Explore BrainMass

Ethical Decision Making: Stockholders and Stakeholders

1. Why is it important to move from a narrow perspective of decisions affecting stockholders, to decisions affecting stakeholders? Illustrate with an example.
2. Describe the disadvantages and the advantages associated with ethical decision making.
3. Discuss the hesitation (that may be justified) associated with teaching ethics. Explain briefly how the authors believe that ethics can be taught constructively in a class.

Solution Preview

1. Some of the important stakeholders of the organization are:

1. Public
2. Community relations
3. Employee relations
4. Share holders
3. Customer relations
4. Non U.S. stakeholders
5. Minorities and Women

Consider the interests of the stakeholders:
Management and stockholders
Shareholders and Non U.S. stakeholders look at their satisfaction. Their satisfaction will be achieved by maximizing the wealth of the shareholder's value. Management will be satisfied if they get due rewards for their efforts.

Employee relations looks at wages relative to the industry, benefits paid, family-friendly policies, parental leave; team management, employee empowerment, and so forth.
Minorities and Women look at percent of minority and women among employees, managers, and board members; any EEOC complaints; diversity programs in place and handling of any disputes amicably. Thus important responsibilities are:

Clean and safe environment
The corporations, which serve their employees, enjoy high degree of employee loyalty that goes beyond the employee-employer relationship. Employees are obviously most productive when they do the work in a clean & safe environment.

Fair and equitable compensation
Employees are respected for their work, are suitable rewarded and the remuneration are fulfilling, are empowered and have a say and have freedom to maintain a balance between their social and work life. It's the motivation to work towards the organizational goals that keeps them going. It can only happen if they feel 'The organisation cares'. Employees also know that their personal and professional needs are more likely to be taken into account in an organization that is dedicated to meeting its social responsibilities.

Managing Diversity :
Workforce plans that provide opportunities for:
- individual development
- improved individual performance
- greater participation of declared disadvantaged groups
Documenting, communicating and consistently applying anti-discrimination policies.
Ensuring processes are in place to investigate claims of discrimination and provide procedural fairness.
Make sure that good faith efforts are made to recruit a diverse applicant pool, particularly under-utilized minorities and women.

Customer relations might include quality management programs, quality awards won, customer satisfaction measures, resolving customer complaints effectively.

The government will look for the
1. Environment matters: It looks at positive programs in place such as pollution reduction, recycling, and energy-saving measures; as well as negative measures such as level of pollutants, EPA citations, fines, lawsuits, and other measures.

2. Complying of the laws, rules and other regulations of the state.

3. Payment of taxes and other dues within the time.

Thus, it should develop the corporate code of conduct as discussed below:

Criteria for the formulation of corporate codes of conduct:
The principles of the code must be tailored to the specific corporate culture - merely taking over general codes is not enough. The code of conduct addresses those activities of the corporation which are particularly sensitive or which concern the greatest vulnerability (legal, socio-political, and other).

Hence it's important for the corporations that treat environment with respect leave little waste for the environment to consume, have efficient processes, low energy costs, high degree of recycling, high product quality, high social standing and high levels of customer satisfaction. It becomes a Win-Win Strategy for the corporate enabling them to improve their environmental or social record while reducing costs and/or increasing competitiveness and productivity. For example for the investor of the business the most desirable truth is to have excellent economic performance. But the economic performance alone is no longer enough to give businesses legitimacy. The organization has to be concerned with the interest of all the stakeholders. Directors, workers and management receive salaries, benefits and reputation; whilst shareholders receive capital return. Customers receive goods and services; suppliers receive compensation for their goods or services. In return these ...

Solution Summary

This response describes the advantages and disadvantages that come with ethical decision making, as well as how such decisions will affect stockholders and stakeholders.