The reputation of many organizations has suffered as a result of unethical actions among their employees. With the current expansion of business globalization and open markets, scholars are increasingly advocating for ethical businesses and social responsibility. Companies should adhere to laws and morals governing their operations and also, they should also develop an environment that promotes ethical behavior for sustainable development (Salehi, Saedinia, & Aghaei, 2012). According to research, ethical or unethical acts are functions of both contextual factors and individuals’ characteristics which are highly influenced by an organization’s culture. In the United States, ethical businesses make it a rule to set ethics guidelines and clearly communicate the guidelines to all stakeholders. Also, ethical behavior in business is tied to an incentive system (Salehi, Saedinia, & Aghaei, 2012). Ethics should cut across all business operations units, and business leaders should be held accountable to formulate company codes of ethics and to ensure the codes are implemented and adhered to irrespective of what position one holds in the company. Adam Smith also acknowledged that corporate can engage in unethical practices by writing ‘people of the same trade seldom meet, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise the prices’ (Salehi, Saedinia, & Aghaei, 2012). Business ethics apply to all aspectsof business conduct from how it develops, produces and delivers its products and services, to its interactions with its employees, customers, suppliers and wider society (Lagan, 2013).
Businesses should be considerate to the social and natural environment in which it operates. From a utilitarian perspective, a business engages in unethical practices to attain short-term gains. However this practice is not sustainable in the long run (Lagan, 2013). Some of the unethical practices in businesses include environmental violation, improper contracts, contract violation, sexual harassment, theft, health and safety violations and corruption (Lagan, 2013). Consequences of unethical behavior are seen in the following two examples.
An internal investigation carried at Wal-Mart found executives of its subsidiary company in Mexico, had paid Mexican officials over twenty-four million US dollars in bribe to facilitate an easy entry into the market (Lagan, 2013). Top management had knowledge of this but did not take any action to discipline the executives involved in this corruption. Further investigations are underway to determine if the company violated the Foreign Corrupt Practices Act and if found guilty will be prosecuted. Corruption compromises the morals of a society and deprives it of equity in wealth distribution and justice (Lagan, 2013).
One of the largest banking institutions in the world, HSBC was charged with violating United States sanctions (Lagan, 2013). The organization transferred billions of dollars for nations under sanction; Mexican drug barons were able to launder illegal money through the bank and also supported organizations linked to terrorism by partnering with Saudi Arabian banks. The bank had to pay $1.92 billion as a settlement (Lagan, 2013). Such unethical practice puts the society at danger as it promotes illegal activities also it costs the company money and tarnishes a business’ reputation. Those in power in businesses should be held accountable for failure to act to discourage unethical practices or to engage in unethical practices themselves (Lagan, 2013). The protection of an organization’s integrity should be a part of risk management rather than just athe cornerstone of organizational culture development requiring the C-suite executives to be constantly aware of the happenings in an organization (Lagan, 2013).
References
Lagan, D. (2013). Why business ethics matter to your bottom line. Sydney: Chartered Accountants Australia and New Zealand.
Salehi, M., Saedinia, M., & Aghaei, M. (2012). Business Ethics. International Journal of Scientific and Research Publications, 2(1), 1-5. Retrieved from http://www.ijsrp.org/research_paper_jan2012/ijsrp-jan-2012-46.pdf
