COMPARATIVE BUSINESS ETHICS AND SOCIAL RESPONSIBILITY
Ethics is considered as the moral philosophy in order to run the business process smoothly. Maintaining ethics helps the business organization to enhance commercial activity. Organizational business managers are the responsible person to make decision related business process. Through integrating ethics and social responsibility business organization can enhance their reputation in the current market. Business ethics follows moral philosophy of the business organization in order to complete business related function.
On the other hand, social responsibility of the business organization follows rules of the government to uphold the public of the society. Implementing these two factors in the business process helps the organization to work properly. Financial business industry has faced several pressures regarding the unethical business practice. In recent case of Australian finance sector, it has been identified that the financial organization has failed to imply ethics on the business process. This study will elaborate the background of the Australian finance industry. Apart from that, the study will also include the ethical issue that has been raised because of not practicing ethics in the industry. The study will also identify ethical issue has been made or not about the situation. Ethical decision making process will be included to mitigate ethical issue related to the study.
It has been identified from the article that financial organization has failed to maintain ethics in the last year. The finance industry of Australia, especially banks has created stories of scandal and malfeasance over the past years. Ethics Index of Australia has measured that finance sector of the country has not maintained ethical principle in order to generate revenue. While most of the business sector of the Australia has remained constant by maintaining ethical issue, but in case of finance sector it has been identified that ethics point of finance sector dropped by 6 point. In the year of 2017, Ethics index point of the finance sector was 41.
This year, Governance institute of Australia has given 35 points to the finance industry (business in sider . com.au, 2018). Finance sector of the Australia is ranking in last position from the last three years because of the ethical issue. However, the current score drop has created major issue in the financial sector of the country. Most of the people of Australia are considering the financial sector as the unethical one.
Financial sector of the Australia is majorly focusing on the revenue rather than corporate responsibility. Biggest financial institution of the Australia such as Commonwealth bank, national Australian bank, Westpac banking corp., Australian and New Zealand Banking Group has also failed to follow ethical principle. Ethical issue in the financial sector has been raised because of corruption, leadership and social responsibility related issue.
CEO of the financial organization has failed to maintain ethical practice within the organization. The Royal Commission of Australia has filed case against the financial managers because of unethical business practice. Apart from that, it has also been identified that one in the two life insurance company of Australia follow unethical business. Significant enquiry of The Royal Commission has identified the causality between profitability and misconduct. The inquiry commission that the business organizations have provided loans without any checking has identified it. The Australian Commission put emphasis on the adverse influence on the consumer and reputational damage of the employees (Kolk, 2016, p. 33). In addition, the commission has ordered to provide training to the employees regarding the ethical practice. If the financial organization continues to focus on the profit part then it can drop even further.
Issue rose from ethical perspective
The given article has identified that Australian financial industry is facing several problem because of not maintaining ethical practice (Schwartz, 2017, p. 19). Report of Australian Governance has showed that the finance sector has failed to maintain leadership, corporate social responsibility and corporate citizenship.
Corporate social responsibility
Finance industry of Australia has failed to maintain corporate social responsibility because of ethical issue. Biggest banks of the Australia have not maintained liability at time of doing business operations. Financial industry of Australia has not integrated environmental and social concern in time of running the business process. In addition, the business organization has given major importance in the revenue generation part. Apart from that, the financial organization like banks, Life Insurance Company, brokers have not given importance to the stakeholders, which were considered as the main reason for raising the CSR issue. Big financial organizations have behaved unethically for that, fail to contribute in the economic development of the country. Apart from that, moneymakers have also failed to provide quality training for the workforce.
Apart from all these, the finance industry of Australia has failed to take decision related social activity by imposing proper ethical behavior (Quarshieet al. 2016, p. 89). As the Corporate Social Responsibility is all about creating trust among the society, these types of organization has failed to gain trust among the services they provide. It has been identified by the report that most of the big banks of the country were not cross checking the consumer details in time of giving loan. Apart from that, thebanks have charged money for the dead people. These are the main reason for rising issue related to ethics. Finance organization has disappointed to maintain proper business practice.
In case of Australian finance market, managers have failed to follow ethical leadership in order to maintain business process. The moneymakers of the financial organization have given major focus on the profit making rather than ethical standard (Joutsenvirta and Vaara, 2015, p. 749). Financial employees have not followed the rules for maintaining goodwill with the organizational consumer. As the financial organization has not maintained relationship with the stakeholders, it has raised serious problems related to ethical issue. The financial managers have failed to maintain consistency in time of conducting business operation. Managers also fail to adhere to rules that have been developed by the Australian government. Some of the biggest bank of the country does not even follow their business standard in order to maintain the business process.
Not following ethical standard refers that the finance organization does not follow core value of the finance industry. Apart from that, the selected article that employees of the financial sector facing issue related to their salary has identified it. Managers were not provided bonus to the employees for several months. Corruption has been found in the financial sector. The biggest banks of the Australia have failed to adhere to the state and federal laws of the Australia. Apart from that, managers of the bank have not put focus on the policies in time of maintaining the businesses. Even some of the financial organization has failed to maintain clarity in time of making policies related to the financial business. Other than these factors, workplace environment and culture of Australian financial industry was challenging (Campopiano and De Massis, 2015, p. 517).
Financial industry of Australia has not put focus on the corporate citizenship in order to maintain the business process. Apart from that, many of the Life Insurance Company and banks have not maintained proper employee relation by enhancing organizational morale, detainment, participation and services. Apart from that, financial organization has also failed to improve consumer relation by treating consumers ethically. As enhanced market occurs by maintaining relationship with the consumers, for that financial organization requires to have maintained the relation with the consumer by providing better customer service.
Decision-making related ethical issue
In order to mitigate ethical issue related to finance industry, finance organization of Australia requires following proper ethical standard in order to maintain business process in the country (Rupp et al. 2015, p. 17). The financial organization required to have followed ethical standard in time of decision-making. Cost benefit decision-making tool would have helped the financial industry to gain better ethics Index in the current year.
Proper leadership style can help the finance organization to mitigate risk related to money and help the managers to maintain proper leadership practice. Implying ethical leadership style can help the financial organization to define values of the organization. Additionally, it can help the financial organization to follow the mission and vision statement. Maintaining proper leadership style can help the financial organization to maintain standard behavior within the organization, which can result as industrial enhancement. Setting the tone related to organizational value can help money managers to maintain the entire team. Following proper leadership can help the financial organization to mitigate issue that has been raised because of not following ethical principle. As the financial industry is facing major ethical issue, the financial organization requires preparing ethical practice to rise up the ethics index of the Australian governance. The leaders of the finance organization also requirereevaluating the decision before implementing it in the business process.
Corporate social responsibility
As the finance industry of Australia has failed to maintain corporate social responsibility, for that the organization requires to identify proper corporate social responsibility. Using significant model of the corporate social responsibility can help the financial organization to follow proper ethical principle. Apart from that, implementing proper CSR model can help the financial organization to mitigate challenges related to ethical issue (Wu et al. 2015, p. 821). Maintaining corporate social responsibility helps the finance organization to maintain internal and external dimension. This also helps the finance industry to manage corporate change in the crisis. This also helps the organization to maintain environmental impact and human resource of the organization. Proper decision making related to the business process can help the financial organization to maintain ethics related to corporate social responsibility.
Financial organizations like banking, broking and Insurance Company requires setting goals for different type of operational functions. Different type of function in the financial sector of Australia can include marketing, management, finance and human resource. Apart from that, cost benefit analysis in the time of decision-making can help the financial organization to find weakness and strength of the business process. As commented by Schereret al. (2016, p. 279), this is also helping the financial industry to achieve benefits by maintaining ethical parts. Additionally, it can help the industry to take proper action and decisions related to business investment. Additionally, cost benefit analysis help the industry in order to appraise desirability within given policy of ethics. It also helps the industry to balance cost benefits involving other alternatives.
In case of Australia, it has been identified by the article that medical charities, primary schools and pathological service providers are mainly follows ethical principle related to the profession. This type of business industry follows proper leadership style in order to sustain the business process. Apart from that, this type of industry always maintains corporate social responsibility in time of providing services to the consumer. Employee of these types of businesses maintains honesty, integrity, loyalty, fairness and accountability in time of maintaining operational business.
Decision making process by aligning ethical moral philosophy
Utilitarianism philosophy can help the finance industry to mitigate consequence that has been faced by last three years. As utilitarian identifies best good for huge number of people thus it can help the finance industry to mitigate several ethical issues (Teulon, 2014, p. 28). This type of moral philosophy helps the financial manager to make decision, which can be resulted as the greatest benefit for the stakeholders. For case of financial industry, utilitarianism perspective is to argue about the bad services. This moral philosophy helps the finance industry to shape significant ethical mindset and character. This type of approach helps the financial manager to take actions in terms of the consequences that has been happened.
It can provide net benefit of the cost to all the stakeholders related to financial industry of Australia. This type of approach creates influence from the similar type of legal cases to take reference in the difficult situation. Additionally, this type of decision-making help the financial organizations to provide benefit to the affected parties, such as employees and consumers. Apart from that, this type of moral philosophy can aids the manager to calculate utility of the consequence buy using possible alternatives in the current market (Boner, 2018, p. 11).
It can also help the organization to maintain employee and employer behavior by developing proper standard. At time of making decisions, managers required to maintain proper behavior in order to imply new rules. Managers of the financial industry required to understand that corruption is wrong for any type of business. This type of approach help the financial industry to identify specific actions related to the industry. Following the ethical rules can help the finance industry to mitigate issues that has been raised in last three years.
In order to conclude the entire study, it can be said that business ethics and social responsibility helps the business organization to maintain environment of the business. Business ethics of the organization follows moral principle to enhance business activity. Social responsibility and business ethics helps organization to implement proper code of ethics to maintain social responsibility. It has been identified that, not maintaining ethical principle has raised several legal issue, which has resulted as the business failure.
Financial business industry has faced several pressures regarding the unethical business practice. The selected article about Australian finance sector shows that not implying ethical practice can create major legal issue. The study has identified the main issues, which was reason behind the unethical practice. Apart from that, study has also identified the decision that can help to mitigate the issues. The study has also added ethical moral philosophy to mitigate issue related to business ethics.
Boner, J., 2018. Philosophy and political economy.Routledge.
businessinsider.com.au (2018), Viewed on:2/10/2018 from:https://www.businessinsider.com.au/ethics-trust-governance-institute-australia-2018-8
Campopiano, G., and De Massis, A. (2015). Corporate social responsibility reporting: A content analysis in family and non-family firms. Journal of Business Ethics, 129(3), 511-534.
Joutsenvirta, M., andVaara, E. (2015). Legitimacy struggles and political corporate social responsibility in international settings: A comparative discursive analysis of a contested investment in Latin America. Organization Studies, 36(6), 741-777.
Kolk, A. (2016). The social responsibility of international business: From ethics and the environment to CSR and sustainable development. Journal of World Business, 51(1), 23-34.
Quarshie, A. M., Salmi, A., andLeuschner, R. (2016). Sustainability and corporate social responsibility in supply chains: The state of research in supply chain management and business ethics journals. Journal of Purchasing and Supply Management, 22(2), 82-97.
Rupp, D. E., Wright, P. M., Aryee, S., andLuo, Y. (2015). Organizational justice, behavioral ethics, and corporate social responsibility: Finally the three shall merge. Management and Organization Review, 11(1), 15-24.
Saeidi, S. P., Sofian, S., Saeidi, P., Saeidi, S. P., andSaaeidi, S. A. (2015). How does corporate social responsibility contribute to firm financial performance? The mediating role of competitive advantage, reputation, and customer satisfaction. Journal of business research, 68(2), 341-350.
Scherer, A. G., Rasche, A., Palazzo, G., and Spicer, A. (2016).Managing for political corporate social responsibility: New challenges and directions for PCSR 2.0. Journal of Management Studies, 53(3), 273-298.
Schwartz, M. S. (2017). Corporate social responsibility.Routledge.
Teulon, F., 2014.Ethics, moral philosophy and Economics. Financial Economics, pp.28-8.
Vidaver-Cohen, D., andBrønn, P. S. (2015). Reputation, responsibility, and stakeholder support in Scandinavian firms: A comparative analysis. Journal of Business Ethics, 127(1), 49-64.
Wu, L. Z., Kwan, H. K., Yim, F. H. K., Chiu, R. K., and He, X. (2015). CEO ethical leadership and corporate social responsibility: A moderated mediation model. Journal of Business Ethics, 130(4), 819-83