Stability of Business Ethics in Organizations

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Updated: Aug 21, 2023
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Category: Business
Date added
2021/11/22
Pages:  4
Words:  1216
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Business ethics differ from industry to industry. The nature of an organization’s activities impacts the ethical issues with which it must contend. The significance of business ethics extends far beyond employee loyalty and morale, or the strength of a management team’s bond. Like all organizational activities, the ethical operations of a company are directly related to profit in both the short-term and long-term. The reputation of a company in the surrounding community, other companies, and individual investors is paramount in determining whether a company is a worthwhile investment.

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If a company is perceived to operate ethically, investors are less inclined to buy stock or otherwise support its operations.

With consistent ethical conduct comes an increasingly positive public image, and few considerations are as important to potential and current investors. To maintain a positive image, companies must be committed to operating on an ethical foundation as it pertains to the treatment of employees, respect for the surrounding environment, and fair practices in terms of cost and customer treatment. Many different factors play a role in how an organization establishes its ethical framework. This paper will attempt to explore the ethical framework of organizations through the lens of governance, stability, and transparency.

Governance

Governance is the inner structure of an organization, from its most subordinate workers all the way up to its upper executives. This term is also used to describe how a corporation makes decisions regarding business-related activities, from achieving its short-term and long-term objectives to communicating with shareholders. Corporate governance has far-reaching effects not only for the business itself but also for the financial market as a whole. Corporate governance is shaped by internal and external mechanisms. Internal mechanisms help manage, direct, and monitor corporate activities to create sustainable stakeholder value.

External mechanisms are designed to supervise the company’s activities, issues, and performance to ensure that the interests of insiders – the board, executives, and officers – are aligned with the interests of outsiders (shareholders and other stakeholders). Striking a balance between seizing opportunities while maintaining accountability and ethical integrity has proven a defining challenge for business enterprises. In the broader sense, corporate governance is concerned with the well-being of society, including stakeholders. This issue has raised various stakeholder concerns, leading significant socially-responsible stakeholders to use their influence to guide board decisions towards being more ethical.

In today’s fast-paced business world, being able to adapt to change is a quality that every successful organization needs. Within varied industries, conditions and requirements are always changing. To be successful and maintain stability, adaptability is key. Stability in an organization might refer to concepts such as consistency, predictability, and maintaining the status quo. A stable organization is structured in its procedures and processes, knows the direction it is headed, and adheres to a prescribed vision, mission, and strategic plan. An organization requires both change and stability for long-term success. Some degree of stability is almost a prerequisite for organizational change; without it, change will likely result in confusion.

In the long run, sustained confusion can undermine the effectiveness and/or efficiency of the organization. When considering the stability of an organization, it might be regarded as an indication of viability, the potential to endure into the future. Of course, the organization will still experience numerous changes, either voluntarily or forcibly, as it grows and adapts to its environment in order to survive and thrive. An organization needs to change, but at the same time, they need to retain some of those stabilizing elements that have served them well in the past and may protect them in the future. Organizational change is often linked with terms such as adaptiveness, continual improvement, creativity, differentiation, diversity, flexibility, innovation, entrepreneurial endeavour, responsiveness, and transformation.

Transparency

Absence of trust in organizations is often because of a lack of transparency in the working environment. Transparent leadership is the key not only to cultivating a culture of trust among leaders and their employees but also among the general public that they serve. Employees who are kept in the loop and understand their role in the overall purpose and goals of the organization are understandably more likely to put their trust in their employer. When leaders are transparent, problems are solved quicker. Being transparent about company issues allows employees to help find solutions.

Transparency begins when leadership is clear with employees. This means that they need to engage with employees, especially those on the front lines. This can happen through large meetings or smaller group interactions. In larger organizations where it might be difficult for executives to visit the contact centers to talk to employees, leaders can record videos with company news and updates to disseminate instead so every employee gets involved. A lack of transparency can cause stress for employees, especially if they are worried about job security. Increasing transparency throughout the organization can create a more cohesive work environment, which will quickly be felt by customers throughout the company. However, excessive sharing of information can lead to information overload and can justify constant debate and questioning of senior executive decisions. High levels of visibility can stifle creativity as people fear the ever-watchful eye of their supervisors. Moreover, openly sharing information on personal performance and salary levels, often invoked as a way of promoting trust and collective accountability, can backfire.

Relationship Between the Three Elements

While very different in nature, the relationship between ethical governance, transparency, and stability lies at the nucleus of an organization’s success and survival. The three components, along with the utilization of the best organizational practices, revolve around safeguarding corporate interests and creating sustainable value for society, citizens, customers, employees, and investors. Following a continuous process of review and improvement, this approach incorporates vital proposals for efficiency and success. Ethical conduct in administration is defined by how a part of an organization, be it a person, policy, or procedure, manages collective action from a perspective that avoids causing harm to any party involved.

Organizations must be viewed as systems characterized by shared and transparent administration. These systems aim to establish overall structures and guidelines for managers of large corporations, reinforcing the values of transparency, responsibility, and professionalism. For this reason, a stronger link between ethics, transparency, and stability is needed, providing a basis for companies or organizations to act in ways that are acceptable, reasonable, and congruent with given values.

However, despite these positive actions, it should be underscored that an organization is part of the business world, and therefore needs to create value and generate profit.

Conclusion

Ethics is the responsibility of not just the organization, but also the people within it. They are likely to be the best when it comes to addressing the factors affecting individual decision-making as well as the potential risks posed by corrupt individuals. In addition, they handle ethical issues that arise during project processes and consider the ethical working environment. Recognizing the need for appropriate positive relationships to build trust is essential for collaboration between the management structure and the individual or employee. Individuals in an organization tend to trust, and openly cooperate with systems — regardless of whether they win or lose by those systems — when the process is deemed fair. This signifies that people have faith in an ethically sound system and hold individuals and the organization as a whole accountable for their actions.

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Stability of Business Ethics in Organizations. (2021, Nov 22). Retrieved from https://papersowl.com/examples/stability-of-business-ethics-in-organizations/