Ethical Issues for Business Organizations in the Essay

Excerpt from Essay :

ethical issues for business organizations in the twenty-first century. The forces of globalization have increased the degree to which diverse groups in society have grown dependent on one another. Hence, their expectations influence the freedoms and responsibilities of other groups. The expectations of various stakeholders have placed greater responsibilities on business organizations to be ethical in their communication with their stakeholders. Business organizations are under growing pressure to be ethical in their employment practices and in the sourcing of raw materials and labour for their operations. In addition, they are expected to recognize their responsibility towards the economic and social development of the communities where they operate and those that they influence through their operations. Hence, business organizations are also responsible to act ethically in relation to their use of the resources of the environment and to the extent that they influence it in adverse ways, such as by polluting it.


1.0 Introduction

Business organizations of the twenty-first century have to survive in the most challenging times in history. In addition to the onslaught of competition as a result of globalization, the forces of democracy have made business organizations accountable to many more stakeholders than the organizations a few decades ago who were primarily responsible to their owners and to the law. In recent years, the social changes including globalization have made various social groups interdependent on one another with regard to their interests. Hence, business organizations find themselves facing responsibility towards various stakeholders including the government, owners, employees, environmental groups, the media and the general public. These groups have acquired the power to promote or curb the growth of the business organizations and have also developed expectations and standards of behavior for business organizations. The recognition of these changes has raised a number of ethical issued for business organizations in the twenty-first century. The following paper discusses some of the most significant ethical issues faced by these organizations.

The issues discussed in the following sections relate to the ethical responsibility of business organizations to be fair and honest when providing information to the public; to be honest and ethical in the treatment of its employees; to act ethically as opposed to being blindly motivated by economic gain in the sourcing of factors of production and raw materials; to recognize its their responsibility towards a broader set of stakeholders; and to make ethical use of the environmental resources. This paper discusses these issues and highlights the changes that have brought about these changes. The findings illustrate that the ethical environment for business organizations will continue to be shaped by the growing interdependence of the various stakeholders and by the spread of globalization and democratic attitudes in society.

2.0 Ethical Communication and Reporting

The ethical reporting of information emerged as the most pressing challenge for business organizations at the start of the twenty-first century. The Enron and Arthur Anderson scandal that broke out in the beginning of the twenty-first century served to highlight the significance of ethical communication and reporting by business organizations. The Enron company had underrepresented its losses to its shareholders and the auditing firm Arthur Anderson had also helped the company in its efforts. The issue served to sensitize people about the importance of ethical communication in business as in other spheres of life. The perpetrators of the fraud clearly did not suffer from any lack of wealth, material comfort or status. What caused them to commit fraud on such a massive scale clearly relates to their moral values and sense of ethics. Therefore, it is important to incorporate ethics training, particularly in the reporting of information that influences decision making by the stakeholders. This incident has helped to bring ethical communication to the forefront of business management and leadership by illustrating the extreme implications and costs of unethical communication in business

Dresp-Langley (2008) illustrates using a case study how the communication contract for business organizations is being reshaped to incorporate the need for ethical communication. Ethical communication relates to the accuracy and appropriateness of the message. Ethical communication in business requires business managers and leaders to communicate information honestly and accurately to the best of their knowledge. Business stakeholders are becoming more and more interdependent. As a result, they depend on the information provided by other stakeholders to make their business decisions. It is therefore important for the information to be accurate and complete so that a distorted picture of the situation is not provided. Being ethical in communication also requires the communicator to anticipate the needs and interests of the other stakeholders and to provide them the information they need, even if they have not requested it or are aware of its importance.

Ethical communication is also an integral part of leadership within an organization. It is the responsibility of the leadership of the organization to develop such a workforce. When leaders communicate information openly and honestly, they inspire the trust and confidence of the workforce, which motivates them to put in high levels of productivity and effort. During the recent economic recession when thousands of people around the world lost their jobs, organizations faced a serious ethical challenge in making the downsizing decisions. Organizations that were able to convey the information in a trusting and confidential way were likely to experience greater cooperation and understanding from their employees. It also helped to prevent any serious decline of morale among the employees who were able to retain their jobs. These two significant events in recent business history illustrate the growing importance of ethical communication in business.

3.0 Ethical Employment

Due to developments in communication and transportation over the past few decades, the frequency and magnitude of migrations across the world has increased. As a result, societies have become less homogeneous than they used to be. This is truer for modern capitalist democracies where the social freedoms have attracted a large number of migrants from developing countries. These changes have resulted in a highly diverse workforce compared to the workforce two or three decades ago. It is therefore, necessary for managers and leaders of organizations to appear non-discriminatory in their employment practices. Any discrimination related to employment is likely to create resentment among the groups being discriminated against and result in friction between the various ethnic and minority groups existing in society. Ethical employment practices require business organizations to actively seek candidates from diverse communities and social groups and create an environment where they can grow personally as well as professionally. Organizations that do not do so and are perceived as such by the community tend to lose social capital and face growing criticism.

The growing sensitivity towards ethical employment practices is reflected in the equal employment opportunities act in the United States, which requires business organizations to actively seek candidates from diverse communities. However, Alder & Gilbert (2006) argue that organizations need to go beyond the law to pursue ethical hiring practices. Gender diversity has also been recognized as an area worthy of attention. A number of researches into gender diversity in business organizations have shown that while organizations may hire increasing numbers of women into the workforce, their numbers in the management positions remain discouraging. Reference has traditionally been made to the invisible glass ceiling that prevents women from climbing up the corporate ladder into strategic positions.

In addition to gender and ethnic diversity, ethical employment practices also involve fair treatment to all employees and job candidates unless the behavior relates to their ability to perform their job responsibilities and functions. Therefore, business organizations need to review their employment practices so that they do not discriminate among employees and job candidates on the basis of colour, ethnicity, religion, nationality, marital status, gender, or sexual orientation. Discrimination on these grounds can have more serious implications for business organizations than they could face in the past. As society becomes increasingly diverse and democratized, many minority groups have become organized and have gained considerable political power. Associations to protect the rights of ethnic minorities and people with diverse sexual orientations have emerged. Therefore, organizations may find themselves involved in a legal suit or face negative publicity and consequent damage to their reputation if they are found to be discriminatory in their employment practices.

4.0 Ethical Sourcing

Globalization has led to the emergence of a single global economy where businesses find it convenient to access labor, finances, capital, raw material and markets anywhere in the world. While this means that organizations are free to access raw materials and labour from any place where they are available at the cheapest rates, business organizations have recently started to come under increasing pressure to balance these economic interests with ethical sourcing practices. Under such practices, business organizations have to be responsible for the moral aspects of their decisions which may be minutely scrutinized by several social groups. Hence, under ethical sourcing, business organizations may not be able to obtain cheap raw materials if they do not do so through ethical means. The case is extremely…

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