Business ethics are a system of moral and ethical beliefs that are needed in any organization to guide the systems and the decisions of the organization and its stakeholders. The purpose of this report to curate practical and effective ethics audit and training protocols for Paradigm toys. The ethics report will ensure that the company’s current and future objectives are met.
The Purpose of Corporate Social Responsibility (CSR) in an Organization
Corporate social responsibility also known as corporate citizenship refer to initiatives taken up by organizations such as Paradigm Toys to give back to the community by taking part in philanthropic causes and contributing to projects that increase social value. It addresses issues such as education, safety, health, human rights, environmental sustainability and corporate governance. This business model was formulated to meet the investors' wealth creation goal and advocate for the betterment of the secondary stakeholders. It positively contributes to a company’s sustainable development as it delivers both economic and social benefits to all stakeholders.
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Primary and Secondary Stakeholders that Influence Paradigm Toys
The primary shareholders at paradigm toys are the customers and the stakeholders. The customers are important to the organization as their purchases determine the profitability and sustainability of the toy business. Paradigm Toys meets its primary goal of wealth creation with every purchase and understands consumer interests by analyzing the purchases. Paradigm Toys is not sustainable without customers, and they have to be the business’s priority. It is therefore important to make quality toys to ensure maximum customer satisfaction.
The other group of primary stakeholders is the owners or the investors. The shareholders expect the company to make returns on the capital they have invested greater than the alternative options with minimal risks (Fernando, 2012). The investors employ managers and employees to make profits for them and are involved in the day-to-day running of the business. Failure to meet their goal of making a profit could lead to termination of employment of managers or the withdrawal of capital which would cripple the business.
Although secondary stakeholders do not directly engage with the company, the company’s actions affect them. The media and the community surrounding the factory are key secondary stakeholders of Paradigm Toys. Media is beneficial to the organization due to its ability to influence consumer attitudes through broadcast content. The community’s attitude towards a business is critical as their concerns are likely to disseminate to the general public quickly with both positive and negative concerns. Ethical practices enable a business to operate within the legal and ethical requirements of each stakeholder.
Ways that Paradigm Toys Should Meet CSR for the Primary and Secondary Stakeholders
Customers are the most critical stakeholders, and Paradigm Toys should ensure that the customer’s interests are met. They should be transparent in their business operations to gain customer’s trust. Recent studies have discovered that most millennials prefer buying from brands with socially responsible practices and use sustainable manufacturing processes (Gitman et al., 2018). Improving consumer effect is directly correlated to the company’s ability to profit, thus meeting its responsibility to the investors.
Paradigm toys must also fulfill their corporate social responsibilities to the community around them by providing jobs and supporting community initiatives. The company’s ethical structure must be demonstrated by its commitment to improving the community that supports them (Gitman et al., 2018). Paradigm toys can choose to sponsor local children's events while advertising toys or mobilizing their employees to volunteer in the local schools and community projects.
Reflection on the Importance of Ethical Leadership
The Importance of an Organization Developing an Ethical Culture
Paradigm Toys products and business environment create several ethical issues, especially on the social rights of children. It is important that it creates an ethical structure due to the different legal and cultural systems that might escalate ethical conflicts. According to Fernando (2012), businesses need to create an ethical culture for the following reasons:
To establish trust between the primary and secondary stakeholders. This will spur the economic growth and sustainability of the company.
An ethical culture protects the organization from abuse and manipulation from rogue employees and competitors.
Ethical practices by employees ensure that the company does not suffer unnecessary liabilities like litigation from third parties.
The social capital is likely to improve, thus improving its profitability.
An ethical culture ensures that the business has consistent practices which improve management and production efficiency.
Most expectations of the primary and secondary stakeholders are met in an ethical business system compared to businesses that operate without one.
The Role that Paradigm Toys’ Leadership Can Play in Fostering an Ethical Culture
Paradigm Toys leadership should commit itself to strengthen its business ethics and social responsibility. The leadership should display its willingness to comply with ethical standards by committing to regular ethics audits of its manufacturing sites and those of its primary contractors. The audits should focus on its employees' safety and human rights and ensure that none of its factories use child labor. The company should also institute a code of conduct that requires it to partner with businesses committed to ethical standards. The partners should adhere to safety standards, import and export regulations, and local and international customs laws (Thorne et al., 2011). The transactions between businesses should be respectful. It is also important that the company commits to improving the skill level of its workers to improve their productivity and their chances of getting better opportunities. In the sales of their products, Paradigm Toys leadership should ensure transparency to parents since the consumers are children on how the toys work and their effect on a child’s wellbeing.
Regarding corporate social responsibility, Paradigm Toys should actively participate in projects that advocate for children’s wellbeing (Thorne et al., 2011). They can give back to the community by making charitable investments in children’s hospitals and homes or participate in community projects. The company leadership should lead by example by participating in volunteer activities to motivate other employees to participate.
The Purpose of an Ethics Audit
An ethics audit is a systematic, independent, and objective examination and evaluation of the ethical content of an organization. The process determines the internal and external consistency of the company’s ethical base (Jurkiewicz & Vogel, 2015). An ethical audit is carried out for accountability purposes and to ensure transparency to all the stakeholders. The audits ensure that the company is consistent in its ethical practices and that any failures are discovered and improved. Ethical audits also provide measures for internal control that ensure the organization meets its ethical objectives. They provide insights into the company’s strengths and weaknesses and provide a baseline for designing better ethical practices. Carrying out frequent ethics audits demonstrates the organization’s willingness to improve its ethical culture and its compliance with stakeholder expectations.
The Value That an Ethics Audit Could Bring to Paradigm Toys
An ethics audit benefits the organization by discovering areas of misconduct before they grow into major problems. The ethical issues may potentially negatively impact the organization’s performance and have adverse legal implications (Jurkiewicz & Vogel, 2015). The data generated from the audit can be used as a benchmark for future improvement of organizational performance and ethical practices.
Developing an Ethical Framework for Use When Faced with an Ethical Dilemma
An Ethical Dilemma in a Business Setting
An employee at Paradigm toys has noticed and reported that one of the toys in their latest toy collection has a safety threat. One of its pieces can detach, which has a likelihood of causing choking to small children. However, this line of toys is their best seller, and no customer has reported problems with the problem. The company leadership is faced with an ethical dilemma of whether they should report the hazard, which would result in recalling the product, which would cause losses to the company, or ignore the problem.
Potential Solutions to the Identified Ethical Dilemma
There are several solutions to the ethical dilemma, including:
One solution would be to report the hazard and recall the product to correct the problem. This solution would have adverse financial implications for the company.
The other solution would be to design toys that are safe in the next line and only exchange the toys for the customers who submit complaints about the toy.
The Recommended Solution to Give an Ethical Choice
The more ethical choice would be to report the hazard and recall all the products from that line to protect the customers, mainly children, from any potential hazard. Although being transparent to customers does not give instant gratification, it is necessary for creating consumer confidence in a product (Kabeyi, 2018). Customer confidence is necessary for long-term growth and creates an ethical environment that will be implemented in the future running of the company.
Developing A Proposal for Implementing an Ethics Training Program
Key Topics to Be Covered in The Ethics Training Program
Training employees in ethics is beneficial to the company as it increases their moral reasoning, which translates to better productivity and profitability of the company (Kabeyi, 2018). Below are some of the major areas the training should address:
Protecting company resources and information through confidentiality. The employees are trained on maintaining the confidentiality of proprietary designs, customer information, and personnel data.
Transparency and honesty when dealing with customers, suppliers, and other stakeholders.
Maintaining a respectful workplace and employee’s code of conduct.
Reasons for Including the Three Topics in The Training Program
Confidentiality by employees is important as it secures the expertise and crucial information that makes the company product stand out. Proprietary information, employee data, and customer information are the three main types of information that should be protected. Proprietary information, otherwise referred to as trade secrets, is sensitive as it gives a product an edge over its competitors. Employee training helps them understand the importance of the information and various ways the information can be breached.
Honesty and transparency are important in cultivating a positive perception of the company. It creates a sense of customer inclusion and confidence which makes the customers loyal brand activists. Carrying out transparent business transactions with suppliers and business partners creates trust and a solid flow of communication. Employees must learn the essential aspects of ethical dealings to ensure the long-term growth of the company.
Workplace etiquette is important as it creates a mutually respectful environment that improves productivity and effective communication within departments. The workplace environment should be open and supportive to different suggestions and promote adherence to ethics. All employees are required to adhere to the company’s code of conduct. Ethical training in this area will ensure employees maintain good relationships with others and learn how to address issues when they arise.
An Effective Delivery Method for the Training Program
I recommend a web-based training delivery and in-person training.
Justification for the Effectiveness of the Training Program’s Delivery Method
A web-based training delivery or internet-based training is a delivery method that involves the use of technology. Both synchronous learning and asynchronous learning are effective methods of ethics training employees at Paradigm Toys. Synchronous learning is a web-based training that an instructor facilitates, while asynchronous learning does not have an instructor and requires the employees to go through the course independently. Web-based training is more effective as it is available on-demand and is cost-efficient, and easy to monitor. This method is effective for the annual employee ethics refresher courses. The training can be monitored to ensure that every employee completes the training, and failure to complete it would lead to a potential consequence (Kabeyi, 2018). It is important to include the test in online training to assess employees' ethics knowledge as web training offers little to no interaction.
An in-person ethics delivery is where training is carried out physically using PowerPoint presentations, videos, or through job-shadowing. This method is more effective for new employees to ensure they understand company policies and offer them a chance to ask questions. The training is carried out by the human resource department or the new employee’s supervisor. This is also an appropriate method to carry out remedial training for employees who have breached the code of conduct but have been given a second chance.
Conclusion
Paradigm Toys can operate successfully and profitably by implementing a code of ethics in its business operations. The solution to ethical challenges is mainly determined by the organizational leadership responsible for demonstrating ethical behavior to other employees. Most benefits of creating an ethical culture are long-term and require a firm belief in the goals and values to realize them.
References
Adda, G. (2016). Business ethics and corporate social responsibility for business success and growth. European Centre for Research Training and Development UK , 4 (6). Retrieved 16 May 2021, from https://www.eajournals.org/wp-content/uploads/Business-ethics-and-corporate-social-responsibility-for-business-success-and-growth.pdf.
Fernando AC. Business ethics and corporate governance (2nd ed.). India: Pearson, 2012. Retrieved from https://www.oreilly.com/library/view/business-ethics-and/ 9789332511255
Gitman, L., McDaniel, C., Shah, A., Reece, M., Koffel, L., Talsma, B., & Hyatt, J. (2018). Managing a socially responsible business . Opentextbc.ca. Retrieved 16 May 2021, from https://opentextbc.ca/businessopenstax/chapter/managing-a-socially-responsible-business/ .
Jurkiewicz, C., & Vogel, G. (2015). The ethics audit: Measuring the effectiveness of ethics education across the sectors. Journal of Management Sytems , 25 (2). Retrieved 16 May 2021, from https://www.researchgate.net/publication/341220251_THE_ETHICS_AUDIT_MEASURING_THE_EFFECTIVENESS_OF_ETHICS_EDUCATION_ACROSS_THE_SECTORS .
Kabeyi, M. J. (2018). Ethical and unethical leadership issues, cases, and dilemmas with case studies. International Journal of Applied Research , 4 (7), 373-379. https://doi.org/10.22271/allresearch.2018.v4.i7f.5153
Thorne, D., Fraedrich, J., Ferrell, O., & Jackson, J. (2011). Mattel responds to ethical challenges. Daniels Fund Ethics Initiative: University Of New Mexico . Retrieved 16 May 2021, from https://danielsethics.mgt.unm.edu/pdf/Mattel%20Case.pdf .
