Ethics In The Organization: Importance, Concept, And Framework - An Essay.

Ethics and Organizational Ethics: Concept

Discuss about the Ethics in the Organization.
 

The ethics in organization refers to a way of working in the organization ethically. In other words, it refers to working in the enterprises by considering social norms and corporate culture that is by behaving ethically and use of ethical practices. Disdain the several theories on ethics that have been created still there is no surety about what is really going and whether it is right or not. This work reviews the literature to enquire about the involvement of ethical decision-making in organization by examining and discussing significant issues. This understanding tries to cover the gap between organizational ethical decision-making and individuals by building a framework.

This framework includes three groups of changes that keep varying that are moral strength, internal factors and external factors. The ethical decision-making varies between the organization as some organization did not know what ethically is correct or not.   Ethical problems originate from the conflict between ethical norms and individual values. The individuals that play an important part varies with their level that is the top level of stakeholders, top executives, middle level, which includes managers and last level is bottom level which includes supervisors and labor. The ethical practices provide the social symbol and helps increase in ranking of organizations. 

Ethics refers to the feature that gathers what is actually justified or righteous for the society as a whole. This differentiates by separating good thing from bad by testing it socially. These are the choices, which an individual make to improve its quality or quantity which ever required. The ethical sense of right or wrong comes from action when tested socially (Business Case Studies LLP, 2016). The organization and ethics play a role together equally, which makes ethics unavoidable part of an organization. As with time, it is seen that any unethical mistake leads to company huge losses in only in values but in the goodwill too. Some features of organizations, which constitute that the company is ethical are:

• Charity and not for profit organizations,
• Fair trade,
• Non- government organizations,
• Corporate with strong corporate social responsibility

Society expectations and legal & professional bodies encouraged the more use of Social responsibilities and ethical practices for the organization. In 1997, as per the Financial Times survey of the Europe identified that ethical practices are the main reason of drop in ranking of Shell’s Company. With this same conclusion as Shell, several Companies whose business practices and products declared as unethical and against the society, for an example tobacco, cigarette, and received huge setback. Ethical problems are those problems that are against the society, not taken on an individual basis (Wong, 2006). The problems that include individual interest and stake are at the organizational level. Therefore, ethical problems are free from any hatred from particular consumers. If there will be problem it’s between the conflict of interest and social norms. Organizations require accountable and responsible managers who possess the ethical decision-making which not only give the company a good return but a good growth too.

Framework of Ethics

The ranking of a company is calculated by measuring organizational performance by different measures with a certain percentage that are:

• 10% for Governance,
• 20% for Reputation, Leadership and Innovation,
• 20% for Culture of Ethics,
• 25% for Corporate Citizenship and Responsibility,
• 25% for Ethics and compliance program.

Above are the measures that contribute to the ranking of the company in which ethics and compliance program contributes 25% in the ranking, which counted as 1/4^th of the final rank (Herald, 2010). This shows that how much ethics is important for the organization.

The framework of ethical decision-making includes moral strength, internal factors and external factors. These are those factors, which keep varying with the time and requirements. There are different factors that affect to-

• Level of consequences,
• Immediacy       
• Probability effect
• Social harmony            

• Internal factors are:
• Individual values
• Individual differences
• Moral Awareness
• Geographic variables 

• External factors are:
• Performance Management System
• Level of accountability

After including above all three factors collectively, it generates an organization outcome, which affects ethical decision-making and behavior of the organization. The moral strength refers to moral behavior and understanding of the situations and how it is taken. It includes the level of consequence means how far thing can go or what is the acceptable point, Immediacy means how much urgent required, probability effect refers to the probability of occurrence of situation and social harmony refers to accord with the society. Internal factors refer to the factors which is played inside the organization that are individual values and the difference depends on their understanding level, moral awareness refers to how much morally they active towards society and organization, geographical variable refers to variability of different areas which comes under organization (May, 2006). The external factors refer to those factors that are outside the organization that are performance management system means how performance is measured outside. The most important is the level of accountability in which author Beu and Buckley in 2001 referred accountability can be a play as an important factor contributing to ethical decision-making and behavior with an organization. The level of accountability and responsibility found to be highly strong in relationships that built socially, whereas these relationships based on understanding, affinity and cooperation.

The research of ethics in reference to an organization is not a easy process; as there are different subjective theories already exist. The most important of them is validity and filtering of data described by the researcher’s biasness. This can overthrow by collection and interpretation of information from various informants. This analysis served in validating and filling the plans or schemes proposed.

The Westpac was one of the mainly recognized organizations which stand out as ethically decision-making and behaved once in survey of 2010. It is the only company, which survived in US financial system bailout. Except Westpac, no other company of Australia can make out again in the list of world most ethical businesses (Westpac Banking Corporation, 2007). The ethical practices adopted by Westpac are reasons for making it renowned organization that is:

• Their principle for doing business and code of conduct is with honesty and integrity, act collectively, manage conflict of interest responsibility, respect for confidentiality and not allowed to misuse information and respect law and act accordingly.        
• Separate code of ethics for senior finance officers and accounting practice and reporting on financial information in accordance with requirements of SOX.
• Internal policies and procedures, which take the requirements of the human resource team by giving proper training (Team, 2014).
• Their concern for reporting and whistle blowing by mentioning them about their reporting areas that is in attention of management, human resources team.
• Their policy for not allowing directors and employees in dealing with company shares and insider trading.        

Methodology

Above are the ethical practices that govern the Westpac banking corporation. With this, Westpac mentioned their codes of conduct of working are same as their principle of doing business. These principles not only give new heights to the corporation, but also set the standards of treating a customer for every employee of the organization. As per the Oxfam Australia, who accused the four main banking companies that include Westpac Banking Corporation for backing companies who is doing business in an unethical manner. After this review, Westpac has strongly replied of leaving customers or stopping their business with them who comes under unethical company. This structure again gives recognition to Westpac in World Most Ethical(WME) companies list which is the sixth year in a row.  

The understanding advises managers have to concentrate on problemewcfs, which related to leadership, structure and code of conduct of the organization while going for ethical practices. The leadership at various parts of the organization will have to create a strong understanding of ethics by giving benefits and punishment and communication. The decision to act ethically should be moral, employees should think which action is the right.

Any route that gives the company short-term profit unethically should be, avoided. Ethical behavior and corporate social responsibility can bring important change into business by:

• Attracting customers for organization products, thereby boosting sales
• Reducing labor absenteeism and encourage employees for work.
• Attract the investors and which can keep the share prices high

However, above are the benefits that ethics can provide in the organization. Ethics can be applied in every department of the organization with the help of the manager and its management. The manager takes the control of positions of authority those have to conduct ethically. It also monitors the employees’ behavior towards his contribution with the desire of the organization. If there is any default in complying manger can take corrective action.

This led managers to act with the functions of management that are by planning, which is done by the top level management who set the vision and mission where work is needed under their sight and at other areas where the principles are enough to govern, organizing creates a stage for reaching goals and objectives decided in planning (Schwarten, 2014). At this stage, resources given with distribution of responsibilities that can achieve the decided goal. After planning and organizing, its leading, which is the most important of these stages as in early stages, that is planning and organize are to be implemented. The fourth stage is controlling, which decides the outcome of this process or functioning of management. This stage charged with the role of management as well various factors that are internal or external for instance technology, diversity and structure.

Implied Practices of Westpac Banking Corporation

The most important of them is Diversity, which constitutes an organization that is a geographical location, human culture, goods and services. These factors highly affect the diversity of organization by giving pressure to management of making rules and regulations ethically. Furthermore, socialization is required among the managers for developing ethical practices by giving them voluntary adoption, which gives them a better application of ethical practices. Instruction regarding ethical practices should circulate among the stakeholders from the top most managers to low-level manager so that it can be applicable on every stage. There should value chain through which values give positive decisions. The ethics relate to two different terms that is corporate social responsibility and corporate governance. These terms heavily contribute in the ethical culture of an organization (Probono Australia, 2013).       

The term “corporate social responsibility’ refer to the term which originates from the ethically way of doing business. It made up from political and social causes that fixed organization fix percentage of earnings. Organizations have informed to take stand for the ways their operation influences society and its environment. They asked to apply supporting ways in which they conduct their business. Supporting meant for the organizational activities, which is considered as a voluntary part that concentrate with social and environmental concerns in business working and with the stakeholders (D’Amato, et al., 2009). Corporate social responsibility (CSR) boosts the growth of the company by an increase in goodwill.

Organizations face challenges and difficulties on implementation of CSR. These usually relate to issues either political or organizational and often attached to culture. The difficulty of working globally society gives either new demands or organization and its leadership. In the new era of CSR, there is need to be watch on the stakeholders, consumers, employees as well as NGO and activist groups have to be satisfied. A well-handled corporate social responsibility is in the favor of all stakeholders to not only consumers, but also shareholders, employees, suppliers and other business partner’s work together with the organization (HandUp Australia, 2013). A Corporate social responsibility is done by thinking of society diversification globally. It not only generates ethical behavior, but also provides team cooperation, collaborative teams and strategic alliance. 

Ethics and Corporate governance play an equal role in making the organization ethically and behaved and decision-making. Corporate governance is wider term that includes the rules relationship, policies and system where authority maintained in the organization. Corporate governance is mainly governed at the board of director level that influences the organization environment. Ethics is a narrow term as compared to corporate governance as it depends on the overall performance of the company whereas ethics depend on the society norms which are not clearly prescribed. Corporate governance with ethical behavior and decision-making gives a good contribution to the growth of the company by increasing goodwill. Corporate governance and ethics become more difficult when any indirect implications of practices that may affect the society in a negative way and make company unethical.

Findings

Managers are the main key decision makers, which makes them accountable to stakeholders, shareholders, consumers and society. As per the Economist Milton Friedman, the only entities that can have responsibilities are individual and it noticed that only people are at charge can act ethically. Hence, the most difficult decisions in corporate governance are with those who are at the ethical level, as they have to consider consequence in various fronts that is personal, corporate and societal (Kelly, 2011).  Systematically, an organization requires incorporating ethics with the existing activities of the managers at different levels. Those who linked with making of ethical practices are to be given protection from the risks of developing an alternate mechanism for ethical issues.

Conclusion

These findings are not though conclusive, it just highlights several issues. There is confusion what is ethics. At the time of ethical problem, there is always an issue of ethically right and self- interest. The decision made by keeping the ethical prospect in mind. It is also believed that business and ethics should work together for making an effective decision.  

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