corporate social responsibility

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When is Lying as a Strategy Ethical?

Published July 18, 2014 by Mayrbear's Lair

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My research on ethical decision making revealed that in order to create and maintain a successful business, leaders must include ethical decision-making as one of the firm’s operational processes. In addition, they must also comprehend and identify potential issues and educate staff members on what defines ethical decisions within the context of the organization. In their book, Business Ethics (2013) Ferrell et al., remind us that more often than not, business leaders automatically assume their staff members will make ethical decisions the same way they do in their home: with family or friends in their inner circle. However, within the construct of an organization or work group, not many people have the freedom to make decisions on ethical issues that are independent of the organization’s parameters. Furthermore, their research also revealed that to help establish an ethical environment, business leaders must also take into consideration the many components involved with the ethical decision-making process, including: (a) ethical issue intensity, (b) individual factors, and (c) organizational components including the corporation’s culture (Ferrell, Ferrell, & Fraedrich, 2013). These are significant elements that can influence the intentions behind decisions which lead to ethical or unethical conduct.

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The media’s recent expose on the VA scandal, for example, revealed that the organization developed a culture that nurtured lying as a strategy. One reason was to ensure certain supervisors would qualify for monetary bonuses. However, this is an industry where implementing the use of lying as a strategy can cause great harm and brings extreme disgrace to their governmental organization, as well as to the public. In fact, the ongoing investigation continues to reveal, that this strategy yielded catastrophic outcomes including the fatalities of many heroic veterans who honorably served their country; veterans that trusted and relied on this government agency to provide them the assistance they desperately required in the healing process. This scandal was yet another horrifying reminder of how the use of lying as a strategy can have dire consequences.

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With all the evidence piling up to support that engaging in a strategy of lying can yield catastrophic outcomes, my research work also included a closer examination of when the use of lying as a strategy is acceptable and see if I could track down any examples to support this position. To answer this, I simply had to look back at my own professional career experiences to confirm that there is only one profession that I know of, in which this strategy is not only used, but is expected as well: magic and illusion.

As an entertainer who spent nearly fifteen years traveling and performing with magicians and illusionists, I can personally vouch that the career of an illusionist is the one profession where the public is happy to embrace the idea of lying as a strategy. Many magicians that choose to pursue this career path do so as a life calling. That was not the case with me. I revealed in my eBook, Ethics in the Real World, (2013), in more detail, how I got involved in this magical industry. The truth is, up until that point, I was focused on pursuing a career as a theatrical stage performer, but got sidetracked along the way when I moved to Los Angeles and infiltrated the music industry by becoming a corporate staff member at Capitol-EMI Records.

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The magic industry was my first experience working in a profession that incorporated lying as a key strategic ingredient for how I was making a living. I had always been perceived by many as a “goodie two-shoes” because I was known for going by the book and following rules to a “tee.” For me, using tactics like misdirection and misinformation was a foreign concept. I had to learn how to think outside the box of what I comprehended was reality. Once I did that, I was in a state of mind more open to embrace different realms of possibilities. In laymen’s terms, I learned how the art of lying and misdirection are used as a strategy to yield positive outcomes.

Stage illusions and the art of magic, once rehearsed and perfected for a live theatrical stage performance, are merely a form of entertainment that incorporates the concept of lying; one that the audience has come to expect. Many people are accepting of this concept because they know the rules of this field before hand (transparency) and have given themselves permission to participate in this world of illusion. The reason for this is because it is one brand of entertainment that can provide the public with a sense of wonder, which in turn stimulates them emotionally. Furthermore, the anticipated payoff for this experience is that the consumer is left feeling positive and transformed from the experience. In a world where competition is fierce and life seems to be a struggle at times, people need and want a place to escape. The entertaining world of stage magic and illusion offers the public an opportunity to experience a different kind of reality – one where the impossible seems possible.

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In summary, my research work on when the use of lying as a strategy can be implemented ethically, led me to conclude that the industry of magic and illusion is one market where consumers have given their permission and expect to participate in the art of deception as a form of escapism and entertainment. In short, my analysis revealed that there is an ideal market for the use of lying as a strategy that can produce positive outcomes. Plus, I discovered there are effective ways to do so ethically: being transparent and choosing a career that reveals to consumers it is all part of an illusion. In other words, implementing this tactic is merely done as a means of entertainment, allowing audience members the opportunity to escape their problems for a little while to enter into a realm where the wonder of magic is real.

That’s it for this week. Have a great weekend, everyone, and keep working on chiseling those organizational management skills!

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We can run a business by placing a lot of emphasis on happiness in addition to placing some emphasis on profit as well. – Thich Nhat Hanh

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References:

Berry, M. A. (2013). Ethics in the Real World. USA: Kindle Direct Publishing.

Ferrell, L., Ferrell, O., & Fraedrich, J. (2013). Business ethics: Ethical decision making and cases (9th ed.). Mason: South-Western.

 

Building an Ethical Foundation

Published June 16, 2014 by Mayrbear's Lair

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The concept of success is difficult to define because it has a different meaning to each individual. For some, success equates to climbing the top of the corporate ladder to assume the role of an executive office. Another person’s view of success is being in service to others, like family, friends, and outsiders.  Baack (2012) postulates that the main concepts that most individuals identify as personal success include: (a) building an ethical foundation, (b) training and preparation, (c) finding the right fit with an organization, person, or group, (d) continual improvement, and (e) achieving balance in their lives. He further suggests that each of these components contribute to a satisfying life, relationships, and career (Baack, 2012). In other words, success can be defined in terms of the components required to help contribute to the greater good. This also suggests that each individual is capable of assessing ethical and unethical behavior. For example, had enough individual decision makers taken the necessary steps, perhaps companies like ENRON would not have engaged in misconduct.

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To build an ethical foundation, one must begin the process by developing a personal code of ethics. This typically begins by enforcing the golden rule. Common sense principles like this can help an individual to establish personal morals. Also, additional training in ethics and counseling can help with moral questions as they occur. This supports the concept that ethical actions are the starting point and ultimate goal to achieve any successful outcome.

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In my research work on ethical behavior for Ashford’s MBA program, some of which is compiled in my eBook, Ethics in the Real World (2013), I point out that individuals with no oversight, accountability, or consequences for their actions can become a danger to themselves and others. In short, a person with unlimited power, without unlimited compassion, is most likely to cultivate a climate of unlimited corruption. In addition, it can lead to the development of personality disorders rendering individuals with an inability to recognize inappropriate behavior. In fact, they can become so disturbed they are unable to see they have a problem (Berry, 2013). Governments do their best to regulate misconduct with laws and policies, but it is really up to each individual and corporation to develop codes of ethics and emphasize the significance of ethical training.

On Wednesday, we will take a closer look at ethical training and the preparation involved to help build an ethical foundation. Until then … keep organizing!

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If people are good only because they fear punishment, and hope for reward, then we are a sorry lot indeed. – Albert Einstein

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 References:

Baack, D. (2012). Organizational Behavior. San Diego, CA: Bridgepoint Education, Inc.

Berry, M. A. (2013). Ethics in the Real World. USA: Kindle Direct Publishing.

The Framework of Ethics

Published August 2, 2013 by Mayrbear's Lair

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As the idea of organizational sustainability continues to expand, stakeholders require that their leaders cultivate strong values and excellent personal integrity, exercise wisdom, and embrace a willingness to make difficult choices.  Savitz and Weber (2006) purport, that successful leaders must also foster an environment of openness and transparency to maintain the trust of their stakeholders (Savitz & Weber, 2006).  To achieve this for example, there are a number of frameworks business leaders can employ to measure their organization’s structural and ethical behavior.  The focus of this research will examine two of those frameworks: the Balanced Scorecard and the Triple Bottom Line models.  In addition, the study will analyze the components that characterize the two systems and explain how they are used to enhance corporate ethics and business performance.  To further comprehend these concepts, this research will analyze how organizations incorporate these frameworks to develop business ethics programs that drive ethical decision making.  To illustrate these ideas, this study will focus on two organizations as examples and look closer at how they applied these frameworks into their corporate culture.  The findings of this research will conclude that organizations measure their structural and ethical behavior to preserve stakeholder trust because they are the effective systems that help them establish an ethical culture, drive ethical decision-making, improve performance outcomes, and support an environment that cultivates ethical behavior.

The Models

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The Balanced Scorecard Model

Leaders want their organizations to experience success and longevity while cultivating a climate that drives ethical decision-making.  In addition, stakeholders want to feel confident that their organization is operating without causing harm to others and is not engaged in fraud or ethical misconduct.  To appease stakeholders, leaders can devise methods to measure performances and devise systems to monitor the various components.  One model leaders incorporate to measure organizational behavior is called the Balanced Scorecard (BSC) management system.  Kaplan and Norton (1996) state that the BSC model helps translate an organization’s vision and strategies into a coherent set of performance measures.  There are four components of the scorecard:  financial measures, customer knowledge, internal business processes, and learning and growth.  These mechanisms serve to: (a) create balance between short-term and long-term objectives; (b) help achieve desired outcomes and control the performance drivers of those outcomes; and (c) monitor and manage hard, fact-based or objective measures and softer, more opinionated or subjective measures (Kaplan & Norton, 1996).  They also provide an accurate understanding of an organization’s objectives and the methods for achieving those goals.

The BSC also construes an organization’s mission and strategies into a more comprehensive set of performance measures that provide the framework for strategic management systems.  Ferrell et al. (2013) purport that this can be accomplished by providing various devices that track financial results while monitoring the progress of an organization’s growth capabilities (Ferrell, Fraedrich, & Ferrell, 2013).  In short, the BSC focuses on all the elements that can contribute to organizational performance and outcome success that encompasses the financial, consumer, market, and internal devices.

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A BSC Corporation

The more tuned balanced scorecard (BSC) concepts become, the more corporations embrace them.  One organization for example, that has been identified as a company who operates under the BSC framework is Shat-R-Shield (SRS) Corporation.  SRS is a manufacturer that specializes in plastic shatter-resistant lamps for the food and consumer products processing and packaging industries.  Perry (2010) contends that  SRS is driven by Karen Ponce, the CEO, who has adopted a work ethic that her job is to work on the business, not in the business (Perry, 2010).  As a result, the organization went through rigorous BSC training and, in doing so, discovered how successful they could be because of the effective measuring strategies implemented that monitor organizational outcomes.  Although the transition to a BSC corporation was challenging, results concluded the benefits of becoming a measurement management business outweighed their efforts.  By the time the organization made the full transition, they were able to incorporate three major strategic initiatives which helped them soar to new heights.  As result of becoming a BSC organization, they optimized business systems, improved management behavior, and enhanced product development.

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The Triple Bottom Line Model

Effective leaders are always looking for methods to improve business performances and improve ethical behavior.  In addition, the pressures and demand for measurement of social performances gave rise to social and ethical auditing, accounting, and reporting (SEAAR).  Ferrell et al. (2012) posit that the Triple Bottom Line model is another effective ethical auditing system that provides a framework for corporate leaders.  This model considers the social, environmental, and financial impacts that affect corporate decisions (Ferrell, Fraedrich, & Ferrell, 2013).  Leaders that want to increase their commitment to corporate social responsibility (CSR), sustainability, and ethical conduct engage their organizations in triple bottom line reporting as a means to confirm that their directives and investments support the organization’s values and desired outcomes.

Many leaders believe that an organization’s overall success goes hand in hand with social and environmental achievements.  Boatright (2009) contends that the impetus for triple bottom line accounting is derived from several sources.  For example, federal guidelines now require corporations to measure all avenues of their performance.  They must evaluate the benefits of their CSR programs to ensure the appropriate devices are developed and incorporated to demonstrate the value of their CSR activities to stakeholders (Boatright, 2009).  In addition, they are required to incorporate several influential rating organizations that rank the company on social performance.  The Dow Jones Sustainability Index is one example of a prominent ranking system that provides this service.  The Global Reporting Initiative (GRI) has also provided a framework that organizations have adopted to report their social and sustainability progress.  The main objective of GRI is the disclosure of environmental, social, and governance performance.  Businesses use the GRI to design standard systems of reporting nonfinancial outcomes in a manner that recipients of the reports can comprehend easily.

The benefit of incorporating the GRI is to provide the opportunity to compare an organization’s sustainability with that of other companies and offers them the possibility of boosting their status in the eyes of their stakeholders.  Coffman and Umemoto (2010) postulate that the triple-bottom-line framework is a sustainable model that presupposes a bottom-line should be achieved for each component – environmental, social, and economic with equal emphasis on each (Coffman & Umemoto, 2010).  Corporations that operate with the triple-bottom-line framework will most assuredly gain the support and confidence of stakeholders.

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The Patagonia Project

An increasing number of organizations are employing CSR and are engaging in environmental and social stewardship practices.  These organizations are referred to as benefit corporations.  Research from the Worldwatch Institute (2013) suggests there are currently 200 benefit corporations, none of which are publicly traded.  The outdoor apparel and accessory firm Patagonia, for example, is recognized as one of the largest benefit corporations, reporting annual sales of $540 million for the fiscal year ending April of 2012 (“Companies Increasingly Pursue Triple Bottom Line,” 2013).  Patagonia’s advocates contend they mold a triple bottom line into their DNA.  Incorporating this strategy has freed them from concerns of litigation and ramifications that result from ethical misconduct.  Gunther (2013) contends Patagonia conducts business in accordance with their mission statement: build the best product, cause no unnecessary harm, and use business to inspire and implement solutions to the environmental crisis (Gunther, 2013).  To demonstrate their ethical behavior, Patagonia recently engaged in a partnership with a network of Argentine ranchers and The Nature Conservancy.  Their objective is to build a sheep-grazing business to produce wool that will not only protect, but also restore regions of the Patagonian grasslands.  The business practices this organization displays is a prime example of a corporate culture whose decisions and business operations consider the social, environment, and financial components that impact stakeholders.

Conclusion

Corporate social responsibility has value only if the organization actually engages in the benefits they claim to have in place.  Companies continue to shift from the framework and practices outlined from the industrial age and transiting to conform to the revolutionary age of competition for information.  As a result, the information age climate requires new capabilities to achieve competitive success.  Kaplan and Norton (1996) profess that the ability of an organization to assemble and develop its imperceptible assets has become far more pivotal than capitalizing on physical, tangible assets (Kaplan & Norton, 1996).  The findings of this research conclude that without ethical models to measure organizational structure and ethical behavior, leaders will not have the support systems in place to detect and avoid misconduct efficiently that ensures stakeholder trust that will guide them to success.

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References

Companies increasingly pursue triple bottom line. (2013, May 1). Retrieved July 17, 2013, from enrionmentalleader.com: http://www.environmentalleader.com/2013/05/01/companies-increasingly-pursue-triple-bottom-line/

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

Coffman, M., & Umemoto, K. (2010, October). The triple-bottom-line: Framing of trade-offs in sustainability planning practice. Environment, Development and Sustainability. Dordrecht, Netherlands. Retrieved July 16, 2013, from http://search.proquest.com/docview/750311725?accountid=32521

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

Gunther, M. (2013, February 11). Patagonia seeks more sustainable wool in Patagonia. Retrieved July 17, 2013, from greenbiz.com: http://www.greenbiz.com/blog/2013/02/11/patagonia-sustainable-wool

Kaplan, R., & Norton, D. (1996). The balanced scorecard: Translating strategy. Boston, MA: Harvard Press.

Perry, G. (2010). A balanced scorecard journey. Retrieved July 17, 2013, from balancedscorecard.org: http://balancedscorecard.org/LinkClick.aspx?fileticket=Qd7wk08IcWE%3d&tabid=57

Savitz, A., & Weber, K. (2006). The triple bottom line. San Francisco, CA: John Wiley & Sons, Inc.

 

Corporate Social Responsibility

Published July 22, 2013 by Mayrbear's Lair

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Companies are in the business of making a profit for the benefit of their stakeholders.  This in turn means they have a responsibility to the employees, customers, suppliers, communities and society at large. Boatright (2009) posits that most organizations are cognizant of their responsibilities. They seek strategies to reach desired outcomes and initiate directives that adhere to corporate social responsibility (CSR). In fact, evidence suggests it is becoming more difficult for companies to gain sufficient competitive advantage in today’s cut throat marketplace without CSR. Together with regulations that are in place, more corporations are engaged in practices that monitor such things as fair prices, fair labor conditions, direct trade, democratic and transparent organizational behavior, community development and environmental sustainability (Boatright, 2009).  Top managers, however, are not always in the best position to make ethical choices because of various components. In one case study for example, a manager was thrust into a situation that required decisions and judgments based upon the organizational culture. In addition, as an expectant parent, the leader’s financial status changed temporarily because his wife was on unpaid maternity leave. This now left him as the sole breadwinner. In short, the supervisor’s new situation made it difficult for him  to make the best choices that were in alignment with his personal moral views because of the external pressures from his job and the internal pressures of a husband and an expectant father. He was feeling stressed from being in a position where he had to contemplate choices that could ultimately result in his termination.

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The legal issue he contemplated were having to conform to new policies that lead to behavior in violation of federal trade commission laws and mandates. Upper management was pressuring him to engage in practices that encouraged using information from trusted clients to give them an advantage in the market. This in turn created unfair competition. In addition, he did not have the support of many of his departmental staff members. In fact, many voiced  loudly their objection to the new direction the firm was taking. Ferrell et al. (2012) suggest that a company’s history consists of the unwritten rules that become part of its culture. Leaders at the helm are considered responsible for their behavior as well as that of their subordinates.  Corporations that follow the guidelines set forth in the Sarbanes-Oxley Act define parameters that institutions are expected to comply with, which includes systems that monitor and assess the internal and external auditing of financial statements (Ferrell, Fraedrich, & Ferrell, 2013). By adopting these new practices proposed from upper management, their company was in a unique situation to utilize information from trusted client relationships in order to profit over other organizations. This is a serious offense that raises the alarm for stakeholders.

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There are advantages and disadvantages to the manager’s situation. The advantages are huge capital gains, status, recognition, and other enticing benefits. The disadvantage is conducting business unethically and illegally which can result in termination and incarceration. To incorporate these new practices, it encourages employees to chase monetary rewards based on commissions and fees on mutual funds that are risky, can go sour, and damage the credibility of the firm and its representatives. In short, chasing high profits unethically, will inevitably lead to the organization’s demise and the downfall of many respected careers. Because of the added pressures to provide for his expectant partner, the pressures from his superiors to engage in questionable practices, and the threat from one of his biggest clients, this leader had to face some very serious choices which could have long term negative outcomes. McGraw (2012) contends that surrounding yourself with the right people helps you learn the right actions to make the right decisions (McGraw, 2012). The financial industry tends to attract individuals that are drawn by power, which can turn to greed and corruption contingent upon personality traits. Many top executives find themselves in situations where they are called to participate in ethical misconduct from pressures like this leader faced. Their choices are: (a) comply and go with the directive of their superiors taking the risks that are involved with misconduct, (b) choose not to participate, which could ultimately cost them their job, or (c) find a solution that does not involve the exploitation of trusted client information to achieve similar positive outcomes. The last choice requires presenting a strong argument to upper management however, that supports changing the view of the superiors with reasons that urge them to engage in more ethical practices to achieve their goals. Ultimately it is up to each individual to come up with a strategy they can support and embrace with a healthy conscience.

References:

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.

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