Question 1. How do morality, ethics, and leadership play a role in shaping good and bad business?
Answer. With Enron and other similar scandals flummoxing the corporate world even now, the significance of morality, ethics, and sincere leadership automatically comes to the fore. There is no debating around putting the business into ethics or putting ethics into the business. Literature endorses that sustainable and fruitful business enterprises share values with the societies they operate in. The absence of this trait may put them under legal scanner or render them insignificant in the eyes of stakeholders.
Statistically speaking, 59 percent of respondents, in a survey conducted in 2006, rated their school programs as good for integrating ethics into the decision-making. Organizations with ethical work cultures outperformed the stock markets and indices of peer companies by 300 percent, stated a survey that was conducted to identify the linkage between good business and ethical conduct. Researchers have further vindicated that organizational culture is among the strongest predictors of the market value that an organization is projected to create for every dollar. Between 1993 to 1998, firms with strong ethical cultures outperformed the stock market by 20 percent.
This statistical evidence well avers that values, morality, and ethics indicate a positive work culture and impart a superior value creation. Ethical and moral values engulf a wide range of behaviors as respecting the customers, ethical marketing practices, non-discrimination on the basis of personal variations, and respecting the surrounding society and environment as a whole.
Drawing a contrast between Southwest Airlines and Japan's skymark, it is obvious that a diminutive practice of greeting the customers can make a significant difference in their satisfaction and hence the business profitability. While the former emphasized on respecting and caring the customers, the later, in 2012, announced that its clients should not expect attendants to stow their bags. The announcement fanned the whiff of negativity and customers ridiculed the declaration.
The case of the airlines is quite suitable to understand how ethical and moral principles can shape a good or bad business. If simplest of things as customer care can create so much uproar, bigger moral concerns including environment and society are well expected to cast their nets deeper. There are several other real-world cases that depict the important role of morality and ethics in shaping the business values. For example, on facing a shortage in quality Arabica coffee beans, the managers at Starbucks Coffee joined hands with Conservational International to develop programs for farmers to increasing the supplies. Their efforts protected the biodiversity and critical habitats. As per the opinion of corporate strategist Michael Porter, Starbucks ethical organizational culture spurred the shared values and hence the competitive advantage. While the efforts on the part of managers increased the supply of Arabica coffee beans, profits of the farmers got enhanced simultaneously. It was a classic example of a win-win situation that fulfilled human values and interests.
Apparently, moral values, ethics, and leadership are well intertwined to shape a good business contour. While morality and ethics are theoretical concepts, leadership is a dynamic force that puts these concepts into practice to stay tuned to the changing requirements of the 21-st century businesses. There is no denying the fact that business contours have undergone a colossal change in the last century. With enhanced focus on teamwork, diversity handling, environmental concerns, and an overall corporate social responsibility, the onus is on leaders to develop an organizational culture so as to foster values, morality, and ethics.
Furthermore, ethics and leadership are related by power in an organizational context. Both ethics and leadership require power. In what sense this power is used decides the course of ethics and morality. For instance, a leader exercising his/her power in a dictatorial manner without paying due heed to individual concerns' cannot be termed as ethical. As such, leadership cannot exist without ethics as leaders time to time have to solve many ethical dilemmas.
While some authors have hinted at the conflict between ethics and profit-making of the business, recent opinions do not approve that. Organizations can keep good business practices and find the way out to make profits at the same time. They do not need to hamper their moral and ethical practices in the pursuit of money. In this regard, Tanbridge House school event vindicated that organizations must focus on customer service and emphasize good and moral organizational practices. If these things pay them money, firms need not apologize. Contrarily, just eyeing on profits and ignoring ethical responsibilities is not a good business idea; it can obstruct the profits and reputation in the long run.
Succinctly, good ethics and morality equate to good business. Leadership, having employed these desired traits, can make the business sustainable and profitable in the long run.
Question 2. What influence can big companies have on our society pertaining to these issues by practicing good or bad business?
Answer 2. As business and society are interrelated, it is natural that business practices will be positively linked with the societal impacts. That is, while ethical business conducts are likely to foster harmony in the society, fraudulent conducts can tear apart the social fabric thereby creating severe tensions.
The most important impact of unethical and immoral business behaviors is an infringement of social responsibility. There are numerous examples that exemplify how bad business norms influence the society as a whole. Whether it is poor working conditions in Dubai, exploitation of workers in Third World nations, safety breach in Toyota cars, or any other Enron-like scandals, the impact of the society and communities is detrimental.
First and the foremost, practicing unethical behavior leads to trust deficit in the society that metastasizes into a gnarled employee-employer relationship, employee-customer relation, and a biased power balance in the society. The example of Enron well testifies it. The fraud, well-designed by managers, propagated the culture of self-dealing and enrichment in the society, at the cost of share-holders.
The case further reveals the end of social-spiritual capital in the society. Workers come from diverse nations and carry different beliefs, opinions, values, and perception. While they share the basic needs as connectedness, belongingness, and trust, they also share the basic human weakness as selfishness and greed. Good ethical conduct, thus, fosters the connectedness, but unfair practices enhance greed and selfishness in the society thereby putting social-spiritual capital in danger.
The failure of leadership at Enron is a classic example that testifies the aforementioned argument. The toxic organizational culture resulted in negative work ambiance in the society. Though the management hired the most talented workers, it duly failed to come up to their expectations. The management failed to maintain the required honesty and openness with employees. Employees who dared to question its practices were silenced.
Apparently, there is a strong relationship between business and the society and bad business behaviors lead to a constant race to the bottom. While unhealthy competition, unequal distribution of benefits and corruption boom, transparency and accountability are put on the backburner. An overall relationship with the civil society takes a beating when big companies fail to play ethically. Civil society is a dynamic force, and unacceptable business notions lead to antagonism between both parties.
For example, NGO Greenpeace activists questioned the management of Bharti Airtel for its high carbon emissions caused by excessive diesel use in phone towers. Coke and Pepsi faced severe protests over quality matters, and construction companies in Dubai were put under the scanner for exploiting workers from outside. Likewise, other big companies were accused of outsourcing their operation to cheap nations and not paying heed to employees' safety.
Taking a cue from the corporate cases, it can be well ascertained that bad business values malign the benevolent forces in the society. Undoubtedly, Enron was an ethical hurricane that changed the contour of the relationship between business and the society. In addition to that, there are lots of other issues as illegal immigrants, high fuel prices, the quality of fast-food, corporate governance, minimum wages, discrimination, and so on. The litany can go on, and on but these examples well indicate the tensions in the society because of unethical business practices. While good and transparent business practices flourish morality, values, and ethical leadership capabilities, unethical behaviors incur a huge social and financial cost to the community as a whole. Time to time, businesses have been reviled for polluting the environment, and exploiting workers and consumers for its own advantage. The common thread among these grievances is the abuse of power by big companies. In an article published in BusinessWeek, around 72 percent Americans endorsed that corporate has too much power, and it can well affect the civil society by its good or bad practices. While good business conducts maintain the power balance in the society, bad conducts abuse the power by not taking care of its responsibilities at the same time.
All in all, the relationship between business and society rests on laws as well as shared understandings. Shared understanding is not clearly spelled out, but entail the expectations one have from the other. The corporations behaving exclusively with money-making mindset fail to meet the expectations of the society and hamper the sacrosanct relationship that is believed to exist between the business and the society.
Succinctly, business has many impacts on society related to the economy, governance, privacy, environment, and intellectual property. The economic impact is influenced by fair/unfair wages, the material purchased from suppliers, and the benefits provided to workers as per legal regulations. The case of construction workers in Dubai well indicates the economic impact of the business practice. The high rates of suicide, utter dissatisfaction, and deteriorating health of workers is an instance of negativities a business can reap in the community.
There are many instances when businesses have to collect personal information of the customers. Unfortunately, some cases have come forth where companies have shared the information with the third parties without the approval of clients. The case of T.J. Maxx involving the stealing of personal records of customers well testify the impacts of frauds on the general public. In the same vein, accounting frauds as happened in Enron are notorious for inducing the bribe-culture in the society.
Question 3. How does one's moral compass affects the rest of a company and in turn the rest of the world?
Answer. "One foul fish spoils the whole pond," the adage well suits here. An organization's culture is the total of values, beliefs, and perceptions. These traits, to an extent, are guided by the moral compass of individuals working in the company. There is a strong positive relationship between individuals' moral compass and the morality of the organization as a whole. The moral compass is referred as the internal voice telling what is right and wrong in given circumstances. People feeling guilty of their actions are referred to as having lost their moral compass. For instance, Enron CFO Andy Fastow admitted that he had lost his moral compass and felt shameful for many things he had done. Apparently, if he had acted in full compliance of his moral compass, things would not have gone so wrong.
Studies over the years have led researchers to explore the phenomenon of moral deviation further, i.e., people are well likely to behave unethically without clearly recognizing that they are doing so. Scholars have called it an ethical drifting that has entailed two primary phenomena. First, there are some bad apples whose ethical compass is inherently defective. The second perspective states that there are some intrapersonal and interpersonal( influence of others) reasons that are responsible for moral deviation or ethical drifting of others. The influence of others specifically describes the essence of how an individual's moral compass affects the rest of the world.
The social nature of morality conflates with interpersonal reasons in deciding the moral course of actions. As humans are social, they derive their strengths and weaknesses from fellow beings. Morality is communal in the sense that it acts as a guiding factor in social relationships. Like morality, immorality is also social. Though it is likely that the moral compass of some people( say psychopaths) is inherently defective, the moral compass of others can impact the ethical behaviors of even the most honest of people. Van Lange hypothesized that even the choices of people are significantly affected by social forces, i.e., the others' individual compass.
Real-world examples affirm that the ethical failure of big businesses is the not the handiwork of just a single individual. His/her actions rather have trickled down to affect the functioning of junior employees thereby spoiling the entire organizational and national culture. Enron case was ballooned not only because of the designers of the fraud, but also because of many other witnesses who could not challenge the Enron's unclear management style. Additionally, there were some others whose actions factually perpetuated the effects of the scandal. Enron scandal was also not limited to the company. The negative influences were felt across the globe thereby confirming that one's moral compass can have a killing impact on the whole world.
Moral development theory has further hinted at the social processes that may be responsible for the neglect of moral content or deviation of moral compass in individuals. Studies on social norms state that observation and modeling of others result in influencing the moral dimensions connected people. These factors play a role in altruism as well as moral negligence. Bryan(p.400 ), for instance, hypothesized that people are more likely to behave good if they see others doing so. Conversely, they are likely to ignore others if the people surrounding them do the same. Research studies also confirmed that a child who is exposed to aggressive adults is likely to show aggressive traits in his/her behavior than the counterparts. The same concept applies to moral conduct. If an individual engages with an individual who is not ethical in conduct, he/she is also likely to develop that unethical conduct with time. These findings well relate the concept of social identity to social norms that duly affect the behavior patterns of individuals.
The theoretical and practical underpinnings, thus, well testify that the moral compass of individuals influences the whole organizational culture. Scholars have additionally identified the level of influence by differentiating between in-group and out-group members. Imitation of conduct increases among in-group members. In a study, students were given the paper of Mathematics with an option to cheat. Participants were exposed to a confederate who ostentatiously cheated. Overall instances of cheating increased when the confederate was an in-group member, i.e., belonging to the same university to that of participants. The instance is also an indicator of how psychological closeness perpetuates among in-group members.
Psychological closeness between individuals automatically transforms the sharing of beliefs, values, and perceptions; it blurs the boundaries between the self and others. The psychological connection flows the feelings of joy, sorrows, and embarrassment towards each other thereby encouraging individuals to take on the properties and conduct of each other. The argument boils down to the hypothesis that psychological closeness with a wrongdoer can have detrimental ethical impacts.
As socialization is normal in organizational culture, a new entrant tends to adopt the behaviors that have been marked as acceptable by his successors. It is quite possible that some of those conducts may be unethical. Simple examples being opening networking sites in the office, chatting on the phone for long hours, doing personal chores in office time, and using the official property for personal uses. Scholars have affirmed that socialization has a seductive power. Individual either gradually succumb to unethical practices or get swayed by the psychological benefits of unethical conducts. The organizational culture of the company gets severely affected in both of these scenarios.
Barbara Lay Toffler clearly described how socialization practices changed in Arthur Andersen when the firm took a shift in the auditing system. Earlier, there was an independent auditor who respected integrity; however, the company shifted to professional auditing services who preferred revenue generation over accurate auditing. These instances well pinpoint that the conduct of individuals can be detrimental or beneficial for the organization as well as the whole world.
Works Cited
Bennett, W.J. The Moral Compass: Stories for a Life's Journey. New York: Simon and Schuster, 1995.
Bryan, J.H. "Models and Helping: Naturalistic Studies in Aiding Behavior." Journal of Personality and Social Psychology (1967): 400-407.
Carroll, Archie B. and Ann K. Buchholtz. Business & Society: Ethics and Stakeholder Management. Mason: Cengage Learning, 2009.
County Times. "Leaders Questioned on Morality in Business at Tanbridge House School Event." County Times, 29 June 2014.
Daft, Richard. Organization Theory and Design. Cengage Learning, 2006.
Galinsky, A.D. "The Effects of Perspective-taking on Prejudice: The Moderating Role of Self-evaluation." Personality and Social Psychology Bulletin (2004): 594-604.
Kirby, Carrie. The World's Four Biggest Credit Card Scams. September 2014. 6 March 2016 <http://www.wisebread.com/the-worlds-4-biggest-credit-card-scams>.
Mitchell, T.R. and W. Felps. "How, When, and Why Bad Apples Spoil the Barrel: Negative Group Members and Dysfucntional Groups." Research in Organizational Behavior (2006): 175-222.
Moore, Celia. "Ethically Adrift: How Others Pull Our Moral Compass From True North, and How We Can Fix It." London Business School, 2013.
Morgan, Briggs &. "Shaping an Ethical Workplace Culture." SHRM Foundation, 2013.
Sundar, Pushpa. Business and Community: The Story of Corporate Social Responsibility in India. SAGE, 2013.
Van Lange, P. "Being Better but not Smarter than Others: The Muhammad Ali Effect at Work in Interpersonal Situations." Personality and Social Psychology Bulletin (1991): 689-693.
Wong, Paul T.P. "Lessons from Enron Debacle: Corporate Culture Matters." Langley, Canada: International Network on Personal Meaning, 2014.
