Addressing unethical practices through improved departmental communication and controls

Unethical Behavior Memo

Attention: Management

This memorandum is in response to recent inquires made concerning the suspected continuance of unethical practices within the company. As you are undoubtedly aware, unethical behavior can be extremely detrimental to a company's future. It makes performance exceedingly difficult to measure, and it can cause various crucial entities within a company to malfunction, thus effectively crippling the firm's ability to operate and meet the needs of clients (Rosanas & Velilla, 2005). Knowing this, such disreputable activity can be particularly challenging to remedy, especially when trying to simultaneously run a profitable company. Fortunately, through my research and internal examination I have pinpointed certain areas that need immediate attention. These departments include: accounts receivable, accounts payable and sales. My conversations with the principals of the aforementioned areas have revealed that the underlying problems in these sectors are cause for intense scrutinization. Restructuring and ulterior management techniques should certainly be considered. Additionally, I will recommend several corrective controls that will limit the likelihood of future unethical recurrences. I will give my unique and customized recommendations on a department-by-department basis.

Accounts Receivable Department

After speaking with the Accounts Receivable Supervisor, the lack of executive communication with this department became increasingly apparent. The administrator of this department claims that direct interaction between upper and middle management is extremely rare. In fact, he stated that he and his constituents only receive feedback from company leadership "once a year at our annual review." As communication is critical to the maintenance of any type of successful business relationship, it is equally vital within one's own company (Brockmann & Rook, 1989). The failure to sustain open lines of communication creates an environment in which unethical behavior is much more likely to occur (Brockmann & Rook, 1989). This is mainly because when there is little interaction with management, employees do not fear reprimanding resultant from the engagement in unethical exploits. Furthermore, not only do communicational failures breed an attractive environment for unethical behavior, such systematic shortcomings also dissuade employees from reporting unethical activity when they witness its presence in the workplace. According to The National Business Ethics Survey conducted by The National Ethics Resource Center, "More than half (54%) of employees who witnessed but did not report unethical misconduct believed that reporting would not lead to corrective action" (Hyatt, 2007). This fact is most often attributable to the absence of reliable and direct lines of communication with the individuals (i.e. upper management) that have the power to instill curative measures (Hyatt, 2007). Therefore, I would certainly recommend the immediate instillation of an effective communicational apparatus. Perhaps the executive body could create a discrete arena in which employees can voice their concerns directly to management. Monthly meetings between upper and middle management teams would also be effective in making leadership aware of the current needs and apprehensions of their workforce (Gehrke, 2011). Also, the offering of financial incentives to those who truthfully report unethical activities is yet another extremely effective means of limiting this type of activity and encouraging employees to speak up when they witness it (Gehrke, 2011).

In keeping within the financial realm, the supervisor of the Accounts Receivable department also complained to me of his inability to motivate his employees. This seems to be a result of the arbitrary tactics utilized by upper management in the giving of raises. In fact he precisely stated, "We all receive the same raise, even in a booming year when sales are high." The lack of performance-based financial incentives once again creates an attractive environment of immorality (Bellizzi & Hite, 1989). When workers know that no matter how well they perform, they will be given the same pay increase at the end of the year; they are more inclined to use their time on the clock unproductively. This situation tends to lead to the use of company resources for personal reasons (i.e. using a company phone to make a long-distance personal call) or falsification for personal gains (Bellizzi & Hite, 1989). As this company has indeed experienced some of these problems, it would be my recommendation that a new performance-based raise system be initialized. By fiscally encouraging employees to increase their job-based performance, these individuals will likely spend more of their time working to achieve corporate objectives and less time engaging in personal activity on the company's dime.

Sales Department

After engaging in a prolonged discourse with the manager of the sales team, I have concluded that problems within this department once again arise from an archaic performance pay system. Despite the sustained profitability of this company, he claims that, "Each salesperson continues to receive only 1% commission on the sales in his or her territory." And as a result, he believes that employees are exerting only minimal efforts to recruit new customers. While sales from existent customers have remained stable, this system certainly needs to change if this company ever plans to expand in the future. I would not hesitate to recommend a similar advancement or "futurization" of the current scheme. Once again, financial incentives are an excellent and historically proven way to increase an employee's effort level and morale (Bellizzi & Hite, 1989).

Ultimately, the ethical problems facing this company are unquestionably substantial. I must strongly suggest that immediate corrective action be taken. I believe that my investigations have uncovered a predicament that could potentially lead to the downfall of this organization. However, I also believe that you have made this inquiry early enough that the crisis can still be managed. It will take significant amounts of due diligence and systematic restructuring in order to build a prosperous firm that is ready to take on the future with a reliable body of labor. The origins and corrective actions I have outlined above should be used as a framework for remedying present quandaries. Also, these recommendations should be continuously regarded and reevaluated in order to ensure that this company does not lose track of its workforce's activity again in the future. While running a lucrative company is certainly a full-time job, one must never forget that it is a company's employees that comprise the engine that drives the corporate car down the road to profitability.