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Accountability and Ethics in Corporate Management
This paper presents a detailed examination of accountability in management. The writer provides critical reviews of published literature on the topic and includes several areas of it including; corporate ethics, managerial performance and using the performance reviews for accountability purposes as well as individual worker ethics and accountability.
ACCOUNTABILITY AND ETHICS IN THE CORPORATE WORLD
As the world continues to globalize America also faces its own economic slump. Given the two situations the business world has had to take a long hard look at itself in recent years and determine how to improve its operation for continued success. One of the aspects of a business that can make or break its continued existence is accountability. The accountability of any business starts at the corporate level and works its way down to the level of individual employees. Each aspect of the company, from the worker on the line to the manager of the department to the CEO has to be accountable for his or her contribution to the business, whether that contribution is a positive one or a negative one. Accountability has to do with many things including the ethics, the performance and the projected future of each department as well as the company an entity. The dictionary definition of accountability is an obligation or willingness to accept responsibility or to account for one's actions. This is an important factor in business as well as in life. The business venue of accountability is one in which each level of management or workers are directly dependent on the level directly above and below them. The accountability of those levels can have a significant impact on the others that are affected.
Because accountability plays such an important part in the growth and success of a business there have been many articles published about it. The articles examine the accountability of different levels of the workforce and conclude its importance, its need for change and its continued success. Published conclusions about accountability at the corporate level, managerial level and individual level can be used to develop policy for current and future needs.
CORPORATE/EXECUTIVE STANDARDS AND ETHICS
Within the last decades several studies have been conducted regarding the importance of ethics in business at the corporate and executive level. One such study was published by Harvard University's Graduate School of Business, written by Lynn Sharp Pain and explored the need for managing an organization's integrity (Paine, 1994). Paine believes that managers often think ethics are a question of personal scruples that is confidential between them and their conscious. Often times the corporations or companies refuse to accept responsibility according to Paine for things the employees do wrong. If an employee acts unethically he or she is a rogue employee and it is not representative of the company itself nor should the company be held accountable according to some business current standards. Paine points out this mind set from the beginning of her paper so that the reader has an understanding of what issues she plans to address. Corporations or executives are sometimes so concerned with liability that they fail to accept even reasonable responsibility according to Paine (Paine, 1994).
Ethics, after all, has nothing to do with management. In fact, ethics has everything to do with management. Rarely do the character flaws of a lone actor fully explain corporate misconduct. More typically, unethical business practice involves the tacit, if not explicit, cooperation of others and reflects the values, attitudes, beliefs, language, and behavioral patterns that define an organization's operating culture. Ethics, then, is as much an organizational as a personal issue (Paine, 1994). Managers who fail to provide proper leadership and to institute systems that facilitate ethical conduct share responsibility with those who conceive, execute, and knowingly benefit from corporate misdeeds (Paine, 1994). "Paine outlines several of the reasons that corporations must begin to acknowledge the company role in organizational ethics and why they have to begin to incorporate ethics and accountability into their structural foundation (Paine, 1994)."
Managers must acknowledge their role in shaping organizational ethics and seize this opportunity to create a climate that can strengthen the relationships and reputations on which their companies' success depends. Executives who ignore ethics run the risk of personal and corporate liability in today's increasingly tough legal environment. In addition, they deprive their organizations of the benefits available under new federal guidelines for sentencing organizations convicted of wrongdoing (Paine, 1994). "
According to Paine the act of accountability begins at the top with the executives taking integrity based approach to running the company. It is important for the top management workers to recognize this means a combining of the recognition of legal responsibly and the need for individual ethical behavior from each employee of the firm.
Paine stresses the need for integrity and accountability being incorporated into the whole picture. "Though integrity strategies may vary in design and scope, all strive to define companies' guiding values, aspirations, and patterns of thought and conduct (Paine, 1994). When integrated into the day-to-day operations of an organization, such strategies can help prevent damaging ethical lapses while tapping into powerful human impulses for moral thought and action. Then an ethical framework becomes no longer a burdensome constraint within which companies must operate, but the governing ethos of an organization (Paine, 1994)."
Using the example of Sears, Roebuck & Company, Paine details the way a corporate failure to accept accountability can lead to a drop in customer base which leads to a loss of profits. The complaints were filed in 1992 regarding the company's automotive repair business (Paine, 1994). "Consumers and attorneys general in more than 40 states had accused the company of misleading customers and selling them unnecessary parts and services, from brake jobs to front-end alignments. It would be a mistake, however, to see this situation exclusively in terms of any one individual's moral failings (Paine, 1994). Nor did management set out to defraud Sears customers. Instead, a number of organizational factors contributed to the problematic sales practices (Paine, 1994)."
Paine was strong in her discussion about the many factors that lead to a break down in executive accountability factors when she addressed the slumping economic conditions as one of the things that may have promoted the blind eye attitude of the top brass within the organization (Paine, 1994).
Sears management attempted to spur the performance of its auto centers by introducing new goals and incentives for employees. The company increased minimum work quotas and introduced productivity incentives for mechanics. The automotive service advisers were given product-specific sales quotas -- sell so many springs, shock absorbers, alignments, or brake jobs per shift -- and paid a commission based on sales (Paine, 1994). According to advisers, failure to meet quotas could lead to a transfer or a reduction in work hours. Some employees spoke of the "pressure, pressure, pressure" to bring in sales. Under this new set of organizational pressures and incentives, with few options for meeting their sales goals legitimately, some employees' judgment understandably suffered (Paine, 1994)."
Management's failure to clarify the line between unnecessary service and legitimate preventive maintenance, coupled with consumer ignorance, left employees to chart their own courses through a vast gray area, subject to a wide range of interpretations (Paine, 1994). Without active management support for ethical practice and mechanisms to detect and check questionable sales methods and poor work, it is not surprising that some employees may have reacted to contextual forces by resorting to exaggeration, carelessness, or even misrepresentation (Paine, 1994).
Paine presents an overview of corporate accountability and what the lack of it can cause even when it is not an intentional oversight. She explores the facets of upper management within the realm of accountability. When the corporate structure does not recognize its responsibility at that level, according to Paine, the dribble down affect can have severe financial consequences. Paine's use of Sears as an example, of upper management and corporate accountability provides the reader with concrete consequences. For future studies the published works of Paine will be a solid reference with which to guide the next phase (Paine, 1994).
Larry Quinn also published work regarding the executive accountability on a corporate level. Quinn used a dual normative view to detail the basic principles of accountability at the corporate level (Quinn, 1995).
Two normative views are common in the business policy and management literature about what principles ought to guide management decision making. Proponents of the first view hold that, because executive- level managers are agents for shareholders, maximizing the present value of the firm is the appropriate motivating principle for management (Quinn, 1995). Proponents of the second view (e.g., normative stakeholder theory) hold that principled moral reasoning ought to motivate management decisions.
These views were once regarded as antagonistic in that the policies each view recommended to managers frequently diverged: shareholder interest and ethics often led to opposing policies (Quinn, 1995). In the current "ethicized" U.S. consumer market, however, no such policy divergence need occur." Quinn…[continue]
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