Free «The Role of Ethics in Enhancing Effectiveness of Business Organizations» Essay Sample


In a 2002 publication, Goldman raised fundamentally profound questions about the ability of business to thrive within an ethical framework. The reason for his inquisitive inclination is the awareness that ideally ethics should create the platform through which mutual interests of the individual is relegated to the background in favor of the collective group interest, more especially when this individual interest poses a threat to the group interest. It appears somewhat impractical knowing that the conventional norm of the business world of today is unbridled competition. It is more of a zero sum game in which the winner takes it all.

It is also worth stating that, there are isolated cases of businesses engaging in operations that benefit the general public. What is however striking is that, if all businesses engaged in operations of social good will then ultimately there would be no need to raise the question of ethics to its current altitude. In a recent study, Bank (2002) hinted that given the chance every business organization and the individuals that represent them will cut corners to ensure that short run gains are made irrespective who or what is sacrificed along the way. Thus representing a classical case of corporate profit interest pitched against collective interest. Some of the immediate and long term consequences include the progressive erosion of the system of free enterprise and its attendant scandalous outrages.

As far as the mid 1990s, evidence began to emerge that profit maximization and overall business effectiveness could also be achieved through strict adherence to high ethical standards, this was in marked contrast to the deep rooted corruption of the day. According to Collins & Porras (1997), a good number of companies had enjoyed tremendous degree of success thanks to their strong policy of non-compromise on business ethics. With this serving as the guiding framework, this report proceeds to engage in the delicate task of proving that, in the most real world situation, companies can achieve success notwithstanding her inflexible they remain in the implementation of their ethical standards.

Beyond this, the most complicated task involves approaching the sticky question of how ethics can be infused into employees to such an extent that they just become part of the working milieu. What is central to this report is the acknowledgement that doing so is no mean task, but it is still within reasonable scope of attainment. Therefore the next several paragraphs will be dedicated towards how this can be done and most importantly how doing so enhances the effectiveness of any business entity.

1.2 Discussion of Research Concerns

The findings of comprehensive study conducted by Bakan (2004), points to a mounting pressure brought upon publicly listed businesses to achieve their stated earnings targets. It is this pressure and the accompanying risk of not realizing these targets that Bakan (2004) attributes to the temptation by top executives to engage in unethical practices as a means of sustaining themselves in business. The case of Enron’s utilization of misleading creative accounting strategies to inflate their net worth is a classical illustration. 

Regrettably, the danger with such unethical practices is such that the very moment the imputation is discovered and made public then, the inevitable drop in investor confidence and business sustainable is hit right in the heart. At the end of the day, it brings to question the wisdom in engaging in mischief in the first place, knowing that the cost of detection is greater than the short term gains. Bakan further concedes with a strong tenacity to bring business corporations under scathing attack for being narrowly self-conceited.  Is business really as monstrous as Bakan makes his readers to believe?

It is prudent to state affront that the role of leadership in instituting and instilling ethical business practice in any business organization is just indispensable. On a normal day, a subordinate is more convicted of what he or she observes more than what instructions he or she has to adhere to. Indeed, saying that as per standard regulation, every business entity is guided by internal ethical codes, yet in the real world, the executives who engage in preaching virtue become entangled in the culpability of vices.

Meanwhile of crucial relevance to the leadership factor is the question of broad based engagement as part of the process of setting ethical standards. It is known that, the concept of ethics is highly subjective, meaning that it means different things to different people at different times and even in different circumstances. What is therefore relevant is for corporations to be precise about what they stand for and the respective obligations expected of all team players. It is on this firm foundation of viable internal ethical policies that can be translated into tentative external ethical policies that will guide and regulate the operations of any company with its environment.

Besides the Enron saga, several other multinational and small and medium sized businesses have found themselves on the wrong side of history because of the utter consideration of profit at the expense of the social good (Fussora & Ross 2002). Shell Corporation is one such example of a corporation whose activities has triggered massive public outrage. The collusion of Shell Corporation with the Nigerian government to ignore good corporate social responsibility has resulted in the rise of militant groups doing unconventional aggressive battle against the corporation in its government allies in the Niger Delta state of the Federal Republic of Nigeria. 

In sharp contrast to the case of Enron and the Shell Corporation, L’OREAL, the famous French producer of assorted cosmetic products as part of its corporate social responsibility to its customers and society, decided to give back some of its earnings to the society through the provision of higher educational scholarship funding for academically endowed female students. It is a decision that does not only strengthen its corporate social responsibility credentials but also serves as a very important boost to its corporate image in the long run (Bowles & Herbert 2000). Credibility in the eyes of the consuming public is simply not anything that can be traded for short term parochial gains as is the case of Enron, leading to its tragic collapse.

1.3 Recommendations

A business entity that is genuinely committed to the achievement of developing a firm ethical foundation must of necessity embrace communication as vital component in the quest to achieving this stated goal. The communication stream between top management and subordinates should be carefully used to ensure that all team players are part of the process. A person is more inclined to demonstrate greater commitment to a cause he or she is part of rather than a passive obligation (Gibson 1999 & 2000). The communication process should enhance regular flow of objective information on pertinent issues such as propagating the values of the organization, expanding their perspectives on relevant matters that concern them to make them better equipped to make robust decisions.

More so, it is a normal human tendency to make consultations every now and then to discuss dilemmatic ethical questions. Breeding such a culture with the business organization eventually ensures that employees remain reasonably guided by the established ethical conduct catalogue.  

1.4 Conclusion

Contrary to the long held notion that ethics are business activities are worlds apart, there is an increasing tidal wave moving towards a paradigm shift that emphasizes ethics above parochial short term gratifications. Scores of examples have proving that business organizations that cut corners in their bid to hit profit targets eventually become victims of their short sighted success. By and large there is yet to be compelling evidence to prove that ethically conscious business organizations have crumbled under the weight of public outrage.

The reason is that public confidence and high credibility are essential marketing forces that reap greater rewards in the long term, in a proportion that far outweighs the engagement of backdoor practices (Gary et al 1999). Globalization is steadily setting higher standards that cannot be overlooked in so far as any serious business agenda is concerned.


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