Organizations that are committed to high ethical standards are often faced with

Question

Organizations that are committed to high ethical standards are often faced with difficult and complicated ethical questions. Think about how organizations make decisions and the role of the organization's ethical values in their decisions. Choose an actual organization that faced a difficult ethical decision. This decision can be limited to a specific act, but it can also be an ongoing policy or plan. Describe the ethical considerations related to the decision. Identify the stakeholders affected by this decision and discuss how the decision affected them. Then evaluate the organization's actions from an ethical point of view. Explain why the organization has or has not acted ethically and explain what, if anything, the organization should have done differently.

Explanation / Answer

Ethics are the principles and values the organization adopt while making decisions. Ethics has great role in developing employee morale and loyalty towards organization. The company decisions based on ethical principles affect the image of the company and have the ability to affect the financial status and customer trust. The employee behavior, team work and collaboration are the result of ethics which help in the success of the company. The decision made by adopting unethical principles may ruin the culture and reputation of the company and lead to destruction. Hence the organization’s ethical values have great role in decision making process.

The role of ethical values in organization’s success in clearly evident in the ethical issues related to the company Enron. Enron was successful firm in the field of energy and the stock grown quickly. But later it was found that the reason behind fast growth of company was the unethical practices adopted by the top management. Management hidden the financial records with the help of the accounting firm Arthur Andersen which shows the debt and showed profit which resulted into stock price increase and lot of people bought the company shares. But later when the fraud was detected the stock price fallen and the investors and share holders lost their money. The company went bankrupt and employees lost their job.

The incident was the result of a plan to show higher profit and show the management’s success in front of the board, investors and the public and not limited to a specific act. The decision has affected the various stakeholders involved in business with Enron and questioned the control of boar over management. It also increased the significance of corporate governance to promote ethics in workplace and protect stakeholder interests. The ethical considerations involve the act of CEO and other executives to exercise fraud and misrepresent the company financial data to promote their abilities and increase the share. The customer and stakeholder trust got affected and company lost its goodwill. The company went bankrupt and the shareholders and investors lost their money. The accounting firm also got destroyed. The stakeholders affected were the employees, the share holders, the investors, company board, the accounting firm and the public who availed the services of Enron directly or indirectly.

The organization acted unethically in order to show that they are top among others and the management is a successful one. Instead of doing fraud and misrepresentations they would have adopted ethical principles and worked hard to make the company successful. This would have increased company’s image, employee satisfaction and provided long term success in the industry. The incident shows that nobody can sustain long term adopting unethical methods.

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