Personal and Organizational Ethics and Values Between

¶ … Personal and Organizational Ethics and Values between for-Profit and Not-For-Profit Organizations

For-profit and not-for-profit companies often operate very differently from one another. Here this will be shown with a comparison between the American Red Cross (a not-for-profit company) and the Coca-Cola Company (a for-profit company). The background of each one of them will be addressed, and they proposed solutions and recommendations will be discussed. Each company has its problems, whether it is for-profit or not, but there are unique problems faced by each kind of company. The differences in whether they are for-profit or not-for-profit can have a significant effect on the companies themselves and whether they are able to continue being successful or whether they must make changes in order to see growth and development in the future.

Case Study Analysis of Personal and Organizational Ethics and Values between For-Profit and Not-for-Profit Organizations:

The Red Cross and Coca-Cola

Introduction

Understanding the differences between for-profit companies and not-for-profit companies is important. One area in which they differ is ethics. It would seem logical that all companies would have high ethical standards, but that is not always the case. Even the "best" companies can sometimes suffer ethical failures or have other issues related to the way they treat customers and employees. Sometimes these are deliberate, but they are often just a product of carelessness, misunderstandings, or a company that simply grew too big too quickly to be able to address all of its issues. Discussed here will be the American Red Cross (a not-for-profit company) and the Coca-Cola Company (a for-profit company). The goal is to examine the background of both of these companies in an effort to discover where ethical dilemmas lie and how they could be corrected. Both companies are obviously successful, but at what price? Are they both operating ethically?

That is a question that needs to be answered. At the same time, there is another concern: how do these companies define ethics and are those definitions in line with the way in which other companies and individuals define ethics? If they are in line with other ethical ideals that would seem like a good thing - provided the ethical code was actually being followed. However, some companies may have ethical codes that are not considered to be "standard" or that they word in ways that may not be acceptable to other companies or individuals. Discovering these companies and these problems is very beneficial to society, because that allows a decision to be made as to whether these companies should continue to be given business. It also helps others decide if they want to work with them, donate to them, or otherwise have interaction with them. While some people will not care either way, many people are affected by (and concerned with) the ethics of the companies with which they do business.

Background

The American Red Cross

The American Red Cross is a not-for-profit company. It was first established in Washington, D.C. In May of 1881 (Bennett, 2005). Clara Barton was the founder and she was the first person to be president of the organization. In 1905, the Red Cross came under congressional charter so that it could provide services to the U.S. when needed (Hutchinson, 1997). That made it truly a humanitarian organization, and the only one that was viewed as a company which would help the United States when problems with its citizenry occurred. Before the Red Cross was founded, Clara Barton worked as a federal bureaucrat and also as a teacher. She went to France on vacation, but while she was there she started working with the International Red Cross (Boissier, 1985). This happened during the Franco-Prussian war.

Because of the work she did in France, she decided that she would bring the mission of the Red Cross to the U.S., where it could help even more people. There are now more than 1000 Red Cross chapters in the United States, operated by a board of directors made up completely of volunteers. They oversee all of the activities of the Red Cross and enforce the ethical standards held by the organization. Those standards are to be kept in line with the norms in the community in which the Red Cross is operating, and also to be kept in line with the code of ethics the Red Cross has created for itself. There have been obstacles in the past for the Red Cross, however, that have left some people in the United States untrusting of the organization and its true commitment to others.

One such past event was the terrorist attacks on September 11, 2001. The Red Cross immediately began urging people to give blood and to give money. Many people did, but none of it was actually needed (Forsythe, 2005). When that came to light, some people felt as though they had been betrayed and that they had donated their time and money for something completely unnecessary. It was a frustrating time for many Americans in the wake of such a tragic disaster. They did not need or want to feel as though an organization that was supposed to be helping people may have been asking for more than its fair share. Unfortunately, that was not the only concern for the organization, and not the only past reason why people in the United States have started to become mistrustful of it.

Another problem for the Red Cross was the finding that the organization did not perform background checks of any kind on its volunteers or its employees (Boissier, 1985; Willemin & Heacock, 1984). That was a big concern, because there have been fraud problems in the past. Many resources have been wasted because of dishonest people in the Red Cross, and that makes people who really do want to help others reluctant to provide any donations to the organization. The fear that the donations (especially monetary donations) will be mishandled is a strong one, and that can keep people away even when they would like to help others in their community or elsewhere. There is only a minimum check performed on those who want to work with the organization, and that includes a social security number verification and a National Criminal File search going back seven years. Anything else a person has done will not be located, and that makes for inconsistencies for a number of Red Cross workers. Between that and the very slow response times that have been seen with disasters like Katrina, it can be hard to see the Red Cross as being a highly ethical organization. During Katrina, there were many people who said the Red Cross responded very slowly, did not seem organized, and avoided helping many of the communities along the Gulf Coast.

Discrimination has also been something the Red Cross has been accused of, primarily because of its blood donation policies that do not allow homosexual men to participate in giving blood (Bennett, 2005). However, the issue of blood safety is not one that can be based on the social policies of an organization. It is based on public health, and guidelines from the FDA that clearly state men who have had sexual relations with other men cannot give blood. This has nothing to do with the Red Cross specifically and everything to do with the FDA wanting to reduce the risk of infections such as HIV being passed through blood transfusions. There are many other criteria that also exclude people from giving blood, so there is no direct evidence that the Red Cross has a discrimination policy against homosexuals or anyone else, including African-Americans and other minority groups.

Further discrimination talk regarding the Red Cross came about because of the story of Charles Drew, an African-American man who allegedly bled to death when a hospital denied him a blood transfusion based on his race (Willemin & Heacock, 1984). The story has been around for over fifty years even though it has been refuted by many people including the Drew family. The American Red Cross sees providing a safe blood supply for all patients who need it as the top priority of the organization, no matter the characteristics of that patient. There are many layers of safety one has to work through, and it would be very difficult to get through those layers and still deny giving someone blood based on their race or any other characteristic. Careful records are kept by hospitals and by the Red Cross. While it is not impossible that discrimination does occur in some ways inside the Red Cross or any organization, these examples show that there is no obvious, outward discrimination based on characteristics for which an organization in the United States is not allowed to discriminate.

It has also been stated that the Red Cross sold coffee and donuts during WWII instead of giving them away (Forsythe, 2005). That is true, but with a serious caveat that most people fail to realize. The service agencies throughout Britain during that time were helping British military personnel. However, they were not as well-financed as the Red Cross. Because of that, the British agencies needed to charge their military members for the same things U.S. military members were getting for free from the Red Cross. Since the British were hosting thousands of American troops and they might be embarrassed by the differences in their funding statuses, The Secretary of War at that time requested that the Red Cross start charging service members for things like donuts and coffee (Bennett, 2005). The organization complied because it believed the request was a wartime demand. The items were sold at cost or below it, and no profit was actually made by the organization based on those sales. That was also the last time any military personnel were charged for these kinds of items by the Red Cross.

The American Red Cross is the only organization that has dedicated itself to helping the people of the United States when crises occur. There are more than one million current Red Cross volunteers and approximately 30,000 employees who provide relief to more than 67,000 disasters each year. It could be something affecting only a few people, such as a house or apartment fire, or it could be a major disaster such as 9/11 or Katrina. The Red Cross is also the largest blood supplier for hospitals throughout the United States. In short, the Red Cross in this country is doing a job that others do not seem to want, as no other agencies have stepped up and started to perform the same kinds of duties as those of the Red Cross - and there has been plenty of opportunity to do so.

Coca-Cola

Coca-Cola came about in 1886. It was created by a man named John Pemberton, who was a pharmacist in Atlanta (Giebelhaus, 2008). He liked to find new cures for things like headaches, and the cure worked so well for the Civil War veteran that he started marketing it to others. As it became popular it was bought by another man, Asa Candler, who made it successful (Sellers & Woods, 1997; Young, 1996). Now, Coca-Cola is wildly popular. It is the largest marketer, manufacturer, and distributor of beverages and syrups (non-alcoholic) in the world. The company is based out of Atlanta, Georgia and more than 30,000 people all over the world work for Coca-Cola. It makes syrups, beverage bases, and concentrates for the Coca-Cola brand, but it also produces soft drinks under other brand names that are sold be subsidiaries. There are more than 230 of these sold in 200 countries (Murden, 2005). One of the main strategies for Coca-Cola in the U.S. is to do enough marketing so that it dominates sales of fountain drinks in places like fast food restaurants, pizza places, and similar eating establishments.

There is a recession taking place in the U.S. today, and that is providing some problems for companies like Coca-Cola. The negative growth of the economy is allowing for inflation and higher employment, along with a raised and less comfortable cost of living. Consumers do not have the purchasing power or disposable income they once did, and that means the potential for a negative impact on the bottling industry. Coca-Cola works with many different bottling companies throughout the world in order to make sure its beverages get created and distributed properly (Nirmala, 2003). A serious problem for any one of those bottling companies could mean issues for Coca-Cola that could cost it financially. These kinds of issues could also harm the reputation of the company if it is not able to provide its customers with what they need and want in their beverage choices.

In order to sustain the investments they have made in the world, in various communities and countries, the Coca-Cola Company has to stay profitable. Small communities also depend on larger companies to strength the economy and help them environmentally and socially. Other nations have grown and developed quite well because of what the Coca-Cola Company has done for them. Millions of dollars get invested back into those countries from the company, and that helps build good relationships that allow Coca-Cola to market to an even greater number of people around the world (Giebelhaus, 2008; Nirmala, 2003). However, all the good Coca-Cola has done for other countries and for the United States often gets overshadowed when the company is accused of doing something inappropriate or unacceptable, especially if any of that involves unethical strategies for competition with other companies.

In 1999, for example, Coca-Cola was accused of unethical strategies for competition in the European Market (Giebelhaus, 2008). Allegedly, the company was using discounts and rebates so that the shelf life of the product could be decreased. In that same year the company got into trouble again when African-American employees brought a discrimination suit against the company (Giebelhaus, 2008). That was a serious allegation. They not also said that the company was discriminatory, but that when these practices were pointed out and brought to the management, absolutely nothing was done about it. The criticism of the Coca-Cola Company continued based on poor dealing with a trade union in Columbia. Four of the workers died, forty-eight decided to go into hiding, and another sixty-five were the recipients of death threats. The union stated that it was the Coca-Cola Company itself that was behind the threats and the rest of the activities that took place in Columbia during that period of time (Murden, 2005).

In 2002, Coca-Cola was charged with fraud in its market testing and ended up paying $21 million to Burger King (Murden, 2005). Not only did it have to pay a sizeable chunk of money, but it lost a major customer when it lost the Burger King Corporation. It also lost the trust of many of its stakeholders, which may have been even more significant. The trend continued as three Coca-Cola employees were charged in 2006 with trying to sell confidential information and trade secrets to PepsiCo - Coca-Cola's largest competitor. PepsiCo clearly made the right ethical decision when it told the Coca-Cola company about the offer instead of simply taking or refusing it. Many of the employees of Coca-Cola lost confidence in the company, as did consumers and stakeholders. In 2007, the company introduced an ethics and compliance program that is part of their code of conduct. Honesty and integrity were required by the code in all matters dealing with the company.

A public interest group is also suing Coca-Cola for its vitamin water products, saying that the company has made health claims that are unwarranted. The company has argued that no one could be mislead into thinking any of their beverages were healthy. Billions of dollars have been put into the vitamin water line, and the commercials clearly state that the products are healthy ways for consumers to get hydration. Most of the commercials feature professional athletes drinking the beverage. The deceptive advertising lawsuit that was brought against the company led to a 55-page ruling by a federal judge. That ruling stated that the Coca-Cola Company had stated that consumers could not be misled into thinking vitamin water was healthy, but that the company was not saying the facts of the lawsuit were wrong. The factual allegations in the complaint were then accepted as being true. Whether Coca-Cola was being deliberately misleading or whether it was just poor advertising is a decision that is generally left to the minds of the public.

Alternatives

Both the American Red Cross and the Coca-Cola Company have serious changes that need to be made and that they can make (and must make) if they are going to continue to be successful. From the background information it appears that both organizations have had problems, but it also appears that Coca-Cola has faced more lawsuits and direct action taken against it than the Red Cross has. This is not entirely surprising when it is clear that a company is in the market for a profit. Many companies that are trying to make money will skirt the ethical guidelines or deliberately misinterpret them in order to be able to try to get away with something that will make the company a great deal more money. Whether this was what these organizations have done is debatable in some cases, but it is clear that changes are needed in order to see more ethical behaviors in the future.

For the Red Cross, some alternatives include:

Require background checks that are more intense and that cover a broader scope of past issues for a longer period of time.

Acquire and train other organizations that can help with rescue and disaster efforts, so the organization does not have to do it all.

Work to better assess where and when help is needed, so that there are fewer delays and a proper distribution of resources.

Consider paying a board of directors instead of using all volunteers, as volunteer workers can be busy with other things and not always have the time and incentive to address all the issues and make the best decisions.

For Coca-Cola, different kinds of problems are present. That company should look at some of the following alternatives:

Work to create, solidify, and establish a proper code of conduct that correctly deals with ethical concerns.

Admit that errors have been made in the past and discuss why they were made so that solutions can be found.

Consider the value of social responsibility and move toward a business model that provides for that social responsibility not just in the United States but in all countries where the company operates.

Ensure that racial and discriminatory practices are abolished, along with competitive strategies that are unethical in any way.

As can be seen, there are various alternatives that can be addressed for both companies. They are both very slow to react to the issues they face within their organizations, and they both have an image that has been tarnished by the mistakes they have made. That has resulted in a loss of faith from their supporters and stakeholders. Not-for-profit companies seem to have the same kinds of issues and problems that are faced by for-profit companies, even though one would somehow expect them to be different. The one main difference is the unpaid board of directors and other volunteers in the Red Cross. It can be hard to do as much as possible when there is no pay, especially in lean economic times. That can cause the organization to suffer. With Coca-Cola, the problem is capitalistic greed, not communal nature issues like the Red Cross. Coca-Cola wants to make as much money as it possibly can, and in light of that all of the other issues appear trivial.