Describe the Ethics and Stakeholders

Whether it is a team, small group, or a large international entity, the ability for any organization to reason, act rationally, and respond ethically is paramount. Leadership must have the ability to recognize the needs of its members (or called "stakeholders" in some theories or models), especially the very basics of a person's desire to belong and fit into the organization. It is the stakeholder theory that implies that all stakeholders (or individuals) must be treated equally regardless of the fact that some people will obviously contribute more than others to an organization.

Leadership not only has to place aside each of their individual (or personal) ambitions (along with any prejudices) in order to present the goals of the organization, but they also have to engage the stakeholder with the benefit of the organization in mind. Further, it is leadership that has to be able to influence the stakeholders by presenting the strong minority voice in order to move the organization's members toward ethical behavior. Importantly, the leadership (or stakeholder management) has to have the desire, the will, and the skills to ensure that the other stakeholders' voices are respected within the organization, and leadership has to ensure that those other voices are not expressing views that are not shared by the larger majority of the members (or stakeholders). Therefore, stakeholder management, as well as any other leadership of organizations, has to take upon themselves the arduous task of ensuring an "ethics system" for their own management styles, personalities, systems, performances, plans, policies, strategies, productivity, openness, and even risk(s) within their cultures or industries.

The stakeholder theory is a theory of organizational management and business ethics that addresses morals and values in managing an organization. It was originally detailed by R. Edward Freeman in the book Strategic Management: A Stakeholder Approach identifies and models the groups which are stakeholders of a corporation, and both describes and recommends methods by which management can give due regard to the interests of those groups. In short, it attempts to address the "principle of who or what really counts".

In the traditional view of a company, the shareholder view, only the owners or shareholders (= stockholders) of the company are important, and the company has a binding fiduciary duty to put their needs first, to increase value for them. Stakeholder theory instead argues that there are other parties involved, including employees, customers, suppliers, financiers, communities, governmental bodies,political groups, trade associations, and trade unions. Even competitors are sometimes counted as stakeholders – their status being derived from their capacity to affect the firm and its stakeholders. The nature of what is a stakeholder is highly contested (Miles, 2012), with hundreds of definitions existing in the academic literature (Miles, 2011).

The stakeholder view of strategy integrates both a resource-based view and a market-based view, and adds a socio-political level. One common version of stakeholder theory seeks to define the specific stakeholders of a company (the normative theory of stakeholderidentification) and then examine the conditions under which managers treat these parties as stakeholders (the descriptive theory of stakeholder salience).

71. Describe the Ethical Origins

The term 'business ethics' is used in a lot of different ways, and the history of business ethics will vary depending on how one conceives of the object under discussion. The history will also vary somewhat on the historian—how he or she sees the subject, what facts he or she seeks to discover or has at hand, and the relative importance the historian gives to those facts. Hence the story I'm going to tell will be somewhat different from the story someone else might tell in various particulars, and I hope that instead of being a dull recitation of facts it might in fact prompt some discussion at the end by those who would tell a somewhat different story.

The story I will tell has three strands, because I believe the term business ethics is used in at least three different, although related, senses. Which sense one chooses therefore gives priority to nature of the history of the topic. The primary sense of the term refers to recent developments and to the period, since roughly the early 1970s, when the term 'business ethics' came into common use in the United States. Its origin in this sense is found in the academy, in academic writings and meetings, and in the development of a field of academic teaching, research and publication. That is one strand of the story. As the term entered more general usage in the media and public discourse, it often became equated with either business scandals or more broadly with what can called "ethics in business." In this broader sense the history ofbusiness ethics goes back to the origin of business, again taken in a broad sense, meaning commercial exchanges and later meaning economic systems as well. That is another strand of the history. The third stand corresponds to a third sense of business ethics which refers to a movement within business or the movement to explicitly build ethics into the structures of corporations in the form of ethics codes, ethics officers, ethics committees and ethics training. The term, moreover, has been adopted world-wide, and its meaning in Europe, for instance, is somewhat different from its meaning in the United States.

Business ethical norms reflect the norms of each historical period. As time passes norms evolve, causing accepted behaviors to become objectionable. Business ethics and the resulting behavior evolved as well. Business was involved in slavery, colonialism, and the cold war.

72. Describe the Ethical Decisions

Ethical decision-making refers to the process of evaluating and choosing among alternatives in a manner consistent with ethical principles. In making ethical decisions, it is necessary to perceive and eliminate unethical options and select the best ethical alternative.

The process of making ethical decisions requires:

· Commitment: The desire to do the right thing regardless of the cost

· Consciousness: The awareness to act consistently and apply moral convictions to daily behavior

· Competency: The ability to collect and evaluate information, develop alternatives, and forsee potential consequences and risks

Good decisions are both ethical and effective:

· Ethical decisions generate and sustain trust; demonstrate respect, responsibility, fairness and caring; and are consistent with good citizenship. These behaviors provide a foundation for making better decisions by setting the ground rules for our behavior.

· Effective decisions are effective if they accomplish what we want accomplished and if they advance our purposes. A choice that produces unintended and undesirable results is ineffective. The key to making effective decisions is to think about choices in terms of their ability to accomplish our most important goals. This means we have to understand the difference between immediate and short-term goals and longer-range goals.

73. Describe the Social Responsibility

Social responsibility is an ethical framework which suggests that an entity, be it an organization or individual, has an obligation to act for the benefit of society at large. Social responsibility is a duty every individual has to perform so as to maintain a balance between the economy and the ecosystems. A trade-off may exist between economic development, in the material sense, and the welfare of the society and environment, though this has been challenged by many reports over the past decade. Social responsibility means sustaining the equilibrium between the two. It pertains not only to business organizations but also to everyone whose any action impacts the environment.This responsibility can be passive, by avoiding engaging in socially harmful acts, or active, by performing activities that directly advance social goals.

According to some experts, most rules and regulations are formed due to public outcry, which threatens profit maximization and therefore the well-being of the shareholder, and that if there is not outcry there often will be limited regulation.

Some critics argue that corporate social responsibility (CSR) distracts from the fundamental economic role of businesses; others argue that it is nothing more than superficial window-dressing, or "greenwashing";others argue that it is an attempt to pre-empt the role of governments as a watchdog over powerful corporations though there is no systematic evidence to support these criticisms. A significant number of studies have shown no negative influence on shareholder results from CSR but rather a slightly negative correlation with improved shareholder returns. Some studies have shown strongly positive correlations between a CSR-type commitment to sustainability and company performance in the long-term.

Date: 2015-12-18; view: 791