Business Ethics
Determine the impact of this event on ARC’s “benefits of business ethics” (employee commitment, investor loyalty, customer satisfaction, and bottom line). A survey conducted by NBES indicated that 79 percent of employees agree that ethics is important in continuing to work for their employer while approximately 20 percent of employees are not concerned about the ethical environment of the organization. According to Ferrell & Faedrich (2010), a commitment by the organization to goodwill and respect for its employees usually increases the employees’ loyalty to the organization. The misconduct by executives, slow responses to disasters, money mismanagement, and donation mismanagement issues caused a division between the organization and its employees, investors, customers, and bottom line. The unethical behavior at American Red Cross (ARC) does not impact employee commitment, however, it does enhance productivity and loyalty. The investor loyalty was compromised after the events at ARC because donors were no longer able to trust that their money would be used for what it was intended for. This made it more difficult for ARC to raise money for future disasters because people were not making as many donations as in the past. Investors are becoming increasingly concerned with ethics, social responsibility, and reputation of companies because negative publicity, lawsuits, and fines as a result of unethical behavior can lower stock prices, diminish customer loyalty, and threaten a company’s long-term viability (pg 19). The reputation created by the acts of certain employees of American Red Cross caused mistrust among employees, customers, and investors. Employees are less likely to stay with an organization they don’t trust, customers are less likely to remain loyal to an organization that is deceptive, and investors are less likely to invest funds for an organization that is not generating income due to its unethical behavior. As a result, the organization
Bibliography: Ferrell, O., Ferrell, L., & Fraedrich. (2010). Business Ethics. Mason: Cengage Learning.