Assignment 1: The American Red Cross (ARC)

Assignment #1- The American Red Cross (ARC)
Brittany Jackson
April 28, 2009
Ethics and Advocacy - HRM 522
Dr. Stone

Assignment #1 - The American Red Cross (ARC)
1. Determine the impact of this event on ARC’s “benefits of business ethics” (employee commitment, investor loyalty, customer satisfaction, and bottom line). This event has had a major impact on the American Red Cross Association’s business ethics. Often times, employees join organizations because they believe that they share some of the same values as the organization. When business ethics are comprised in an organization it tremendously affects employee commitment and their overall performance. A lack of ethics in an organization sends
The absence of well-respected leaders can cause major problems within an organization. A lack of business ethics in an organization can also cause tension between employees (Hartman, 2010). Employees that follow the rules can be resentful to those who do not follow the rules, causing dissension in the organization. The lack of business ethics can also cause American Red Cross to lose investors. Investors choose to work with organizations they trust. As information surfaces of their unethical behavior, investors will deny the American Red Cross these vital business relationships. Investors mays also tell other investors about these unethical practices, making it hard to the American Red Cross to obtain these resources. This decreases the chances of the American Red Cross being able to find money for sustainability, which can lead to the organization’s longevity being compromised. Customer satisfaction has also been comprised by this event. The reports of fraudulent use of donations has caused donors to become irritated. This leads to people bad mouthing the
Determine and discuss the ways in which ARC’s corporate governance failed to provide formalized responsibility to their stakeholders. The American Red Cross’s corporate governance failed to provide formalized responsibility to their stakeholders in many ways. The American Red Cross’s Board of Directors had the ultimate responsibility of ensuring that the organization was performing ethical practices. This absence of leadership allowed room for unethical practices, which lead to various illegal and unethical activities. The ARC failed by not allowing their stakeholders to make leadership decisions. One of major problems that the ARC experienced was their constant change in leadership. Different managers with different values and visions for the organization, creates an inconsistency within the organization, making it hard for employees and management to stay on the same page (Monks and Minow, 2011). When an organization experiences a lot of turnover from upper management, it can be discouraging to employees. It can also create a sense of confusion and carelessness within the organization. A formalized responsibility given to stakeholders could have allowed them the ability to properly screen these executives and employees to ensure they were a good fit for the organization. Secondly, the ARC failed to provide corporate governance by not properly updating The Ethics Rules and Policies. When updating this document the ARC neglected to use the word