Case Study: Business Ethics
Case Study: Business Ethics
Various ethical problems faced by people are quite complex and sometimes even insoluble, as ethical assessment of the right or wrong behavior is always a purely subjective thing. Unlike people, not every organization has its own ethics to impose the behavior pattern on an employee, which further complicates the ethical beliefs of a person who can assume that employees should act in the same way at work and otherwise outside of it. Personal ethics, as a rule, develop under the influence of family upbringing, social environment, moral qualities, value systems, and choices that take place in the most important moments of life. In contrast to the personal ethics, business ethics prescribes the norms of behavior at work. Business ethics defines a leader’s competence, obliges him or her to deal with such issues as the attitude of the organization to employees, and employees to the organization. Therefore, the task of any enterprise is to increase the efficiency of its activities, successful solution of which largely depends on the level of personnel management.
Risks are the possibility of an unfavorable situation or unsuccessful result of production and business or any other activity. Ni and Van Wart (2015) discuss political, social, environmental, commercial, and other types of risks, which potentially can have an influence on the organization’s activity. To be able to critically and effectively evaluate the principles of accountability, transparency, and employee conduct at the new Procurement Agency (PA), it is important to briefly discuss two recent business scandals that and were related to the ethical aspect of doing business, and were discussed and criticized at the international arena.
Thus, the transparency issue can be discussed by considering the most recent scandal related to the United States politician, Scott Pruitt, who paid to the lobbyist wife for a stay at the hotel room the price that was lower than the market price (Lipton 2018). The politician was forced to quit his job position because of the strict ethical norms that are constantly monitored by the US authorities. It is worth noting that the American authorities fight against corruption in lobbying, forcing all officials and congressmen to publish information about their incomes and property. A federal official being negotiated with, as well as his spouse, minor child, potential employer, etc., cannot have a disqualifying financial interest that may affect or not affect the decision making process. This situation refers to a political risk and the PA’s activity may be affected due to this type of risk, since the PA’s management considers recent situations that led to the embarrassing publication in discussions with the Majlis the UK government has faced. Moreover, the cooperation with the nearby countries may be questioned due to a high level of corruption in each of them, which is also a potential risk for the PA.
Given the Pruitt’s business scandal, it can be stated that the assessment should be based on the creation of compliance systems in companies. Compliance does not mean just one of the security service functions, but requires a more systematic approach and the participation of specialists of other qualifications, since compliance affects many aspects that require a special approach (Comer & Stephens 2016). The aspects can include the adoption of the system of reporting about corruption, resolution of the conflict of interests of the company executives, verification of a counter-party, as well as relationships with third parties. The aspects can also include the identification and prevention of actions taken in violation of compliance requirements, etc.
Another example of the business scandal is related to the reasons why Kalanick, the founder of Uber, was forced to leave his position of the company’s CEO in 2017. In particular, one of the Uber’s employees, a female, reported a sexual harassment at work. The company’s management response to that woman was that the person who did this to her was showing good results at work, and that it would be wrong to punish him for the only one mistake although there were many cases similar to this one. The position of Uber’s management regarding gender at work is also supported by the fact that the company was going to give all employees leather jackets as a bonus, but only men received them in the end (Kleinman 2017). The PA’s management should learn from this situation to be able to avoid potential social risks that can occur at the firm as well as adopt a socially compliant environment when doing their business. To solve this problem, the organization must develop a conceptual framework that defines the general direction and concept of actions (Clapham 2017). Such implementation would contribute to the development of the competitive area among the company’s employees, cooperation with each other, improvement of workers’ professional skills, etc.
To ensure ethical principles, norms, rules, and standards become a reality of the business life of the PA, they must be included in the decision-making process at all levels of management, as well as in the work practices of all employees. The policies and practices recommended as the basis for the development of ethical principles at the PA should be based on the seven main mechanisms, through which ethical norms can be put into practice. Ni and Van Wart (2015) noted that the policies and practices included ethical codes, ethics committees, training, social audits, legal committees, services that consider claims of citizens on ethical issues, and changes in the corporate structure of the organization.
In particular, it is recommended to consider using the social audit at the PA and adopt evaluation of team behavior in the corporate environment of the PA (Ni & Van Wart 2015). The adoption of the statute will provide the PA’s management with certain rights and even privileges, which will allow not to violate the general ethical background and certain actions that promote the development and prosperity of the society. The use of the social audit will help the PA’s management to verify and provide information on the extent to which the corporation’s activities meet the expectations of people. It can be used in the agency for internal control over the degree of ethical actions of the group of managers, implementation of the ethical code, rational use of resources, reporting to shareholders, etc. However, social audit, despite its value for business development, management and public benefit in general, did not receive significant development and is used mainly on the scale of a corporation (De Colle, Henriques & Sarasvathy 2014). Apparently, it is a matter of the complexity and cost of carrying out audits on a scale not only throughout the country, but at least one industry. Only some of the companies that conduct a social audit for internal needs make the audit results accessible for the public or shareholders.
In addition, it is also recommended to develop a judiciary committee at the PA that will be responsible for monitoring the compliance of the corporation with all UK laws and regulations in all areas of activity (Tricker 2015). Part of the work of such committee is to monitor the compliance of a corporation’s actions with laws, especially with the ones that are ethical in nature, which are to protect the environment, protect human rights, etc.
Given the results of the previous discussions, it is irrelevant to note that an appropriate leadership model for a strategic ethical change in PA should be based on the characteristic of leadership styles for prevailing functions. In particular, a leader should combine the qualities of a leader-organizer, leader-creator, and leader-diplomat. These leadership styles are built on the ability to take the needs of the team close to heart. Such traits attract and lead people through optimism and confidence in the successful solution of the problem. Employees trust such a leader because they know that he or she will offer the right way out of any situation. The character of the leader is inherent tact in reprimand and generosity in the promotion.
Thus, the leader-creator sees and implements a new and unknown information that attracts colleagues and does not need to command people, since they follow him or her on their own. Such a leader is able to formulate a problem or task that has arisen in such a way that team members are interested in his or her decision and begin to act in good faith (Gudkov 2017). The leader-diplomat prefers confidential meetings with like-minded people. Such a leader chooses the soft means of influence and is usually aware of all the gossip. Such leader advertises his plans rarely and is always ready to listen to the interlocutor. (Hardt 2013). The combination of the three leadership styles involves combining emotional, business, and informational components. In particular, an employee feels more confident and calmer with an emotional leader who can be the soul and heart of the team (Stout & Blair 2017). Such a leader empathizes with people, so they come to him or her for support. Managers of the PA should develop such features in order to receive respect and support not only among employees, but also the outside business world.
A business leader (team hand) is a person who is able to adequately organize work by making necessary contacts (Stout & Blair 2017). To decrease the impact of potential political and social risks at the PA, the management should develop a leadership style at the organization, so that the leader would act as the brain of the team, help employees to solve emerging issues and problems using erudition and own awareness of many issues. A leader who is always opened for suggestions and can give advice to those who ask for him/her will always listen an employee and adopt changes at the corporate culture of the organization to be sure that employees’ rights are not violated and everyone will be treated respectfully regardless of gender. The development of an ethically-concerned leader will help to gain recognition and avoid communication barriers at the PA.
A leader who is acting diplomatically will never put the PA at a political risk and will be acting in accordance with the UK business standards trying to avoid any situation that can lead to corruption and political scandals. By creating a leadership style that would combine three traits required for an effective leadership, the PA will be able to do a reliable, fair and respectful business.