Cengage Learning

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Employer Liability for Negligent Hiring

Published September 9, 2013 by Mayrbear's Lair

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Smart business leaders have a firm grasp of comprehending the law and recognizing its limitations when it comes to operating a business. Walsh (2013) explains that, “No single set of employment law covers all workers” (Walsh, 2013). In fact, employment laws consists of a variety of federal, state, and local laws that are contingent upon such things like: (a) whether the individual is a government employee, (b) whether the individual works in the private sector, (c) the size of their company or (d) whether they have any union affiliation. In addition, employment laws are ever changing, as new employment laws are created and old ones are reinterpreted.

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To better understand these laws, we will examine a case study of a scenario involving  a 17 year old plaintiff that seeks damages as a result of being violently assaulted by an employee of the defendant, XYZ Motor Freight Inc. When XYZ hired the employee that committed the assault, they questioned the individual with respect to prior vehicular offenses and criminal convictions. However, due to their position on EEOC discrimination statutes, XYZ only chose to verify his vehicular offenses and ignored his negative response to the criminal convictions inquiry. Rassas (2011) suggests that employers who have a working knowledge of labor law and the obligations of employers can help them avoid litigious events such as this. A lack of knowledge can unintentionally result in a failure to abide by a law and impact the operation of an organization significantly (Rassas, 2011). For example, employment laws have been established to protect both employees and employers by imposing certain responsibilities. For employees, employment at will is a default rule that permit employers to terminate employees without having a good reason. This means the employee has the freedom to engage in collective bargaining with their employers. In addition, according to employment laws, each relationship is subject to the terms and conditions of employment that meet minimum required standards. However, in today’s society the most effective and successful people, whether employer or employee, should also take responsibility and accountability to ensure their own safety as well as those of others.

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XYZ’s position is that it did not seek to verify the criminal background check citing they had no duty to do so because of a lack of foreseeability. They further defended their position stating that to impose such a duty would be against public policy and place too great a burden on them. However, in this case, failing to do so created another burden for them. Seaquist (2012) purports that when an employee is working within the scope of their employment, the employer will be liable to third parties for the torts of their workers under the doctrine of respondent superior (Seaquist, 2012). The plaintiff in this case seeks justice arguing that the employer should have been cognizant that the employee they hired was dangerous because he had a history and a record of violent sex related crimes when they hired him. In other words, by not checking his criminal background they created a dangerous condition by putting him in a situation in which he was able to bring harm to others because they failed to verify his criminal record.

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Both sides have very effective defenses to support their position. XYZ claims they did not verify the criminal background check because they were acting in accordance with EEOC discrimination law issues. However, because the employee was hired to participate in interstate commerce, it is their responsibility to make sure the individual performs their duties to best of their ability and trust they will not engage in misconduct or inappropriate behavior. In my view, if I were a business leader for XYZ, I would be concerned about the damages from the negative publicity alone that a case like this attracts. That is reason enough to engage in thorough employee investigations scrutinizing criminal backgrounds a little closer because of the nature of the trucking industry. As a part of the legal counsel for XYZ, I would suggest a settlement to keep the matter private to preserve the organization’s reputation, and take responsibility for their employee’s ethical misconduct by paying any and all damages to the plaintiff as an act of good faith that supports an ethical corporate climate.

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The plaintiff is in her right to seek damages for being so horrifically violated. However, the jury must decide on whether or not XYZ was responsible for negligence because they were acting in accordance with EEOC mandates with respect to the background check issue. Unfortunately, in a life changing situation as this, hopefully both parties learned some valuable life lessons from this experience. The defendant can begin to take more effective methods to insure the competence of their employees, and the plaintiff came to understand, that although an individual may represent an organization, that does not mean the individual is free of behavior from criminal or ethical misconduct. The moral of the story: never, ever, accept a ride from a stranger. The movie Hitchhiker was a good reminder as to why.

References:

Rassas, L. (2011). Employment law: a guide to hiring, managing, and firing employers and employees. New York, NY: Aspen Publishers.

Seaquist, G. (2012). Business law for managers. San Diego, CA: Bridgepoint Education, Inc.

Walsh, D. (2013). Employment law for human resource practice. Mason, OH: Cengage Learning.

Code of Ethics

Published August 9, 2013 by Mayrbear's Lair

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The world marketplace continues to expand at alarming speeds because of innovations in technology, transportation, and communication.  As a result, international borders have disappeared and a global sociopolitical economy has emerged where businesses now compete on a worldwide level.  This new environment permeates across boundaries where diverse cultures, values, regulations, and ethical standards exist.  Leaders have been forced to adopt and learn new ways of conducting business in order to maintain their share of the marketplace in this increasingly competitive, and, in extreme cases, hostile climate.  In order to gain the trust and support of stakeholders and prove that organizations and their leaders are engaged in ethical conduct, many organizations implement ethics programs and include a Code of Conduct Statement to represent their standards for ethical and moral behavior.  The focus of this research examines the components required for the development of a Code of Ethics doctrine that outlines the standards for ethical and moral conduct. To help develop and shape the doctrine’s framework, this research takes a closer examination of the fundamentals required including the following mechanisms: (a) a statement of values and principles; (b) a set of rules that frame the parameters of ethical performance; (c) training, communication, and implementation strategies; (c) the role of leadership; (d) corporate social issues; (e) laws and regulations that impact the organization; (f) oversight and enforcement strategies; (g) ethics auditing programs; and (h) considerations for globalization.  The findings of this research will conclude that although limitations and poorly designed codes of conduct encourage unintended outcomes, a company’s Code of Ethics represents an organization’s standards for ethical behavior and moral conduct because when significant disagreements emerge, these statements can achieve a measure of consensus; clarify standards which may otherwise be construed as vague expectations; and provide a clearly defined set of guidelines that represent a company’s values, principles, and aspirations.

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Statement of Values

A corporate Code of Ethics doctrine communicates the standards for ethical behavior in a business environment.  Ethics is a common way to determine what it means to be an upstanding citizen and is utilized as an effective tool for guiding the decision making process.  Ethics outlines the nature and basis of morality where moral judgments, standards, and rules of conduct are identified.  Business ethics, on the other hand, consists of the core values, ideals, and standards that guide behavior and define an organization’s specific principles.  These principles are usually conveyed in the corporation’s mission statement and Code of Ethics doctrines.  The policies in these documents outline pervasive behavioral boundaries and establish a guideline that identifies rules and regulations that the organization embraces as all-encompassing and absolute.  For example, Ross (2007) cited that Chinese factories where low-wage labor force conditions exist and staffers are subjected to eleven-hour work days, twenty-seven out of thirty days a month, could use a Code of Ethics doctrine to create better working conditions.  These conditions exist because: (a) factory leaders justify their ethical misconduct as a solution to satisfy the demands of the expanding global market and (b) there are no policies or regulations in place to deter this behavior (Ross, 2007).  Without clearly defined codes of conduct or regulations to prevent ethical misconduct and corporate abuse, factory bosses will continue to operate prioritizing profits over the well-being of the stakeholders that support them.

At the core, the ethics code must reflect the moral values and the underlying principles of the industry with honesty and integrity as well as address the significant ethical issues leaders face in today’s business culture.  These include: (a) protecting the environment, (b) avoiding fraud and ethical misconduct, (c) prohibiting financial corruption, (d) addressing the manufacturing of harmful products that puts the public at risk, (e) eliminating sexual harassment and discrimination, and (f) protection from piracy.

To develop an effective Code of Ethics, the first step is to begin devising a statement of values that includes the non-negotiable principles of the organization.  Fisher (2013) contends that leaders should design codes of conduct with the following objectives: (a) to express best ethical practices, (b) to articulate a specific value system that concisely delineates both decisional and behavioral rules, (c) to apply ethical conduct through leadership, (d) the requirement of staff participation, and (e) to accept and guide ethical behavior with incentives that motivate staff members (Fisher, 2013).  For example, companies like Ben & Jerry’s and Patagonia have established environmental sustainability as a positive core value and have committed their organizations to operate in an environmentally friendly manner.  Other companies, however, are driven by negative core values that focus on profit and self-interest only, like the tobacco companies that misled their consumers about the hazards of smoking.  A Code of Ethics doctrine should be influenced by the owner’s core values.  These principles could include: dependability, loyalty, commitment, open-mindedness, consistency, honesty, efficiency, creativity, humor, motivation, innovation, positive attitude, optimism, passionate, respectful, courageous, educated, endurance, empathy, and having fun.  These fundamental concepts can play a significant role to help shape a mission statement and a Code of Ethics doctrine.

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Training and Communication

Limitations and poorly written codes of conduct can present unintended consequences.  In the business world, ethics is an ambiguous concept that many leaders believe is a highly technical discipline to interpret and most feel unqualified addressing the subject.  In fact, Freeman and Wicks (2010) suggest that many top level managers suffer from moral muteness.  In short, they lack training and, as a result, are unable to fuse ethics with business conduct (Freeman & Wicks, 2010).  In truth, leaders must consider both the ethical and legal aspects of a situation to make the most effective decisions.  Top managers are in a position of influence and possess a power that controls the destiny of an organization.  Efficient ethical training programs help leaders: (a) make more effective decisions, (b) choose how and who to conduct business with, and (c) decide whether profits are more significant than achieving positive outcomes with social mindfulness.  By electing to conduct business ethically and engage with other like-minded organizations, leaders cultivate an ethical climate that helps avert facing issues of misconduct and avoid legal ramifications.

The most efficient way for leaders to engage in moral conduct and cultivate an ethical environment is to educate these executives to implement effective ethical training programs.  Ferrell et al. (2013) purport that ethical training programs equip staff members with strong reasoning abilities and intellectual skills that can guide them to comprehend and discover more effective solutions to complicated ethical issues.  They have identified the following six stages of moral development based on psychologist Lawrence Kohlberg’s model of philosophy: (a) punishment and obedience; (b) purpose and exchange; (c) interpersonal expectations, relationships, and conformity; (d) social system and conscience maintenance; (e) prior rights, social contract or utility; and (f) universal ethical principles.  Kohlberg’s theories further suggest that individuals should continue to evolve and reshape their morals and ethical behavior with extended training and education, as well as by drawing from personal experiences (Ferrell, Fraedrich, & Ferrell, 2013).  Leaders then apply their highly developed skills to identify and address the nature of the moral dilemmas as they arise to help them achieve optimum solutions.  For example, when a supervisor discovers a staff worker engaging in ethical misconduct, because of their high level of training, the manager can recognize the issue more easily and attempt to resolve it.  When leaders establish clearly defined policies, provide education and training systems to support them, staff members are more likely to abide by them and accept the consequences for behavior that falls outside those boundaries.  A Code of Ethics doctrine may also include a clause to address the training requirements expected from all staff members.

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Implementation Plan

When there are disagreements of an ethical nature, a Code of Ethics doctrine can help achieve a measure of consensus.  The most effective leaders comprehend the significance of identifying the voluntary and legally required aspects of institutional practices and the behavior that supports it.  In addition, this research supports that the most successful leaders engage in actions that demonstrate the leader’s conduct and business practices, while taking responsibility for cultivating of an ethical climate.  This strategy serves to inspire staffers to adopt similar practices.  Aristotle (384– 322 BC) suggested that a person’s character is developed by habituation.  In other words, a person’s righteous or iniquitous behavior is developed by the continuous engagement in acts that have a common quality.  These repetitious acts rely on the individual’s natural tendencies to gravitate towards virtuous or immoral behavior (Aristotle, 2012).  Equipped with this knowledge, leaders are better able to guide ethical behavior and implement programs that help guides staff members to develop patterns and habits that embrace moral conduct.  For example, investigators discovered Enron’s leaders had developed a culture of deceit to safeguard capital gains.  To assure stakeholders and to avoid repeating this situation again, leaders began to design and develop effective ethical training programs to educate employees and implement conducts of ethics as part of their organizational culture.  In addition, the establishment of the Sarbanes-Oxley Act (SOX) by Congress prompted corporations to work with the government in partnership by creating a federal oversight system that monitors corporate accounting practices, making fraud a punishable criminal offense.  Corporate leaders that implement programs inspired by the SOX mandates are able to address a wide range of provisions including corporate transparency in financial reporting; monitor corporate board members conduct; and complying with criminal justice practices.

Leaders that implement ethical training programs for staff members establish a culture that discourages misconduct, prevents behavior that represents a false corporate image, prohibits executives from hiding poor performance outcomes, and acts as an oversight system to monitor accounting and auditing practices to ensure operational integrity.  In addition, to guarantee stakeholder trust and confidence, CEOs now sign off on all company financial forms to confirm that all organizational processors have complied with every mandate.  These significant topics can also be addressed and included in an organization’s Code of Conduct doctrine.

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The Role of Leadership

A Code of Ethics statement clarifies standards that may otherwise be vague expectations.  Most leaders consider themselves ethical.  Others, however, question whether ethics is a substantive component of effective leadership.  Regardless of their views, executives are in a unique situation and have the power to guide corporate culture and shape ethical conduct.  Chopra (2012) contends that despite the advantages a person may have – wealth, intelligence, popularity, or influential social connections – none of these components provides the magic wand to effective leadership (Chopra, 2012).  Leaders continue to face difficult dilemmas and how they cope with various situations can make the difference between a positive outcome that contributes to the benefit of others and whether it results in disastrous outcomes.  For example, a leader that cultivates an atmosphere of deception and misdirection fertilizes the environment for destruction.  Therefore, the most effective and successful leaders must have the ability to: (a) guide a corporation to profits for the sake of the stakeholders, (b) achieve organizational goals in an ethical manner, and (c) motivate employees to engage consistently in ethical behavior in alignment with the organization’s code of conduct consistently.  Furthermore, the most efficient top level managers incorporate policies to inspire high performance levels and motivate staff members to engage in conduct that goes beyond mere observation of policies.  The best leaders establish trust and earn the loyalty of all their stakeholders.  Leaders that work in partnership with personnel achieve greater levels of success.  In return, stakeholders that respect organizational leaders that are more likely to support them and volunteer services beyond achieving organizational goals.  The role of leadership can also be addressed immediately following the mission statement in the form of a Leadership Letter from the organization’s CEO.

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Corporate Social Issues

Codes of Conduct doctrines provide statements of value and can also address a corporation’s social responsibility policies.  Organizations with leaders that incorporate ethical choices and learn corporate social responsibility operate businesses that consist of little worry and fear from concerns of bringing harm to themselves, others, or the environment. This is because their values include business practices that contribute to the welfare of citizens and the environment rather than engage in conduct that exploits or depletes resources.  For example, organizations like Plum Village focus on creating a culture that supports happiness by developing a community of stakeholders that are motivated to support them.  Hanh (2012) postulates Plum Village founders achieved this by creating a model that is not solely focused on profits.  By cultivating an atmosphere that supports joy and happiness, their organization and others like them prove that businesses do not have to sacrifice happiness to achieve high levels of profit (Hanh, 2012).  Furthermore, time and time again, history proves organizations that engage in destructive behavior, commit fraud, and operate without regard for stakeholders or the environment do not enjoy the same long term success.  Leaders that focus on cultivating a climate to motivate ethical conduct without compromising their ability to profit are more likely to succeed as well as maintain the confidence and support of stakeholders.  These are concepts that can be included in the organization’s code of conduct statement or, alternatively, for smaller organizations, can be addressed by implementing green strategies into their daily business practice, like recycling and incorporating efficient systems that reduce energy and fuel costs.

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Laws, Regulations, Oversight, and Enforcement

A Code of Ethics doctrine can also incorporate regulatory measures as another method to influence the impact of the ethical behavior and outcomes in a business environment.  The development of ethical compliance programs serves as a process that establishes corporate commitment to practicing ethical behavior.  These programs are designed by utilizing codes of conduct as the blueprint to direct ethical performances.  In short, effective leaders implement regulatory measures to help them achieve positive outcomes with social awareness and corporate accountability.  For example, Carpenter (2012) contends that because of the complicated manner in which leaders conduct business in the global market, they are required to: (a) identify, comprehend, and implement the acceptable use of corporate funds; (b) recognize the falsification of important documents and account records; and (c) identify debatable techniques sales representatives engage in to close deals (Carpenter, 2012).  These are common issues managers address in the corporate arena.  In addition, competition, political pressure, and different value systems also influence ethical conduct and outcomes.  To help leaders address these complicated challenges, the US government established the Federal Sentencing Guidelines (FSG) to help prevent ethical misconduct that results from white collar crimes.  Bredeson and Prentice (2010) purported that the SOX act, for example, was developed and imposed stern security mandates to: (a) create an oversight program that is monitored by a new federal agency, (b) reform the entire accounting industry, (c) restructure Wall Street practices, (d) alter corporate governance practices, and (e) confront insider trading and obstruction of justice (Bredeson & Prentice, 2010).  As a result, the Public Company Accounting and Oversight Board (PCAOB) was also developed to help support these mandates and work in partnership with the Securities and Exchange Commission (SEC) to help implement SOX’s numerous regulations.  Furthermore, these new governance practices were designed to protect whistle-blowers that support ethical conduct.  The implementation of these regulations, oversights, and the enforcement of these strategies all serve to maintain stakeholder confidence.

Laws and Code of Ethic doctrines are created to help define relations between individuals and corporations that affect the economic and social order of a society’s governance practices.  Mann and Roberts (2013) postulate that these laws are developed to reflect the social, political, economic, religious, and moral principles of society (Mann & Roberts, 2013).  In other words, laws are used as tools to control behavior in society and function to regulate human conduct.  Corporate leaders work in partnership with government agencies to guide acceptable ethical conduct to protect people and keep them safe.  Regulatory measures provide the motivation for organizational leaders to develop core practices that ensure legal and ethical compliance.  They put focus on the development of structurally sound core practices that consist of structural integrity in both financial performance and non-financial performance outcomes.  An organization’s Code of Ethics doctrine should provide in great detail an outline of the policies and regulations that staff members are expected to abide by.

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Ethics Auditing Strategy

Codes of Conduct doctrines also serve to deter corporate leaders from misusing their power and putting stakeholders or the public in harm’s way.  Companies are in the business of making a profit for the benefit of their stakeholders.  Leaders must be conscious that they are required to engage in behavior that supports responsible conduct towards their stakeholders, consisting of employees, customers, suppliers, communities, and society at large.  Ferrel et al. (2013) assert that organizations devise transparent methods to monitor and audit organizational outcomes and behavior by having open access to observe and analyze the following components: communications, compensation, social responsibility, corporate culture, leadership, risk, stakeholder perceptions, and the more subjective aspects of earnings, corporate governance, technology, and other significant areas (Ferrell, Fraedrich, & Ferrell, 2013).  Leaders want their organizations to benefit from large capital gains.  To help achieve this, they integrate ethical programs and audit systems into their code of conduct practices to encourage positive outcomes.  These significant concepts should also be included in the corporations’ Codes of Ethics doctrine.

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The Global Marketplace

In today’s marketplace, a Code of Ethics doctrine must also communicate the standards for ethical conduct on the worldwide stage.  Because organizational leaders are forced to face some very serious choices that could have long term positive or negative outcomes, they initiate directives that support corporate social responsibility (CSR) to achieve a long term competitive advantage in today’s cut throat global marketplace.  McGraw (2012) contends that being surrounded by the right people helps individuals learn the right actions to make the right decisions (McGraw, 2012).  Because US Business practices regulations are not enforced worldwide, many American leaders must contemplate high risk issues like: (a) complying with superiors to engage in ethical misconduct to achieve goals, (b) choosing to refrain from unethical behavior at the cost of losing their position, or (c) discovering another a solution (that may be unpopular) to avoid misconduct to achieve positive outcomes.

As a solution to help establish a more level playing field among companies who compete in the global market, the World Trade Organization (WTO) was created, consisting of 153 members.  Narlikar (2005) declared the WTO provides a variety of noble objectives including: (a) improved standards of living, (b) full employment, (c) expanded production of and trade in goods and services, (d) sustainable development, and (e) an enhanced share of developing countries in global trade.  Members also receive a commitment from the WTO to contribute to these objectives, engaging in a mutually advantageous partnership focused on reducing substantive tariffs and other trade barriers.  In addition, members are assured of the elimination of discriminatory treatment in trade transactions (Narlikar, 2005).  In short, the WTO is committed to liberalizing global trade by addressing economic and social issues with respect to agriculture, textiles, clothing, banking, communications, government purchases, industrial standards, food and sanitation regulations, and intellectual property.

Another important issue many corporations face when entering the global arena are companies that make payments to influential people for the purpose of obtaining favors or receiving business contracts.  The US identifies this type of business conduct as bribery – an illegal practice and a criminal offense.  Ferrel et al. (2013) purport that many American companies were operating at a disadvantage when competing with foreign companies whose governments did not prohibit the act of bribery.  As a solution, in 1998 the US and 33 other countries signed an agreement to combat the practice of bribing foreign officials in global business transactions.  This agreement is called the US Foreign Corruption Practices Act (FCPA) and serves to prevent this kind of conduct from occurring (Ferrell, Fraedrich, & Ferrell, 2013).  The United Kingdom implemented a similar agreement with the UK Antibribery Act to hold corporations and individuals liable for bribery regardless of where the offense is committed.  These and other organizations like the International Monetary Fund (IMF), The United Nations Global Compact, and the Sherman Antitrust Act, provide businesses competing on in the worldwide market parameters and regulations that are enforced help to deter ethical misconduct.  These issues should also be addressed in the Code of Ethics doctrine.

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Conclusion

Code of Ethics doctrines are a set of rules that help establish the standards that guide individuals and organizational behavior.  The Constitution of the United States, for example, is a doctrine that provides – in detail – regulations with the idea of forming a more perfect union to establish equal justice and to promote general welfare among its citizens (Government, 2012).  Corporations are microcosms of a similar organizational system that converge with the intent to promote general welfare and to make a profit doing so.  Companies want to achieve their goals in a uniform manner and do so by operating within the frame of justice that supports the well-being of society and their stakeholders.  For this reason, the development of an efficient and effective corporate ethics program is essential to provide a clearly defined set of parameters that is communicated through the organization’s vision, mission statement, and is further detailed in their Code of Ethics doctrine.

If an organization’s Code of Ethics statement is to have success, it must have full support of the entire organization beginning with the top level managers and include all levels of personnel.  Boatright (2009) suggests that unless this occurs, the code is unlikely to be successful (Boatright, 2009).  The findings of this research have deduced that although limitations and poorly designed codes of conduct encourage unintended outcomes, the development of an effective Code of Ethics doctrine, together with the implementation of an organization’s ethical program, serves to communicate the company’s standards for ethical behavior and moral conduct.  Time after time, these doctrines prove to be essential because when there are disagreements, these statements can achieve a measure of consensus, clarify standards which may otherwise be construed as vague expectations, and provide a clearly defined set of guidelines that represent the company’s values and principles to effectively help with the decision making process.  These combined elements can help achieve the highest outcomes.  In conclusion, for an organization to function successfully and harmoniously with the community and their surrounding environment, they must establish a code of behavior that everyone is willing to accept and abide by.

This concludes my six week research on ethics in organizational management. Next week we begin our six week journey into the realms of Business Law! Thanks for staying with me on this epic adventure in organizational management.

-Mayr

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References

Aristotle. (2012). Ethics. Seattle, WA: Amazon Digital Services, Inc.

Boatright, J. (2009). Ethics and the Conduct of Business (Sixth ed.). Upper Saddle River, NJ: Pearson Education, Inc.

Bredeson, D., & Prentice, R. (2010). Student guide to the Sarbanes-Oxley Act. Mason, OH, USA: Cengage Learning.

Carpenter, D. (2012). The consumer financial protection bureau. Washington, DC, USA: CreateSpace Independent Publishing Platform.

Chopra, D. (Composer). (2012). The seeds of success. [D. Chopra, Performer] On 21 Day Meditation Challenge: Creating abundance [Audio Sound Recording]. San Diego, CA, USA: D. Chopra.

Ferrell, Fraedrich, & Ferrell. (2013). Business ethics and social responsibility (9th ed.). Mason, OH: Cengage Learning.

Fisher, C. (2013). Decoding the ethics code: A practical guide for psychologists. Thousand Oaks, CA: SAGE Publications, Inc.

Freeman, E., & Wicks, A. (2010). Business ethics. Upper Saddle River, NJ: Pearson Education, Inc.

Government, U. (2012). the constitution of the United States of America. New York, NY: American Civil Liberties Union.

Hanh, T. (2012). Work: How to find joy and meaning in each hour of the day. Berkeley, CA: Parallax Press.

Mann, R., & Roberts, B. (2013). Business law and the regulatoin of business. Mason, OH, USA: Cengage.

McGraw, P. (2012). Life code. Los Angeles, CA, USA: Bird Street Books.

Narlikar, A. (2005). The world trade organization: A short introduction. New York, NY: Oxford University Press.

Ross, R. (2007). Slaves to fashion: Poverty and abuse in the new sweatshops. Ann Arbor, MI: University of Michigan Press.

Ethics and Health Care

Published August 7, 2013 by Mayrbear's Lair

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A majority of US citizens are concerned about their health care. Spinks and Wells (1996) contend that many issues, including rising costs, have prompted a closer investigation into the behavior of health care providers and institutions from an ethical perspective (Spinks & Wells, 1996). The major challenges we as Americans face, are implementing effective methods to maintain and monitor our health and well-being in partnership with our medical practitioners and insurance systems that support overall care. Americans are looking to tackle such problems as: (a) poorly or inadequately equipped facilities, (b) long waiting times, (c) substandard conditions, (d) misconduct from practitioners, and (e) exorbitant medical, hospital, and pharmaceutical costs. In addition, the dilemma most people face is that health care costs consume large portions of a family income, while the majority of health care practitioners enjoy lifestyles and salaries extensively higher than most of the patients they care for. To add insult to injury, most high ranking government officials and politicians selected by the people they serve, are provided with lifelong health care benefits while vast portions of the constituents they represent have none. Many people feel that because the representatives they elected to serve them are provided with health care, that the public should also be entitled to the same health care benefits and privileges. After all, the tax paying citizens are the stakeholders that hired these government officials to serve their interests.

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Everyone in society has a right to be healthy and enjoy the highest quality health care system of their choice, however because of ever changing conditions in modern society, this ideal has been a difficult outcome for many to achieve. Ferrell et al. (2012) suggest that the ever changing global market also contributes to health care issues. For example, because of global health care fraud, businesses and governments are depriving individuals the resources to receive quality products and health care (Ferrell, Fraedrich, & Ferrell, 2013). For example, many corporate bosses take advantage of countries that export products with substandard oversight systems in place. This atmosphere allows them to engage in short cut practices that result with products that provide less medicine in their packaging. The falsification of insurance claims is another problem that arises and often results in higher insurance rates. In addition, some companies provide incentives for referrals while others compensate doctors and hospitals for buying their products. Until the playing field is leveled in the global market place and these various conditions exist from country to county, closer scrutiny is required to detect and deter ethical misconduct.

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In the meantime, many people debate on whether or not health care is a universal right that should be provided by governments. A large population believes that because good health supports productivity that governments should provide citizens with health care systems that support their well-being. Countries like Germany for example, consider health care a right every citizen is entitled to and provides high-quality health care services. Others who believe health care is a privilege tend to be the corporations who stand to profit from health care systems, in which case becomes a matter of ethics. Where ever corporate giants produce systems that place profits ahead of the welfare of their stakeholders it’s only a matter of time before the contamination is exposed and changes are introduced. Furlong and Morrison (2014) contend that one must have a solid foundation in theory and principles of ethics to make the most effective professional decisions. Leaders who abide and comprehend the knowledge of ethics and understanding, particularly of alternative views, create an environment of cultural competence (Furlong & Morrison, 2014). In conclusion, there are no easy answers. First and foremost, each citizen should take responsibility, educate themselves in preventative care and work in partnership with their government and medical institutions to come up with the most effective methods to create a health care system that everyone can benefit from. In short, it is the citizens that make up society. It is the citizens that protect and support their governments and the institutions that provide services and goods. In turn these institutions should not question whether it is their duty or right to protect those that support them. In return for their support and loyalty, these institutions should show appreciation and gratitude to their stakeholders. It is their obligation to do what they can to protect the hands that support them which includes access to the same quality health care they are entitled to. It is the right of each individual to live life to their fullest potential with systems in place that include support for prevention education and maintenance of the public’s health and well-being. The bottom line is, without the continual support of their stakeholders, these institutions will find it extremely difficult to experience longevity and success.

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References:

Ferrell, Fraedrich, & Ferrell. (2013). Business ethics and social responsibility (9th ed.). Mason, OH: Cengage Learning.

Furlong, B., & Morrison, E. (2014). Health care ethics. Burlington, MA: Jones and Bartlett Learning.

Spinks, N., & Wells, B. (1996). The context of ethics in the health care industry. Health Manpower Management. Keele, England, United Kingdom: Emerald Group Publishing, Ltd. Retrieved July 21, 2013, from http://search.proquest.com/docview/206620783?accountid=32521

Ethics in the Global Marketplace

Published August 5, 2013 by Mayrbear's Lair

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The global marketplace continues to expand because of the increasing number of organizations that are now engaged in commerce outside of their own jurisdiction. Boatright (2009) purports that as large multinational corporations (MNC) cross their own boundaries intense competition is at the core for the elevated levels of ethical problems that arise because in most cases, leaders and managers are unprepared to address them (Boatright, 2009). For example, many MNCs often engage in practices that exploit inexpensive labor and natural resources from less developed countries (LDC) and most do so without making investments in them that would help advance their economic development. Corporate leaders, for example,  find themselves in situations where they are forced to make unethical choices because they are being asked to place the procurement of profits as their primary goal disregarding the health and welfare of the consumers that support them. Leaders in one case study were asked to provide products that contained harmful substances and export them to other markets outside the US where little restrictions apply. The fact that managers even have to consider this as an option personally is appalling and at heart of why we are seeing so many examples of corporate misconduct exposed in the headlines like a pharmaceutical manufacturing plant that shipped contaminated vaccinations, or a peanut farm that was exported products contaminated with salmonella. When corporate leaders are faced with issues like these, profit is usually at the forefront of their decisions over safety.

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Corporate leaders are driven and have a duty to make sure their organization is run efficiently to achieve successful outcomes. Byron (2006) suggests that with the guidance of corporate leaders, a company’s purpose is to articulate their dominant values, translate those values into their principals and allow those principals to influence corporate culture. For example, the old version of corporate culture was characterized by such values like freedom, individuality, competition, loyalty, efficiency, self-reliance, power, stability, contractual obligations, and profit. If these values are not regulated and controlled, unworthy values like greed and the motive to dominate rather than serve can propel individuals and organizations to engage in ethical misconduct. In the new corporate climate however, leaders are embracing and learning to comprehend the ethical connection between the organization and a broader picture of its stakeholders which include employees, supplies, consumers, the community and the environment (Byron, 2006). Regardless of the situation an individual find themselves in, the final decision should reflect good judgment and the right choice, which in my view, does not include bringing harm to stakeholders. This in the long term, is a best practice choice.

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Unfortunately, many leaders are forced to make a decision between profits and the welfare of their consumers.  Some are aware of how other companies handle similar situations and feel immense pressure to adapt those industry practices to save their own hide and remain competitive in their market, or as Ferrell et al. (2013) describe, “When in Rome, do as the Romans do” (Ferrell, Fraedrich, & Ferrell, 2013). Leaders face a multitude of pressures because (a) their organization is showing signs of eroding market share, (b) unethical supervisors put pressure on team leaders to cut costs or layoffs would result, and (c) they are usually under a time restriction to yield results. In addition, rather than work in partnership with colleagues to find the best solution, sometimes supervisors make it clear the weight of the decision is on one person’s shoulders. In a case like this, the decision could yield a positive outcome and everyone is victorious. However, if the decision should prove disastrous, that manager is on their own.  In conclusion, many organizational leaders find themselves facing similar issues because they have not established an ethical culture and instead created a climate that is vulnerable to ethical misconduct.

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References:

Boatright, J. (2009). Ethics and the Conduct of Business (Sixth ed.). Upper Saddle River, NJ: Pearson Education, Inc.

Byron, W. (2006). The power of principles: Ethics for the new corporate culture. Maryknoll, NY: Orbis Books.

Ferrell, Fraedrich, & Ferrell. (2013). Business ethics and social responsibility (9th ed.). Mason, OH: Cengage Learning.

Cultivating an Ethical Corporate Climate

Published July 31, 2013 by Mayrbear's Lair

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The corruption and scandalous behavior of organizational leaders has prompted corporations to set up more effective policies to reduce ethical misconduct. In fact, as a result, many organizations have taken a proactive approach when it comes to cultivating an ethical climate. Recent studies suggest that 90% of fortune 500 companies now employ codes of conduct and new laws require CEOs to sign off on documents that state they have no conflict of interest financially or personally that may cause unethical operations. These are some of the measures corporate leaders take to maintain the trust of their stakeholders. Boatright (2009) posits that there are three kinds of codes of ethics. The most common specify rules for various situations and are identified as codes of conduct or statements of business standards and practices. Another kind of statement addresses core values or the vision of an organization. This is referred to as a mission statement or company credo. These include affirmations of the commitments an organization makes to key stakeholders. The third form is the corporate philosophy which describes the beliefs that guide the company. Philosophy statements are usually written by the founders of new industries, like when innovative technology is developed that introduces new ways of doing business. In addition, there are some companies that develop an aspiration statement which describes the kind of company they aspire to evolve into (Boatright, 2009). These various codes of ethics provide the stakeholders an explanation of the organization’s values and ethical principles that guide their actions.

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The institution examined for this blog post is The Chopra Center for Well-being. Deepak Chopra and David Simon, two highly esteemed medical doctors, created the Center for Well-being to offer a medical facility that integrates both eastern and western medicine to help people experience physical and emotional healing (Chopra & Simon, 2013). Organizations that manage public health and welfare have a responsibility to their clients and a higher need to establish codes of conduct because errors and ethical misconduct in this industry can result in the loss of life. Because of this, stakeholders require assurances of an effective ethics program to detect and prevent criminal conduct. The Chopra Center’s homepage clearly states their goal which is to guide guests and provide tools and healing principles that nurture health and restore balance to help them live a more joyful life. These statements clearly communicate their organizational goals and  the methods they employ as ethical medical practitioners.

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It is important that stakeholders trust the leaders that run a corporation. Ferrell et al. (2013) postulate that the development of an effective business ethics program outlines an organization’s objectives and devise systems to manage, evaluate, and monitor their operations (Ferrell, Fraedrich, & Ferrell, 2013). Stakeholders want to feel confident that leaders are engaged in actions that do not include abuse of power or misuse of organizational resources. For example, in addition to stating their goals on the homepage, The Chopra Center website also has a link to their mission statement which professes they exist to serve as a global source for healing and transformation. By clearly publishing their mission statement, their goals, their history, media information, a FAQs page to address questions and other information to address concerns, the Chopra Center website helps minimize risk and manages stakeholder fears by providing a wealth of information with openness and transparency. The information provided on their website displays a formal control of input that indicates is supported by a strong support staff whose shared values help establish a sturdy structural system. In conclusion, the Chopra Center team clearly seems to comprehend the importance of establishing an effective ethical culture because as an organization in the health care industry, it helps them avoid legal issues that could end up with disastrous consequences.

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References:

Boatright, J. (2009). Ethics and the Conduct of Business (Sixth ed.). Upper Saddle River, NJ: Pearson Education, Inc.

Chopra, D., & Simon, D. (2013). The Chopra Center for Well-Being. Retrieved July 14, 2013, from The Chopra Center for Well-Being: http://www.chopra.com/welcome-chopra-center

Ferrell, Fraedrich, & Ferrell. (2013). Business ethics and social responsibility (9th ed.). Mason, OH: Cengage Learning.

Ethics Audit Programs

Published July 29, 2013 by Mayrbear's Lair

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Most organizations incorporate some form of ethics system regardless of whether it is formally established or informally understood. Campbell and Houghton (2005) contend that ethical behavior does not simply translate to complying with legal and professional regulations; it is a state of mind in which individuals follow unwritten tenets and exist in a culture of making choices that does not bring harm to others or the environment (Campbell & Houghton, 2005). For example, leaders of ethics audit programs should require that individuals that manage them should  have adequate training to run ethical compliance programs. In other words, they should make sure the individual appointed to this position is sufficiently qualified. For example, one company that appointed an employee to manage the ethics committee for their organization was appointed merely because he was conveniently located near the office, not because of his experience in ethical or legal matters. In addition, he was reluctant to take the position unless he was substantially compensated for his time. This means his motives were driven by a reward system not by his moral values or principles. This component changes the dynamic of his role as an authoritative figure.

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Rules and policies in an organization are made to include the culture and values of a company. Boatright (2009) posits that these guidelines are outlined in a company’s formal documentation which includes their mission statement, a code of ethics policy, personnel manuals, training material and management directives. Orientation training, compensation, promotion, auditing and monitoring systems serve as various devices that help support a company’s rules and regulations (Boatright, 2009). In another  case study, the organization conducted its own ethics auditing report and concluded it was doing a good job of monitoring ethical issues and even complied with the report’s recommendations to establish a confidential hotline for employees to report legal concerns. However, one of the organizations top executives discovered another reality actually existed. One where: (a) employees are violating operational procedures, making unauthorized short cuts to meet deadlines that have resulted in harm to employees and the environment, (b) an inequality and glass ceiling situation that exists with respect to the compensation between male and female employees, and (c) discrimination issues in targeting a specific ethnic group and taking advantage of their unfamiliarity with labor laws. In addition without organizations like the EPA and OSHA monitoring their activities it is easier for them to engage in practices that violate regulations. Now that the leader is cognizant of these issues if he does nothing to change the situation or report it, when it is eventually discovered, he will find himself in dire need of an ethical crisis management and recovery plan to save his hide.

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Organizations that do have an ethical program or implement an ethics auditing system will face challenges that can result in legal and ethical misconduct. Ferrell et al. (2013) suggest that to help prevent a crisis from erupting, the development and implementation of a crisis management plan can serve to help leaders respond and recover faster from unethical and scandalous events that may occur (Ferrell, Fraedrich, & Ferrell, 2013). Although executives are not responsible for the events of the past, they are charge of guiding the organization’s future. If they are not able to manage ethical issues they face, he and the organization could face substantial legal and financial ramifications which will in turn disrupt company operations, prevent employees from performing their duties, slow production, damage the institution’s reputation, and lose the confidence of their stakeholders. If leaders avoid these issues they will only escalate until they reach the tipping point and at that juncture, it may be too late to recover. In the meantime, the executive’s job and reputation will be on the line because investigators will look to them for answers. It is recommended therefore, that leaders work on developing a crisis management plan because executives that cultivate an unethical environment steer organizations straight into the maelstrom of a managerial catastrophe.

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References:

Boatright, J. (2009). Ethics and the Conduct of Business (Sixth ed.). Upper Saddle River, NJ: Pearson Education, Inc.

Campbell, T., & Houghton, K. (2005). Ethics and Auditing. Canberra, Australia: ANU E Press.

Ferrell, Fraedrich, & Ferrell. (2013). Business ethics and social responsibility (9th ed.). Mason, OH: Cengage Learning.

Ethics and Federal Compliance Laws

Published July 24, 2013 by Mayrbear's Lair

Aristotle

To comprehend the topic of business ethics, it is important to identify the voluntary and legally required aspects of institutional practices and the behavior that supports it. Aristotle (384– 322 BC) believed that a person’s good or bad character was developed by habituation. In other words a person’s goodness or wickedness is developed as the result of repeatedly engaging in acts that have a common quality. These repetitious acts rely on an individual’s natural aptitudes and tendencies to gravitate towards righteous or immoral behavior (Aristotle, 2012).  In other words, the formation of a person’s character emerges by actions that are committed repeatedly in a certain manner and as a result of being guided or receiving direction externally to support these patterns. Once the behavior is understood by the individual, they can then choose to engage their free will. The continuation then, of the behavior, becomes a habit which over time translates into second nature. This demonstrates how a leader’s conduct and business practices cultivate a climate that is adopted by subordinates. During the Enron scandal for example, investigators discovered that Enron’s leaders developed a culture of deceit that was supported by their top executives, board members, and corporate attorneys, to gain the competitive edge and ensure capital gains.

 Antiques-Question-Federal-Oversight

The Enron collapse revealed deep failings that existed in the American accounting system and in the operation of corporate boards. Enron and other widespread corporate accounting scandals resulted in Congress establishing the Sarbanes-Oxley Act (SOX). It was designed to create a federal oversight system to monitor corporate accounting practices by making financial fraud reporting a criminal offense. Boatright (2009) reported that the SOX Act also increased the penalties for executives that engage in criminal activity. In addition, SOX addressed a wide range of provisions to require corporate transparency in three major areas: financial reporting, corporate boardrooms, and criminal law (Boatright, 2009). Poor business decisions alone however, did not result in Enron’s downfall. What was cleverly disguised from stakeholders was insider plundering. Because of this, Congress feels that Federal oversight is needed. Investors rely heavily on financial reports and in turn these reports can become the vehicles that lead to fraud. For example, by presenting a false image, executives can cover poor performance outcomes to maintain their lavish lifestyles. SOX changed the way corporations address problems with accounting and auditing. It requires that every publicly traded organization establish an independent auditing committee that is solely responsible for detecting fraud. It also supports internal whistle blowing by mandating all companies incorporate policies to support employees reporting acts of fraud without fear of retaliation.

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CEOs careers are now on the line. They are required to sign off on company financial forms to ensure their processors have complied with all mandates. Many corporate chiefs complain about the amount of time and money that is invested to comply with SOX regulations, but most agree that it is worth the trouble to reassure investors. Ferrell et al. (2012) posit that in addition, the law requires corporations to design a code of conduct that includes transparency and accountability in financial reporting to stakeholders (Ferrell, Fraedrich, & Ferrell, 2013). Experts expect further misconduct to occur despite the regulatory laws because global competitors are not required to comply with these regulations. This means that more scrutiny is called for because the more integrated world markets become, the more difficult it is to compete on a global level when the playing field is uneven. In the meantime, only time will reveal the long term results.

References:

Aristotle. (2012). Ethics. Seattle, WA: Amazon Digital Services, Inc.

Boatright, J. (2009). Ethics and the Conduct of Business (Sixth ed.). Upper Saddle River, NJ: Pearson Education, Inc.

Ferrell, Fraedrich, & Ferrell. (2013). Business ethics and social responsibility (9th ed.). Mason, OH: Cengage Learning.