Ferrell

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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.

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.

 

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.

Leadership and Corporate Culture

Published July 26, 2013 by Mayrbear's Lair

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Executives have the power to shape corporate culture and motivate ethical conduct. Most leaders consider themselves ethical. Some, however, question whether ethics is a relevant component of leadership. Boatright (2009) contends that it is just as important to embrace ethical behavior in public life as well as in private life. Most corporate moguls are under the impression that behaving ethically alone is enough to sustain them as an effective leader. In fact, studies suggest that leaders do not believe specialized skills or knowledge in ethics are necessary to produce effective results in the work place (Boatright, 2009). This is a false perception. Situations arise more often than not in a business environment where leaders cannot easily resolve issues without identifying the ethical implications. This research focuses on the role a leader plays in the development of an ethical corporate culture. It takes a closer look at the importance of ethical leaders and the various roles they serve in an organization.  In addition, this study will illustrate the relationship between ethical leaders and their stakeholders. The analysis will also examine various leadership styles, the impact they have on corporate culture, how they affect ethical-decision making, and draw from examples to support this investigation. The findings of this research will conclude that leaders, who engage in business practices without ethical rules and regulations, will eventually discover that ethical misconduct behavior can easily become an inevitable component in their future.

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Importance of Ethical Leadership

The most successful leaders use their power to shape corporate culture and motivate ethical conduct. Because they are in the business of making a profit, they design strategies to achieve desired outcomes. Deepak Chopra (2012) reminds us that life is riddled with challenges, obstacles, and situations that leave many individuals asking the question, “Why is this happening?” No matter what advantages an individual may possess – money, intelligence, charismatic personality, a positive disposition, or influential social connections – none of these elements offer a magic key to effective leadership (Chopra, 2012). Managing directors are continually faced with difficult challenges. How they manage these trying situations can make the difference between the prospect of success and the threat of failure (Chopra, 2012). For example, when leaders cultivate an environment of fraud and deceit, they are fertilizing the ground for failure and destruction. In order for an executive to be considered an effective leader, they 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 their employees to adhere to behavior that is in alignment with the organization’s code of conduct.

Consistency also plays an important role for successful executives. The most effective leaders incorporate policies that inspire high performance levels and motivate organizational behavior that goes beyond just observing regulations. When leaders establish trust with subordinates, they earn the loyalty of their staff. In return, employees trust their leaders to protect them from harm in return for their services, dedication, and loyalty. By making choices to work in partnership with their employees, leaders can help them achieve greater levels of success than perhaps even they realized were capable of achieving. Employees who respect their supervisors, feel supported and appreciated by them, are more likely to become motivated and go beyond just achieving organizational goals.

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Leaders and Stakeholders

Stakeholders provide leaders another reason to cultivate an ethical culture. As a leader, it is their responsibility to make sure the company is guided towards the path of success and profit for the benefit of the stakeholders that support them. Executives, therefore, must incorporate effective strategies and hire the appropriate talent to reach desired outcomes as part of their responsibility to the employees, consumers, suppliers, and society as a whole. Ferrell et al. (2013) posit that because stakeholders have the ability to affect corporate policies it is imperative that leaders find methods to use their power to influence positive outcomes. There are five power strategies leaders utilize to achieve their goals: (a) reward power, (b) coercive power, (c) legitimate power, (d) expert power, and (e) referent power. Studies suggest these five power bases can be implemented to achieve both ethical and unethical outcomes (Ferrell, Fraedrich, & Ferrell, 2013). For example, a leader that incorporates legitimate power believes they have the right to exert their influence and that others are obligated to accept it. This kind of power is typical in hierarchical environments where leaders are assigned titles and specific positions of authority. In this type of culture, stakeholders readily acquiesce to leaders who command legitimate power. In some instances, however, leaders use this power to engage in behavior that is opposite of their belief systems. These individuals use strict protocol and the chain of command to their advantage. This is typically one way leaders can influence individuals to engage in misconduct. In this setting, it is easier to establish a climate of deceit because subordinates are hesitant to disobey orders for fear of the punishment or termination. The leaders at the well-oiled Enron machine, for example, employed all five power strategies to maintain their grand illusion.

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Leadership Styles

An individual’s leadership style also plays a significant role in shaping the corporate culture and motivating ethical conduct. Glanz (2002) reports there have been many studies conducted to help determine the best leadership styles. Most conclude that effective leaders exhibit varying degrees of the following virtues: (a) courage, (b) empathy, (c) judgment, (d) impartiality, (e) enthusiasm, (f) humility, and (g) imagination (Glanz, 2002). The best leaders, however, continue to expand their knowledge, re-examine outdated business strategies, maintain smooth operations and high production levels, and motivate staff confidence. In his book, Leadership Aikido, John O’Neil (1999) introduced six concepts to achieve victorious leadership skills without harming others. These concepts were inspired by the martial arts tradition of Aikido. He ascribes the following six practices that enable leaders to assess and develop their fullest potential: (a) cultivating self-knowledge, (b) practicing the enigmatic art of planning, (c) speak the language of mastery, (d) allowing values to drive the decision-making process, (e) changing the outcome of failure to one of success, and (f) abiding by the law of unintended consequences. This method of leadership embraces the elements of aikido to help executives identify and overstep five major obstacles that impede progress: (a) failure to grow emotionally, (b) failure to make creative decisions, (c) failure to empathize, (d) failure to manage ego, and (e) failure to overcome boredom and alienation (O’Neil, 1999). Leaders that continue to develop effective leadership skills will most likely achieve higher levels of organizational success.

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The Decision-Making Process

The decision-making process also plays an integral role in how leaders influence corporate culture and motivate ethical conduct. Hanh (2012) posits that because leaders can get into difficult situations, they must have the ability to handle strong emotions in the workplace in order to maintain effective relationships. To achieve this they must keep communication open and become cognizant to avoid the creation of a negative or repressive work culture. The most successful leaders incorporate practices that help manage strong emotions and become educated on how to utilize these strategies in good times before strong emotions arise. This strategy offers leaders the ability to respond in a more skillful fashion and incorporate effective methods during a crisis (Hanh, 2012). For example, Hanh’s Plum Village organization has developed a culture that incorporates three positive influences of power to guide their code of conduct. They are love, understanding, and letting go. The leaders at Plum Village posit that these three influences of power help in the decision-making process because they are used as effective tools that focus on the release of suffering. Their strategies of operation are designed in a way that does not incorporate punishment or destruction. In addition, they conduct their business practices in a manner that protects the environment and all living things.

Leaders that incorporate ethical choices and learn corporate social responsibility operate a business free of worry and fear concerning their future because their business practices support the stakeholders and the environment rather than exploiting or depleting them. Leaders that possess the ability to listen to their own pain and to that of others are capable of finding solutions for transformation. The most successful leaders learn that ethical leadership can help them realize their goals with the support of their stakeholders. In short, leaders that continue to learn to take care of themselves first, have better knowledge of how to take care of others. This is one effective strategy that ethical leaders use to establish a culture that embraces harmony and respect; one that encourages employees to feel pride and joy.

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Conclusion

Organizations like Plum Village that focus on creating a culture of happiness have produced a community that stakeholders are motivated to invest in. Hanh (2012) posits they have created a model that does not focus solely on profit. They also cultivate a climate to create joy and happiness (Hanh, 2012). Businesses should not have to sacrifice happiness to achieve high levels of profit. Organizations that are destructive, engage in fraud, and operate without regard for stakeholders do not enjoy longevity. Leaders in this arena cultivate an atmosphere of discontent and anxiety. Executives on the other hand, who focus on cultivating a climate that motivates ethical conduct without compromising their ability to profit, are more likely to succeed and maintain the confidence and support of their stakeholders. For a workplace to function successfully and harmoniously there must be a code of behavior that everyone is willing to accept. The most effective method of making sure this is accomplished is for leaders to make it a part of their organization’s culture. The most successful do so by setting an example and participating in a leadership style that reflects ethical behavior. They must also include strategies to incorporate supportive speech and engage in actions that bring content and cheerfulness to themselves, their organization, and the community at large. The findings of this research conclude that leaders who engage in ethical misconduct and cultivate a culture of deceit will achieve disastrous results like Enron unless they embrace effective leadership skills that have the power to shape a corporate culture that supports and motivates ethical conduct.

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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. (2012). Spiritual Solutions. New York, NY: Random House, Inc.

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

Glanz, J. (2002). Finding your leadership style. Alexandria, VA: Association for Supervision and Curriculum Development (ASCD).

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

O’Neil, J. (1999). Leadership Aikido. New York, NY: Three Rivers Press.

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.