Business ethics Essay
In business there will always be the line to act with integrity or to lie, cheat, and steal. Famous author Douglas Adams once said, “To give real service you must add something which cannot be bought or measured with money, and that is sincerity and integrity” (Heathfield, n. d). The priority of any business is to serve the needs and wants of the customer and more important his or her stakeholders. Any business decision made in major corporations must line up with stakeholder’s interests, but more important stakeholders have the social responsibility to represent in the best interest of the entire corporation.
The prevalence of so many major scandals with corporations caught in the public is drawing much needed attention on concepts of ethic, and social responsibility. Ethics and corporate responsibility is a direct application of the ideas of in business practice. This papers purpose is to explain the role of ethics and social responsibility in building a strategic plan while incorporating the stakeholder interests. Business execs have the responsibility to adhering to the unspoken ethics they have only not taught but also have enforced by society and the law.
Ethics are inherently common sense decisions made by those in authority with the power to affect an entire organization. When, business executives make decisions they must consider business ethics and the organizations (stakeholders) values. Once the essential questions ask is, “Do the organization’s values reflect accepted society values? (Young, 2004) Business executives must execute strategic business plans where they take into account not only each value associated with each choice, but the consequences of each choice.
The interests of the stakeholder are one of the prime obligations of an organization. The demands of the stakeholders are generally to increase profits; this is echoed by economist Milton Friedman, the “one and only one social responsibility of business” is “to increase its profits,” assuming an honest and open marketplace”. (Bigelow, 2013), According to Friedman also that corporations owe no responsibilities to society. However, critics will disagree that corporate social responsibility is always to put the customer first, which ensures a customer’s happiness and loyalty.
Stakeholders are not only investors into companies but they also have voting power, which carries social, and financial influence within the company. Their social responsibility is to the customers and to the employees (Jones, 2012). They have decision power, and ultimate control over allocation of resources. Corporations and organizations ultimately exist to satisfy the needs and agendas of the stakeholders. The problem lies in, however; when the needs and the agendas of the stakeholders can blur the line between what is ethically right and what is considered against the law.
The organization’s obligation to the stakeholder is as much as a priority as the relationship to the public. “The relationship between a customer and a firm exists because of mutual expectations built on trust, good faith, and fair dealing in their interaction” (Ferrell). When creating a strategic business plan the organization must incorporate its social responsibilities for the customer, and prevent any ethical dilemmas.
Clear examples that recently have captivated the news over the decade has been the highly publicized cases of Waste Management, Enron, WorldCom, Tyco, HealthSouth, which exaggerated earnings to meet the expectations of stakeholders, Freddie Mac, AIG, Bernie Madoff, and host of others. These examples of accounting fraud, manipulation of books, and stealing from clients made by top executives in the position to meet the expectations of stakeholders and not making ethically sound decisions.
To prevent these scandals from occurring, ruining not only the organization, the employees but also the public’s faith within the corporate world, according to research ethical risk management is an option dependent on the infrastructure in which it promotes ethical conduct and standards. The directives and the support from management in the way it manages potential problems with the lack of ethical standards. Because of the number of scandals not only have businesses implemented stronger measures for ethical practices but also have the legal systems. The establishment of the
Sarbanes-Oxley Act (SOX) in 2002, which came after the scandal of WorldCom, was because the number of major corporations collapsing under the weight of their own unethical practices. According to the SEC, “the Act mandated a number of reforms to enhance corporate responsibility, enhance financial disclosures and combat corporate and accounting fraud, and created the “Public Company Accounting Oversight Board,” also known as the PCAOB, to oversee the activities of the auditing profession” (SEC, 2012). Ethics is a fundamental part of compliance and governance systems.
Ethics explicitly should integrate into the elements of strategic planning in businesses. In determining the roles that factor into managing stakeholder’s interests ethically organizations must first take into consideration that the business is the first line of defense in taking responsibility for managing and supervising corporate responsibility effective in accordance with the level of influence the business set by the organization. Executives in a position to communicate to stakeholders must always implement ethical decisions when balancing their needs and the organizations’.
The executives must be responsible in providing clarification and verification of ethical standards in place. The executives must drive the culture and work environment of compliance toward ethical standards and practices to ensure the effectiveness. Business ethics is important in every organization and the main responsibility is to act with integrity and honesty. References Ferrall, O. C. (2004). Business ethics and customer stakeholders. Academy of Management Executive, 18(2), retrieved from http://danielsethics. mgt. unm. edu/pdf/Customer Stakeholders.
pdf. Bigelow, L. (2013). What are the social responsibilities of a company to its stakeholders? Hearst Newspapers, Retrieved from http://smallbusiness. chron. com Heathfield, S. (n. d. ). Inspirational quotes for business and work: Integrity. Retrieved from http://humanresources. about. com Young, P. (2004). Ethics and risk management: Building a framework. Risk Management, 6(3), 23-34. Retrieved from http://www. jstor. org “The Laws That Govern the Securities Industry. ” (2012). SEC. Retrieved from http://www. irmi. com/expert/articles/2005/head02. aspx.
University/College: University of Chicago
Type of paper: Thesis/Dissertation Chapter
Date: 6 November 2016
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