The Hierachy Gap: the Importance of Creating Value in Lower Level Employee

Topics: Ethics, Business ethics, Corporate social responsibility Pages: 8 (2595 words) Published: August 31, 2010
Executive Summary
The research centers on how value affects the organization when they focus on the lower level employees’ interest, fairness, transparency, and create opportunities to advance. The results being better product service retaining valuable employees and improving stakeholders’ value. A failure to governance has lead to the collapse of trust in the stakeholders with the economic recession. The main argument is that taking care of the bottom line means better treatment of lower level employees who increase profits in organizations and increase value for stakeholders. It is important to examine the importance of managing human capital as carefully as financial capital as a scarce strategic resource because ninety percent of profits and stakeholders value is created by lower level employees. Over many centuries, the often the overlooked lower level employees have done their jobs with little regards to monetary value from top executives. The ethical leadership focuses on what values we place for our human capital. If an organization is serious about creating value that is long term then top management needs to invest in the frontline workforce. The managerial model is outdated in understanding corporate relationships. The model for today’s global organization is the enterprise strategy which guides all our stakeholders’ relationships. Therefore all employees are working jointly with top management as good citizens. This is why the overall success lies in commitment to lower level employees.

What is an organization’s social responsibility to its lower level employees to create value for its stakeholders? How important is it to examine the importance of managing human capital as carefully as financial capital as a scarce strategic resource? How can employee evaluations be fair and transparent? Does clarifying the corporate code of conduct assist in the lower level employees’ behavior? Should top management take pay-cuts in troublesome economic times? Should there be a link between top managements’ bonuses and other incentatives with the productivity of the corporation’s lower level employees? If the leaders are not adequately addressing key issues under a stakeholder’s framework the result can be costly, disrupt the organization mission and vision, and undermine the trust of primary and secondary stakeholders. Many organizations realize they could help their business’ success by connecting to their communities and improving relationships among primary stakeholder such as the lower level employees. Culture and leadership play a key role in providing continuous advocacy and what steps management needs to take for a more ethical pathway. With the growing numbers of global corporations, high importance is place on the code of ethics. The frontline employees are equally but separate part of the organization framework. Under the traditional business model, the employees were not considered owners. Therefore, they had little power except under unions and government laws. The old traditional business hierarchy is engraved in many executives who still make the mistake of focusing on the shareholders, board members, and financiers. The important stakeholders are able to make a global impact on the value of the organization. In a strategic venture, true value and increase profitability can be achieved with the teamwork of lower level employees and top management. Traditional Management Framework: Shareholders Capitalism

In the traditional management framework, top management had to be concerned about profitability. This was the measurement of value in a singular format. Top management shared financial reports to shareholders and board member for over a century. (See appendance 1) Employees can receive mix messages regarding the culture of the organization. The old formal mindset position of the organization is to conduct business in a manner that creates the highest ratios on profitability. Pressure by...

References: Beth Israel Agrees to go without to Save Jobs (2009,March 12).
Jennings, M. M. (2008, March 3). Business ethics: Case studies and selected readings (6th Ed.). South-Western Publications. p.505
Nelson, K., & Trevino, L. (2004). Managing business ethics: Straight talk about how to do it right (3rd ed.). New York: Wiley
1. Business Model: hierarchy view
2. Basic two – tier stakeholder map
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