Organizations face various challenges in their daily operations, which might include competition, lack of enough capital and poor management among others. However, one of the most significant setbacks that affect organizations is corruption. Indeed, corruption is a human weakness that is slowly becoming a crisis among some business organizations. Organizations that have been implicated in corruption scandals have often been subjected to heavy penalties as punishment that can discourage others from engaging in such a barbaric act. Corruption is an ethical challenge that has denied people opportunities to grow and realize the full potential of their capabilities. The corruption scandal in the British giant drug manufacturer, GlaxoSmithKline, exposed the real danger of this vice to human life. Hundreds of doctors in China were bribed to prescribe medications from the company thus putting the lives of the patients at risk (Parry, 2013).
GlaxoSmithKline (GSK) is a multinational pharmaceutical manufacturer whose headquarters are based in Brentford, Britain. Currently, the global chief executive officer of the organization is Emma Walmsley while the chief financial officer of the organization is Simon Dingemans. As a multinational pharmaceutical manufacturing company, GSK operates in several countries in Europe, Asia, Australia, Africa and North America. The company is said to be one of the top five pharmaceutical companies in the world. Since its establishment, the organization has managed to fund several research programs that have led to the discovery of more effective drugs and vaccines. The mission of the organization is to help people do more, feel better, and live longer. For several years, the company has supplied reputable pharmaceutical products that have improved the quality of life for many patients.
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GSK is a multinational company with thousands of employees in different countries. Therefore, the company has set up a code of ethics which guide its operations across the world. According to the code of ethics of the company, the patient focus is critical meaning that the organization is committed to providing the best quality products for its patients. In addition, its code of ethics emphasizes the aspect of transparency in all of its operations since this virtue helps to build trust with each other and the society. The code of ethics also states that all GSK employees are expected to work with the highest standard of integrity regardless of the circumstances. To ensure that the patients are able to receive high-quality products, the code of ethics of GSK states that good practices must be followed during the manufacture and handling of the products. A set of standard operating procedures have been laid out by the company to ensure that employees adhere to them to produce the best quality products.
In July 2013, the Chinese authorities revealed that they were investigating corruption allegations against the British giant pharmaceutical company; GSK. Corruption is a serious ethical challenge in the contemporary world. Many leaders have failed to curb this problem that has threatened to affect the ease of doing business. Corruption also tends to increase the overall cost of production meaning that the poor are the worst affected because they may not be able to manage the exorbitant prices of products. The revelation of the corruption scandal at GSK in China shocked the world as hundreds of GSK employees in China were implicated in bribery cases. It was established that the employees bribed doctors to prescribe GSK products to their patients (Jia, 2013). In fact, it is estimated that the executives of the company in China spent close to 489 million dollars bribing the doctors and travel agencies, which conspired to forge traveling documents.
The corruption case caused a significant impact on the global operations of the company with parallel investigations being launched in the US and the United Kingdom. Such actions caused negative publicity which caused a reduction in the global revenues of the firm. Several top executives of the company in China were arrested and others deported to their countries. The company was thus forced to pay billions of dollars as a penalty for fueling corruption in China. Specifically, in China alone, the company was fined 500 million dollars. Besides the corruption allegations in China, GSK has also been accused of unethical acts in other countries such as Poland, Lebanon, and Jordan ( Jofre, 2014). The cases of corruption thus reveal a failure in the structure of the organization.
The Response of the Leadership
Bribery and any other form of corruption are vices which should not be tolerated in any organization. Leaders of the organizations play a significant role in ensuring that integrity is maintained in all aspects of operations. After the revelation of the corruption scandal in China, the leadership of GSK took several measures to address the problem. First, the leadership suspended all executives who were implicated in the corruption scandal. It is always important to ensure that the person who has been accused of committing certain crimes in the organization is suspended until full investigations are done to ascertain the truth. Therefore, the decision by the GSK leadership to suspend some of the employees helped to facilitate the investigations. If the accused person is allowed to continue holding the office, he or she may interfere with the evidence needed to establish the facts.
The second response of the GSK leadership was increased monitoring of the expenses. The investigations in China had revealed that a lot of funds were lost through fraudulent payments of conferences that never took place. Precisely, the investigations exposed that some of the money was spent to make payments for imaginary trips. It was established that travel agencies had worked with some selected company employees to forge travel documents and claim funds for travel expenses. Increased monitoring of the expenses is, therefore, necessary because it would reduce the chances of such a thing happening. The leadership of the organization came up with structures that would ensure close monitoring of all expenses. The additional requirements that were put in place restricted the way company employees could access and spend the funds.
The third action was the hiring of external investigators to probe the operations of the company in China. The effort by the GSK leadership to have independent investigations is crucial because it would reveal the true state of the organization in terms of corruption. Internal investigations are critical because they help the company to detect potential risks and correct them before the effects can happen. After the scrutiny by the external investigators, the firm was able to pinpoint the exact problem that facilitated the bribery cases. Therefore, the report enabled the organization to make radical changes regarding its operations in China to ensure it regains and maintains its reputation.
The other action taken by the leadership of the organization was the strengthening of the compliance strategy. Massive training was conducted by various departments to ensure that all required procedures were followed to ensure high-quality pharmaceutical products. The standard operating procedures were reviewed in the effort to ensure that they comply with the standards. Compliance is crucial for any organizations to operate successfully. The decision by the leadership of GSK to strengthen compliance would ensure that it is much difficult for the employees to give bribes to promote sales. In fact, such acts would be easily detected and the culprits brought to book for their actions.
The other decision of the leadership to address the challenge was the cooperation with the government investigators. Indeed, the Chinese authorities received full support from the leadership of the organization during the investigations. Consequently, the inquiries were able to reveal some of the most shameful acts of bribery done by the executives of GSK in China. It was wise for the leaders of the organization to work closely with the authorities during the investigations for purposes of transparency. It would be difficult to trust the leadership of the organization and its operations if they refused to work with the investigators.
After the report of the investigations was made public, the leadership of GSK made it clear that the bribery cases in China were against the code of ethics of the organization. They further explained how some of the company officials in China acted contrary to the stipulated ways of doing business. The leadership of GSK accepted to take responsibility and promised to do everything possible to prevent any future recurrence of the scandal. Moreover, the leadership of GSK agreed to pay the penalty imposed due to the corruption scandal. Failure to pay the fine could have prompted further actions by the government of China, which would have caused more harm to the existence of the organization in China.
How the Leadership Could Have Responded More Effectively
The response to a particular challenge is significant because it helps to avert further harm to an organization. In this case, the GSK leadership responded pretty well to the problem at hand. However, I firmly believe that there is more they could have done. After the bribery case was made public in mid-July 2013, the top leadership of the organization immediately denied any wrongdoing. It was wrong for the leaders to make such statements without conducting thorough investigations since the denial revealed a lack of transparency and accountability in the leadership structure. Instead, it would be better for the organization to establish the facts first before making any bold statements to the public. Additionally, conflicting reports from the leadership often make the organization to lose public trust which is crucial for any business to achieve success in its marketing strategies. It is also difficult to win back public trust once it has been eroded. To this extent, it was a mistake for the organization to deny any wrongdoing without establishing the facts.
Secondly, the leadership of GSK should have issued an apology statement to the government and the public. It is crucial for the top leadership to take such actions because they act as proof of the commitment of the organization to abide by the principles of integrity and transparency. Additionally, the organization should have immediately suspended all executives who had been implicated in the scandal to show the commitment of the organization in fighting the bribery and any other form of corruption within its ranks. Any patient who might have suffered because of the scandal should have been compensated for the unnecessary suffering. However, the leadership of GSK failed to offer any compensation to thousands of patients who were unnecessarily made to use the drugs prescribed drugs to patients by bribed doctors for the sake of pleasing the executives of GSK in China. Such actions put the patients at high risk of developing other complications leading to unnecessary suffering. Therefore, it would be better for the company to compensate all patients who were affected by the bribery acts of the executives.
Recommendation to Avoid Bribery in Future
It is not enough to set procedures for operations and penalties for unethical behavior. Therefore, an organization’s management needs to ensure that all employees understand the significance of practicing ethical behavior. To this end, employees should be educated about the subject of integrity and transparency as this has been evidenced to have a significant positive impact. Indeed, employees who understand and appreciate the essence of transparency and accountability are less likely to promote bribery and other corrupt dealings in all aspects of the business.
The second strategy that can be used by the organization to avoid bribery is whistleblowing ( Miceli, Near & Dworkin, 2013) . The organization should be able to come up with policies and several channels which can be used for raising the alarm when things are going wrong in the business. Part of the reason why the bribery scandal at GSK was so rampant was the lack of a whistleblowing channel that would have allowed the acts of bribery to be detected early and action taken in good time. Appropriate whistle-blowing channels would ensure that any attempts by employees to engage in corruption are revealed. Such a strategy would discourage employees from participating in corrupt dealings. However, such a policy should be able to protect the whistleblowers from any victimization.
Thirdly, the leaders should consider incorporating data analytics into their strategic plans, which is a valuable tool that keeps all the sensitive information concerning the transactions of the organization. With these tools, it would be easy to detect acts of fraud and any other fraudulent dealings within the firm. In addition, a lot of information can be obtained from the data analytics, which can be of significance in ensuring accountability and transparency in the organization.
The other recommendation is for the leaders to include in their plans a comprehensive risk assessment strategy. Fraud is often done by employees who have served in the organization for long periods and have understood its operations. Therefore, the leaders of an organization need to come up with a clear risk assessment mechanism in their strategic plans to help in identifying the potential risks that are likely to expose the organization to fraudulent activities.
Corruption is a big problem because it affects all aspects of a business. To this end, leaders should consider having an anti-corruption program for all employees in the organization tailored towards making the employees understand the need to shun this vice. Anti-corruption programs have the potential of making the employees have a positive way of handling funds.
Practices and procedures are important in an organization. Lack of proper procedures often causes confusion and subjects the organization to a myriad of risks. Most cases of corruption can be prevented if appropriate practices and procedures are well kept within the organization. For instance, daily operations and procedures in the organization can be documented for easy monitoring to act as a reminder to the employees to continually adhere to the set standards within the organization.
Conclusion
Ethical behavior is necessary for organizations to become successful. Vices such as bribery and other forms of corruption have adversely affected the operations of organizations with the case of GlaxoSmithKline corruption in China acting as a classic example. Hundreds of the top employees of GSK in China were implicated in a massive bribery scandal where doctors were given money to boost the sales of GSK products. Such acts by a reputable company are disappointing. The leadership of any organization has a responsibility of ensuring accountability among the employees. For instance, policies and procedures can be set up to ensure that corruption cases are minimized. Ultimately, everyone who is implicated in corruption should be charged in a court and sentenced according to the law. Such moves would discourage employees from engaging in corruption practices.
References
Jia, H. (2013). China clampdown on GSK linked to drug costs.
Jofre, S. (2014). GSK faces accusations of bribing doctors in Poland. BMJ: British Medical Journal (Online) , 348 .
Miceli, M. P., Near, J. P., & Dworkin, T. M. (2013). Whistle-blowing in organizations . Psychology Press.
Parry, J. (2013). Head of GSK in China is replaced as details of fraud scandal emerge. BMJ: British Medical Journal (Online) , 347 .
