Ethical standards in the American Red Cross and Coca-Cola Company

¶ … 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.

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.

Proposed Solution

The Red Cross chapters that are seen in communities all over the country are the backbone of the local presence there. They have to be supported by the community. If they are not supported, the people who really need and deserve help from the Red Cross may not receive it in a timely manner, if at all. Donations are what keeps the Red Cross afloat, but people are reluctant to donate if they do not know who is managing their donated money and for what purpose it will actually be used. The main proposed solution for the Red Cross would be background checks. They are not that costly, and the peace of mind that they give to those who may be thinking about donating should be enough to encourage more donations. In turn, this will make up for the cost of the background checks themselves, because a higher level of donations will cover the checks plus provide even more money with which the organization can work to help others.

As for Coca-Cola, the main proposed solution for them would be a code of conduct that is clearly made available to the public and that is actually put into practice. The company has a great deal of money, but yet it comes across as capitalistic and greedy. While that is understandable to a degree because it is a for-profit company, Coca-Cola must learn to scale back its greed so that it will not continue to drive away consumers who no longer feel as though they can trust the company. Coming up with a code of conduct will be a good first step toward rebuilding trust, but the company must show that it is going to live by the code of conduct and that it will not just create it as a marketing ploy. A valid code of conduct for any company is one that is followed, and that is what Coca-Cola must do if it is to regain the trust of the American public.

Recommendations

The Red Cross appears to be the only large organization that helps disaster victims. While it is a noble cause, recent events where the Red Cross has "dropped the ball" indicate that there may be a need for some government intervention. Is it sensible for Congress to place such a burden on one organization? Is that a good idea for the American people? It would seem not, which would indicate that the creation of at least one (preferably more than one) organization that could take on some of the responsibilities and duties of the Red Cross would be a good idea - and something that should be explored. Because of the work the Red Cross does there are many people who have been helped with serious problems - both natural and man-made. Still, people do miss out, and the tide is turning away from the Red Cross a bit for two reasons: lack of funds in a tight economy and lack of trust in light of the fraud and other concerns that have been seen with the organization.

Where Coca-Cola is concerned the issue has nothing to do with what the company is doing for the community and everything to do with whether its business practices are acceptable. The idea that the company might be racist and discriminatory is not one that makes most people want to buy its products. Additionally, there are other problems with the company when it comes to its competitive practices and how it handles moving into new markets. Activists and others are already working for more legislation of the food and beverage industry, which could get the Coca-Cola Company caught up in other lawsuits and problems. Because this is the case, the best thing for the company to do would be to get ahead of all of that and start doing things ethically all the time, even if being ethical is more expensive. If the company operates smartly but ethically, it will not experience financial problems from doing things the "right" way - and it may even gain more customers.