Ethical Challenges in Business Organization

Associate Director such as requesting an appointment, so that, we can have the exact date to meet her. The Interview session runs smoothly without any major problem. The cooperation given by all group members and Madam Sarnia is very satisfying. Introduction On the morning of 4 November 2013, two our group members, Attica and Aid, went to the 33rd floor of Meaner Mbabane, Clan Tuna Appear, Koala Lump to have an Interview session with Madam Sarnia Bat Dally who Is the Associate Director of Debt years old and was born in Juror Barr.

She graduated from University Malay in degree of Accounting in the year 2003.

She started working in Mbabane Investment Bank or formerly known as Assemblers in the same year she graduated. She has been working there for more than 10 years. She is an experienced worker in her position. Since she is a competence employee and have a good reputation in her Job, we are interested to interview her regarding the business ethics issue.

Literature review Definition of Business Ethics There are people who wish to be honest in business, but they must be sneaky or dishonest in order to make profit.

Anyone who thinks about what he or she ought to do is, consciously or unconsciously, involved ethics. Ethics deals with values, with good and bad, with right and wrong. Business ethics is no longer concerned solely or primarily with the criticism of business and business practice. The new concern is just how profit should be thought of in the larger context of productivity and social responsibility and how corporations as complex communities can best serve both their own employees and the surrounding society.

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There is some misunderstanding in the means of doing business.

Adopt a too narrow vision of what business is such as the pursuit of profit and then derive unethical decision. It is only say that the idea of the profit motive’ as an end in itself , as opposed to profits as a means of encouraging and rewarding hard work and investment, building a better business and serving society better. It is true that business is and must be competitive, but it is not true that it is cut-throat or that ‘one does whatever it takes to survive’. The central concept of much of recent business ethics is the idea of social responsibility. Managing ethical behavior is one of the most pervasive and complex problems faced by business organizations today.

The employees’ decision to behave is influenced by a myriad of individual and situational factors such as background, personality, decision history, managerial philosophy. The model of for understanding ethical behavior had been proposed in the article. The question of ethics in business conduct has become one of the most challenging issues confronting corporate America in this era. Current behavioral research strongly supports a person-situation interaction explanation of human behavior in which both individual and situational factors influence the behavioral choices made by individuals. Researchers have suggested three personality measures that may influence ethical behavior which is ego strength, Machiavellian and locus of control.

Colonization also seems to influence a person ethical system. The model of ethical behavior in organization would help the managers to understand both employees behave ethically or unethically in business organization and what managers can do to influence this behavior. As the individual enters and gains managerial philosophy and behavior, the reinforcement system and the characteristics of the Job itself. Ethical Challenges in Banking The global financial crisis resulted in widespread disruption to financial markets and institutions. As a consequence, policy makers and supervisors took steps to improve regulatory interventions in order to support financial stability.

Trust is the very cornerstone of the financial services industry but this trust has been eroded, not only as a consequence of the financial crisis but by a growing catalogue of examples of MIS-selling, malpractices and poor market conduct behavior by individual financial institutions across the sector. This lack of trust has made the general public extremely cynical over the very values, the self interests and the excessive rewards hat still characterizes the industry. Nowadays, the financial sector is the sectors which have the lowest of trust from people include investor confidence since there is a lot of misconduct in company of financing. Misconduct is still widespread in the financial services industry. Restoring investor confidence is crucial to overcome this crisis, but it remains difficult .

The example of their misconducts such as financial fraud and recent banking scandal. The financial sectors need to redesign their incentive, rules and regulations. Regarding the current outlook for banks it was pointed out that they had already dad improvements in their risk management while down-sizing their balance sheets. Consumer groups pointed out that financial consumer protection had not yet received appropriate attention by regulators in those sectors. Too many actions by the financial sector have been destructive that leading to negative returns for pension funds, misapplication of resources, and scandal.

A main cause of the crisis was a wrong regulatory paradigm, relying too heavily on self-regulation, but there have also been shortcomings in corporate governance and ethics. Banks have adjusted their activities and business models and while risk capital models have come more sophisticated, the scarcity of capital more generally has made regulatory capital rules more binding and important in risk management considerations. Contingency planning is also playing a more vital role in risk management. It was noted that there is no perfect regulatory system, but some principles of governance of regulation should be observed. Conflict Of Interest Conflict of interest is a very big ethical problem which precisely for that reason deserves special attention, both from a legal viewpoint and from the point of view of ethics applied to organizations and professions.

In recent years, conflict of interest is getting more attentions from society. Some examples are provided, such as a doctor advises her patient to undergo certain tests or treatments in doctor’s own clinic or interest arises in many of decisions that professionals, managers, and employees, as well as public and private companies and organizations, have to make in the course of their normal activities. Another example, an employer’s interest in increasing her earnings conflicts with her employee’s interest in reducing company wage’s bill. Attitudes toward conflicts of interest tend to vary considerably. In a sense, conflict interest in unavoidable problem, there is no point in worrying about its ethical dimension.

The problem of conflict of interest is closely related to the problem of corruption. Corruption is a clearly a type of deliberate or accepted conflict of interest in which the interest of the agent is illegitimate. A great variety of solutions has been offered on this problem. Some solutions are intended to prevent the conflict of interest before they arise. Misuse of Company Resources (Internet) and Social Networking Every company mostly would have internet for business matters.

Somehow, there are some employees that are using social media for personal business. This is under unethical problem. Somehow, some companies provide social network for their employees to make them productive and not overworked. Another possible use is marketing tool. For managers, it is quite difficult to contacts with the employees.

Social networking website provides an opportunity for management to have faster contacts with their subordinates. If there is an issue that needs immediate attention, a manager can send a message through social networking websites and the internet to their employees to get the information they need to make a decision. Social networking websites reduce the amount of time it takes for a Job to be completed because they cut down the amount of time it takes for employees and management to contact each other. Somehow there are some potential problems. According to Wilson (2009), there are five principle worried that management has in regard to social networking, such as, perceived loss in staff productivity, data leakage from staff gossiping freely in an open environment, damage to a company reputation, scam practiced by “cyber crooks,” and the open access to company information because of outdated passwords.

Nowadays, employee Internet misuse and abuse has become a growing concern that has impacted several predominant corporations. According to a survey of human resource directors, approximately 70% of companies provide Internet access to more than half of their employees and such widespread corporate reliance on the Internet has spurred a series of industry-driven studies to investigate the prevalence of employee Internet abuse. As employee Internet abuse has become an identifiable concern, corporations have developed various strategies to help combat the problem. Employers have utilized Internet Use Policies to set forth written deadlines on acceptable or unacceptable Internet conduct. The Internet Use Policy is a visible tool that not only provides guidance on appropriate online behavior but also outlines how violations will be handled.

They also advise employers to regularly alert employees that their online activities may be monitored and that inappropriate use strategies to avoid abuse of internet usage. There are some employees use internet for personal, not for organization. This is included in misuse of organization resources. This problem cited as evidence of declining ethical standards. Using company computers for personal business is one of the most common ways employees’ misuses of company resources.

In articles, it state that while this survey of large companies suggests that access to social networking sites may be restricted by some organizations, employees may well make use of these outside the workplace. In the article, it state method to avoid this problem which is monitoring the employees. This method has some policies and rule as well such as clear purpose of monitoring. There are hundreds of software and hardware solutions available on the market to monitor a vast array of activities. The price of monitoring or surveillance software ranges from several thousand dollars down to free.

Most solutions can log keystrokes typed, application and website usage, detailed file usage, incoming and outgoing chats and e-mails, internet connections, windows interacted with, internet packet data, desktop corrections, software installations, and much more. The software can present all activities logged in easy- to-read graphical reports. Employers can set specific alerts to notify management when an employee performs a certain action or is perhaps not meeting productivity locals. Keystroke monitoring is perhaps one of the most invasive types of monitoring. There are programs that generate reports detailing every key pressed on a keyboard.

The companies that make the appliances to monitor employees cite uses for their products to stop leaking sensitive information, stop breaking laws, stop violating company policies, limit legal liability, and to monitor and recover lost crucial communications to name a few. Companies can implement easily and stealthily the advance monitoring systems allowing the employer to monitor workers without their knowledge. The corporation may install hardware devices at the firewall that will track all electronic transactions or can remotely install software made invisible to the computer user. The technology to monitor an employee’s activities is extremely sophisticated and fully capable of exposing any action taken on a business computer. The practice of employee monitoring is in practice by large and small businesses throughout the world.

It is also very important to note that employers are monitoring more than Just computer usage, many also employ telephone and video monitoring. According to California state law on California Public Utilities Commission, organizations monitoring phone calls are required to inform participants of the recording or monitoring of the conversation by either putting a beep tone on the line or playing a recorded message (1983, General Order 107-8). Many companies also observe employees using video surveillance equipment. Over the last couple of decades, devices that they are completely oblivious to are recording an increasing number of events in every citizen’s daily lives. There is an all-out assault of tools including hardware, software, telephone systems, and video recordings that organizations are using to protect themselves and work to increase productivity.

Ethical Climate There are alarming statistics regarding the amount of misconduct within organization. These unethical conducts includes lying to internal or external constituents, engaging in abusive behavior and others. To reduce the problem of misconduct, scholars are interested in the role of leadership. Ethical leadership is defined as, the demonstration of normatively appropriate conduct through personal actions and interpersonal relationships, and the promotion of such conduct to followers through two way communication, reinforcement, and decision making. Ethical leadership has two main aspects which is the moral person component, such s integrity, concern for others, Justice, trustworthiness, and second aspects is moral manager component, such as communicating, rewarding, punishing, emphasizing ethical standards, role modeling ethical behavior.

Ethical leaders embody many positive personal characteristics and also seek to influence their employees by actively managing ethical conduct. Leaders set the ethical tone for an organization by enacting practices, policies, and procedures that help facilitate the display of ethical behavior and reduce the likelihood of misconduct. Ethical leaders, as role models of ethical behavior, demonstrate to followers how to be skilful in recognizing ethical issues and equipped in handling ethical issues. The ethical leadership bring the ethical climate. Ethical climate will be related to employee misconduct within work units by drawing on social information processing theory.

Individuals look to their environment for cues to characterize their work environment and to understand appropriate ways to behave. Workplace Discrimination Measurement of prejudice, discrimination, and attitudes toward diversity in the workplace is becoming important for two important reasons. First, business and industry are increasingly recognizing the need to address diversity and multicultural issues in workplace practices (Redound, 1996; Cox, 1993; Daly, 1998; Sue, 1995). Although affirmative action may have been a primary impetus to addressing these concerns (Baker, 1996), by and large, many organizations are recognizing the overall diversification of the workforce (Block & Newsletter, 1989; Johnston, Packer, & Gaffe, 1987). As this demographic shift occurs, organizations are recognizing the need to contend with the cultural sensitivity of managers and employees, interpersonal elation’s with a culturally diverse workforce, and the need to increase co-worker appreciation of cultural diversity (Carr-Ruffian, 1999; Fernando & Davis, 1999).

To address these issues, consulting psychologists are designing and implementing training programs to increase cross-cultural sensitivity, tolerance, and appreciation of diversity in the workplace (Redound, 1996; Baker, 1996; Sue, 1995). Certainty, business and industry efforts to address multicultural training are to be encouraged, however, there is no clear focus or agreement about what constitutes good multicultural training in organizations. The vocational psychologists and muskmelons are recognizing the influence of prejudice and discrimination on career development, particularly for people of color, such as, racism. Racism may be resulted in some African American women limiting their career choices. With some formula, they could measure the level of discrimination in the workplace.

The number of people of color who apply for employment, and the hiring rate for people of color at all organizational levels are examples of archival data that may be useful in assessing workplace diversity. Unethical Misconduct There are many reasons for employees misconduct in a company such as being reed, for financial benefit, or others individual motivation. Carol, who said in 1991 that business ethical conduct, is a vital part of Corporate Social Responsibility. “Misconduct” is defined by Ethics Resource Center 2005 as “any behavior that violates the law or organizational ethics standards”. Employee misconduct has a wide range of levels of impact upon an organization, ranging from small-scale dishonesty to corruption and fraud for personal gain.

In order to minimize the problems and to improve ethical conduct, the business leaders and human resources managers are leading the roles on ethics management. Some methods to improve the ethical conduct is integrity program. This program is to encourage shared commitment by employees to be responsible for self-managed conduct. The methods used under this program are such as education, penalties and leadership. Besides this program, compliance program is one of the ways to improve the ethical conduct.

Methodology The method used for this research is by conducting an interview with one respondent. The interviewee is free to give her opinion regarding the matters asked by the interviewer. Qualitative Research Method The interview method is considered as the best way in order to obtain a more understandable views on ethical challenges faced by the respondent in her company. This is in line with Clansman’s and Stratus’s (1973) assertion that “The interview must be used to provide context and meaning”. Qualitative method provide the means to gather information about business ethics, unethical misconducts in the bank and making conclusions regarding the matter.

Sample Design The upper senior manager that we chose to be interviewed in Madam Sarnia Bat Dalai. First and foremost, before we have a direct and proper interview with Madam Sarnia Bin Dalai on 4 November 2013, we have done the personal appointment with her arsenal assistant a week before the interview session, therefore we have no problem to meet her on the day of the interview was conducted. She is a highly skilled manager in her field with more than 10 years working experience. She is a Muslim, thus we believe that her faith influence her work ethics and professional conduct. The structure of reporting the results of this study has been organized in the context of three main issues.

The main issues are the definition of business ethics, unethical issues in business organization, and codes of ethics in an organization. The focus of he reporting structure was to study the extent to which the interviewee is able to give information regarding the ethical practice in Mbabane Investment Bank and how can we use the information to relate them to the business ethics that we should apply in our daily life and businesses. The definition of business ethics depends on the principles practiced by the person per SE. This is mentioned by the respondent in the interview, Madam Sarnia: “Business ethics are moral principles that act as guidance to the way a company should act and do their business. The principles that determine a person’s action will also shape his or her ways of doing business.

It usually involves the act of distinguishing between what is “right” and what is “wrong”. It should be easy to differentiate unethical practices. For example, the most unethical practice that we always hear about is bribery. The respondent also mentioned about her concept of an ethical organizational behavior in the interview: “To me, an ethical organization is those with a clear value identified in doing the day-day business and in dealing with the relevant stakeholders including the shareholders, customers, the employees, regulators and the public at large. An ethical organization would live and breathe the industry best practices in corporate governance by promoting a culture of excellence, transparency, integrity and accountability in its day to day operations.

One of the challenges in order to be ethical in a business is to make an ethical decision. “Decisions are made amongst others based on the familiarities of the issue and the experience I had so far during my tenure with the bank, as to be honest, there is no book written that could teach you how to make the right decision until and unless you personally experience the event and learn to move forward. Making a right decision is not easy but it is a skill that needs to be acquired on the Job. Most of the time, I know the decision that I made is right as it was done after seeking other views relevant to the issue at hand from my peers, bosses and the experts. If it involves a legal issue, a view from the legal counsel will be sought whilst if it is a regulatory issue, then the regulator’s view will be sought prior to making such decision.

In addition to the above, decision made are also driven by the value that we adopt here in the bank. ” Therefore, the correct business philosophies and decisions are essential n order to ensure a business is practicing the correct ethical behavior. Unethical Challenges There should be many unethical issues faced by organizations around the globe. In this research we will focus on the dilemmas faced by the respondent in the bank. There are three unethical issues that is going to be discussed which are conflict of interest, misuses of company resources and discrimination in work place.

Conflict of interest is a situation that has the potential to undermine the impartiality of a person because of the possibility of a clash between a person’s self interest and public interest or professional interest. L also faced some conflict of interest in hiring new staffs. Especially when some of my younger relatives are applying to work here. “ Misuse of Company Resources Misuse of company resources is often included in workplace code of conduct not only to serve as a theft deterrent but also to promote productivity and ethical conduct within the workplace. Some common misuses of company resources include inappropriate use of the internet, personal phone calls, and personal use of fax machines or copiers and other workplace equipments.

These actions are not only considered as an inappropriate use of company equipment and resources, but also lower the productivity of the individuals performing these actions. In many ways, this is considered a form of theft because the inappropriate use of time means that the company is paying an employee to perform a Job task while that employee is engaging in some other activity unrelated to their work. According to the respondent, the misuse of company resources mostly involves the usage of the internet: ” … Here is some of my intern who uses the company’s computer for personal use. Of course that is not a huge crime but a few of them use the computers to access social networking sites like Backbone. It would be a huge problem if they neglected their work.

The youngsters nowadays Just cannot get enough of the internet I guess. ” Discrimination Discrimination is the unequal treatment of people based on identifiable characteristics. Some types of discrimination are illegal, and there are policies against other types in government agencies and public organizations. Many of the legal provisions are based on the 1964 Civil Rights Act. Discrimination in the aerospace is regulated to ensure that people have equal access to Jobs and equal benefits once hired.

There are many different ways of discrimination such as race discrimination, age discrimination, gender discrimination and also disability discrimination. In accordance to the the discrimination issues, we asked the respondent opinion regarding this matter: “l really object any type of discrimination. People should be treated with equity. Codes of Ethics A guide of principles designed to help professionals conduct business honestly and with integrity. A code of ethics document may outline the mission and values of the equines or organization, how professionals are supposed to approach problems, the ethical principles based on the organization’s core values and the standards to which the professional will be held.

We asked the respondent about the codes of ethics that is been practiced in Mbabane Investment Bank: “Moneybag’s T. I. G. E. R values are the essential guiding principles for those situations where the rule book provides no run the day-day business and life.

” We also asked Madam Sarnia about her opinion regarding the relevance of business ethics code in a business and got her immediate respond: “A good practice, good provenance, transparency and doing business with full integrity will be good for business as it helps in building the trust with the customers or client, creating a long term relationship with the customers or clients. ” A good code of ethics is important for every organization. It should not be viewed as a burden. According to the respondent: “No it should not be viewed as a burden but rather as a value that need to be embraced by the employees in an organization, believing in it as what it is stand for and practice it in a day-day work so it became part of us, work wise or personal life. Adopting best practices in what we do will lead to greater things and brings an organization to a greater height and standard, be it from the shareholders stand point or from the public stand point.

Moneybag’s tagging “Humanism Financial Services Across Asia” is very close to our heart as it represents the way we do business here in Mbabane, for example, having the customers interest first, making banking friendlier, convenient and easily accessible and are committed to our corporate social responsibility in helping the less fortunate. ” In preventing the unethical misconduct, there should be regulators. Those who involved in any type of conducts should be punished accordingly. We got the respondent view on this matter: “If any, the respective individual who did any misconduct will be penalized internally. More or so that in the course of our business in Mbabane B in particular, each of us is required to be licensed with the Securities Commission (SC), therefore requires each of us to be aware of what we do or otherwise be subjected to a serious penalties by the SC.

Our human resource or compliance department would have the mechanics in dealing with such personnel who commit any misconduct internally. ” Unethical Implication on Organization There are many hidden costs of doing unethical practices. They may give a short term profit but will cost dearly in the future. These are the few of the implications of unethical practices that we come out with from the interview: Unethical behavior harm sales According to a survey by Within Worldwide on 2003, 80 percent of people said they decide to buy a firm’s goods or services partly on their perception of its ethics. Unethical behavior harms stock price Seventy-four percent of people Writing polled said their perception of a firm’s honesty directly affected their decision about whether to buy its stock.