BUSINESS ETHICS

WHAT IS ETHICAL CULTURE?

 Organization culture is the values and behaviors which governs and controls the organization operations. Ethical culture in an organization entails ethical behaviors which adhere to the set standards. Ethical culture encourages ethical behaviors and members show high risk tolerance and they are committed (Peterson, 2005). Leaders act as role models and influences ethical decisions and ethical behaviors by creating and maintaining ethical culture. Leaders implement both formal and informal system in maintaining ethical culture. Formal methods include the provision of resources, policies and codes, training programs and decision processes. Informal methods include presenting positive behaviors, training people on how to conduct themselves, effective communication and provision of norms.

WHAT IT MEANS TO MAINTAIN AN ETHICAL CULTURE

            For business survive, it must implement workplace ethics and motivate members to behave ethically. Apart from profitability and success, ethical culture will foster professionalism and productivity. Maintaining an ethical culture is simply the process of developing standards which will shape ethical behaviors (Peterson, 2005). Promoting ethical behaviors is the key goal in an ethical culture. Leaders have the responsibility to develop ethics-related goals for maintaining an ethical culture. Corrective actions such as developing and enforcing higher ethical standards are required to improve and maintain ethical culture. An ethical culture is important as it not only improves the employees’ morale but it also improves a positive reputation. To maintain an ethical culture means that an organization should set higher ethical standards and Codes of Ethics which will act as an ethical path toward pursuing goals. In order to main an ethical standards, organization require commitment and accountability (Peterson, 2005). 

CORE ELEMENTS IN MAINTAINING AN ETHICAL CULTURE

• Core ethical values

 Core ethical values are the key elements in developing and maintaining an ethical culture. A corporate culture cannot exist without core values and this means that in making all decisions, core values are they key elements. They act as a central dimension and a path for decision making. In order to maintain a positive ethical climate and culture, ethical values are fundamental important (Schwartz, 2013). Ethical values help diverse organization members develop ‘deep moral values’ which guides the behaviors. An important point that leaders should understand is that core values are universal and all people within the organization should adhere to the values. They should be ethical in nature, align with human dignity and support the democratic way o life.

 

 

Example of core ethical values

• Trustworthiness and transparency
• Respect for human rights
• Responsibility and accountability
• Fairness and equity
• Self-discipline
• Charity (Schwartz, 2013)

How to Establish Core Ethical Values

 

• Policies

 There should be written ethics policies which contains core ethical values. The document entails the organization expectations from employees on issues related with use of resources, intellectual property and interaction with colleagues. The document contains information related with specific characteristics which each and every member should poses including   integrity and respect (Schwartz, 2013). The written codes of ethics should be clear since its purpose is to maintain an ethical corporate culture. For example, it is important for leaders in the production department to maintain an ethical culture by following the core values related with managing the quality of product, implementing the production methods, inventory control and more.

• Processes

 Core values should be established in the firm’s processes. Hiring is among the important firm’s processes and leaders in this department should consider core values such as honesty in recruiting people. Leaders should consider core values in testing and interviewing and allow the core values to control in learning ethical issue of the applicants. Leaders should use the integrity testing in measuring executive psychopaths and understand applicants who are unethical and manipulative (Schwartz, 2013). Leaders should also apply core ethical values in ethics training.  Performance management system should measure the performance appraisal and identity actions which align with ethical values. Leaders should consider core ethical values in promotion d in order to maintain ethical corporate culture.

• Practices

 For core ethical values to be meaningful, leaders should set core values in the organization practices. For example, all levels should adhere to core values in making decision. Executives, board of director and other department managers involved in decision making and practices such as training should adhere to core ethical values (Schwartz, 2013). This will not only improve organization’s reputation but it will also maintain an ethical corporate culture.

• Formal ethics program

In order to maintain an ethical culture, ethics programs are effective.  Leaders should note that larger organization keep on changing regulations and ethics programs must be established to motivate employees cultivate and comply with workplace ethics. However, before implanting ethical programs, organization should establish and promote ethical conduct (Schwartz, 2013). Compliance and ethics programs will serve an important purpose of providing core of ethics which each and every member will understand the follow. Leaders should understand that codes of ethics should be non-legalistic and should mainly focus on expected behaviors. Every member in the organization should read   and adhere to them. Leaders should conduct ethical training regularly and in all meeting and compliance officer should monitor the training programs.

 

• Ethical leadership

In order to maintain an ethical corporate culture, ethical leadership should be a driving force.  It is the role of top managers to set a moral tone and provide an ethical guidance to the members.  Leaders should act as role models and demonstrate appropriate conducts. Leaders should develop strong interpersonal relationships through effective communication (Schwartz, 2013). Leaders should ensure a strong bond between ethics and values and all managers in all levels should develop organization values. It is the role of leaders to demonstrate ethical leadership in order to influence ethical behaviors to members.  When leaders behave ethically, employees will become more committed and avoid illegal behaviors.

 ROLE OF CULTURE IN GLOBAL BUSINESS ETHICS

  In global business ethics, culture play role in individualism and collectivism. In global business, Individualism focus on personal goals, personal freedom and satisfaction while collectivism focus on communal relationship, harmony and cooperation. Ethical initiatives in the two system play role in that in individualism cultures, ethical concern are handled by external advisors.  Ethics programs provide the basic concept and functional and dysfunctional concepts in managing individualism and collectivism cultures (Beer & Business Expert Press, 2010).  For example, culture in individualism society provides an individualist managerial approach which promotes personal responsibility. On the other hand, collectivism managerial approach develops harmonious relationships and combines of diverse skills. Culture play role in low power societies and higher power societies where the former culture expects individual to embrace positive behaviors from personal point of view and the latter expects individuals to learn from superiors. Culture in feminine and masculine societies develops ethic program which promotes moral perception in culture difference. The importance of ethical culture programs in multinational firms is that managers are provided with reliable guidance. They achieve ethical goals by applying the best practices in addressing society cultures (Beer & Business Expert Press, 2010).

IMPORTANCE AND RATIONALE FOR MAINTAINING AN ETHICAL CULTURE IN GLOBAL BUSINESS

 The underlying principle of ethical culture in global business is broader and it touches things which have to do with human resources, ethics and management, social responsibility and more. Ethics in management entail different roles with respect to different cultures. Ethical culture in global context sets high standards and professional conduct and firms adheres to law and ethical standards (Trevino & Weaver, 2003). Culture sets global operating guidelines where multinational companies operate on. Maintaining a global ethical culture is important in ensuring that multinational companies adhere to global values. Global ethic and standards will allow multinational companies to adhere to international rules. They will develop new structures, new leadership role and develop marketable character.

ETHICAL BUSINESS PRACTICES IN GLOBAL BUSINESS

 In global business ethics, leaders should develop core values in global level. Companies should understand the different values in different cultures and should adhere to values such as honesty, respect among others. Leaders should develop training and create policies to help employees becomes culturally sensitive in the global content (Olaru & Gurgu, 2009). Organizational members should be engaged regularly in ethics and compliance through effective communication and compliance leadership. Compliance committees will play a great role in monitoring ethics and compliance. Business unit managers from different levels such as human resources and finance should unite with international business units and develop code of conduct and standards of behaviors.

 

 

SPEAKER’S NOTES

 In modern word, corporations face challenges contributed by unethical behaviors and the solution to this issue is developing positive business conducts. To address business-related scandals, codes of ethics are the key element which organization should consider. Note that ethics comprises guiding principles which people use in developing actions. Different culture embraces different values which contribute to proper behaviors. In this case, the guiding principles are the code of ethics and these play a significant role in improving reputation and creating positive image (Peterson, 2005). Code of ethics creates ethical culture since employee gains a greater knowledge based on legal issue. Ethical culture is also applicable in global business since all corporations strive to succeed internationally. For  multinational corporations to succeed and achieve a sustainable  advantage, they  focus on developing cross-culture core competence .in global business, global corporations  are developing training to ensure that employee adhere to  legal requirements. To ensure that codes of conducts are followed in local and global business, ethical leadership is important and it is the role of leaders to develop competency. The latter will help in understanding the ethics programs required, vision and values. Last, leader should create and implement ethics programs for the purpose of evaluating the ethical behaviors and providing training (Trevino & Weaver, 2003).  .

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reference

 

Schwartz S. Mark. (2013). Developing and sustaining an ethical corporate culture: The core elements. KELLEY SHCHOOL OF BUSINESS (56) 39-51.

 Retrieved from: http://www.unife.it/economia/lm.economia/insegnamenti/governance-and-accounting-of-smes/materiale-didattico/lecture-3/reading-3_schwartz

 

 

Olaru Delia Silvia & Gurgu Elena. (2009). Ethics and Integrity in Multinational Companies. Review of International Comparative Management (10) 1 , 113-120.  Retrieved from: http://www.rmci.ase.ro/no10vol1/Vol10_No1_Article10.pdf

 

 

Beer, L. A., & Business Expert Press. (2010). A strategic and tactical approach to global business ethics. New York, N.Y.] (222 East 46th Street, New York, NY 10017: Business Expert Press.

 

Peterson, R. A. (2005). Business ethics: New challenges for business schools and corporate leaders. Armonk, NY [u.a.: Sharpe.

 

Trevino, L. K., & Weaver, G. R. (2003). Managing ethics in business organizations: Social scientific perspectives. Stanford, Calif: Stanford Business Books.