I. Abstract
This assignment examines and reviews the elements of business ethics and its institution in the 21st Century. This includes the examination of social responsibility, values and ethical dilemmas and leadership for sustainability. This culminates in the critical analysis of definitions and pointers within the textbook and from the writers own point of view of these matters and issues. After this, there is a review of a real case involving Alcoa and how it has created its ethical framework and dynamics. This is examined in great length alongside the core websites relating to corporate ethics. The imports and lessons are examined and reviewed and a conclusion is drawn.
II. The Three Themes
There are three main theories and ideas that are developed in the paper. They include the major issues and matters relating to major ideas and concepts that are necessary in examining the corporate governance structures and the ethical systems of modern businesses.
Social Responsibility: The textbook shows that a firm’s obligation and responsibility does not just cover the need to make profits. There is the need and requirement for companies to go beyond making profits and enriching shareholders only. This used to be the idea until the 1970s. However, in today’s world, a firm will have to be sensitive to its social responsibility which includes what it does to its stakeholders including the wider environment, the society, workers, customers amongst others. A stakeholder is defined as a person who affects and is affected by the activities of a given organization. Therefore, social responsibility involves the ethical responsiveness and sensitivity to these parties and entities who are connected to an organization.
Values and Ethical Dilemmas of Leaders: Every organization needs a set of predefined and predetermined standards and values that will define the parameters of moral choices and moral decisions. Moral decisions are very different from legal requirements. Legal requirements are defined specifically and every company has to respect them. However, morality has an element of subjectivity which makes it vary across different worldviews. However, morality could have many implications and affect the long-term survival of a firm. Therefore, a firm will have to set up a value code that will help them to deal with these ethical issues. Ethical dilemmas are moral-oriented issues that leaders will have to deal with in order to link the fundamental values of an organization with issues they encounter in the routine running of the organization. They will have to apply the right standards in order to satisfy the conflicting parties and attain the best possible result.
Leadership for Sustainability: A business is set up to last over a long period of time, not just a few years. Hence, there is the need for the long-term survivability of a firm to be taken into account when taken decisions. This balance is split with the need for profitability in the short-run which includes the exploitation of resources and seeking to maximize the dollar values of transactions without sensitivity to stakeholders and the environment. Leadership for sustainability is about the process whereby a firm’s directors taken into account the long-term implication of their actions and work to preserve the needs of stakeholders and the environment in order to achieve the long-term growth and survival of a firm.
III: Chapter 5: Organizational Ethics and the Law
Bribery: This is an amount of money paid to induce a given kind of reaction from an authority or an important figure. It indicates that a party provides some kind of money to a given party in order to get that party to act in a way that is not legally acceptable but favors the organization that made that payment. According to the International Business Ethics Institute, many multinationals pay various forms of bribes in order to gain important goals and ends. Bribery often leads to major corporate scandals that leads to major reputational risks that limit the ability of a firm to achieve its long-term goals
Corporate Culture: This is the way things are done within an organization and it is based on a set of relatively stable attributes that develop in an organization over a period of time. Corporate refers to the generally accepted norms and processes within which a firm does its things. This comes about after years of working and promoting various activities and processes that are generally accepted as universal in the company.
Ethic Audit: An ethic audit is a check on the activities and processes of a company in order to evaluate how well the structures of ethics in the company operate and how well they achieve the results of the directors for the ethical structures. Ethical audits are conducted regularly or where necessary in a company because it is important to ascertain how the company operates and how it meets its goals and expectations in times of ethical dilemmas
Mechanisms: These are arrangements and structures put in place to ensure that certain ethical decisions and choices are made within a company. They usually include various checks and balances that a company institutes in order to achieve certain goals and ends in various ways and forms.
Laws: These are legal structures and legal processes that are based on the constitution of the country which regulates parts of the actions and activities of a given company. Laws must be obeyed and in cases where they are not obeyed, there are consequences that comes with a given company. Unlike moral issues that could affect the long term prospects of a company, laws affect the directors or the responsible persons or the company directly and there must be accountability which could lead to criminal prosecution.
Ethisphere.com: This is a website of different ethical companies that come together to form the association. They define standards in ethics and safety and they continuously research these standards and improve them over time in order to help companies to attain improved and enhanced performance levels within the right moral activities and processes.
Globalethics.org: They provide the tools for ethical fitness and the promotion of cultural integrity. Therefore, they act as a consultancy entity and organization that is focused on studying the environment and providing a pool of competencies and resources for the enhancement and improvement of the environment within which corporate entities can do business and carry out their activities.
Saiglobal.com: This is focused on training and development of staff members and leaders of entities. They do things by examining and evaluating various needs of companies and working on them to improve and enhance operations and activities.
Question 1: The case shows that the ethical work climate of Alcoa is one that is well structured. There is a conscious effort by the management to set up a system through which the workers’ actions are to be regulated and this is based on a series of parameters or principles that guide the conduct of all workers to promote ethics, health, safety and excellence. These standards have existed over the past 30 years and they have grown in order to create a framework for the development of ethical rules and standards.
In spite of these parameters, there is no requirement or desire to force workers to meet them and achieve them by being imposed upon them. Rather, they develop gradually within an emergent framework. Thus, the ethical framework can be seen as a blend of rigid rules and emergent issues that are captured and integrated into the system and authorized or given recognition by the topmost corporate leader of the company – the President himself.
Question 2: The directors of Alcoa were instrumental in setting the tone and parameters. First of all, they defined the broad framework and the main parameters within which safety and ethics will be instituted in the company. This included the identification of key watchwords that guided the conduct and activities of the company and its staff members. However, they allowed the junior managers to define things that were relevant and set the parameters. This created major processes and procedures through which the company was to operate and do its things.
With time, when the standards and regulations were consolidated, they sent them to the top directors and managers for authentication and official institution. This made the codes and standards a formal regulation and a formal tool for the company. Therefore, Alcoa grew to integrate and develop these new rules and regulations and apply them over a long period of time.
Question 3: Reporting is important. This is because the directors have a fiduciary responsibility and obligation to shareholders. This includes the right to use the money and resources of the company for the best interest of the company. They use this power to delegate authority to workers and this delegated authority has accountability requirements and regulations. Therefore, there were safety guidelines and rules that Alcoa’s managers in Mexico had to follow. And in all times and situations, they were to provide reports. Failing to provide feedback and information about what was done indicated that the managers in Mexico were running things as they deemed. They were taking up too much authority than was delegated to them. Hence, there was the need for them to be fired. Moreover, they made very minor mistakes. This included errors that were against the spirit of the ethical regulations. And hence, they were to be corrected if they had given all material facts to the headquarters. Failure to make those disclosures led to the situation whereby they had to be fired for disobeying the rules of the company.
Question 4: In theory, the “Value in Practice” rules of Alcoa can be adopted by any company. It forms a set of standards that have worked in a large corporation. As such, it is likely to work in other companies. However, this comes with major problems and issues. First of all, not all companies are in the same industry as Alcoa and are at the same size as Alcoa. Thus for instance, what Alcoa spends on ethics is around the entire budget of other companies who operate around the world at that scope. Thus, following their rules in detail will not work or achieve results.
This means that the only solution for adopting Alcoa’s value in practice is to create a framework whereby there could be adjustments and changes to align ethical practices to the realities. Therefore, every firm must create a basic framework within which they can define their values and from there, move to identify major issues that constitute rules and then use them as a means for formulating ethics and standards.
Implications
The idea indicates that the best management and ethical system is one that is created and consolidated through a series of flexible principles. Within the principles, the staff members are to define what is important and these are presented to the directors and strategic managers to endorse and create into rules and regulations that are binding as standards of integrity. Over the years, these rules are to be implemented to various degrees of seriousness and implications
Conclusion
Ethics and integrity standards are to be developed over a given period of time. This indicates that these ethics must be developed and redeveloped in order to meet the corporate goals of the company. Once accepted, they must be implemented according generally accepted rules and norms and these must be the responsibility of managers. Furthermore, there must be constant reports to the head office to confirm what was done and how it was done otherwise, there could be consequences.
Part 2: Overview of Relevant Lessons
The main lesson learnt from this essay is the fact that being a director and a business leader is about taking decisions that will lead to the definition of ethical conducts in the company. These are often done by defining some basic and simple rules that are grown and enhanced in order to create a corporate ethical framework and systems.
These systems are to be implemented and all members of the company must ensure they are implemented to meet social responsibilities and ethics. This includes the creation of a framework for the achievement of a high level of integrity. Directors must implement them and ensure that all managers meet the standards of a company with a culture of ethics.
Rules are to be implemented as a part of keeping integrity. This must be reported to the directors in order to ensure that ethical standards are leading to results and this must guide the conduct of people across the organization.
Works Cited
Business-Ethics.Org. Are Standards Becoming Standard Operating Procedures? An International Update. 2005. Web. 4 January 2016. <http://business-ethics.org/articles/International%20Standards%20and%20Global%20Codes.pdf>.
Carroll, Archie and Ann Buchhlotz. Business and Society: Ethics and Stakeholder Management. Wadsworth: South-Western College Publishing, 2013. Print.
Freeman, Evans and David Reed. Stockholders and stakeholders: A new perspective on corporate governance. Los Angeles: UCLA Extension Press, 2013. Print.
Lawrence, Anne and James Weber. Business and Society: Stakeholders, Ethics, Public Policy,. New York: McGraw Hill, 2014. Print.
Mallin, Christine, et al. Corporate Governance and Complexity Theory. Lanham, MD: Edward Elgar Publishing, 2012. Print.
O'Sullivan, Patrick, Mark Smith and Mark Esposito. Business Ethics: A Critical Approach: Integrating Ethics Across the Business World. London: Routledge, 2012. Print.
