Corporations to Be Ethical and Responsible Over

¶ … Corporations to be Ethical and Responsible

Over the last several years, the issue of corporate ethics has been increasingly brought to the forefront. This is because there has been a transformation in how firms are interacting with various stakeholders. In most cases, there has been a shift in which parties will receive the greatest benefits from particular activities (i.e. The shareholders, board of directors, managers and analysts). This has increased the underlying amounts of mistrust that the public will have in the actions of firms.

To address these challenges, the majority of organizations have been adopting a code of ethics. This is a part of larger effort, to create a series of guidelines that will help everyone to determine the best course of action in a variety of situations. The results are that most people believe this has helped to create a standard which is transforming the work environment. Evidence of this can be seen with observations from Ferrell (2012). He determined that this has allowed firms to change perceptions and the way employees are interacting with customers. Over the course of time, this improves the ability of corporations to address the needs of various stakeholders. (Ferrell 2012, pp. 240 -- 245)

However, the problem is that most firms do not create a true ethics policy. Instead, they establish rules that are based upon the values of managers. This is problematic, as many employees will see this as an attempt to influence their behavior using new control procedures. When this approach is utilized, these rules are rarely effective at transforming the atmosphere of the company.

A good example of this can be seen with observations from Swartz (2000) with him saying, "Professionals are in a different situation to that of employees. Ethical codes are used by management to ensure compliance and are devoid of ethical content. It is argued that this is part of management's control system in a time of flatter organizational structures with a far wider span of control. The ambitions of some are to utilize ethical codes (so that the business organization is able to engender societal change is dangerous). And likely if successful, this will return us to an age in which we will see increasing amounts of regulation and little to no individual creativity." (Schwartz 2000, pg. 173) These elements are showing how there are conflicts inside an organization with the implementation of ethical standards. To determine if this kind of approach can be successful requires looking at how these policies will impact employees. Once this takes place, is when we can provide specific insights that will allow us to determine if this kind of strategy will help corporations to act in an ethical and responsible manner.

The Views on Ethical Policies from Management's Point-of-View

There are different points-of-views about implementing a code of ethics. This is because some firms believe that this is a way of solving all of their problems and addressing the needs of everyone. Evidence of this can be seen by looking at insights from Garber (2008). He found that ethical policies will have a positive impact on society, firms and investors (which are going beyond existing regulations). When they are consistently enforced, this will create expectations as to how employees are supposed to be dealing with the customers on a regular basis. Once this occurs, is the point that everyone will have positive attitudes about working with customers and other colleagues / employees. The combination of these factors is showing how this helps to transform the operating environment of the firm. This is when companies are able to address the needs of various stakeholders by holding everyone accountable to a higher standard. (Garber 2008, pg. 16)

Moreover, Schemehorn (2011) found that a code of ethics inside a corporation will create a new standard for all staff members and executives. This is because the policy and actions that are taken by managers will be seen as a way of establishing what is expected. As employees, will use this to determine what specific behaviors they should be engaged in. When they see managers following these guidelines, this is creating role models for them to look up to. Over the course of time, this consistency will help to transform the operating environment and how the firm is interacting with different stakeholders. (Schemehorn 2011, pp. 67 -- 86)

A good example of this can be seen with a study that was conducted by Fernando (2008). He found that there are series of ideas that will have an impact on employee behavior to include: religion, corporate values, gender and age. Any kind of ethics policy will be able to take these ideas and implement them together. This is the point that managers will have a positive influence on the organization (as they can instill these ideas upon employees). The below diagram is depicting how these ideas will impact the actions of staff members and executives inside an organization. (Fernando 2008, pp. 145 -- 155)

Factors Impacting Executive and Employee Behavior

Religion Corporate Values Gender Age

Beliefs Actions

These figures are showing how the actions of employees and managers will be effected by all of these factors combined. This will have an impact on everyone's beliefs and the kind of actions that they are taking to deal with specific issues. Therefore, this is confirming how a code of ethics is effective in changing the behavior inside an organization. (Fernando 2008, pp. 145 -- 155)

The information from these sources is demonstrating how ethical polices can have a positive impact on employees and managers. As a result, both are illustrating how this can transform the way everyone is interacting with each other and customers. In the future, this makes the firm more prepared for dealing with a host of challenges. This is the point that these policies will create standards that are going above and beyond existing regulations. When this happens, the company is able to avoid issues that will hurt their reputation such as: law suits, discrimination / sexual harassment claims and customer quality. Once this takes place, is when an employer can improve their image among employees (which helps them to be seen as an organization that treats everyone fairly).

The Impact of Ethical Policies from the Employees Perspectives

When an ethics policy is first implemented, there must be consistent approach on enforcing the standards equally between managers and employees. Like what was stated previously, this is one of the key tools that all staff members will use in determining what kind of actions should be taken. Those organizations that have executives following the same kind of policies and behavior will create a positive change in employee perceptions. This is because they see these transformations as an honest attempt to deal with the challenges impacting the firm. Once this takes place, is the point that everyone will continually use the code as a guideline in determining how they should be reacting to a wide variety of situations. (Lentz 2010, pp. 66 -- 78)

A good example of this can be seen with information that was collected from Lentz (2010). She found that a code of ethics is an effective tool for changing employee perceptions in the workplace. This is because the actions that are taken by managers will show everyone what is expected of them. Once the staff members, see executives following these policies is when they will engage in similar activities. Over the course of time, this will change how everyone is interacting with each other and different stakeholders. This is important, in demonstrating how the actions of managers in relation to the code of ethics will affect employee perceptions. This is when they will see this as a legitimate change inside the organization or a move that is designed to control them. (Lentz 2010, pp. 66 -- 78)

In those situations where managers are following these policies, there will be a change inside the operating environment. This is because these ethical standards are serving as way of imposing different kinds of rules and regulations on everyone. When the staff believes that these guidelines are fair, is the point that they are willing to follow them.

Evidence of this can be seen with Google. What helped to make this firm so successful is they used their code of ethics to redefine the work environment. At the heart of their approach was focus on the motto, "Don't be evil." Moreover, they believe that the key in addressing the needs of different stakeholders is to have the employees applying these values as part of their job requirements. These include: respecting each other, avoiding conflicts of interest, serving users, protecting Google assets, obeying the law and preserving confidentiality. These factors are showing how the firm was able to use their code of ethics to define the kind of products and services consumers are receiving. As a result, one could argue that when these guidelines are implemented properly, it will have a positive impact on the behavior of staff members. (Crosson 2008, pg. 1049)

Moreover, the code of ethics can be modified to have an impact on employee perceptions by creating new rules for the workplace. This limits any kind of actions that executives are taking by forcing them to follow these guidelines. When this occurs, there is a change in the way everyone is interacting with each other and different stakeholders.

A good example of this occurred with Ben and Jerry's ice cream. The founders wanted to create a firm that addressed the needs of everyone by engaging in practices that were embracing a new sense of responsibility. This is because Ben Cohen (the founder and President) wanted an organization that was fair to employees. To demonstrate this, a policy was enacted that limited the salary of corporate officers to no more than 7 times the amounts of the lowest paid employee. This meant that Cohen's salary was $133 thousand per year, as the company had a value of more than $140 million. (Gitman 2009, pg. 149)

These actions helped to shape how everyone seen the organization. As they felt that the firm was following higher ethical standards in contrast with competitors. During the course of interacting with different stakeholders, is where these ideas influenced the actions of employees (by encouraging them to do more). This is when the firm began to be seen as more than just a corporation. Instead, they were viewed as an entity that cared about: communities, the environment and everyone that worked for them. In this aspect, one could argue that these of code of ethics will have a positive influence on employees. This is because they see the managers engaging in similar policies, which gives them a sense of confidence about the firm and the products they are providing. (Gitman 2009, pg. 149)

However, there are situations when there will be an adverse impact of a code of ethics on employees. This is because many executives will use a number of strategies during the process. This will lead to a policy that is either too vague or one that is very controlling. In the case of the general policies, these kinds of changes can to be broad. This makes it difficult for anyone to understand how to apply these policies as a part of their daily activities. Once this occurs, is when there will be little to no change in employee behavior. (Lamb 2011, pp. 30 -- 37)

Those firms with very controlling policies will often face challenges associated from employees who have no flexibility. This is problematic, as they will begin substituting rules in place of using their own common sense and applying these principles. When this happens, it can make a firm unresponsive to change (with staff members unsure about how to deal with a host issues). (Lamb 2011, pp. 30 -- 37)

As a result, any kind of ethical policies must provide everyone with enough flexibility to apply the idea. While simultaneously, having controls in place that will provide them with guidance and direction. If this kind of approach is taken, it will have a positive impact in establishing a code of ethics that will address the challenges inside an organization. This is the point when there will be a transformation in operating environment (with these rules guiding employee behavior). (Lamb 2011, pp. 30 -- 37)

Moreover, many firms are not as focused on the ethical practices of CEOs. Instead, there is an emphasis on their ability to increase the overall bottom line results or help inspire everyone. This means that ethical decisions and their effect on employees, is at the bottom of the list. Evidence of this can be seen with a study that was conducted by Lamb (2012). He found that 13% of large company executives thought that ethical decision making was important. This is down from 20% of managers surveyed in 2003. However, Lamb also determined that executives who are practicing ethical decision making will have positive impact on employees. This is through them applying these ideals to basic leadership principles. The combination of these elements is allowing them to effectively implement a code of ethics for employees. When this happens, staff members are open to these ideas and will begin to follow these practices. This is illustrating how employees will obey ethical guidelines when they are applied to everyone. Once this takes place, is the point that there will be a transformation inside the organization. (Lamb 2012, pg. 79)

From an employee's point-of-view, a code of ethics will help to make everyone more flexible. This is because it is providing precise directions in how staff members should be reacting when dealing with a host of ethical challenges. However, during the process of applying ethical standards, executives must ensure that everyone is treated equally. This means that managers must be subject to the same kind of policies as staff members. At the same time, there has to be a balance in making the policies to general or restrictive. If these kinds of variables can be taken into account, they will help employees to use ethics as a way to protect stakeholders. This is when staff members are willing to follow these guidelines from a shared belief with these basic principles.

Can we rely on corporations to be ethical and responsible?

Corporations can be ethical and responsible in their practices. This is accomplished by establishing a foundation for everyone to follow through a code of ethics. Then, there must be an emphasis on everyone working together to follow these principles. Over the course of time, this will transform the way employees and managers are interacting with different stakeholders. This is the point that they will begin to engage in practices that are more empowering. (Morgan 2006, pp. 291 -- 333)

A good example of this can be seen with firms that are using corporate social responsibility. This is when a company will engage in practices that are designed to benefit the entire community (i.e. supporting the environment, cleaning up neighborhoods and sponsoring mentorship programs). Some of the largest corporations have become involved in these activities as a way to increase their image. At the same time, it is having managers and employees work in conjunction with each other in these activities. For staff members, this is helping to build a sense of higher purpose where they see their position as more than just a job. Instead, it is one that is working with the company to help benefit customers and the communities where they are located. This is when everyone is willing to do more for the firm to be successful over the long-term.

As a result, corporations can be more ethically responsible by engaging in practices that are supporting different stakeholders. This must occur with the employees inside the organization. The reason why, is because they are playing a critical role in: helping the firm to reach out to customers and effectively adjust to changes in the marketplace. History is full of examples of how the lack of ethics has contributed to different disasters at the hands of selfish executives. This has created a backlash against these organizations, with many employees unwilling to go the extra mile for their employer. (Parker 2002, pp. 91 -- 114)

In the last few years, there has been a transformation inside many organizations. This is because they believe that engaging practices (which are benefiting stakeholders) will lead to changes in employee attitudes. When this occurs, firms are more capable of adapting to the different challenges that they are facing inside the marketplace. (Parker 2002, pp. 91 -- 114) (Knights 2007, pp. 506 -- 532)