Analysis of personal organizational ethics and values in for-profit and nonprofit organizations

PERSONAL & ORGANIZATIONAL ETHICS

Personal and Organizational Ethics Values for, for-Profit and Non-Profit Organizations

Ethics is a requirement of the society to both individuals and organizations. Ethics are applied to business and personal behaviors, and are used to determine how companies and individuals abide to policies. To indicate the application of ethical principles in organizations, an analysis is carried out of For-Profit and Non-For-Profit organizations, in this case Bank of America and Boys Club of America. This is by analyzing an ethical dilemma they are experiencing, their approach to the problem, and the legal, political, and social outcomes emerging from this cause of action.

Part One

The Boys Clubs of America is a non-for-profit organization founded in 1860s in Harford, Connecticut Formed with the aim of giving boys who roamed the streets a positive alternative. The club has undergone major changes beginning in 191 when several boys' clubs affiliated to form the federated boys clubs and later the Boys Club of America (BCOA, 2011). It later changed to the Boys and Girls Club of America in 1990 after incorporating girls to fulfill the mission that enables young people, especially those with needs to reach their full potential as caring, responsible, and productive citizens. Currently the club's headquarters are in Atlanta, Georgia, with major branches in Dallas, Chicago, Los Angeles, and New York. The clubs employs 51,000 professionals, 218,000 volunteers, and 26,000 board volunteers (BCOA, 2011). The club focuses in key areas of development like leadership, career and education, character, arts, health, and life skills. They also work with specialized programs like Latino outreach, gang and delinquency prevention, and unity among the youth (BCOA, 2011). The organization is based on a congressional charter with the government under title 36, with part of its funds coming from the government and others from member and corporate donations.

The Boys and Girls Clubs of America have been undergoing ethical issues. The club depends on funding from the government and donations made by individuals and corporations. However, during the current economic downturn, the club has found it difficult to maintain several of its clubs across the nation and retain its employees many of whom were volunteers. This led many of the clubs in desperate need of maintenance, as funds were low from reduced donations, with the recession also increasing the operating costs (Bach, 2010). According to Perry (2010), this situation was compounded by questions of the club's ethics, as they questioned the club's spending. four republican senators, Tom Coburn, John Cornyn, Charles Grassley, and Jon Kyl questioned how the club spent on lobbying, perks, executive compensation, travel, and other items. The senators made an inquiry to chairman of the club over the club's expenses when it was reported a loss of $13 million in 2008 form 990 tax return (Perry, 2010). They argued that executives were receiving heavy compensations, like the president's $900,000 compensation in 2008 when many of the clubs were closing down due to budget shortfalls.

The club responded to these issues and challenges with a statement made through a letter by the Chairman. This stated that these problems were not the doing of the club but the effects of the economy. The club identifies the tough economic times make it very difficult for management to remain within budget and maintain the clubs across America. One of the solutions identified for solving this problem is the use of many volunteers, who are approximately 218,000 across all clubs in the U.S., while maintaining a lean staff (Bach, 2010). The organization claims that the economic downturn led to budget cuts across all organization contributing to a reduction in revenue for the club that depends on members and corporations to contributions. Another approach to this problem involves eliciting funds and donations in form of a grant from Lowe's Charitable and Educational Foundation amounting to $1 million to maintain clubs. The funds the club gets from various donors and contributors are meant to assist in completing pending projects in 2011 and use of Lowe's employees as volunteers to cut back on costs (Anonymous, 2009). The grant also aims at preventing the club from closing down some of its clubs and maintains those that need repair.

To solve these problems Boys and Girls Clubs of America's management need to create a responsibility image to dispel the perception that the executive is using a large part of donations and overlooking the club's goals and needs. According to Bouckaert (1998), a non-for-profit organization has a responsibility to the society and must create a positive social perspective through the implementation of policies and decisions. This will also promote the organization as one that assists youth, prevents juvenile deliquence. Therefore, has a social value and requires the assistance of the community to generate funds that will support projects, maintains staff and prevent closures. The club can advertise several of its successful programs with the youth to gain more public attention. The club should sell itself more than solving youth problems but a club that creates employment, offers social prestige and progress to the youth, is an income generation proec for the youth and a rehabilitation and counseling center for the youth using metorship programs. To solve the question of accountability possed to the club the senators, the club should make reports of past donations and spendings to show that it is a ccountable. This also increases its credibility as the reports justify its actions and spending.

Part 2

Bank of America began as Bank of Massachusetts in 1784, and became the third commerical bank after John Hancock signed its charter. In the 1900s, North Carolina National Bank acquired several small banks and formed the Bank of America (Bank of America, 2013). In 2006, Bank of America purchased MBNA, making the bank the largest credit card issuer in the U.S. another major acquisition was in 2009, when it acquired Merrill Lynch investment bank, making the BoA the largest wealth management corporation in the U.S. In 2008, when the housing market crashed, BoA bought Countrywide Mortgage Company, and introduced new home lending to make it affordable (Bank of America, 2013). These ventures have made the bank currently one of the top five banks in the U.S., with major interests in small business loans, home loan lending, and investment banking. This also places it in a position to become a leading global financial adviser, market and economic adviser and have global operaitons and technologies. The bank is succeeding financially for by 2012, its revenues were $115,04 million, with $1,446 million in profit by the second quarter of 2012 (Fortune, 2012). The company is able to experience growth in terms of profits and revenues despite losses in some years. Its ability to succeed despite a failure is seen in its recovery from the $22 million losses after purchasing countrywide financial corporation (Fortune, 2012). To reover from this, it dropped this name and adopted Bank of America Home Loans.

One major problem and an unethical behavior of the Bank of America are the numerous wrongful foreclosures on house owners whose mortages were owned by leanding companies BoA had purchased. Bank of America has been identified as one of the banks that has abused foreclosures. According to Douglas (2013), Bank of America had acquired numerous libailities from housing crisis arising from troubled home loans. These unethical business practices have driven the bank to be sued for wrongful foreclosures. This is associated with the $40 billion mortgages the bank acquired after the purchase of Countrywide (Douglas, 2013). In response to these problems, Bank of American resulted to settlements that amount to $10.3 billions. Secondly, the bank has opted to withdraw from the mortage market, leaving it to fewer players.

The effects of Bank of America's ethical decisions led to more financial institutions willing to settle litigation of biased foreclosures. These financial institutions unethically sought quick loans and mortgages from consumers who could not afford to buy a home. In effect, these consumers defaulted and the institutions quickly forelcosed property. As a result ltitigation actions were taken against ten other financial institutions following the biased foreclosures. Affected institutions in the legal process are like JP Morgan Chase and Wells Fargo which paid $8.5 billion to also settle allegatons of biased or abuse in foreclosures (Douglas, 2013). In the process, Bank of America also decided to use legal actions to prevent further lawsuits occuring over mortage securities and residential foreclosures. The bank has changed its business model and sold out part of mortgage business and is left operating the home loans sector.

The unethical foreclosures and mortgages in the industry also led to changes in the social behavior of Americans. These events have made the market weary of lending institutions, creating an uncertaininty in the martgage and home lending industry. Consequently, lending for home ownership has become unattractive among consumers. With the depature of lending institutions like Bank of America from the home ownership and mortgage industry, the mortgage rates are high due to less competition. These high mortgage rates imply that fewer consumers will be borrowing tobuy a home.

The actions have also led to changes in the way policy makers define and describe the parameters of the mortgage market. Politicians after the fall of the housing market and the legal battles that ensued from wrongful foreclosures resulted to setting up laws for the market and reforming entities like Freddie Mac and Fannie Mae. The reaction of the society, legal, and political facets to the unethical practices by Bank of America and other lending institutions indicate several aspects of business ethics.

This case supports a principle of business ethics that people are only willing to deal with a business with clear ethical values and who acts honestly even when contrarly to the market practices. A business's ethical values will create trust with clients and will create a positive image to its society (Fieser & Moseley, 2012). Moreover, it increases the competitive advantage of the busienss as it developes culture and values that reflect its reputation and working principles (Holme, 2008). The social outcomes to the unethical foreclosures by Bank of American indicate that business ethics are tied to social responsibility.

Part 3:

Boys & Girls Clubs of America

The press statement made by Mr. Bach the Chairman of the boys clubs of America is not adequate to dispel the problems surrounding the ethical usage of club funds. The statement is a good principle of social responsibility for the Club responded to the fears of the public that funded the club. However, by indicating that the financial woes were not the fault of the club and placing the blame on the economic downturn further creates an ethical dilemma.

I believe in situations that an organization faces involving accusations of misappropriation of funds or company resources; the organization is bound to do much more to dispel fears in their stakeholders. I believe it is the duty of the chairman and the president of the club to investigate allegations made by the senators. This also requires a review of the organization policies and the use and distribution of financial resources. The goal is to identify loopholes that may present opportunities for greedy executives to take advantage. According to Verschoor (2007) the Clubs need compliance standards that meet its needs, high level personnel to implement the compliance, avoid discretionary authority, educate employees on standards, auditing and monitoring procedures, and reporting systems for violations. This implies that the Boys & Girls' Clubs of America are ethically bound to review their policies on salaries award, compensation, and lobbying activities. Moreover, there is a need to align these policies with the goals and objectives of the organization. The club's actions are socially not ethical since the society expects less executive and public extravagance and high executive privileges for a non-for-profit organization. Therefore, the club has a fiduciary responsibility to the society, which it will meet with policies.

Bank of America

The BoA faced litigation problems involving biased foreclosures from bad mortgage practices inherited from Countrywide Financials. I believe the settlement action taken by the bank was ethical given that it was responding to consumer and stakeholders' needs. given the financial crisis that roomed at the time, BoA's response to lawsuits was ethical. In addition, given the complexity and losses of the mortgage industry at the time, BoA was morally right in withdrawing from the market after compensating consumers of Countrywide. However, in my opinion, BoA could also have remained in the mortgage sector but applied different managerial and corporate responsibilities. This means that BoA builds new core business ethics for its mortgage business defined by managerial and corporate fiduciary responsibility to stakeholders (Bouckaert, 1998). This is because BoA ventured into a market that had set of bad practices determined by a few mortgage companies like Countrywide. This calls for setting down of better mortgage lending practices even though they contradict traditional mortgage practices in America. BoA in doing this introduces competition in the market and drives other companies to embrace their social responsibility and carry out ethical trading practices.