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Personal &Organizational Ethics

Table of Contents Table of Contents.............................................................................................................................2 Introduction......................................................................................................................................3 Situational Analysis.........................................................................................................................4 The Enron Scandal.......................................................................................................................4 Outcome & esult ...........................................................................................................................4 !ractical A""lication of Ethical Theories & #orals .......................................................................$ Conclusion.......................................................................................................................................%

Introduction Ethics has been deri&ed from the 'ree( )ord *Ethos+ )hich si,nifies habits- customsdis"osition and si,nificance. Ethics has been related to honesty- morality and fairness in "ersonal and "rofessional li&es of the indi&idual ./imitriou et al- 20111. A )idely acce"ted definition of business ethics does not e2ist but author 3e)is defined business ethics as rules, standards, codes, or principles which provide guidelines for morally right behavior and truthfulness in specific situations ./imitriou et al- 20111. It is obser&ed that an or,ani4ation )ith a di&erse )or(force )itnesses &arious ethical dilemmas and issues arisin, out of ethical &alues. This ha""ens because the interest of the or,ani4ational and "ersonal ethics is different from each other ,i&in, rise to "otential conflict amon, em"loyees and mana,ers. Ethics can be termed as a moral "rinci"les or set of standard follo)ed by an indi&idual. 5usiness ethics can be termed as a set of moral &alues and "rinci"les that hel" the business mana,ers to arri&e at unified conclusion. The im"act of business ethics on mana,erial decision ma(in, is hu,e and has the "otentiality of chan,in, the course of decision ma(in,. It is obser&ed that the influence of le,al la)s on the mana,erial decision ma(in, is hu,e and can ha&e considerable amount of influence on the "ersonal li&es of an indi&idual as )ell. Since- business acti&ity is also re,arded as a human acti&ity the e&aluation of business ethics )ould be done in a similar fashion. The im"ortance of business ethics- "ersonal ethics and le,al influences on ethics )ould be co&ered in this study by the author.

Situational Analysis The Enron Scandal

In the year 2001 Enron Scandal had filed for ban(ru"tcy and the colla"se of the com"any )as re,arded as the bi,,est audit failure of all times. This occurred )hen the shareholders of the com"any had filed a suit a,ainst the com"any after the com"any6 share dro""ed from a double di,it number to less than 71. The root cause of the sudden dro" in the share "rice of the com"any confused the shareholders com"ellin, them to file a suit a,ainst the com"any. It )as obser&ed that lac( of systematic and clear or,ani4ational structure )as the root cause behind the colla"se of the com"any. The com"any failed to com"ly )ith business and le,al ethical standards and there )as a lac( of moral standard amon, the em"loyees of the or,ani4ation. Outcome & Result The failure to "ro&ide a &alid reason for the colla"se of the Enron Cor"oration aroused curiosity amon, in&estors and s"ar(ed contro&ersy amon, com"etitors and in&estment ban(in, analyst. The com"any mana,ement tried to solace the in&estors by claimin, that it )ould hold an I!O se"arately for its internet de"artment but ultimately the com"any filed for ban(ru"tcy .3ashins(y- 20011. It )as noted that &arious em"loyees and mana,ers )ere in&ol&ed behind the colla"se of the com"any. 3ac( of im"lementation of an ethical and moral standard by the human resource de"artment can "a&e the "ath for do)nfall of the com"any. 3ac( of financialsustainability accountin, disclosure and lac( of "ro"er or,ani4ational climate )ithin the com"any )ere solely res"onsible for the scandalous act. The 8S ,o&ernment had immediately

enacted the Sarbanes9O2ley Act in res"onse to this "articular incident in the year 2002 )hich aimed at "rimarily "romotin, trans"arent and accurate auditin, amon, "ublic accountin, com"anies .!ea&ler- 20131.This federal la) has set ne) accountin, standards for 8SA "ublic accountin, com"anies- cor"orate directors and cor"orate mana,ement to enhance the cor"orate "ractices. Practical Application of Ethical Theories & orals

The abo&e mentioned incident is a con,lomeration of the e,oism theory: "sycholo,ical and enli,htened e,oism. Enli,htened e,oism focuses on the fact that indi&iduals should treat each other in similar manner the )ay he; she )ants to be treated. !sycholo,ical e,oism lays em"hasis that indi&iduals are naturally e,oistic and it )ould be unnatural for them not to be e,oistic. Althou,h- most of the com"anies are re<uired to com"ly )ith business ethical standards and the cor"orate res"onsibility charter it is obser&ed that is the ethical standard follo)ed by the com"any that com"els it for financial and sustainability accountin, disclosure. #orality arises out of the res"ect and a)areness for the indi&iduals and the societal needs. Ethics are cate,ori4ed into t)o ty"es: normati&e and descri"ti&e ethics. =ormati&e ethics focuses on the &alues and beliefs that an indi&idual "ossess and descri"ti&e ethics focus on *>hat If+ beha&ior of the indi&idual and the em"loyees ./imitriou et al- 20111. /escri"ti&e theory usually re&ol&es around &arious sub?ects li(e anthro"olo,y- sociolo,y and "sycholo,y. It hel"s in studyin, and identifyin, the different moral systems and ethical code "ractices by the com"any. The theory lays em"hasis on the fact that most of the moral &alues and ethical standards "racticed by the society are ?ustifiable. The unethical conduct "ractices in the or,ani4ation are due to the failure of im"lementation of the moral &alues and standards. #etaethics on the other hand includes

com"osite elements of normati&e and descri"ti&e theories. The only minuscule difference is that it indentifies the difference bet)een the rationale behind the ethical "rinci"les and standards. Ao)e&er- this theory has &arious loo"holes and lac(s to ser&e the "ur"ose of a ,uide. It is "ossible that an indi&idual can face this (ind of situation in any (ind of or,ani4ation and thus the em"loyees can monitor the ethical system themsel&es. If the mana,ement of Enron Cor"oration )ould ha&e follo)ed the 8tilitarianism conce"t then it )ould ha&e ,i&en the em"loyee a clear idea about the distinction bet)een ri,ht and )ron,. The utilitarianism conce"t lays em"hasis on the fact that an acti&ity can be either ri,ht or )ron, and de&elo" a techni<ue that defines the moral &alue of a "articular action. It also hel"s us in understandin, )hether the action conducted in the "ast ha&e an effect on the futuristic actions or not. The theory de&elo"ed by Bohn Stuart #iller lays em"hasis on the fact that an action should be "erformed for the betterment of an entire society. This theory should ha&e been follo)ed by the mana,ement of the Enron scandal for "romotion of a con,enial and )ell defined )or( en&ironment. There are &arious le,islation theories and act )hich could ha&e also ser&ed the "ur"ose of a ,uide for Enron Cor"oration. Cor e2am"le the Sale of 'ood Act "rotects the interest and ri,hts of the consumers )ith res"ect of the coarse as"ects of the Contract la) .#acfarlane- 1DD$1. The contract theory is almost similar to the ,ame theory and is often "referable by the shareholders of the com"any. The theory de&elo"ed by Charles Ess *'lobal Information Ethics+ lays em"hasis on the im"lementation of a uni&ersally a""licable ethical system )hich can reconcile the differences bet)een the cultural and ethical &alues of the indi&iduals .Ca"urro- 200E1.

Conclusion Althou,h- the ,o&ernment of &aried nations ha&e de&elo"ed se&eral le,islation la)s )hich discoura,es unethical and immoral conduct amon, the cor"orate there has been e&idence of se&eral scandalous cor"orate e&ents. The le,al and "ersonal ethics has considerable influence on the business ethics of an or,ani4ation and has the influential "o)er of chan,in, the course of mana,erial decision ma(in, ./ench- 200E1.The theories "ro"osed by the &arious theorists can be a remedial solution in multi"le situations and can also lead to the establishment of the moral conce"ts and standards )ithin a com"any. =ormati&e- descri"ti&e- Aybrid theories can "re&ent misconduct )ithin a com"any and can "ermit the em"loyees of the or,ani4ation to channeli4e their desires and ener,y in a "ositi&e )ay. These theories )ill also ser&e the "ur"ose of a strate,ic direction and hel" in coordination of acti&ities )ithin the de"artments of the com"any .Aolme- 200E1.Thus- the mana,ement of the com"anies can refer to &arious theories and treat them as a continuous "rocess )hich can im"ro&e the ethical climate of the com"any .#auro=atale & 3ibertella- 1DDD1.

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