Issues of business ethics and social responsibility

Issues of business ethics and social responsibility The achievement of the intentions or set objectives of the business organization requires the establishment of the management structure that ensures proper definition of role and responsibilities to provide the basis for the development of effective selection systems that aid the recruitment and engagement of suitable personnel to occupy positions created within the context of the business enterprise to discharge the assigned roles and responsible forward the achievement of the set goals and objective of the business concern Indeed, the set objectives of the business organization cannot be achieved unless the employees of the business enterprise demonstrate the appropriate ethical behaviours in the execution of assigned duties, ultimately enhancing the corporate image of the business outfit in the environment where it operates. This becomes essential to stralegies developed to stimulated the patronage of the goods and service produced and provided by the business concern According Dr. B. Odusina, Managing Partner of Upman Ltd in a lecture paper delivered titled: Business Ethics and Corporate Governance on 16 June 2001 at a Seminar Organized for Mobil Oil Producing at Ogere Training Centre; There is the need to stress that employees who demonstrate unethical behaviour do not promote the fortunes and the area being of the business organization, and thus, unless such negative behaviours are abandoned it becomes impossible for them to make the desired contribution towards the success of the business enterprise Odusina went further to say that management science, today has made available range of attributes, and traits that form the basis for the development of the appropriate business ethical behaviour that should should characterize the disposition and action of the individuals discussed in the latter part of this seminar paper. THE CONCEPT OF ETHICS What are Ethics? Ethics are mural laws that involve: A high Sense of self Awareness Manage tin: Time Management Life Goals Programming Personal Grooming Consciousness Human Relations Striving for Excellence Self Discipline A High sense of Responsibility and loyalty towards: Ones Own Roles Towards Superiors and Subordinates Towards Company Customers and Suppliers Towards the acquisition and use of other resources Towards ones own family, community and nation Nigeria 3. A high sense of Probity in: (a) Dealing with Confidential matters (b) Handling Companys Finances (c) In very different situations A high sense of Accountability For authority and roles played For resources utilized For the life spent HISRORICAL PERSPECTIVE OF BUSINESS ETHICS We start by looking at some causes in recent years of public concern about organizational behaviour. It would, of course be doing a great injustice to past generations to imagine that only our own taken this topic seriously. The 19th century, while giving rise to some highly undesirable business practices, was notable also for its pioneering work in area such as antislavery child labour reforms, and the development legislative framework to curb abuses in company financing. A society which deniers credit to the ethical pioneers of the past, just because they did not address all of today prominent themes, begins to undermine its own foundation. According to David Munay (1997) the ethics of business and organizational life have acquired a considerably higher public as well as professional profile during the past fifteen years Managers and top captains of industrial concerns now receive numerous invitations to conferences, seminars and workshops on topics such as corporate values, corp orate governance and other ethical aspects of management. The books falls carry an increasing number of specialist titles and no self respecting management text can now omit at least some discussion of organizational values or corporate social responsibility. The 1970s in Nigeria saw a focus on rapid wealth creation because of oil boom; a get -rich -quick syndrome and the widespread ignoring of moral imperatives beyond profit loss and cash flow statements. In Nigeria particularly we are now well into a decade of moral reflection Business if far from being the only spare in which this is happening, but it is particularly noticeable arguably because of the widespread neglect of such matters for so long To some extent, this increased interest may be a consequence of a relatively high number of widely publicized scandals as it includes bank frauds, failed contracts, tax evasing by corporate multinationals, swindles in hard currencies by top government functionaries, scandalous advance fee fraud popularly called 419 that is affecting our image abroad to mention a few About three consecutive times last year 2004, most of our popular dailies reported Nigeria to be the second most corrupt country in the world, after Cameroon. This was on the good authority of Transparency International These and other phenomenal unethical practice are giving the government and private sector operators a serious concern. The recent collapse of Arthur Anderson and other much respected international concerns are a case in point EVEYDAY ETHICS The key business ethics concern is the way that the business conducts itself in its ordinary, every day routline activities The way the firm deals with its staff and its customers, the way it designs and supports its products, the way it awards contract and apportions blameà ¢Ã¢â€š ¬Ã‚ ¦ these are the key determines of whether a business is ethical, and are as important as the way it deals with crises. According to Elaire Sternberg (2000) the events that attract attention major frauds, for example may not represent ethical dilemmas for business: in such cases business people often agree on what is right. The problems that such events pose are real ones, but often concern practical difficulties; how to implement agreed moral standard, how to deal with the villains who sadly exist in business as in elsewhere: Sternberg opined further that the really thorny business ethics issues in contrast, are those where there a genuine disagreement about what is right or wrong. THE TOOLS OF ETHICS VALUES It is useful in this text to recognize that business ethics can refer to several different things most commonly, it refers to ethical conduct in and by business. In this sense, in benefits to business include doing the right typically promotes achievement of business goals. While doing the wrong things hinders the successive pursuit of those goals. To recognize things are the right things however, it is helpful to understand the principles that underlie ethical conduct in business. Accordingly business ethics as the knowledge and study of such principles can also be of value to business. According to sternbery (2000), an ethical decision that clearly sets out the principle of business ethic can help business both to identify and actually resolve business ethics problems. A model is theà ¢Ã¢â€š ¬Ã‚ ¦Ãƒ ¢Ã¢â€š ¬Ã‚ ¦Ãƒ ¢Ã¢â€š ¬Ã‚ ¦Ãƒ ¢Ã¢â€š ¬Ã‚ ¦Ãƒ ¢Ã¢â€š ¬Ã‚ ¦Ãƒ ¢Ã¢â€š ¬Ã‚ ¦equivalent of a map it can help guide business through the ethical issues that it inevitably must handle A model is not, however a panacea just as a Map does not physically smooth out the human. What an ethical decision model can do is extremely valuable. Most fundamentally, I can help to eliminate conceptual issues, it can help a business avoid wasting its resource on spurious problems and unwarranted guilt. An ethical decision model can indicate when and how ethical discussion is appropriate in a business context. When all within the business share a common vocabulary for ethical matter, they can articulate moral standards and moral questions easily By reducing moral muteness and promoting the early detection and resolution of ethical issues, an ethical decision model therefore enables the business to benefit from the vigilance its staff. Accordingly, an ethical decision model can do much to reduce the costs and adverse consequence of ethical problems. By illuminating what is at stake in any situation, and what the alternate course of action might be an ethical decision can indicate what information is relevant and what can be ignored. CULTURAL PERSPECTIVE TO VALUES In a given culture, at a given time, there is broad agreement on major values. Mos people agree on what is good (e.g. the right vole), and what is bad (corruption in government). Not all people or groups of people hold the same value, but the value o of those in majority will affect beliefs and behaviours of society. According to Yalokwu (2002), The action of managers are affected largely by then personal beliefs (Guth and Jaguini, 1965). For examples manager who are motivated by economic value will tend to stress the importance of growth for their companies. Managers who are motivated by social values on the other hand, might be willing to sacrifice some company growth to improve the conditions of service of the employees. But however, values are not only factors, that influence managers decision. The specific situation a manager faces will have great influence on or even dominate how a manager behaves. RIGHTS: Ethical concerns penneate every aspect of business activity Ethical issues arise obviously in connection with core ethical values; when there are question of, for example honesty or justice. They also are potentially at issue whenever action or decision affect other people, either by helping or by harming them. But ethical issues can even arise when other peoples right and interests are not directly at stake. Whenever there is a chose to be made between values or a better and a worse way of doing something or a thing is deemed to be a good one of its kind, an ethical judgment is involved. In this broad sense, most judgments and choices and decision about goals standard, quality and priorities are ethical. Accordingly, most business action and choices, decision and judgments have ethical aspects; they involve specifically ethical values or help or harm people or indicate character, or all of the above. Sternberg (2000) opined that, hiring and firing, choosing suppliers, setting prices establishing objectives, allocating resources, determining dividends; disciplining workers, planning schedules, awarding contracts à ¢Ã¢â€š ¬Ã‚ ¦ all involve ethical choices. Even the most trivial decision and ones that appear to be made on purely technical or economic groups typically have ethical aspects, it is not, just in the fringe areas of do gooding that ethical issue occur, but through out all of business ethic is inescapable in business as in life In order, therefore, to know which ethical issues should concern business as business, and to resolve ethical problems in ways that are appropriate for business a clear understanding of business ethics is essential If it is a companys responsibility to be concerned with advancing the interests of its employees, then it will be essential to consider the issue of stability of employment as it is quit apparent that this constitutes one of the paramount interest of most employees. At the very least, losing his job is likely to cause grave in convenience loan employee: he will go through a period of uncertainty and anxiety, will face a period more or less long without stable income, will incur search cost looking for a new job, and at the end of the day may be forced to move to different locally (Elegilo 1996) A firm seen to be truly committed to do its best to provide stability on employment will be sending a very powerful message to its employees that is really concerned about their welfare. The firm is thereby laving the foundation for a two-may commitment. It is well known that guarantee of the life time employee constitutes one of the bases of the extra ordinary loyally that Jepanese employees traditionally exhibit toward their companies. However, what is clear is that the foundation of employee loyalty, in any cas can easily be destroyed by policies that seem to be based on a consideration of the employees so many cost to be cut. Still, it is important to keep a sense of perspective and make it clear that there is no question of auguring that terminating an employee is intrinsically immoral will not be so if the objective by germinating an employee is something good in itself. As would be the case in situations in which management seeks to preserve on enhance the long term viability of the firm, improve the cost structure of the company or (in the case of an unproductive or disruptive employee) remove cause of lower morale or a potential source of danger to other employees. As a matter of fact, terminating some employees may not be unethical but I source cases a may well be a definite ethical duty We may find it emotionally repugnant to dismiss an employee who has a large family; yet managers are not paid to follow the courses of action that they personality fund congenial, but to protect the common good of the company (Elegilo 1996). When preserving the jobs of some employee becomes incompatible with the health or even the survival of the whole organization as it eventually happened in the case of intel. Then failing to take the necessary measure can easily amount to gross irresponsibility. This will be much more so in the case of individual employees who through presistent misconduct erode the standard of the company Other tools of Ethics: 1. Loyalty Steadfastness in allegiance to the management of the business enterprise. The implies the commitment on the part of the set objectives of the business organization 2. Fairness The avoidance of discriminating tendencies in dealing with people of diverse background, endeavouring to treat all human beings as equal, and then give each person equal opportunities 3. Principled Behaviour: The demonstration of a consistent behaviour in similar situations that makes ones behavour predictable, and ensuring the same decision being made in similar situations 4. Confidentiality Being discreet in dealing with the publics in a manner that makes the employee to refuse to divulge official information even in the face of financial inducernent or inspite of threats to his life. MORAL RULES IN HUMAN RELATIONS AND COMMON MORALITY Human Relations Concept The concept of human relations is so vast and encompassing that it touches every aspect of our lives .it is true that whatever we are are doing involves human relation and in interactions in one form or the other Human relations encompass a body of knowledge through which workers and management get things done through each other. Ack Halloran (1978) defines human relation relations as all the interactions that occur among people, whether they are conflicts or cooperative behaviours. The study of how people in work effectively in groups in order to satisfy both organizational goals and personal Kosson Stan (1978) observes that human relations are concerned with the of the people and their groups. It also learns the what that can be done to anticipate, prevent or resolve conflict among organization members The field of human relations is action -oriented emphasizing the analysis presentation and resolution of behavioural problems within organization. Philosophy of Human Relations Dougleas, McGregor (1960) gave the following as the basis of Human relations:- The loyalty and cooperation of the individual in the organization must be earned, won and described. the individual employee in respect of his status, right, prospects for advancement, and his economic well-being, is inescapably linked with the success of the enterprise by which he is employed. The basic relationship of the individual should not be jeopardized by government or union and management activities Personal policies and practices must be designed implemented in such a manner as to promote and safeguard the rights and well-being of the workers. The organisation stays for the individual and not the individual for their organisation Organisation must to provide for the economic and social security of their employees. The society must be free and ready to safeguard their rights and privileges Steps Managers Should Take in Maintaining Human Relations According to William Scolt (1962) managers can create a good human relations environment if they do the following they should lead as they want to be led They should know their personnel they should be genuinely interested in their subordinate They should be afraid to share responsibilities they should tell their people why thins are to be done They should treat subordinates with dignity and respect They should help the people in performing the tasks assigned to them 8. They should praise their people even in public. Human Relations Effectiveness: Use of words The use of words in human relation is the key to it success. Good words in communication, motivation and leadership is essential in any human relations exercise. Good words can do miracles whereas bad words bad words can pollute the atmosphere. It can also cause enormous pain. Stan, Kossen, (1978) gave the following rules: The least important word is l The two most important words is we The two must important words Thank you The three most important words if you please The four most important works: What is your opinion? The five most important words you did a good job The six most important words: ladmit l made a mistake From the foregoing exposition of moral rules in human relations, it can now well be established that the principle of reciprocity will play a big dual-role of keeping strictly to ethical standards on the part of employee and ensuring that their (employee) welfare is not jeopardized by management. Every partly involved (employer/employee) will see themselves as stakeholder that must ensure the sustenance of achieving corporate goals. No side will feel a sense of insecurity or unfairly treated. Differently put, common morality will now say; Respect begets respects Therefore no party will want to jottion the contractual relationship of ensuring the human success through honesty by employees; on the one hand, and treasuring the human resource (employees) by management by seeing to their welfare on the other hand RE -ESTABLISHING LONG-TERM BETWEEN ORGANIZATIONS AND EMPLOYEES Step one: Re- establish Code and Policies for Sustainability Step Two: Re-establish Justice Step three: Re-establish Fairness Step Four: Re-establish Practices of honesty COMMON MORALITY 1. Dignity * Apologize for immorality delay * Extend personal à ¢Ã¢â€š ¬Ã‚ ¦Ãƒ ¢Ã¢â€š ¬Ã‚ ¦Ãƒ ¢Ã¢â€š ¬Ã‚ ¦Ãƒ ¢Ã¢â€š ¬Ã‚ ¦Ãƒ ¢Ã¢â€š ¬Ã‚ ¦Ãƒ ¢Ã¢â€š ¬Ã‚ ¦Ãƒ ¢Ã¢â€š ¬Ã‚ ¦Ãƒ ¢Ã¢â€š ¬Ã‚ ¦Ãƒ ¢Ã¢â€š ¬Ã‚ ¦Ãƒ ¢Ã¢â€š ¬Ã‚ ¦.. 2. Honesty * Stop the spiral of denials * Implement full and immediate disclosure * Facilitate access and respond openly to all queries 3 Fairness * Ensure compensation is commensurate with loss * Accelerate reconciliation to serve as many as possible, and as quickly as Possible Encode and practice lessons to benefit future transactions 4. Sustainability * Use the humiliation of this experience to lead a worldwide effort to standardize global practices 5. Auditing * Establish formal framework for monitoring ethical orientation * Report ethical progress alongside financial progress * Organize think tank ethical group to supervise compliance 6 Updating * Begin planning for ethical mandate beyond resolution of the Holocust issue * Report progress and plans to the world community, employees and industry association. All of us can give many example of ethical rules. Some which readily come to mind are: One should not tell lies, One should keep ones promises' one should respect ones parents, One should help people in distress etc. Many ethical rules are controversial at least to some extent. Thus, for example, while a large majority of people would agree that in most situation, one should not tell lies, there is far less agreement if one proceeds to ask whether exception is to this rule are allowed in some more or less extreme cases. Assume for instance that a mad man carrying cutlass in his hand, asked you whether your sister is in the house. You reasonably fear that he wants to attack her. Your sister is actually in the house. Does the rule that you should not lie cover this situation? When the proper scope and meaning of an ethical rule is called into question, one should refer it to the more ultimate principle and purpose that justify the rule. Thus for example, in the case of the mad man with cutlass, one could reason that one should fell no lie, because (i) telling lies is a way of harming the people one deceive and (ii), it tends to undermine mutual trust among people. If that were the complete justification of the rule against telling lie, which is not the case), it could follow that the rule did not apply in this case. By telling the madman that your sister is not at home, you would not be harming him in any way. One the contrary, you would be preventing him from doing him from doing something that, once he recovers his sanity, he would greatly regret harming alone, nor would you be undermining trust among people by acting in this way. According to Elegido (1996) the following constitute a reasonably complete list of independent and ultimate principle of business ethics. Principle of Solidarity: We must be concerned with promoting the well being of all human beings, not only our own. In so far as we fail to do so, we undermine our own fulfillment. Principle of Rationality: One should always strive to act intelligently Principle of Fairness or Impartiality: One should apply the same standards in judging ones own actions, those who are dear to one, and those of strangers Principle of Efficiency: In trying to promote human fulfillment good intentions are not enough: one must endeavour to use effective means. Principle of Refrain from willing harm to a human being: One should never choose directly to harm a human being. Principle of Role Responsibility: One does not have responsibility for all the aspects of the well-being of all human beings. Ones special circumstance, roles and commitments give one a priority responsibility for certain aspect of the well being of certain people. ETHICS AND SITUATIONAL FACTIRS IN ETHICAL BEHAVIOURS IN BUSINESS As noted by Gary Edward, President of the Ethics Resource Centre in the U.S, two-thirds of companies seeking ethical programmes came off the front page as a result of serious wrong-doing. This suggests that ethic are largely a tactical response to a serious problem, rather than a strategic commitment to a more enduring opportunity and obligation. From this perspective, most ethical initiatives aim to avoid repeating the mistakes that caused that particular crisis. The Federal Government established various agencies to curb a series of unethical practices in our national life. These include ICPC and EFCC Acts and the rest of it. The aim of these agencies among other reasons include overhauling the national and national image of Nigerians both at home and abroad. But this ethical renewal is one situation where the rifle short or fire brigade approach is clearly not enough. Codes and procedures, targeted to an impropriety may highlight the specific of the problem, and usually assign blame to one individual or a group of people, but without addressing the wider cultural competitive and personal factors that contribute to it. The Nigerian society is originally poverty-driven. Probably because of our low technology/agrarian nature or because of our leadership problem and/or total depending on oil, 90% of the national wealth us being controlled by less than 10% of our people. We operate crude capitalism in which the rich is getting richer and the poor, getting poorer. There is highly level insecurity felt by both the private and public sector workers especially about what tomorrow has in stock for them. It is everybody to himself, God for us all; who ever is slow, may the devil take him. In such circumstance, individual is desperately looking for the opportunity to grab and secure his tomorrow and that of his family. Therefore, a feel of patriotism or national consciousness is secondary in the minds of most Nigerians. Unfortunately or incidentally, we worship those who have been privileged to occupy the seat of power, not minding the fact that these people amassed their wealth by crucked means. We roll out chieftaincy titles, and national honours for the celebrated thieves According to John, Dalta Costa (2000) ethics as a reflex action are never as comprehensive or as motivational as the thinking and commitment applied to ethics as pre-eruption. That so many companies and notable corporate bodies and individuals in Nigerian are repeat offenders is directly due to the narrowness of seeing ethics in relation to a one time problem rather than in the context of the national psyche. Companies hire sonant people but do not leave them only to their wits to manage. Organisations expect strategies to be planted, analyses to precede decisions, and measure, to be put in place to monitor progress and results. Sonant companies, as learning organizations as Shell Petroleum, Mobile Producing to mention a few also invest consistently in training and skills development. An ethical orientation involves the same discipline. In addition to understanding the dynamics, that contributed to an error of ethical judgment, organizations need to explore the keeper tensions and contradictions that may put ethics at risk in future. Just as strategies require a situation analysis, ethics requires a temptation analysis. In other words, any individual or groups of people who are put into positions of responsible accountability must have their red alert threshold tests conducted. Retrogression analysis test or other psycho-analytical tests could be administered on them. Differently put, what moral and legal issues have raised ethical concerns in the past? How are these changing and testing the behaviour of the business organisation and its individual employees? What are new pressure points created by changes in technology or competition or globalization? How do corporate behaviours and policies influence the perception of those ethical conundrums? The process here is one of scanning the horizon with an ethical perspective, of expecting new confusions and temptations and anticipating risk. Central to the exercise is understanding not only the scope and scale of temptation but to the moral strengths and weakness of the business organisation for withstanding and overcoming them. This may involve and audit of past ethical performance an analysis of transgressions or an evaluation of the ethical concerns of the employees. The internent, as an example provides much more intimate access to customers, but it also à ¢Ã¢â€š ¬Ã‚ ¦Ãƒ ¢Ã¢â€š ¬Ã‚ ¦Ãƒ ¢Ã¢â€š ¬Ã‚ ¦. new issues of privacy and respect. So, in using this new medium, are the companys ethical skills maturing in concert with its, technical competence? How well equipped is the company for dealing constructively with new temptation afforded by the new technology? According to Dalla Costa, (2002) a strategic assessment sets the course for what must be done. An ethical assessment investigates the how. As we have learned from total quality and other programmes of corporate renewal, the what and how can no longer be separated. THE CONCEPT OF SOCIAL RESPONSIBILITY People often speak of the responsibilities of the firm of the firm or in a more common phrase, the social responsibility of companies These expressions are often used very loosely and are given different meanings be different speakers. Some people assert that business organizations have responsibilities which go beyond making profits. Often, what they have in mind is that it is proper for companies to support worthy community initiatives like universities, museums, hospitals, to reduce a minimum pollution: going voluntarily beyond the standard, set by the law. To employ the physically handicapped; to refuse to invest in certain places (e.g apartheid south Africa) in order to hasten desirable political objectives: and generally to use their activities in a way which is not calculated to maximize their profits but which will contribute to the common goal/good of the communities in which they operate. Other people reject outright the above position and argue that the only responsibilities of a business company are to obey the law and make profits for its shareholders. Still other think that companies can legitimately concern themselves with some of the causes listed above but not with others. It is not easy to find ones bearing in this jungle of conflicting opinions. It is often said that it is the duty of a companys managers to maximize their companys profits. Now whether or not managers have such duty will be a debatable topic. Fundamentally, maximizing profit does not just mean making an effort to generate greater profit. It means making every efforts to make profits as large as possible, subordinating literally everything (including loyalty, compassion the environment social welfare and other such considerations) to the increase of profits. According to Elegido, there is no argument or at least, there outght not to be, that profit is externally important for all business organizations but before one agrees that firms ought to maximize their profits, one ought to ask whether one agrees that profit is ultimately the only thing that matters in business and that in case of conflict, every other consideration ought way before it. PROF. FRIENDMANS POSITION Prof. Friedman, the famous monetary economist has consistently argued in favour of the thesis that an organistion has only one responsibility: maximizing profits for its shareholders while operating within the limits set by the law. He set out his main arguments for this position in a famous and other quoted articles entitled: The Social Responsibility of Business is to increase its profits. In Friedmans view, it is certainly a responsibility of organizations to respect all the laws which protect the public interest. But going beyond this would amount to having socially responsible executives functioning as redistributors who would take other peoples money and spend it on what these executives themselves defined as the general social interest, as if they were some sort of self appointed tax collectors. It is Friedmans contention that it will be better for everybody if business executives concentrate on maximizing profit for in this way, they will more effectively be led by and invisible hand to promise the good of the society. In fairness to Friedman, it sho