Promoting an Ethical Organizational Culture and the Implications for Stakeholders

In the past, corporate social responsibility was widely considered as a way to enhance an organizations reputation or brand, but some corporate leaders may be unaware that a growing number of companies of all sizes and types have identified ways to leverage these initiatives to improve their profitability as well. Likewise, although most corporate leaders are accustomed to financial audits that are used to ensure that their accounting practices are up to date and conform to all legal requirements, there are likely far fewer who are aware of the need for or importance of conducting ongoing ethics audits. To help overcome these gaps, this paper provides an explanation of the purpose of corporate social responsibility, a discussion concerning the importance of ethical leadership and a proposed ethical framework that could be used when confronted with an ethical dilemma. Finally, the paper presents a proposal for implementing an ethics training program at Paradigm Toys.

A. Explain the purpose of corporate social responsibility

Until fairly recently, corporate social responsibility (CSR) was typically regarded as a means to promote and protect an organizations reputation and public image (Harrington, 2011). In recent years, though, CSR has increasingly been viewed as a viable strategy to help organizations of all types and sizes achieve their goals through socially and environmentally conscientious business practices (Harrington, 2011). In fact, growing numbers of companies have recognized that thoughtfully implemented and administered CSR initiatives can actually contribute to profitability (Amarasekere, 2011).

Although every organizations strategies will differ, CSR is comprised of four basic operational elements: (a) how the company is contributing to the development of its local economies; (b) how the company is restricting its operations to the given regulatory boundaries; (c) how ethically acceptable the company's operations are to society; and (d) how the company is making philanthropic contributions to society (Amarasekere, 2011, p. 43).

1. Identify two primary and two secondary stakeholders that influence Paradigm Toys. Two primary stakeholders for Paradigm Toys include the companys employees and supply chain partners and two secondary stakeholders include its customers and the residents of the communities in which the company operates.

2. Analyze two ways that the board of directors at Paradigm Toys should meet their corporate social responsibility to the primary and secondary stakeholders identified in part A1. The leadership at Paradigm can meet their corporate social responsibilities to employees and supply chain partners by treating them fairly and honestly and by ensuring that its business practices are environmentally responsible for the secondary stakeholders.

B. Reflect on the importance of ethical leadership by doing the following:

1. Explain why it is important...

Therefore, it is vitally important for organizational leaders to personally model ethical behaviors and inculcate a sense of responsibility and accountability among employees so they will be more likely to follow suit. Moreover, highly qualified employees are attracted to companies that place a high priority on ethical business practices (Bannon & Ford, 2010; Post, 2017).

a. Discuss the role that Paradigms leadership can play in fostering an ethical culture. While every organizational setting is unique, there is a general consensus among organizational behaviorists that an ethical culture begins at the top. For example, Bannon and Ford (2010) emphasize that, Management must preempt employee misconduct to the fullest extent possible by conveying an open message about the need for strong ethical values throughout the organization (p. 57). While it is essential for an organizations top leadership team to model ethical behaviors, there are other steps that they can take as well to foster an ethical culture. For instance, Bannon and Ford (2010) report that, A robust ethical culture can be achieved by implementing training and other programs that tie a company to its community (p. 57).

2. Explain what an ethics audit is. An ethics audit is essentially a process whereby an organization examines its business practices in-depth in order to identify unethical behaviors and opportunities for improvement (Agheorghiesei & Tatiana, 2013). Some indication of what is involved in conducting an ethics audit can be discerned from the six steps outlined by Krell (2010) as set forth in Table 1 below.

Table 1

Six steps to conducting an ethics audit

Step

Description

Begin with a detailed foundation

An ethics audit is a comparison between actual employee behavior and the guidance for employee behavior provided in policies and procedures. The more descriptive and specific ethics-related policies and procedures are, the easier it is to make these comparisons.

Develop metrics

Ethics audits may not be as black-and-white as financial or operational audits, but they run more smoothly when appropriate thics measures are in place. Consider adding ethics goals to annual performance reviews and, where possible, tying compensation to ethical behaviors.

Create a cross-functional team

Include a human resource professional familiar with people in the business unit being audited. Most ethics audit teams include an ethics and compliance manager where possible as well as an internal auditor and legal managers.

Audit efficiently

Audits frequently disrupt normal operations in business areas subjected to review. Before scheduling an audit, find out if internal auditors or the finance team may be conducting reviews of the same area. If so, combine these…