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What are the roles of ethics in corporate governance
Roles of ethics in corporate governance
What are the roles of ethics in corporate governance
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Ethics Officer
However, eliminating unethical behavior does not just stop in the education. Corporations must be governed throughout all their business transactions. The proposal is that all corporations that are publically traded and have shareholders must employ an ethics officer. The ethics officer will be immune from firings that are unjustified. They will not be part of an employment at-will doctrine (Cross & Miller, 2012). It is proposed that the ethics officer also be part of the corporation’s board of directors, and they have the ability to trump all decisions that are unethical. The ethics officer will not be paid by the corporation but part of their salary will come from the shareholders investments. Not only will they govern the corporation, but the ethics officer will be in charge of ensuring that training is provided to all staff on an annual basis, and whenever a new employee is hired they have to go through an ethics class provided by the ethics officer. Ethics in the work place will be the only job the officer holds.
The ethics officer’s sole duty is not to protect the corporation but to protect society, the shareholders and stakeholders from any unethical actions that could potentially hurt them. They will not be employed as an enemy of the corporation, but as a protector and advocate for the corporation through ensuring that the corporations is acting responsibly and ethically. If Enron and Arthur Anderson had ethics officers that were effective they would not have crashed as hard as they did. Both companies and the people who ran them will always have a bad name and will always be to blame for take many people’s retirements and saving all the while knowing they where cheating the numbers and knowing ...
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...ent of business. (8th ed.). Mason, OH: Cengage Learning.
Ethisphere. (2011). 2011 world’s most ethical companies. Retrieved from, http://ethisphere.com/wme2011/
Ferrell, O., Fraedrich, J., & Ferrell, L. (2011). Business ethics (8th ed.). Mason, OH: Cengage.
Gomstyn, A. (2010). Walmart CEO pay: More in an hour than workers get all year? Retrieved from, http://abcnews.go.com/Business/walmart-ceo-pay-hour-workers-year/story?id=11067470
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Serving History (2011). Enron: Early history. Retrieved from, http://www.servinghistory.com/topics/Enron::sub::Early_History
UCCS. (2010). UCCS awarded $1.25 million business ethics grant. Retrieved from,
Brooks, L.J. (2007) Business & Professional Ethics for Directors, Executives & Accountants. Mason, OH: Thomson South-Western.
Many organizations have been destroyed or heavily damaged financially and took a hit in terms of reputation, for example, Enron. The word Ethics is derived from a Greek word called Ethos, meaning “The character or values particular to a specific person, people, culture or movement” (The American Heritage Dictionary, 2007, p. 295). Ethics has always played and will continue to play a huge role within the corporate world. Ethics is one of the important topics that are debated at lengths without reaching a conclusion, since there isn’t a right or wrong answer. It’s basically depends on how each individual perceives a particular situation. Over the past few years we have seen very poor unethical business practices by companies like Enron, which has affected many stakeholders. Poor unethical practices affect the society in many ways; employees lose their job, investors lose their money, and the country’s economy gets affected. This leads to people start losing confidence in the economy and the organizations that are being run by the so-called “educated” top executives that had one goal in their minds, personal gain. When Enron entered the scene in the mid-1980s, it was little more than a stodgy energy distribution system. Ten years later, it was a multi-billion dollar corporation, considered the poster child of the “new economy” for its willingness to use technology and the Internet in managing energy. Fifteen years later, the company is filing for bankruptcy on the heels of a massive financial collapse, likely the largest in corporate America’s history. As this paper is being written, the scope of Enron collapse is still being researched, poked and prodded. It will take years to determine what, exactly; the impact of the demise of this energy giant will be both on the industry and the
After news of the scandal of Enron, one of the hottest items on e-Bay was a 64-page copy of Enron’s corporate code of ethics. One seller/former employee proclaimed it had “never been opened.” In the forward Kenneth L. Lay, CEO of Enron stated, “We want to be proud of Enron and to know that it enjoys a reputation for fairness and honesty and that it is respected (Enron 2).” For a company with such an extensive code of ethics and a CEO who seemed to want the company to be respected for that, there are still so many unanswered questions of what exactly went wrong. I believe that simply having a solid and thorough code of ethics alone does not prevent a company from acting unethically when given the right opportunity.
Trevino, L. K., & Nelson, K. A. (2011). Managing business ethics: Straight talk about how to do it right. New York: John Wiley.
Trevino, L., & Nelson, K. (2011). Managing business ethics - straight talk about how to
Brooks, L., Dunn, P. (2012) Business & Professional Ethics for Directors, Executives & Accountants. 6th Edition. Thompson South-West.
Ethics shapes our attitudes towards the world, other people, and cultures and how we process right from wrong. I would love to believe that the world is made up of individuals that have a high level of integrity and pure ethical fibers; however, this is not the world in which we live in. Ethics or rather morals entail mechanisms that defend, systematize as well as recommended conceptions of right or wrong, good and bad. Interestingly, organizations have to develop ethical codes to ensure employees and employers understand the difference in doing right or wrong. It is no secret that ethics are an essential aspect of successfully running any organization or government, yet, countless corporations grow precipitously on unethical practices. Ethics
Seawell, Buie 2010, ‘The Content and Practice of Business Ethics’, Good Business, pp. 2-18, viewed 22 October 2013, .
An organization needs to adhere to ethics in order to effectively implement its mission, vision, and objectives in a way in which offers a solid foundation to management and their subordinates to properly develop and implement its strategies. By doing so, the organization as a whole is essentially subscribing to one commonality that directs all of the actions of the employees of the organization. Additionally, it assists in preventing such employees from divergence in regard to the proposed strategic guideline. Ethics additionally ensures that a strategic plan is developed in accordance to the interests of the appropriate stakeholders of the organization, both internal and external (Jin & Drozdenko, 2010). Likewise, corporate governance that stems from various regulatory parties makes it necessary for organizations to maintain a high degree of ethical standards; this is done by incorporating ethics within the organization’s strategic plan so as to foster a positive corporate image for the stakeholders and general public (Min-Dong Paul, 2009).
Ferrell, O. C., Fraedrich, J., & Ferrell, L. (2013). Business ethics: Ethical decision making and cases: 2011 custom edition (9th ed.). Mason, OH: South-Western Cengage Learning.
To provide an example of a breach of ethical conduct in the workplace, we may remember the case of a financial manager in a corporation that decided not to pay overtime to some employees. After a deep outside investigation, the company was summoned with thousands of dollars to remedy the payment that was supposed to be paid to all employees who worked more than forty hours per week. Again, it is needed more than just a booklet stating that the company adheres to the code of business ethics. It is needed serious managers that can run the company with the most seriousness as possible. Consequently, any written codes of business ethics, regardless of how well it has been crafted, need people that adhere to its internal content with a serious desire to do the right thing.
Norman, W., & MacDonald, C. (2004). Getting to the bottom of the "triple bottom line". Business Ethics Quarterly, 14(2), 243-262. http://dx.doi.org/10.5840/beq200414211
Treviño, L. K., & Nelson, K. A. (2007). Managing business ethics: Straight talk about how to do it right Fourth ed., Retrieved on July 30, 2010 from www.ecampus.phoenix.edu
Shaw, W. H., & Barry, V. (2011). Moral Issues in Business (Eleventh ed., pp. 230-244).
Ethics is the responsibility of each individual person, but starts with the CEO and the Board of Directors, setting the right tone at the top and moves down through the organization, including setting the tone in the middle. A company’s culture and ethic standards start at the top, not from the bottom. Employees will almost always behave in the manner that they think management expects them, and it is foolish for management to pretend otherwise (Scudder). One of the CEO’s most important jobs is to create, foster, and communicate the culture of the organization. Wrongdoings or improper behavior rarely occurs in a void, leaders typically know when someone is compromising the company