Business Ethics

Corporate governance can address agency problems, they are the rules that dictate the company’s behavior towards it’s directors, managers, employees, shareholders, creditors, competitors and community.

The term “ethics” is defined as moral principles that govern a person’s or group’s behavior. When speaking of business ethics, one is referring to the study, and examination of moral as well as social responsibility relating to business practices, also including its application to the four functions of management as well as the decision-making process in business (Batesman, pg.167). This internal factor can easily influence the how an organization goes about accomplishing the four functions of management. Wal-Mart, like most businesses believe they uphold ethical standards in their business practice. According to Wal-Mart’s statement of ethics, leading with integrity in a workplace is key to running a business (Wal-Mart Ethics pg.10). Leading with integrity, and expecting teammates to work with integrity is one of their main focuses- Wal-Mart’s original founder Sam Walton said,” that it has always been an ethically led company” (Wal-Mart Ethics pg.4). They follow their three basic beliefs: respect for individuals, service to the customers, and striving for excellence (Wal-Mart Ethics pg.5). Although organizations may have their code of ethics, they still come across the occasional ethical problem in the company. Wal-Mart for example, had an issue with an employee named, Chalace Epley Lowery. Lowery believed that another

The act identifies and assigns accountability to those who knowingly falsify documents and it clearly states the consequences for acting outside the defined standard, relating to corporate governance. Using case studies we will review how the passing of the Sarbanes-Oxley Act is helping to standardized a code of conduct and how it has increased the awareness of corporate responsibility. First, we will review the definitions of corporate governance, business ethics and corporate responsibility. Next, we will examine the effectiveness of the Sarbanes-Oxley Act, through a case study and identify possible challenges the Sarbanes-Oxley Act may face, as public demand for social responsibility increases. Finally, we will review proactive recommendations for provisions to key titles of the Sarbanes-Oxley Act. These provisions will accommodate the growing public demand for ethical and social responsibility.

Phenomenal growth of interest in corporate governance has emerged in recent years. The body of literature on the subject has grown markedly in response to successive waves of large corporate failures. Furthermore, there have been numerous attempts to define what constitutes ‘good corporate governance’ and to provide guidelines in order to enhance the quality of corporate governance.

Prior to the advent of the Sarbanes-Oxley Act of 2002, referred to herein as “SOX,” the board of directors’ pivotal role was to advise senior leaders on the organization’s strategy, business model, and succession planning (Larcker, 2011, p. 3). Additionally, the board had the responsibility for risk management identification and risk mitigation oversight, determining executive benefits, and approval of significant acquisitions (Larcker, 2011, p. 3). Furthermore, for many public organizations, audit committees existed before SOX and provided oversight of internal processes and controls. Melissa Maleske (2012) advised that the roles and responsibilities of the board were viewed “…from a perspective that the board serves management” (p. 2). In contrast, Maleske (2012) noted that SOX regulations altered the landscape “…to a perspective that management is working for the board” (p. 2). SOX expanded not only the duties of the board and the audit committee, but also the authority of these bodies (Maleske, 2012, p. 2).

3. What are some of the reasons for the ARC’s ethical dilemmas and how can the organization guarantee that these problems will not occur in the future?

After the debacle with the blood, they development and implementation of standardized and more uniform history questionnaires to help to ensure that they are maintaining the same standards across all collection sites (Zou, Eder, Musavi, Notari IV, Fang, & Dodd (2007). The changes that were made to the Code of Business Ethics and Conduct in January of 2007 now requires that all employees read and sign the two-page document stating and acknowledging understanding of the company’s expectations. They also implemented a 24-hour anonymous call line where anyone can call to voice concerns about the organization. They also published an “Ethics Rules and Policies” statement that outlines the details about how business will be conducted regarding business funds, property, allocation of time, addressing conflicts of interest, recordkeeping and the handling of media inquiries (Ferrell, Fraedrich, & Farrell, 2015). While those are all effective tools to manage what has happened in the past, the ARC will also need to ensure that they are not allowing anything to damage their reputation going forward. To do this, they will need to be diligent in their hiring practices; ensuring that they are following the same policy and procedures for each employee and that expectations are laid out regarding ethical behavior from the very beginning of employment. They will need to, at least yearly, revisit ethical responsibility topics with all employees to keep those skills fresh and on the forefront of everyone’s mind. It will be imperative for the company to continue to build itself back up from its previous failures and to ensure that they have learned from their

Ethical culture can be viewed as the character or decision making process the employees use to determine whether their responses to ethical issues are right or wrong. Ethical culture is driven by top management. The problems began with American Red Cross when the organization started to see a high rate of turnover in the executive level. The frequent executive turnover significantly weakened the organization’s ability to carry out its federal mandate. ARC also had an oversized board, that did more hiring and firing than building a strong Red Cross. The constant change in leadership was debilitating, and doesn’t do

The American Red Cross failed when they did not carry out or provide formalized responsibility in their operation model. The employees and volunteers were not held accountable for their actions of misconduct and unethical behaviors. In research, there was no indication that ethics was neither a priority nor a requirement within the organization. In fact, there was no formal training provided by management. When top executives assume that their staff and volunteers would naturally behave ethically they fail both the public and employees. In failing to provide this training and upholding policy and procedures the organization saw donation mismanagement, inappropriate management of funds, stealing, and slow response to disaster situations.

1. The Sales Rep. A sales representative for a struggling computer supply firm has a chance to close a multimillion-dollar deal for an office system to be installed over a two-year period. The machines for the first delivery are in the company’s warehouse, but the remainder would have to be ordered from the manufacturer. Because the manufacturer is having difficulty meeting the heavy demand for the popular model, the sales representative is not sure that the subsequent deliveries can be made on time. Any delay in converting to the new system would be costly to the customer; however, the blame could be placed on the manufacturer. Should the sales representative close the deal without advising the customer

There is no disconnect between what the organization did and what my personal ethics demanded. The company was able to reinstate trust and confidence among employees and restored a sense of ethical accomplishment in me.

Many of the reasons for the American Red Cross' ethical dilemmas was because of their untruthful presidents and CEOs as well as some of their employees' greed. Many of the ARC's staff were greedy and were only concerned about padding their own pockets and not about the welfare of others and this is one of the biggest reasons for the ARC's ethical dilemmas. Also, the organization had to many people that were not looking out for the welfare of the company as a whole. Another reason for the dilemmas of the ARC is because they did not have to account for their actions and did not have to report to someone who would hold each and every one of them accountable (www.citizen.org). The company should have all of their members held to the highest standard possible in ethics and values when they are hired and randomly throughout one's employment. Not just anyone can work for an organization like American Red Cross, but it has to be someone that holds themselves at high standards, both

TOPIC 17: The quality of the corporate governance within an organization and the impact on an organization’s key stakeholders.

Every organization also has a profession responsibility to conduct business honestly and ethically. Our readings reported, “Experts estimated that U.S. companies lose about $600 billion a year from unethical and criminal behavior” Kinicki and Kreitner (2009). The organization could avoid having ethical issues by meeting the

1. The Sales Rep. A sales representative for a struggling computer supply firm has a chance to close a multimillion-dollar deal for an office system to be installed over a two-year period. The machines for the first delivery are in the company’s warehouse, but the remainder would have to be ordered from the manufacturer. Because the manufacturer is having difficulty meeting the heavy demand for the popular model, the sales representative is not sure that the subsequent deliveries can be made on time. Any delay in converting to the new system would be costly to the customer; however, the blame could be placed on the manufacturer. Should the sales representative close the deal without advising the customer