Organizational Ethics and Corporate Social Responsibility: What You Need to Know

In previous years, the maximization of profits is the main goal that drove organizational operations. While this is still the case, an increasing number of firms are recognizing the importance of investing in the wellbeing of their stakeholders. This is the essence of corporate social responsibility (CSR). Through CSR, firms commit to improve the wellbeing of employees, communities and protecting the environment. Furthermore, CSR challenges companies to adopt practices and policies that are in line with ethical guidelines. If it is to successfully address the complex challenges that it faces, TechFite needs to adopt various policies that are aligned with its culture but also consistent with ethical values.

Corporate Policies 

The ethical and legal issues that TechFite is confronted with require urgent solutions. The solutions that will yield the greatest success are those that redefine the company’s policies. The first policy that the company should adopt involves making cuts to the bonuses that the top executives face. While this policy may be unpopular among the top leaders, it will undoubtedly gain support from lower-ranking employees. The second policy that TechFite needs to adopt involves making CSR a mandatory, instead of a voluntary initiative. Thirdly, TechFite should convert as many temporary employees as practicable into full time status.

A1. Rationale 

The three policies presented above will serve a number of critical purposes. Slashing the bonuses that the top executives are awarded will go a long way in reducing the company’s wage bill. Today, many firms face accusations that their top leaders continue to receive high pay and bonuses at the expense of the wellbeing of low-ranking employees (Parboteeah & Cullen, 2013). As it cuts the bonuses it pays to its senior leaders, TechFite will essentially be renewing its commitment to employee engagement and welfare. This company has established a culture of inclusion and equality. To preserve this culture, it needs to cut bonuses to top management. The savings that the company makes can be used to revamp its investment in CSR initiatives. For example, the company will be able to honor its commitment to the Dellberg community while hiring more fulltime workers.

For most companies, CSR initiatives are voluntary programs. This means that the pursuit of these programs is at the discretion of the companies. Making it mandatory for the company to take all necessary measures to finance CSR initiatives will enable TechFite to fix most of the problems that it faces. First, the firm will ensure that these initiatives are not sacrificed for such other issues as bonuses for top executives. Secondly, as it commits to funding CSR programs at all costs, TechFite will present itself as a firm which has made the welfare of its stakeholders a priority.

Converting temporary employees to fulltime status is another policy that TechFite has been encouraged to adopt. The main implication of this policy is that it could hurt the company’s financial position. As it is, the company is in financial trouble. However, after reducing the bonuses that it pays to top management, the firm should have sufficient amounts to hire more fulltime workers. Improvements in engagement, productivity and loyalty are some of the benefits that firms enjoy when they demonstrate their commitment to employee welfare (Vertigans & Idowu, 2016). It is because the firm will witness these benefits that it is strongly advised to make more employees work fulltime.

A2. Ethical vs Legal Issues 

Ethical issues and legal issues are concepts that are often used interchangeably. However, there are clear differences that distinguish them. On the one hand, ethical issues refer to matters that are based on human conceptions of morality (Halbert & Ingulli, 2014). Basically, an issue is considered to be ethical if it is in line with moral standards. On the other hand, legal issues are assessed based on provisions of the law (Halbert & Ingulli, 2014). For example, in most jurisdictions, tax evasion is an illegal practice. It is worth noting that the mere fact that an issue is legal does not necessarily mean that it is also ethical. For example, in some African nations, the laws are so lax that firms get away with dumping low-quality or illegal products. While this practice does not violate the laws of these countries, it is unethical since it violates the dignity of the African people.

A3. Ethical Issues in the Scenario 

There are numerous ethical issues in the scenario involving TechFite. Inequality in compensation is one of these issues. It is noted that the company’s top leaders receive generous bonuses at the expense of low-level employees, many of whom are required to serve as temporary workers. The implication of this this issue is that it entrenches unfairness and injustice. Furthermore, the company could encourage resentment among its employees. When firms pay their top leaders generously while neglecting the wellbeing of other employees, they set the stage for strife, low productivity and decline in morale. Another ethical issue in the scenario concerns violation of integrity. TechFite made a commitment to invest in community initiatives. The firm has failed to honor this community. Failing to honor promises is a gross violation of business ethics. If it fails to address this issue, TechFite risks losing the trust and support of the Dellberg community. Its financial performance could suffer as a result. Community support is vital for business success since firms rely on their communities for such issues as markets and sources of raw materials. The third ethical issue evident in the case of TechFite is implementing policies which adversely affect vulnerable employees. It is pointed out in the case that to cut costs, TechFite has demoted some of its employees to temporary status. The firm should address this issue urgently lest it suffers poor employee productivity and high turnover. Moreover, the firm could lose the little confidence that it still enjoys with the Dellberg community.

A4. Purpose of the Ethics Officer 

To ensure compliance with ethical guidelines and standards, many firms hire ethics officers. This officer is charged with the duty of developing ethical standards and policies (“Ethics Officer”, n.d). The ethics officer is also expected to carry out investigations into cases involving violations of ethical guidelines. Another important function that the ethics officer serves is aligning the organization’s ethical guidelines with relevant laws (“Ethics Officer”, n.d). Overall, the ethics officer needs to ensure that all of a firm’s operations are consistent with established ethical standards and applicable laws. As part of his mandate to ensure compliance with the policies and standards that an organization has adopted, the ethics officer executes a number of critical functions. The functions include training employees, integrating ethics into the code of conduct, and initiating probes into suspected incidences of unethical conduct.

Corporate Social Responsibility 

Corporate social responsibility is among the key trends that are shaping business operations today. Essentially, CSR is a form of self-regulation that challenges firms to safeguard the wellbeing of such stakeholders as employees, shareholders, communities and the environment (Mallin, 2009). The importance of CSR cannot be overstated. Improvement in image, enhanced employee engagement, attraction of investors, and the creation of corporate partnerships are some of the important functions that CSR serves (Mallin, 2009). CSR also promotes employee creativity while facilitating the creation of an enabling workplace environment.

Through the adoption of CSR, TechFite poises itself for growth. Some of the benefits that the company will enjoy include improved employee engagement, enhanced investor confidence and higher levels of community support. The company’s financial performance will also be boosted once the firm commits to socially responsible practices and policies. The Dellberg community and the employees of TechFite will also benefit from the CSR initiatives that the company implements. The firm could invest in such community needs as education and healthcare. As it does this, it will enhance the wellbeing of the community. A better working environment, higher pay and involvement in all aspects of the operations of TechFite are among the benefits that the firm’s employees will witness.

B1. Community Reputation 

An improved public image is among the benefits of CSR. Given the critical role that reputation plays, it is important for firms to build strong images. When it is viewed positively within its community, a company is able to use its image as a marketing tool (Neef, 2012). TechFite desperately needs to fix its reputation that has suffered as a result of its failure to honor its commitments. Another role that a positive reputation serves is that it enables firms to build trust and establish credibility (Neef, 2012). TechFite will regain the trust and confidence of the Dellberg community when it demonstrates that it is indeed committed to safeguarding the needs of this community. For example, by investing in such community initiatives as healthcare, TechFite will assure this community that it is not only driven by the desire for profits. The establishment of strong customer relationships is another function that a positive image serves. TechFite desperately needs to repair its image. As it focuses on CSR initiatives, the company will win back the customers that it has lost through unethical and unscrupulous practices.

There is no doubt that TechFite needs to urgently repair its reputation. In addition to the benefits discussed above, an improved reputation will also allow the company to increase sales and charge higher prices for its products. A positive image persuades customers to associate a given company with quality. Consequently, the company is able to charge a higher premium for its products. This benefit is particularly important in intensely competitive markets. If it truly wishes to insulate its operations against competition, TechFite must take steps to repair its image. With a positive reputation, TechFite will also be able to attract competent employees and establish strategic partnerships. This company is in dire need for a revival. By improving its reputation, it will be successful in its rebranding effort. 

B2. Course of Action 

The discussion above has shed light on a number of challenges that TechFite faces. Poor public image, low levels of community confidence and weak relationships with customers are the key challenges that the firm needs to address. To address all these challenges, it is recommended that TechFite should reiterate its commitment to CSR by immediately slashing the bonuses paid to its top leadership. This course of action is broad enough to address all the issues that the company faces. For example, by assuring all stakeholders that it is still committed to CSR, TechFite will be able to win back public support while attracting the customers that it has lost. Moreover, a renewed commitment to CSR will enable the firm to forge strong relationships with the Dellberg community.

As it reduces the salaries that it pays its top executives, TechFite will manage to address most of the problems that it faces. However, this measure will also have some negative impacts. For example, the executives may leave the company as a demonstration of their anger and frustration over the company’s decision to cut their bonuses. While the protest by the top managers will have a damaging impact on the company’s operations, the numerous benefits that the company will realize will offset the damage that it suffers. For example, as it slashes the bonuses of the top leaders, the company will be able to convert more temporary employees to full-time status. Therefore, the firm should proceed to reduce the bonuses paid to top management. 

B3. Course of Action Explanation 

There are various reasons for proposing that TechFite should reduce the bonuses that it pays its top leaders. This course of action is ethically, socially and environmentally responsible. What makes it ethically responsible is that it is consistent with various ethical values. Equality and fairness are some of the ethical values that govern business operations today. As it lowers the bonuses, the company will bring the top leaders to the level of the lower-ranking employees. This is a fair course of action because the firm will be able to assure its employees that all stakeholders share the task of shouldering the burden of the financial hardships that it is facing.

Social responsibility is concerned with maximizing values for stakeholders. By acting socially responsibly, firms make it clear that they are dedicated to safeguarding the interests of all their stakeholders. Slashing the bonuses of the top leaders will clearly enable TechFite to promote the wellbeing of such stakeholders as employees. For example, as pointed out earlier, the firm could use the money that it saves after reducing the bonuses to make more of its employees work fulltime. This course of action is also environmentally responsible. One of the initiatives that the firm could invest in using the savings from the reduced bonuses is environmental conservation.

In conclusion, TechFite represents the many organizations which struggle in their quest to faithfully implement CSR. The financial hardships that the company faces have made it difficult for it to protect employees and invest in the Dellberg community. Consequently, the firm’s reputation has suffered. To redeem its image, TechFite needs to persuade stakeholders that it is still committed to CSR. The company should begin by reducing the bonuses that top leaders earn. The money that the firm raises through this solution should then be invested in various CSR programs.

References

Ethics Officer. (n.d). Retrieved May 24, 2018 from

https://www.shrm.org/resourcesandtools/tools-and-samples/job- descriptions/pages/cms_014713.aspx

Halbert, T., & Ingulli, E. (2014). Law and ethics in the business environment. Boston: Cengage.

Mallin, C. A. (2009). Corporate social responsibility: A Case Study Approach. Edward Edgar

Publishing.

Neef, D. (2012). Managing corporate reputation and risk. London: Routledge.

Parboteeah, K. P., & Cullen, J. B. (2013). Business ethics. London: Routledge.

Vertigans, S., & Idowu, S. O. (2016). Corporate social responsibility: Academic Insights and 

Impacts. New York: Springer.