The author of The 7 Habits of Highly Effective People, Stephen Covey stated. "Moral authority comes from following universal and timeless principles like honesty, integrity, treating people with respect." An organization possessing all three components will generate a strong ethical culture. A high-principled and explicit value code will guide the company to make good decisions, command loyalty and gain respect.
The structure is the first step to creating a strong ethical culture. It is imperative to set hard written guidelines to help managers make good decisions by spelling out the companies ethical and legal positions. In an article "You Say Morals, I say ethics – what 's the difference",
Authors Professor Paul Walker, Conjoint Associate
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Volkswagen is a recent example of a company behaving badly, recently admitting to misleading the Environmental Protection Agency 's emission inspectors by placing deceptive software in millions of cars, to appear greener than they were. This misjudgment in ethical behavior cost the company over $20 Billion; investors backed out anticipating associated costs, and Volkswagen faced customer reparation, fines, and legal fees. Not only was Volkswagen hit in the pocket book but the companies reputation suffered a severe blow.
Toshiba supported unethical norms, conceding its practice was to overstate earnings. An independent investigation discovered "Toshiba had a corporate culture in which management decisions could not be challenged" and "Employees were pressured into inappropriate accounting by postponing loss reports or moving certain costs into later years." Not only did Toshiba tolerate unethical behavior they promoted it. The CEO and President Hisao resigned, but Toshiba has a long path to restore its reputation and gain back investor
The ethical code of an organization illustrates the importance of being honest, acting with integrity, and showing fairness in decision making (Bethel, 2015). Ultimately, “laws regulating business conduct are passed because some stakeholders believe they cannot be trusted to do what is right” (Ferrell, Fraedrich, & Ferrell, 2015, p. 95). In the last couple of years, culture has become the initiator for compliance, which means from the top down there has to be a commitment to act in a way that represents the company’s core values (Verschoor, 2015).
Finding of fact # 1: The ethical problem is a big problem in all large companies (MNCs). I can take the recent case of Volkswagen which has nothing to do with BestBuy
Ethics policies are implemented in almost all businesses. Companies search for candidates that will be moral in their actions so they can ensure long-term financial success. Throughout history we have seen businesses fall due to unethical behavior. In recent years the business Enron Corporation is best known for the scandal that led to the bankruptcy of a company with more than 60 billion dollars in assets. We will examine the circumstances that led to the downfall of Enron, how the scandal was realized, as well as the outcome of one of the largest bankruptcies in American history; a case that exemplifies unethical professional behavior.
Corporate executives like Kenneth Lay and Martha Stewart were taken before the court for poor ethical practices. Leaders of pharmaceutical companies have been found knowing about distribution of unsafe products. Leaders at Coke Cola were found guilty of racial discrimination and leaders of cruise ships fined for dumping waste in the ocean. News reports exposed Wall Street analysts who created phony reports, made profits, and pushing worthless stocks, left citizens questioning if they should invest their money. Leaders of the world’s largest retailer, Wal-Mart, were cited for practices of employee abuses and gender discrimination.
Strong internal rivalry between the after-merged Boeing and McDonnell Douglas Corp is also contributing to company’s ethical scandals. As competition between each party gets stiffer, employees might tend to resort to ethical breaches to gain competitive advantages so as to outshine each other.
Ethics or rather morals entail mechanisms that defend, systematize as well as recommend conceptions of right or wrong. Many organizations develop ethical codes to ensure employees and employers understand the difference in doing good or bad. In that respect, ethics are an essential aspect of successfully running of any organization or government. Ethics ensure employee’s productivity levels are up to the required standards. It also assists them to know their rights and responsibilities. Additionally, employers, as well as any persons in management, are guided by them to ensure they provide transparent leadership. Ethics also defines how customers should be handled. Ethical codes govern the relationship between customers and an
According to Ferrell (2004), “Organizations create ethical or unethical corporate cultures based on leadership and the commitment to values that stress the importance of stakeholder relationships. Establishing and implementing a strategic approach to improving organizational ethics is based on establishing, communicating, and monitoring ethical values and legal requirements that characterize the firm's history, culture, and operating environment” (p. 129). Ethics programs ensure satisfactory relationships with all stakeholders by aligning with all of their demands and needs, and determine conduct with customers and relationships with regulators, shareholders, suppliers, and employees (Ferrell, 2004).
For a company to be successful ethically, it must go beyond the notion of simple legal compliance and adopt a values-based organizational culture. A corporate code of ethics can be a very valuable and integral part of a company’s culture but I believe that it is not strong enough to stand alone. Thought and care must go into constructing the code of ethics and the implementation of it. Companies need to infuse ethics and integrity throughout their corporate culture as well as into their definition of success. To be successfully ethical, companies must go beyond the notion of simple legal compliance and adopt a values-based organizational culture.
Volkswagen is not the first to be called on exaggerated claims, but they are deceiving regulators and customers while selling “clean” cars is outright lying (Gelles). When Volkswagen stated that the cars they were selling were clean for the atmosphere, it was false advertising. If there is another mishap, like false advertising, people will find it hard to trust the company again no matter how good the prices are. That is why the Volkswagen crisis is likely to live on because it is the most egregious example of green washing (Gelles). Green washing is when a company promotes a green-based environmental image, but operates in a way that is hurting the environment. Regulators have found green washing harder to stop, because businesses use it to make them look better, though, in the end, it ends up hurting them for
Ethics in business is a highly important concept, as it can affect a company’s profits, salaries paid to employees and CEOs, and public opinion, among many other aspects of a business. Ethics can be enforced by company policies and guidelines, set a precedent when a company is faced with an important decision, and are also evolving thanks to new technology and situations that arise due to technology usage. Businesses have a duty to maintain their ethical responsibilities and also to help their employees enforce these responsibilities in and out of the workplace. However, ethics and the foundation for them are not always black and white. There are many different ethical theories, however Utilitarianism, Kant’s Deontological ethics, and Virtue ethics are three of the most well known theories in existence. Each theory is distinct in that it has a different quality used to determine ethicality and allows for a person to choose which system of ethics works best with both the situation and his or her personal ethical preferences.
This was not as easy a read for me. I suppose I am a victim of my generational upbringing, in that, I feel the need to be informed in an entertaining manner. This book has good information, but I had to continually check my focus. Those times when I was truly drawn in were the times when the writer was relating back to a story from his life or others and how it worked in to the particular habit he was teaching at that time. That being said, the following areas are where I believe I can use to make myself and my team better.
Ethics is the responsibility of each individual person, but starts with the CEO and the Board of Directors, setting the right tone at the top and moves down through the organization, including setting the tone in the middle. A company’s culture and ethic standards start at the top, not from the bottom. Employees will almost always behave in the manner that they think management expects them, and it is foolish for management to pretend otherwise (Scudder). One of the CEO’s most important jobs is to create, foster, and communicate the culture of the organization. Wrongdoings or improper behavior rarely occurs in a void, leaders typically know when someone is compromising the company
Ethics is central for any organization in treating employees fairly and helping the organization advance its mission. There is no single best way for dealing with ethical challenges, but it is very important for managers to develop ethical policies and procedures for implementation. To minimize possible unethical decisions by staff members, it is important to incorporate written standards grounded in organizational values in the code of conduct.
The Seven Habits of Highly Effective People is a book written by Stephen Covey. In the book he writes about seven habits that highly effective people have. The seven habits of highly effective people are: be proactive, begin with the end in mind, put first things first, think win-win, seek first to understand then to be understood, synergize, and sharpen the saw.
Tyco provides products and services across the world. The company is global and diversified providing a variety of products including electronics, healthcare, fire and security services and engineered products and services. While employing over 250,000 people worldwide they grossed approximately $40 billion in revenue in the year 2005. In 2002 Tyco was involved with the corporate scandal where the management mis-appropriated corporation funds. The previous CEO Dennis Kozlowski was convicted in 2005 on 22 counts of the 23 that he was charged with. This is an example of not only a legal issue of responsibility but also one of an ethical issue that the Tyco Corporation has had to face. In the face of the legal and ethical issues that this mishap had placed the corporation in, Tyco placed Ed Breen in as chairman and CEO. Mr. Breen joined the company in 2002 after the scandal and immediately began the rebuild of the company’s name. With the appointment of Ed Breen and his changing of the company’s ethical standards (to be discussed in the next portion of the paper) he promotes the legal responsibilities of not only the company’s employees but the responsibilities of the suppliers and buyers to report any wrong doing. This reporting also speaks to the ethics of the Tyco corporation employees as well as those of the companies th...