Interrelationship Between Management Functions

TOOLS FOR PROMOTING ETHICAL PRACTICES

In small organisations, it is simple to decide on ethical issues and follow them. But in case of large organizations which have multilevel and multinational operations, and involved a huge and diverse workforce, maintaining ethical practices is a complex managerial task. Certain managerial tools have been developed in order to accomplish ethical practices and business organisations. These include:

1. Establishment of mission statements.
2. Laying down core values. 
3. Formulating business policies and procedures.
4. Formulating code of conduct for business.
5. Establishing grievance handling, mechanism.
6. Ethical Dilemma resolution workshop.

1. Mission statement. A mission statement is a statement which convey the objectives of the organization. In fact, this statement states clearly “what business wants to be”. Does business want to be the biggest manufacturer of Denim cloth,or to provide the best after sale services in the engineering industry, or to be a supplier of most nutritious food. A mission statement clarifies as to where all other policies of the organization should be directed.

2. Good Values. Core values of the organization are based on its vision of mission. They guide as to how the vision and mission of the business organization is to be realized. Examples of core values are: impartiality, technical excellence, professional respect between co-workers, faithful obedience to the law of land and so on. Further, it is also important to prioritize the core values in order of importance.

For example, the core values of Disney’s Theme Park, in order of importance, are :‘safety’,‘courtesy’, and ‘show’, and last of all, ‘efficiency’. As‘safety’ comes before all else , parents know that no matter how grave problems appear, their children are safe in Disney Park. Imagine for a moment how horrifying Disney Park would be if the corporation’s core values were prioritized differently.If, for instance, ‘show’ were more important to ‘safety’, there might have been a possibility to make a compromise on safety in order to make a good show. In such a case, a chance accident could ruin Disney’s repetition beyond repair. By prioritizing ‘safety’and placing it even about the ‘show’, Disney challenged its competitors to rise to higher levels of customer satisfaction.

Listing of core values of business is very important as they inform the outerworld about the priorities of the business. They make it clear to the employees that they are required to follow the ethical behavior in their actions. Further, the core values help to formulate policies and procedures of business which will ensure ethical practices.

3. Policies and Procedures. Organizational policies and procedures should be designed keeping the core values of the organization in mind. The policies and procedures should be clearly spelled out and conveyed to everybody in the organization. In this way, ethical practices can be built in the routine procedures of the organization.

4. Code of Conduct or Code of Ethics. The company’s code of conduct is a document which aligns vision, core values and policies of the company with specific business activities. It broadly tells how an employee of the company or the company itself should act in certain circumstances with respect to certain matters. For example, incontext of ‘gifts and donations', Tata Code of Conduct states.“A Tata company and its employees shall neither receive nor offer to make, directly or indirectly, any illegal payments. remuneration, gift, donations… intended to obtain uncompetitive favors for the conduct of its business.”

Formulating a code of conduct is very important in ensuring the ethical practices in the organization. All the employees and management of the company are required to follow the code of conduct. In case management of the company or its employees do anything in violation of the code of conduct, they become accountable to public for such act of violation.

 To be successful, a code of ethics should:

• have the support of top management
• be followed by top management
• be clearly explained to all employees
• be practical and realistic
• make the company accountable for violating the code
• be continuously implemented by a “watchdog committee” that has authority to take disciplinary actions.

A company’s code of conduct can only be implemented if anybody (including senior personnel) violating the code is held accountable. A violation of the Code of ethics must be investigated and stringent action should be taken. For example, in Delphi, a Fortune 500 company, there is an awareness line where anybody can make a complaint in case he observes any violation of code of ethics by anybody. Such complaint is investigated and stringent action is taken against the person who is found guilty.Such a practice helps in implementing the code of ethics properly.

It is also very important to make the companies accountable to public for violation of their codes. One way of doing it is to make the code of ethics public so that it becomes questionable in case of violation. Companies such as IBM, Unilever, 3M, Tata, and Infosys have made it abundantly clear to the world that guiding principles of the business are. Anybody can read them on their website. This would make it easier to hold them accountable for unethical practice.

However, no manager can anticipated all ethical dilemmas,so the code of ethics cannot deal with every moral problem of the business. However, by standardizing most of the business practices, the code can be a great assistance in maintain ethical practices in business.

5. Grievance Handling Mechanism. Suitable mechanisms have to be created within the organization for proper implementation of the Code of Ethics. Grievance handling mechanism is one such mechanism. Where an employee feels that he is not able to work upon the Ethical code of the organization because of some internal obstruction like resistance from superior, or that he is being penalized for acting ethically, or has any other grievance in the context of implementation of ethical code, there must to be proper forum where he can get his grievance addressed. Otherwise, he would be discouraged to follow the ethical code.

6. Dilemma Resolution Workshops. At times, managers face ethical dilemmas/issues while dealing with suppliers, buyers, employees and other stakeholders. In order to ensure ethical behavior in such situations, ethical dilemma resolution workshops should be organized from time to time to prepare the participants for dealing with ethical dilemmas in future in an effective manner.