Essay on 20% Stock Market Edge: Corporate Ethics & Organizational Culture

Introduction

Organizational culture is a strong determinant of the company's resilience and market value creation. Corporate ethics is an essential part of the culture. According to Forbes, the stock market returns of companies with stable, ethical cultures outdo others with a margin of nearly 20 percent. Customer loyalty, good employees' retention, a positive work atmosphere, and smooth coexistence with the government are the key benefits of maintaining proper company ethics. Yet despite the well documented and clear benefits of an excellent ethical profile, incidences of unethical misbehavior, illegal or unconventional conduct have continued to happen amongst us. The purpose of this memo is to recommend measures to curb this trend and identify the improvement gaps that we have as an organization.

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Issue Description

Our current structure gives more power to the junior managers to make decisions on customer billing profiles, financial records submission, and development of marketing activities. Also, the junior managers have considerable control of their performance reporting most of the time, and the senior management only comes in when a flaw or consistent dips in performance are reported. It is my view that this structure is delicate, and may lead to incomplete or dishonest reporting form the managers, deliberate overbilling of customers to hike performance, misleading advertisements sent to our customers, or altering of records by the managers.

Clearly, the managers, like any of us, are under immense pressure to deliver. Thus, one may feel pushed to pressure their team to "use any means" to get good results. This urge has led to certain instances of unethical decision making within the junior teams. I suggest a change in the current structure to make the managers more responsible for their actions and those of their teams. We need to enhance our ethical decision making by making everyone answerable for their decisions. The soft system at the moment has led to some employees handling customers with condescending attitudes, rudeness, and incivility.

Who is Affected?

The issue displays an inefficiency in our low-level employees. Given that this group works under the junior management, the actions applied should target the managers. The unethical practices soon turn out to be injurious to our customers and eventually may hit back at the organization. It may expose us to a bad public image, litigation, or loss of customers. The action team is senior management.

Proposed Solution

We will need to advance our risk management by investing in a check and balances system that records all transactions and relays them automatically to a central server for reviews by senior management. We also need to implement a maker-checker policy to be installed into this software to ensure that no employee can make adjustments and complete it on their own in the system. The adoption of these measures will restrict opportunity, reduce the motive, and limit the employees' ability to commit fraud. Through new procedures, policies, and controls, staff will also be trained afresh on integrity and be made to understand that the system is always watching.

To enhance the transparency of performance reports, I suggest that a new fraud team be created to independently pull records, to be headed by a manager who is directly answerable to senior management. The new department will have special access to an extension of the database that stores transactions and results. They will extensively vet transactions randomly and call out any suspicious ones and the concerned staff. They will relay their daily reports to the senior manager in charge. It will remain that each employee to shoulder responsibility for committed fraud individually. If proven to have been done in liaison with a manager, each will undergo the disciplinary process separately.

To ensure that the information that reaches our customers is always correct and factual, all marketing campaigns and releases should be approved by the CEO after vetting by department heads. Information on the campaigns should also be cascaded to all organizational departments two days to formal release. With these interventions, the junior managers' roles remain to organize the teams, motivate them, and submit reports on progress. It eliminates the temptation to alter records or fraudulently boost results.

The ultimate intervention I suggest is the launch of a thorough sensitization, education, and enforcement of a general ethical attitude from the top to bottom of the organization. The consequences of unethical behaviors need to be the same for both senior and junior employees. The company needs to develop a strong ethics statement that makes everyone to undertake to work within the law, rules, and regulations, to compete fairly, to avoid inducements, to accept diversity, be a neighbor's keeper and to safeguard the environment.

The above proposition requires that we come together as an organization and chart a way forward as a family. As management, we will need to make clear what is expected of each one of us as employees, model the desired behaviors together, reinforce desirable behaviors and eliminate the unwelcome, focus on building skills and solving more problems, empower staff with tools that promote fair competition, and give correct feedback. The backbone of all these interventions is to walk the talk and lead by example. I sincerely look forward to receiving your guidance on this.

Works Cited

Hellriegel, Don, and John W. Slocum. Organizational Behavior. Mason, OH: South-Western Cengage Learning, 2009. Print.

Johnson, Craig E. Organizational Ethics: A Practical Approach. , 2019. Print.