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Ethical Decision Making: Stockholders and Stakeholders

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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.

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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.

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Leadership and Ethical Decision Making


After many years of hard work in lower and then middle management roles, your career further advances with your appointment to the newly created position of compliance officer for Expert Consulting Group (ECG). This position is the first time that you will be a member of a senior executive team, holding what many would consider an organizational leadership role. There are several challenges and opportunities ahead as you become acclimated to the company and fulfill expectations in the new role.

You have been charged with the tasks of standardizing ethical policies at ECG and implementing them company wide, including essential training. You will be the leader consulted by stakeholders regarding matters that could have code of conduct implications. You will oversee the Ethics Review Committee, which is composed of selected executives. The policies developed are intended to provide greater definition to appropriate work-related behaviors and ensure that ECG and its employees are abiding by all legal and ethical guidelines defined by government, other regulatory bodies, and the company. The ethical policies will also define investigative measures if violations are alleged and any punitive actions if violations are confirmed.

This is also an exciting time for the expanding company of ECG. It has grown from being a small, 25-employee boutique consulting firm focused on information technology (IT) solutions for the financial services industry to a consulting firm of 200 employees with four areas of expertise and four industry practices serving clients in the United States and select European and Asian countries. In the past 6 years, ECG's growth has been fueled by carefully planned acquisitions of selected start-ups and strategic recruiting of respected consultants who could quickly add to the annual sales, which currently exceed $60 million. The company's expansion is expected to accelerate through an initial public offering (IPO) of common stock by the end of the quarter to secure additional financing for more significant acquisitions, including that of the privately held firm Government Allies, Inc. Funding secured from the IPO will also allow ECG to strengthen its resources and capabilities.

Currently, ECG promotes itself as being the firm of choice for IT solutions, supply chain management, customer relationship management, and strategic consulting. Industries of focus and expertise include financial services, communications, retail, and transportation. The intended acquisition of Government Allies would enhance IT consulting expertise and allow ECG to secure a foothold in Federal Government contracts, a primary focus for Government Allies. Both companies are excited about the organizational synergies upon the hopeful completion of the transaction.

Similar to many organizations, ECG is required to abide by various laws relevant to domestic and international transactions, such as reporting to governmental agencies, and HR-related laws. During consulting engagements, ECG may or will need to adhere to guidelines for specific client industries. Client contracts also govern work-related activities with rules of engagement. Furthermore, the intended IPO would necessitate rapid and full compliance with the Sarbanes-Oxley Act (SOX).

As the new compliance officer, you must review the existing ethical standards, research relevant laws, seek input as needed, and develop a comprehensive code of conduct for ECG. The much- publicized ethical transgressions of various well-known corporations have heightened organizational and regulatory sensitivities to establishing and abiding by firm ethical standards. These situations have also created opportunities for individuals such as you to assume key leadership roles in organizations as guiding forces for compliance.

The senior executive team, the Ethics Review Committee, and the board of directors are concerned about successful implementation of the code of conduct that you are developing for ECG. There has been little focus in the past on widely communicated and consistent ethical standards due to a focus on the company's growth and the assumption that employees would take the ethical approach in all business activities. The firm found, however, that each person's perception of ethical can differ and not all employees behave in a manner that the firm (and likely others) would consider ethical. The soon-to-be introduced code of conduct will provide formal and specific company-wide guidelines, leaving much less room for interpretation or leniency. This is a dramatic shift from past practices, so there are implementation concerns.

To alleviate the concerns of ECG leadership and to provide more direction to your role, you have been asked to present a comprehensive and innovative change management plan to address how the new code of conduct will be implemented. In this plan, you should focus on successful company-wide implementation and acceptance of the policies by reviewing specific implementation steps and identifying who will be involved at each stage.

Please give me ten major points on this to get me started.

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