October 28, 2012
HRM 522 Ethics & Advocacy For HR Pro
Determine the impact of this event on ARC’s “benefits of business ethics” (employee commitment, investor loyalty, customer satisfaction, and bottom line). Business ethics includes the principles and standards that guide behavior in the world of business. The ethical behavior of a company is being judged and determined by its stakeholders. They may not always be right but their judgment affects the company’s reputation in society. There are several benefits of business ethics. Ethics contribute to (Ferrell, Fraedrich, & Ferrell, 2011, pp. 18-21): * Employee commitment – comes from employees who believe their future is tied to that of their organization and their willingness to make personal sacrifices for the organization. * Investor loyalty – ethical conduct results in shareholder loyalty and can contribute to success that supports even broader social causes and concerns. * Customer satisfaction – one of the most important factor in a successful business strategy; a company must continue to develop, alter, and adapt products to keep pace with customers’ changing desires and preferences and it must seek to develop long-term relationships with customers and stakeholders. * Profits – must have adequate financial performance in order to nurture and develop an ethical culture. Because of the actions of the American Red Cross following 9/11 and Hurricane Katrina, their benefits of business effects were damaged. Employee commitment wavered because of the actions of the organization. Because of the lack of monitoring some employees or volunteers were doing unethical and fraudulent things (i.e., mishandling funds). This misconduct severely damaged the reputation of the American Red Cross. Investor loyalty was diminished because the American Red Cross was not following their own bylaws and was mismanaging funds donated to the organization.
References: American Red Cross. (2012). Retrieved October 28, 2012. www.redcross.org Ferrell, O. C., Fraedrich, J., & Ferrell, L. (2011). Business ethics: Ethical decision making and cases: 2011 custom edition (8 ed.). Mason, OH: South-Western Cengage Learning. Governance. (2011). Retrieved October 28, 2012, from American Red Cross: http://www.redcross.org/portal/site/en/menuitem.d8aaecf214c576bf971e4cfe43181aa 0/?vgnextoid=d18859f392ce8110VgnVCM10000030f3870aRCRD&vgnextfmt=defa ult