Applied Concept Paper: Critical Thinking Structures for Business Ethics Essay

Executive Summary The purpose of this paper is to demonstrate my understanding of the previously mentioned fundamental concepts and capability in order to relate them to the actual business world through applications of my critical thinking skills. Key concepts such as ethics, social responsibility, whistle-blowers, sustainability, stakeholders, and environmental stewardship are mentioned in Chapters 3 and 4 of (Wheelen, 2012). This paper discusses recent articles regarding ethics in the Atlanta Public School Systems, a violation of the code of ethics by the former HealthSouth CFO back in 2010, and Wal-Mart’s latest ethics controversy. In addition, this paper targets important concepts such as social responsibility, sustainability; environmental stewardship and how they affect the stakeholders of Patagonia Clothing Company, Carlportland, U.S Silica and Lucky Stone Company. These companies have proven themselves to be in the forefront of sustainability initiatives through their everyday practice s. From this research, I learned that adhering to the Code of Ethics in the business world is important on many levels. It guides all managerial decisions, creating a common framework upon which all decisions are founded. In order for companies to fully meet their social responsibility, they should have in place a process to integrate social, environmental, ethical and human rights concerns into their business operations and core strategy. Furthermore, the concept of sustainability has come to the vanguard of the global understanding that economics, environmental health and human well-being are interconnected. This ultimately demonstrates that generating high-quality products in a responsible way increases brand reputation, competitive advantage, and most importantly financial success. Abstracts * Investigation into APS Cheating Finds Unethical Behavior Across Every level This article talks about how across the Atlanta Public School system (APS), staff members worked in secret to cheat on testing results. The report accuses top district officials along with school teachers and administrators, of wrongdoing which had been happening for years. In some schools, cheating became a routine, a part of administrative duties during the annual state examinations. It grew into an organized crime of falsifying test results for children who could not score high enough to meet the district’s self-imposed goals. In addition, Beverly Hall, former superintendent, and her top aides, lied to top investigators, destroyed and altered public records, tampered with information, and misled police to avoid taking responsibly for their unethical behaviors. This resulted in a culture of fear, intimidation, and retaliation in the APS. * Former Health South CFO Talks to Business Students About Wo rkplace Ethics This article discusses the ethical challenges that many CFOs face in the workplace. Aaron Beam, former HealthSouth CFO, served prison time for forging the company’s finances and breaking the code of ethics. Beam warned students of the ethical dangers in today’s workforce. He mentioned why accountants and CFOs get trapped into lying, and feel intimidated by their superiors. In this article, Bean touches on many important points, such as, how money changes people, how having more personal possessions does not guarantee happiness, and most importantly, how we need to stand by our principles and ethics all the time. After spending three months in the Montgomery jail, Beam learned his lesson; he wrote a book, opened a lawn service business, and decided to share his experience with business students in universities across the nation. * Wal-Mart’s Ethics Controversy This article debates how an employee ended up jobless after following the Wal-Mart ethics guidelines. Chalace Epley Lowry started working for Wal-Mart in January of 2006, and after a few days at the job, she witnessed unethical behavior from the VP of her department. Lowry suspected that Ms. Williams, the VP of Corporate Communications might have traded inside information about the company’s stock. She questioned it and filed a formal complaint with her immediate supervisor; she thought that it was the honorable thing to do. In return, her identity got disclosed to the offender, making it uncomfortable in her position since Mona Williams was effectively her boss. Also, she got a lower performance review, and when she complained, she was told to find another job. * Patagonia: Blueprint for Green Business The above article is the story of how Patagonia, an outdoor-clothing and equipment firm, and its founder, Yvon Chouinard, took his passion for the outdoors and turned into a successful business. By conducting business in a non-traditional way, Chouinard created a company with a different outdoor style that makes $270 million in yearly revenues. This organization is among one of the first in America to provide onsite daycare, as well as both maternity and paternity leave, and flextime. Patagonia reuses materials, questions growth, ignores fashion, makes goods that last, and discontinues profitable products. With a laidback atmosphere for employees, its production is at full capacity. Mr. Chouinard’s biggest dream is to turn Patagonia into a totally sustainable, ECO friendly company, where people enjoy coming to work, and he can sleep well at night. * Pursuing Sustainability Business Initiatives, a Large Business In this article, the National Stone, Sand and Gravel Association (NSSGA) recognizes their large producers’ member companies, which are pursuing sustainability initiatives through their everyday practices. The first one, CalPortland Company, one of the major producers of Portland cement, has been pursuing environmental stewardship for years. The second one, Lucky Stone Company, one of the largest family-owned and operated aggregates companies in the U.S, has an excellent environmental reputation. And the third one, U.S. Silica, is a leading producer of industrial minerals which recently adopted a formal sustainability policy. This article also emphasizes what these companies have in common and highlights the benefits companies will obtain by making sustainable decisions now. Concepts Ethics is defined by the textbook as the consensually accepted standards of behavior for an occupation, a trade, or a profession. There is no worldwide standard of conduct for business people. This is especially true given the global nature of business activities. Cultural norms and values vary between countries, ethnics groups and even among geographic regions (Wheelen, 2012). A Code of ethics specifies how an organization expects its employees to behave while on the job. â€Å"A code of ethics, (1) clarifies company expectations of employees conduct in various situations and (2) makes clear that the company expects its people to recognize the ethical dimensions in decisions and actions.† (Wheelen, 2012). Whistle-blowers are defined by the author of the textbook as those employees who report illegal or unethical behavior on the part of others. Even though the Sarbanes-Oxley Act forbids firms from retaliating against anyone reporting unethical acts, 82% of those who uncovered fraud reported being ostracized, demoted or pressure to quit (Wheelen, 2012). The concept of Social Responsibility as it is explained in the textbook proposes that a private corporation has responsibilities towards the society that extend beyond making a profit. Many business people have agreed upon the main responsibilities of a business, which are Economic, Legal and Ethical. Being socially responsible does provide a firm a more positive overall reputation (Wheelen, 2012). Sustainability may include more than just ecological concerns and the natural environment. It can also include economic and social aspects. In the business environment, in order for a firm to be sustainable, it must be successful over a long period of time; and it must satisfy all of its economic, legal, ethical, and discretionary responsibilities (Wheelen, 2012). Stakeholders are a large group of people with interest in a business organization’s activities. This group gets affected by the achievements or failures of the firm’s objectives (Wheelen, 2012). Some examples of Key Stakeholders are: creditors, directors, employees, government agencies, shareholders, suppliers, unions, and the community where the business operates. Environmental Stewardship refers to responsible use and protection of the natural environment through conservation and sustainable practices. Environmental stewardship defined in simple terms as â€Å"dealing with man’s relation to land and to the animals and plants which grow upon it† (Leopold, 2013). Analysis The article about the APS unethical practices touches on one important concept: Ethics. For years the Atlanta School District produced gains on state curriculum test by cheating on student’s exams. Years of misconduct took place at all levels of the organization, from the top of the chain of command to the Superintendent’s office. The cheating prevented many struggling students from getting the extra help they needed (Vogell, 2011). It also created an atmosphere of stress and deception among school employees. Top investigators in the case came up with three possible reasons that cheating flourished in APS. 1. The district set unrealistic goals, and pensions and raises were based on the test results. 2. Because the target test results rose every time the school reached the goal, the pressure rose. Cheating was, therefore, the only way to obtain the results. 3. The top officials refused to accept responsibility. However, I disagree with those three reasons. Just because g oals are unattainable, that does not mean we have to act unethically. Once the cheating started, it could not be stopped. It collapsed on itself, as lying usually does. If top leaders refused to take responsibility, it was their choice. We, as individuals, have to be responsible for our own actions. Teachers are responsible for helping students become better members of society; this includes teaching them good citizenship skills. There are always grey areas in professional codes of ethics because there are many areas that are subjective. Personal integrity and honesty are required by all who agree to follow a code of ethics. If an educator observes someone practicing unethical behavior, it is his/her duty to report such behavior through the proper administrative channels. In the article that talks about the former CFO of HealthSouth, Aaron Beam, he warned students about the ethical challenges that are in the workplace. I especially enjoyed this article because it touches an important subject, the code of ethics. Even the most ethically-aware professionals find their standards challenged on a daily basis . As accountants, part of the code is to represent the public interest, and sometimes that may mean putting it ahead of the company’s interest. As a CFO, that duty is heightened. In addition, the first people employees look to are the CEO and CFO to see if they have a real commitment to ethics. If they behave unethically, employees are likely to do so as well. A respectable CFO must be able to stand up to his/her boss with integrity and to speak unpleasant truths when necessary. Not only can inappropriate behavior lead to compliance failures, fraud, and theft, but the consequences can adversely affect employee morale and the firm’s reputation. An ethical framework is built by making the right choices in the little things. â€Å"Integrity is doing the right thing, even if nobody is watching† (annonymus). In the third article about Wal-Mart, we see an employee who is following the company’s code of ethics and acts as a Whistle-blower when she suspected an unethical act was committed by her department head. It is important to note that â€Å"Wal-Mart prides itself on having one of the strictest and most st ringent ethics policies in the retail industry† (Gogoi, 2007). However, that was not true in this case. Instead of rewarding Ms. Lowrey for such a heroic act, her identity got exposed, and she was encouraged to find another job within the company in 90 days. She even experienced a lower performance evaluation after the incident. She felt disappointed to see the way an ethics complaint was handled by a corporation like Wal-Mart. Most of Wal-Mart scandals are perpetuated by a culture of silence. Rather than addressing the concerns that are affecting workers across the country, Wal-Mart has attempted to silence those who speak out for changes that would help the company, workers, and the community. As front line Wal-Mart workers are facing hardships, the company is making almost $16 billion a year in profits. Meanwhile, the Walton Family (heirs to the Wal-Mart fortune), are the richest family in the country. All of this has taken a toll on Wal-Mart’s image. Some people will not shop at Wal-Mart because they do not want to support a company t hat they perceive is unfair to its workers. Reading about Patagonia got my attention, since I have purchased their outdoor products without really knowing the company’s history. This unique business is conducted upside down and inside out. Decades before recycling became a common practice, Patagonia was already reusing materials. The company’s founder believed in putting the Earth first, by attaining sustainable practices, while making unbelievable profits ($270 million in revenues yearly). This company would not release toxins into rivers or chase endless growth. All of Patagonia’s products are produced with the highest level of quality and manufactured in the most socially responsible way. Patagonia became the first company in California to use renewable sources, like wind and solar energy, to power all its buildings and one of the first to print catalogs on recycled paper. With a payroll of 350 employees, the boss greets them by name. At the sweatshops facility, workers overlook a playground of the comp any’s day care facility. The people that works there are anything but slackers: â€Å"it was impressive to see how involved in sustainability their employees are,† said Matt Kristle, a senior vice president of Sam’s Club (Casey, 2007). In addition, the owners agree to keep Patagonia privately held and say no to anything that may compromise their values. Also, a good portion of the company’s profits is being donated to grass roots organizations, $26 million since 1985. As a company, all of the stakeholders are really committed to doing the right thing. That is why Patagonia serves as a blueprint for future businesses that want to follow this path. In the last article I chose, there are three companies within the same industry that pursue sustainability initiatives through their everyday practices. They all agree that environmental stewardship and social responsibility can interact to increase stakeholder value as well as shareholder value, (Schlett, 2011). U.S Silica, CalPortland and Luck y Stone voluntarily assist their communities in resolving the issues that affect them. For example, CalPortland, does material donations for the City of DuPont’s war memorial. Lucky Stone collaborates with the James River Association to create a spawning reef for the endangered Atlantic sturgeon species. U.S. Silica’s effort to protect an endangered turtle species near Pennsylvania plant is admirable, as well as helping feed local homeless people once a month. By helping their communities to resolve social issues, these companies are helping themselves by increasing brand value and reputation, improving their license to operate, and reducing their risks. Conforming to environmental laws is not enough anymore. Consequently, pursing environmental stewardship elevates an organization into the â€Å"Risk Management† category. And that, when implemented together with social responsibility initiatives for greener products and processes, moves the company into the â€Å"Business and Sustainable Development.† A good example of that is that all three companies have been working through their environmental management systems to go beyond compliance by implementing Best Management Practices. By encouraging a culture of environmental and social stewardship, these three large producers are at the forefront of sustainability, and as a result they are recognizing financial and sustainable success. Conclusion After carefully analyzing all the articles, I came to the conclusion that all those concepts are intrinsically related. It is important to understand that business ethics go beyond legal issues. Ethical conduct builds trust among individuals and in business relationships, which validates and promotes confidence between people. One of the principal causes of unethical behavior in organizations today is overly aggressive financial or business objectives. Abusive or intimidating behavior is another of the most common ethical problems for employees. Making ethical choices is sometimes the most difficult thing, especially when the one losing out is you or your business. Yet, for the greater good and the sake of mankind, one has to look at business as well as personal ethics and evaluate them periodically. All professions have a set of values that are the cornerstone of their belief system and the foundation of their practice. A Code of Ethics is important on many levels. It sets the â€Å"tone from the top† of the company’s culture. An effective Code of Ethics establishes the ethical expectations for employees and management alike and sets forth the mechanisms for enforcement and consequences of noncompliance. There are four dimensions of social responsibility: economic, legal, ethical, and voluntary, including philanthropic. Earning profits is the economic foundation of any company, and complying with the law is the next level. However, a business whose sole objective is to maximize profits is not likely to consider its social responsibility, although its activities will probably be legal. Sustainability is the balance between people and the environment. Air, water, and land are all impacted by the behavior and actions of human beings, but these impacts can be controlled. The challenge for companies in the twenty-first century is developing an environmentally responsible strategy that keeps them ahead of the game, helping them maintain an advantageous position in the marketplace. It is not enough to simply check boxes, publish a sustainability report, or reduce waste in factories. Companies must be truly innovative in terms of how they manage their relationship with the environment. 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