Importance of Maintaining an Ethical Culture

The CEO has assigned you the responsibility of educating the leaders within the organization of the importance of maintaining an ethical culture. For this assignment, you will take on the role of a vice president of a major organization. The tone of the presentation should be of a persuasive nature, as you will also be asking these leaders to take this initiative to each of their areas. As you compile this presentation, include the following:

  1. Explain exactly what it means to maintain an ethical culture within the organization.
  2. Analyze the role that culture plays in global business ethics.
  3. Describe the importance and rationale for maintaining an ethical culture within the entire organization. Think about methods that you can use to motivate employees and employers toward ethical business practices.
  4. Recommend ethics guidelines they can use within each of their areas.

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What It Means To Maintain An Ethical Culture Within The Organization.

According to Trevino & Nelson (2021), a company’s culture influences the moral judgment of employees and stakeholders. Companies that work to create a robust ethical culture motivate everyone to speak and act with honesty and integrity. Companies that portray strong ethics attract customers to their products and services. Maintaining an ethical culture within the organization means establishing clear accountability for ethical culture as a management function. Ethics and compliance functions rely on similar skill sets, leverage similar tools, and operationally must be well-coordinated. While program management for ethics and compliance program elements can be combined, ethical workplace culture is ultimately determined primarily by senior executive management, not an Ethics and Compliance Department.

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Additionally, maintaining an ethical culture within the organization means including ethical behaviors in promotion criteria. When employees perceive that ethical behavior helps them climb the corporate ladder, it reinforces the organization’s emphasis on building and maintaining an ethical culture (Trevino & Nelson, 2021). Many companies require some form of risk screening for employees under consideration for promotion to senior-level positions. In some instances, this involves reviewing HR files to make sure there have not been any disciplinary actions or significant policy violations; in others, it can involve credit, litigation, or public records review to make sure that the individual does not pose risks to the organization before ascending into a position of greater trust and influence.

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The Role That Culture Plays In Global Business Ethics

Brooks & Dunn (2020) assert that culture reflects the moral values and ethical norms governing how people should behave and interact with others. Culture describes a way of doing things. It is universal in every business interaction and strategic decision. Improving this process through training can increase productivity by 30 percent (Brooks & Dunn, 2020). For our organization to see incremental growth in the coming decades, we must consider how we’re doing business internationally and develop the strategic skill set to master business across cultures. The most generally accepted concept is that culture is a crucial determinant of an individual’s ethical ideology, which affects an individual’s inclination to behave ethically. In other words, culture is a guideline in determining whether certain practices are appropriate and acceptable. Culture impacts how local values influence the concept of global business ethics.

Without a culture emphasizing the importance of integrity, honesty, and trust, mandatory ethics training programs are often doomed to fail. The national culture may partially impose a company’s values, norms, and beliefs. Each professional is influenced by the values, social programming, and experiences he or she has absorbed since childhood. These collective factors impact how a person perceives an issue and correct or incorrect behavior. For some cultures, the evolution of international business and culture sometimes creates a conflict, such as what is seen in gift-giving practices or views on women in the workplace. Ethics impacts global business in management, corruption, and corporate social responsibility. The influence of cultural factors on business is extensive. According to Brooks & Dunn (2020), culture impacts how employees are best managed based on their values and priorities. It also impacts the functional areas of marketing, sales, and distribution. It can affect a company’s analysis and decision on how best to enter a new market.

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The Importance And Rationale For Maintaining An Ethical Culture Within The Entire Organization

Amidst growing scrutiny of business practices, it is more important than ever for companies to carry out work correctly. Ethics programs are an exceptional tool for promoting moral conduct. Organizations also need employees dedicated to ethical decision-making. Another reason why business ethics is important is that it can improve profitability. A well-implemented ethics program can also reduce losses. Ferrell & Fraedrich (2021) show that twenty-two percent of cases examined in the 2018 Global Study on Occupational Fraud and Abuse cost the victim organization $1 million or more. Companies that practice questionable ethics may also experience a decrease in stock price and severed business partnerships, which can affect profitability. In addition, business ethics is linked to customer loyalty. Over half of U.S. consumers said they no longer buy from companies they perceive as unethical.

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Conversely, three in 10 consumers will support ethical companies on social media (Ferrell & Fraedrich, 2021). Business ethics cultivates trust, which strengthens branding and sales. Business leaders can encourage their employees to act ethically by implementing proper procedures and rules that mandate employees to hold themselves to a higher standard and take accountability for their actions. Leaders and managerial staff, most importantly, can also lead by example. That said, the methods that motivate employees and employers toward ethical business practices include offering ethics training. Managers should set up seminars, workshops, and similar programs to promote ethics in the workplace. Training sessions reinforce the organization’s standards of conduct, clarify what practices are and are not permissible, and address possible ethical dilemmas. Another method is Visibly reward righteous acts and punishing unethical ones. Managers’ performance appraisals should include evaluations of how actions measure against the organization’s code of ethics. Appraisals need to include how managers achieve these goals and the goals themselves. Employers can get motivated towards ethical behaviors in the organization by gaining the support of top management to reword any unclear goals and to add or develop an ethics program in your company based on the feedback you get from your workforce and your careful research into common ethical issues in your industry—study other organizations as examples.

Recommendations For The Ethics Guidelines They Can Use Within Each Of Their Areas

An ethics framework to guide decision-making is more than just identifying applicable, individual ethics principles. Translating ethics principles into ethical policy generally requires specific actions by actors across multiple levels, including individual, administrative, and societal. The recommendations in this paper contain many components the organization has considered or is already implementing in its work on health standards for improved performance.

To ensure that managers understand their accountability for setting the company’s ethical culture, the organization should:

  • Establish an Ethics Steering Committee comprised of senior business and operations executives along with senior representatives from compliance, Human Resources (HR), and Communications to ensure the ethics program is fully integrated into the business’ operations;
  • Appoint a senior executive as the Ethics Officer (as a part-time role) for each geography or business unit to evaluate and reinforce the ethical culture; and
  • Connect ethical conduct to compensation and make it part of each executive’s performance objectives.

Additionally, to demonstrate that compliance policies are ethical, culture enablers should:

  • Create a policy committee comprised of average-level employees and managers to review new company policies to make sure they address employee needs with appropriate but not hyper-technical detail;
  • Post employee compliance policies on their intranet site supported by vital search functions; and
  • Use reading level software on all policies – targeting readability at below the average education level of the employees as many are likely not familiar with the topic.
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