excluded from the job
candidate pool. Word-of-mouth recruiting, such as recommendations from other employees
or colleagues, is often a very effective means of attracting high quality employees. However,
Bernard (2000) stated that it is prohibits all businesses from discriminating base on an
individual’s race, color, religion, gender, or national origin. Also, it is prohibited employers
from discriminating based on age and physical or mental disabilities.
Code of Ethics
Employees of high integrity do not necessarily share the same ethical points of view. Frank
(1994) stated that each person develops a unique ethical point of view, a perspective shaped
by parents, siblings, friends, teachers, religious leaders, political leaders, other moral role
models, and culture. An ethical dilemma arises because situations are ambiguous, and two
people of high integrity might disagree on the best ethical response. Therefore, an
organization’s code of ethics minimizes ethical ambiguities by communicating guidelines for
employees to apply when making decisions according to Denis (2009). The general principles
embodied in a Code of Ethics such as respecting all owners, customers, employees, suppliers,
community members, and the natural environment. Mark (2005) briefed that an extensive
review of corporate Code of Ethics, global Codes of Ethics, and the business literature found
the following six universal moral values including Trustworthiness, Respect, Responsibility,
Fairness, Caring and Citizenship. On the other hand, Dennis (2009) provided an example of
a Code of Ethics that high lights four guiding principles including open communication,
respect for others, personal integrity, and performance excellence. Communication means
M. U. M. Usam – JD63240
Business ethics
58
employees have an obligation to communicate with others. It needs to take time to talk with
one another and to listen. Respect means everyone should treat others as like to be treated
themselves. Everyone should not tolerate abusive or disrespectful treatment. However,
ruthlessness, callousness and arrogance should not be adopted in organization. Integrity
requires employees to work with customers and prospects openly, honestly, and sincerely.
Moreover, Excellence means that employees should satisfy with nothing less than the very
best in everything they do. They should continue to raise the bar for everyone so as to discover
how good they can really be.
Creating Codes of Ethics must be followed by effective implementation. Effective
implementation of a Code of Ethics increases employee job satisfaction and organizational
commitment, enhances ethical performances, and impacts how employees assess the
organization’s ethics according to Randi (2000). Effective implementation requires support
from senior managers, employee training, and management enforcement. Widely distribute
the codes and accompany them with a letter signed by a high-level executive that emphasizes
the importance of applying the codes on a daily basis. Employees should sign the codes after
they have been introduced during orientation or an ethics training workshop.
Ethical Training
Without having been trained in philosophy, few managers realize that almost every business
decision has ethical ramification. Sean (2004) pointed out that ethics training helps to create
a culture of trust. People employed in organizations with formalized ethics training have more
positive perceptions about their organization’s ethics and greater job satisfaction. Jean (2007)
addressed that ethic training should be conducted throughout the organization. All employees,
ranging from the CEO and Board of Directors to the janitor, experience ethical dilemmas on
a daily basis. Bob (1999) pointed out that both new and long-term employees need ethics
training. Making ethics training part of a new employee’s orientation process demonstrates
the importance of ethics to the organization. Conduct a follow-up session six months later to
reinforce the importance of ethics and explore ethical issues they have experienced at work
up to that point as Bob (1999) suggested. On the other hand, Denis (2009) noted that longterm employees significantly shape the organization’s ethical tone. One long-term employee
M. U. M. Usam – JD63240
Business ethics
59
denigrating the organization’s ethical efforts can destroy all the managerial effort put into
aligning a new employee with the organization’s ethics. Therefore, training long-term
employee to lead ethics training sessions is essential so as to share stories on how the
organization’s code of ethics was upheld in difficult situations.
Ethical Obligation to Various Stakeholders
Ethics is the set of principles a person uses to determine whether an action is good or bad.
Ethics permeates every stakeholder interaction involving owners, customers, employees,
lenders, suppliers, and government officials as Denis (2009) stated.
Communication within Organization
If the organization allows management staff and employees to share the information and
doing so improves the subordinate’s performance, then it is very ethical. However, if sharing
the information violates a confidentiality agreement and the subordinate is likely to misuse
the information, then it is very unethical according to William (1990). Organizations must
open avenues of communication among all management staff and employees to discuss
ethical issues as they arise as Stewart (2006) pointed out. A failure in internal communication
system within organization can result in external whistle-blowing, which is damaging for both
the organization and the whistle-blower as mentioned by Denis (2009). According to Ethics
Resource Center’s 2005 National Business Ethics Survey, this is because 59% believe no
corrective action will be taken, 46% fear retaliation, 39% fear no anonymity, 24% assumed
someone else would report it and 18% did not know who to contact. The survey concluded
and recommended that organization must establish communication systems for receiving this
information. Someone in the organization must be held accountable for overseeing that the
ethical problem are addressed, the information is held in confidentiality, and the employee
providing the information is protected from retaliation. If an appropriate ethics reporting
system is not available, employees are left with two options damaging to the organization.
The employee can either remain quiet as the situation worsens or damage the organization’s
reputation by blowing the whistle to a public authority according to Margot (2009).
M. U. M. Usam – JD63240
Business ethics
60
Ethical Leadership
Managers are role model, and the ethics of their actions are constantly being evaluated by
subordinates according to Denis (2009). The way a manager treats owners, customers, and
employees sets the standard for acceptable behavior within the manager’s work unit. A
manager’s behavioral commitment to ethical principles or lack thereof, filters down to
subordinates and other as James (2007) briefed. Paul (2007) pointed out that Hard-working,
conscientious, caring, and moral managers who generate high quality performance outcomes
tend to attract, develop, and promote hard-working, conscientious, caring, and moral
employees who generate high quality performance outcomes. Also, James (2007) pointed out
that honesty is a mutually reinforcing ethical bond between managers and their subordinates.
Dishonesty by either the manager or employees punctures the ethics bond between them.
Discussion and Analysis
In most of the workplace, implementation of ethical management may find very difficult. One
of the difficulties is to gather the information from the employees.
Improve Communication System
Employees may hesitate to reveal those ethical problems to their supervisor or senior
management or they may think that nothing will be improved even though
Those unethical events have been reported. For doing the better in communication within
organization, senior management may establish the proper communication system for
receiving those ethical problems. Organization may appoint an individual person to act as the
Ethics Compliance Officer to gather that ethical information within the operation of
organization. The Ethics Compliance Officer gives confidence to those employees who want
to report the ethical problem. The officer should be held accountable for overseeing that the
ethical problems and relevant information should be held in confidentiality. Also, the officer
should review regularly the ethic standard and activities of organization. In some
circumstances, the officer should oversee the ethics communication strategy and the ethic
training program for the new coming employee.
M. U. M. Usam – JD63240
Business ethics
61
In the case of receiving unethical information and compliant, the officer should analyze that
information and make the decision to improve and report to the senior management if
required. With the Ethical Compliance Officer playing the role of bridging the internal
communication channel within organization, everyone working in the organization can report
those potentially illegal or unethical conduct. The officer provides employees with an
institutional mechanism for reporting unethical or illegal behavior. Hence the difficulties of
gathering ethical information can then be minimized.
Ethical Training within Organization
Ethics training can initiate dialogues at work around argumentative ethical issues and greater
impact on employee behavior than the presence of Code of Ethics. Ethics training helps to
create a culture of trust. Ethics training is not only provided to the junior staff, it should be
provided to the all member within organization including the management staff as well as the
board member of corporate organization. At the time of economic recession, organization
may be attempted to eliminate ethics training as an extraneous expense when budgets are
tight, but this is exactly when ethics training is need most.
Many organizations recognize the need to conduct ethics training for employees at all level
of organization and should be reviewed regularly. However, difficulty may be found in this
stage because not enough information for reviewing the ethical standard and training. Then
the senior management should assign create a safe learning environment by choosing
someone the participants trust to facilitate the ethics training workshop. The responsibility
should be assigned to a trustworthy human resources department staff person who has a solid
understanding of human resources issues. Of course, some employees will not speak honestly
with the human resources staff, particularly about those ethical issues. It is because they fear
of being fired or may be their comments will have a negative impact on their future
performance evaluations.
If it is the case, the senior management should assign one with facilitator role to someone
both the senior management and the employees trust. This facilitator can play the role of
informal leader within all working place. This facilitator already has a good feeling of the key
ethical issues and can make sure the discussion is realistic and relevant. Also, this facilitator
M. U. M. Usam – JD63240
Business ethics
62
can inspire self-learning among participants by keeping everyone focused on the main issues
while being flexible to new issues as participants arise. The existence of this facilitator is
capable of encouraging participants to analyze and modify their own point of views.
One of the self-learning experiences among participants is the discussion training. The
discussion training is by means of creating some business ethics scenarios for participant
discussing. The most meaningful ethical issues to explore are those employees observe,
experience, unfair treatment, or hear about while employer either in their current organization
or for a previous employer. Those participated employees should develop written scenarios
about these ethical issues and share them with others. Throughout this discussion training, the
ethical issues information can be obtained. Then the ethical management can be implemented
and under review more easily. On the other hand, it can create a team-building sprite among
the employees.
Discrimination within Organization
Discrimination on gender, race, age and physical or mental disabilities is offence against
discrimination ordinance in Hong Kong. However, many business organizations may perform
a certain extent of discrimination during in the employee hiring process, particularly in those
small and medium business organizations. It is because those small size business
organizations’ hiring method is most of time by means of word-of-mouth recruiting, such as
recommendations from other employees. Of course, ethical management should be starting
from the employee hiring process. However, many small business organizations focus on the
employee’s technical skill and rather than ethical skill. Therefore, those job candidates with
recommendation from the ethical employee will have more chance in job application.
Good Reputation from Avoiding Discrimination
Instead, in the large-scale business organization, discrimination on age, gender, race and
physical or mental disabilities may be found in the fairer treatment in workplace. The
organization may arrange different kind of job to suit those job candidates. On the other hand,
those business organizations showing without discrimination during the employee hiring
M. U. M. Usam – JD63240
Business ethics
63
process will have a better reputation in community. For the consequence effect, the
organization with the better ethical image in the community can attract more high-quality
staff and perform a better and better in the long run.
M. U. M. Usam – JD63240
Business ethics
64
Conclusion
Business ethics in an organization is to establish codes of conduct with the respected and
positive attitude for employees. The Caux Round Table Principles, Organization of Economic
Co-operation and Development Guidelines for Multinational Enterprises and United Nations
Global Impact can be entirely used to explain and analysis the importance of business ethics
in the workplace. The ethical problems including gender diversity, sexual harassment, age
discrimination and racial discrimination, lack of communication and lack of corporate social
responsibility would be discussed and analyzed in the academic essay.
Business ethics is the study of conflict, conflict between economics and values, between
competition, commerce, and capitalism and between morality, integrity and responsibility.
All of these are being experienced in Zimbabwe today as the country grapples with its
tyrannical and dictatorial government.
Ethics relates to the science of morals, or a system of principles and rules of conduct and very
broadly the whole field of moral social science, incorporating political social science, law and
jurisdiction. Robert Mugabe repeatedly demonstrates that he and his government have no
respect for humanity or the principles to make a moral U-turn to salvage the country from the
brink of disaster.
M. U. M. Usam – JD63240
Business ethics
65
Reference
Ethical Studies Second Edition, Bob Bowie, Robert Bowie, Edition 2, illustrated, Publisher
Nelson Thornes, 2004
Ethical Issues in Youth Work, Professional ethics, Sarah Banks, Taylor & Francis, 2010
Ethical Issues in Business: Inquiries, Cases, and Readings, Peg Tittle, Broadview Press, 2000
Current Issues in Business Ethics, Peter W. F. Davies, Routledge, 1997
Janie, R.G & Peter, J.G (2000) Advertising effect on children's buying habits in the U.S.,
Journal of Marketing Vol4, No.2
Michelle, M.M, Eric B. R. & David, M.S. (2003) The McLawasuit: The fast-food industry
and legal accountability for obesity. Vol.22, No.6
Food L. J. & Poly (2008) Supersied America: Are Lawsuits the right remedy. Journal of Food
Law & Policy
Hartman and Desjardins, Business ethics: Decision making for personal integrity and social
responsibility, 2008
Linnett, R. (2000). Psychologists Protest Kids' Ads. Advertising Age, 71, October 11,4, 69
Moore. E.S.& R.J. Lutz (2000). Children, Advertising, and Product Experience: A Multimethod Inquiry. Journal of Consumer Research, 27(1), June, 31-6
Consumer
international
(2008)
WCRD
2008
[Online]
Available
//www.consumersinternational.org/Templates/Internal.asp?NodeID=
from:
http:
97050
&int1stParentNodeID=89647&int2ndParentNodeID=95043
Margaret Scheikowski (2009) Family sues KFC over "food Poisoning". [Online] Available
from: http://news.ninemsn.com.au/national/845258/kfc-sued-over-salmonella-poisoning
Laura Costa, Ph.D.(No date) Protect You from Harmful Chemicals in Cosmetics and
Household
Products.
[Online]
Available
from:
http://loveyourbody.nowfoundation.org/harmful_chemicals.html
M. U. M. Usam – JD63240
Business ethics
66
Consumers International: The global voice for consumers. (2009). [Online] Available from
http://www.consumersinternational.org
Chemical Health Monitor (no date) title. [Online] Available from http://www.eeb.org
/activities/chemicals/0903-REACH_consumers_FINAL-1.pdf
Food
Industry
Group
(no
date)
McDonalds
NZ
[Online]
Available
fromhttp://www.fig.org.nz/articles-detail.php?acticle_id=55&type=case_studies
KENTUCKY FRIED CHICKEN (KFC) IN INDIA (No date) [Online] Available
fromhttp://www.freeessays123.com/essay21631/kentuckyfriedchickenkfcinindia.html
Yamini Aparna K. Vivek Gupta(2004) KFC in India: Ethical Issues [Online] Available from:
http://www.asiacase.com/ecatalog/NO_FILTERS/page-CROSSMGT-649128.html
Alyce Lomax (2009), Most Socially Responsible Company. Retrieved January, 10, 2010 from
http://www.fool.com/investing/general/2009/01/09/fool-awards-most-socially-responsiblecompany.aspx
Archie B. Carroll, (1991), the Pyramid of Corporate Social Responsibility, towards the moral
management of organizational stakeholder: balancing economic, legal and Social
Responsibility .
Retrieved,
September,
13,
2018
from
http://findarticles.com/p/articles/mi_m1038/is_n4_v34/ai_11000639/pg_2/
Danny Samson & Richard L. Daft, (2005), Fundamentals of Management, Second Pacific
Rim Edition, (Ch 5, pp 165-173), Australia, Nelson.
J.J Asongu, (2007), The History of Corporate Social Responsibility. Retrieved January. 10,
2010 from http://www.brass.cf.ac.uk/uploads/History_L3.pdf
Julio Viskorich, (2009), Good Examples of Corporate Social Responsibly. Retrieved January
10, 2010 from http://www.helium.com/items/1411478-starbucks-and-social-responsibility
Macatney Jane (2008), Chinese Milk powder Contaminated with Melamine. Retrieved,
September,
13,
2018
from
http://www.timesonline.co.uk/tol/news/world/asia/article4758549.ece
M. U. M. Usam – JD63240
Business ethics
67
Martin Cohn (n.d.), the importance of Community Relations. Retrieved from September, 13,
2018
from
http://www.evancarmichael.com/Public-Relations/216/The-Importance-of-
Community-Relations.html%20(mark)Miltion Friedman, (1970), The Social Responsibility
of Business is to Increase its Profit, The New York Time Magazine. Retrieved from
September, 13, 2018
From
http://www.colorado.edu/studentgroups/libertarians/issues/friedman-soc-resp-
business.html
Ney Grant (2007), Setting Business Owners Expectations. Retrieved, September, 13, 2018
form http://www.allbusiness.com/buying-exiting-businesses/4974293-1.html%20(G)
Perter M.E & Kramer M, (2006), Strategy and society: The Link between Competitive
Advantages and Corporate Social Responsibility, Harvard Business Review: November –
December, pp.78-92
The corporate Social Responsibility, (2007). Retrieved September, 13, 2018, from
http://www.wbcsd.org/templates/TemplateWBCSD5/layout.asp?MenuID=1
William B. Werther & David Chandler, (2006), Strategic Corporate Social Responsibility,
1st Edition, U.S., Sage Publications. Inc
M. U. M. Usam – JD63240
Business ethics
68
Gantt chart
Figure 1
M. U. M. Usam – JD63240
Business ethics
69