Business Ethics
Individual and Business Ethics
Ethics refers to an individual’s personal beliefs about whether a behavior, action or decision is right or wrong. It is a contextual factor, which is determined by other factors including family influences, peer influences, experiences in life, situational factors and personal morals and values. These individual factors are reflected broadly within the organization forming a foundation for business ethics which can be said to be a set of moral codes that individuals within an organization should feel responsibly obligated to follow. Such moral codes act as standards of behavior which guide individuals at all levels of management in performing different business activities.
Business ethics are particularly formed on the basis of how the organization treats its employees through its policies on recruitment and selection, remuneration, grievance handling and the general working environment, how the employees treat the organization in terms of, for example, honesty, integrity, handling of conflicting interests and working relationships and lastly how the business treats all the other stakeholders such as its customers,suppliers, competitors,dealers, the government and the society. All the three categories of individuals determine the success of the business and the management must therefore ensure a balanced existence among them by determining a generally accepted code of conduct which will enhance cohesion and hence enable optimal efficiency and effectiveness in business dealings. It is important to note also that business ethics are critical in guiding on the individual and organizational take on how to be involved and conduct social responsibility programs as a way of giving back to society.
A case of shell’s business ethics
Given the importance of business ethics to organizations, major corporations have undertaken programs to formulate the basic business principles and individual cods which determine the overall conduct of the business. The Shell group of companies which affiliate from the Royal Dutch Shell Company for example came up with both a set of business principles and codes of conduct which are integrated to functionally ensure a realization of its core values which include among others, honesty, integrity, respect for people, trust, teamwork and professionalism.
From its inception, Shell has evolved as global group of energy and petrochemical companies whose mission is meeting the energy needs of the society in ways which are economically, socially and environmentally viable presently and in the future. Basing on this purpose, the ethical system used by the firm is ends driven, this particularly for the reason that it sets out the long term objectives and subsequently generates a mission statement, business principles and the individual moral obligations which are merged with the aims of reaching out to the main goal of the business. The system might also be said to be ends driven because it is created from the organization’s broader set of responsibilities to the employees, shareholders, customers, the society and other economic agents like the contractors, suppliers and in joint ventures where it undertakes responsibility and accountability to such business ends.
Shell’s code of ethics is derived from its business principles. These include economic, competition, business integrity, political activities, local communities, communication and engagement and compliance (with the laws and regulations of the countries where Shell operates its businesses ).These principles reflect a broader perspective of the business and how it is involved firstly, with its employees, customers, economic agents, the shareholders and more importantly, the society in which the business is operated from. Specific derivatives in this instance would be honesty, integrity, respect, health and safety, security and the environment. These in essence underscore the need to fight corruptive practices, safeguarding information and communications, provision for sustainable development, human rights, equal employment opportunities and prevention of harassment at work.
The use of code of ethics among employees, the management and other stakeholders
A code of ethics should be integrated within the organization by defining the different parties involved within its set up. At the onset of implementation would be the management who should show commitment on adhering to them and respecting the role in which they play but more importantly influencing their adoption within the organization. Given that of the business ethics is a highlight on the need to respect people and the human rights including avoidance of harassment of any form within the organization, the management is bound to share out business ideas with respect to the laid down ethical regulations and in an integral manner. It would also be prudent that through implementation of such codes, the management should develop a culture within the organization which encourages respect among individuals within and externally, teamwork, effective communication, integrity and honesty. This would particularly ease the role of selling out what is perceived as best practices.
The management has also a role of ensuring that there is equal employment opportunities offered to every applicant in the same way as applications for contractual tenders should be announced and awarded .Communication from the management should be impartial as regards to such organizational operations to avoid cases of discrimination, harassment in its diversity and corrupt practices that emanate from conflicting interests within the management. This can only be achieved when the management appreciates the role of ethical conduct within the organization and its overall effect on the ethical culture adopted by the organization. It is in this instance that training and developing employees towards the adoption of such codes and their change of attitude comes as a prerequisite for the management to deal with.
Codes of ethics could also be used by employees in the sense that they regulate their conduct both within and outside the organization. An example can be cited in the case of Shell where core values which form the basis of the organization’s ethics like integrity, honesty, respect and communication among others are engraved within the organization’s policy principles not just to ensure compliance but ownership by employees. Virtues of honesty, integrity, teamwork, trustworthiness, effective communication and professionalism are paramount if the organization has to operate effectively and efficiently. Such traits would hinder involvement in activities such as corrupt practices, insider dealings and conflict of interest especially when the management puts up a system of either open door policy or confidential employee discussions either to raise grievances or at times to report misconduct.
Employees in this case have an obligation to ensure that they are drivers of change and efficiency within their organization and have to therefore work towards establishing a framework with which to co-ordinate their activities to realize the main objective of the organization. Further to this, employees are bound by a code of ethics to involve themselves in political activities to the extent that they uphold the company’s core values and business principles.
For the board of directors and other stakeholders to the business, code of ethics needs to be applied in a more carefully structures way given that they pose circumstances where there is a conflict of interest between them and the organization. Lafollette (2003) (Ed) addresses the issue of ethics particularly in a broader sense of corporate responsibility in the way to represent a higher value for the society than just the business interests. The first case is of a family owned company, Malden Mills, which even after burning down and at the verge of bankruptcy still paid wages and benefits to its out of work employees and it was this humane act that motivated the engineers to consult with the management to create a new fabric “Polartec” which the market worldwide responded to so well that the company profits dramatically rose under Feuerstein.
The second case was with Merck, a pharmaceutical company which even without the funding of the WHO or other international humanitarian or funding bodies successfully developed an anti-parasitic drug “invercemectin” later “Mectizan” under Dr. William Campbell to fight river blindness. Merck went ahead and manufactured, tested and distributed the drug for free even without agency funding for logistics.Mectizan was highly successful in combating the disease and proved how much an organization could extend so much responsibility to the society even at the verge of supposed loss and extreme odds. The two cases just prove the extreme ends and measures that an organization could take to ensure that the organization does not only ensure efficiency and effectiveness in its operations but also in providing an enabling environment for cohesion among the employees ,the management, the stakeholders and the general society through its dynamism and teamwork.
Moody (2009) discusses in depth the importance of human rights and affirmative action particularly for the women, the less privileged and disabled in society. Shell however needs to modify their code of ethics to encompass a more efficient structure which would encourage innovation, efficiency in communication and build capacity for competition and growth. Looking at its business principles and code of ethics, it is not clearly defined how they would quickly in the face of competition create an enabling environment for innovation or an initiative for identifying the needs for training and development. Integrating this need into the company’s principles and code of ethics, the management has to ,in particular encourage an efficient way of communication and adopt a system of management by objectives (MBO) whereby responsibilities could be agreed on and the management just ensuring on the agreed upon performance .Discussing adoption of codes of ethics is very important in their ownership by employees and the organization is bound in this way to work out their success.
Formulating new codes of ethics can however be faced with a lot of hostility especially in the occasion when there is perceived feeling of conflicting interest not only among the management but among employees too. This can however be eased if there are proper structures such as grievance handling and effective communication from the management to ensure the contentious issues are addressed. A culture of openness and trust would in this case play a major role in ensuring that their introduction and adoption is taken positively.
In conclusion, a code of ethics is very important in every business especially in the contemporary competitive world where people and organizations strive to win the hearts and minds of their customers for profits and in the same way give its employees an opportunity to be motivated to innovate and actualize themselves within the organization. A code of ethics would guide on the operations of the business in a way that would prove to the society (who are its main contributors to business success) that the business is committed to respect them and add value to their lifestyle as it strives to meet its stakeholders’ demands. It is therefore paramount that the organization apart from following a mission of successful exploitation of competitive business also reach out at a corporate’s social level to alleviate the societal conditions of economical hardships as part of its ethical agenda.
References
Chamorro-Premcizic T. (2007) Personality And Individual Differences, BPS Blackwell
Egan G. (2010) The Skilled Helper-A Problem Management And Opportunity Development Approach To Helping, Brooks/Cole, Cengage Learning
Hodgkinson G. P. & Ford J. K. (200) International Review Of Industrial And Organizational Psychology, Vol.24
Mcmlenahen S. J. (2005) Social responsibility Doesn’t Happen In Isolation,Inducstryweek.Com/Articles/Manufacturing
Moody S. (2009) Dyslexia And Employment-A Guide For Assessors, Trainers And Managers, John Wiley & Sons
Lafollette H. (2003) (Ed) The Oxford Handbook Of Practical Ethics, Oxford University Press
Shell International Limited (2010)
