Q1. Stakeholders are people or business that has investments in a particular organization in which the organization's objectives and policies can affect the organization and vice versa (Fassin 2012). Yes, stakeholders are interested in the ethical management of the organization if they are the real or genuine risk takers in the organization because it could affect their bottom line as the risk taker (Fassin 2012). There are different types of stakeholders and their stakes are defined differently according to their stake in the organization, therefore, considerations for level of social and ethical responsibility are different. According to McKinney, Emerson &Neubert (2010), organization with strong ethical orientation, structure, and culture are significantly not willing to accept unethical behavior from most stakeholders. Absolutely, stakeholders are definitely interested in the organizations' overall success and profit, which is why it is argued that the ultimate responsibility of the leadership in an organization is the pursuance of increase in the stock price (McNulty Eric n.d.).
References:
McKinney, J., Emerson, T., &Neubert, M. (2010). The effects of ethical codes on ethical perceptions of actions toward stakeholders. Journal Of Business Ethics, 97(4), 505-516. doi:10.1007/s10551-010-0521-2
McNulty Eric J. (n.d.) A purpose-value-performance approach to leadership. RoseMont Institute. Received from: www.rosemontinstitute.com
Fassin, Y. (2012). Stakeholder management, reciprocity and stakeholder responsibility. Journal Of Business Ethics, 109(1), 83-96. doi:10.1007/s10551-012-1381-8
Q2. Are stakeholders really interested in the ethical management of an organization? Why or why not? Despite the rhetoric, is the size of the dividend or the organization's overall success all that matters? Why or why not?
One can quickly argue that a stakeholder has a right to a profit in whatever manner their relationship as a stakeholder exists. Even so, does a stakeholder have a right to a profit at the expense of ethical practices? Johnson (2013) points out those organizational leaders have an ethical responsibility to stakeholders as they can bring value to the organization. Stakeholders can also bring an unethical disservice to business as well. For example, Johnson (2013) illustrates the Nike scandal where subcontracted businesses had child labor conducting work. That company was certainly a stakeholder also, but placed Nike is a tough situation to bring in non-profit stakeholders to ensure they were operating ethically.
While organizational leaders do have a responsibility to stakeholders, they also have an inherent responsibility to ensure stakeholders are on board with business ethics practices and should consult stakeholders to change the company's posture by gathering their insights (Johnson, 2013). Clearly, there is much documented proof of unethical situations that has cost businesses, and by extension stakeholders, large amounts of money that could have otherwise averted wrongful turnouts.
In the end, ethical stakeholders understand that ethical business practices will help avert substantial costs in the long run. While profit is extremely important to stakeholders, substantial loss is not no matter how large a dividend or successful the company is on the surface.
Johnson, C.E. (2013). Meeting the Ethical Challenges of Leadership: Casting Light or Shadow, 5th Edition. Sage Publications
Q3. I love this discussion because my informal evidence suggests many stakeholders do not care--I ask in a little study (note: my wife hates this), "Do you know the ethical practices of fill-in-the-blank?. The answer is routinely a look of puzzlement.
People buy Nikes, shop at Wal-Mart, buy Dole Bananas, and buy pharmaceuticals illegally from Indian pharmacies with only one thought--it is best for me. Additionally, most people I ask also have no idea in what companies their 401K/403B is invested.
It appears to me that we like the idea of ethical business practices, but most really do not care if they can get a good deal.
Am I too cynical?
Q4. Some stakeholders have a genuine interest in the ethical management of an organization, however often times interests are in profit and publicity. Therefore if unethical practices are going on the majority of the stakeholders turn a blind eye as long as there is not negative publicity and profits being made. According to BurnesadOswick (2012) stakeholders should not be passive observers and stakeholders need to play an active role, which results in ending unethical practices and identifying unethical practices. Stakeholders need to be involved in the development of moral and ethical practices of the organization, play an active role to ensure ethical management of an organization.
An organizations overall success can be greatly influenced by stakeholders involvement. According to Balzarova and Castka (2012) the contribution and involvement of stakeholders influences the social standards that are developed within an organization. The study supports stakeholders can have a positive influence with the development, application and success of ethical practices within an organization.
Balzarova, M. A., &Castka, P. (2012). Stakeholders' influence and contribution to social standards development: The case of multiple stakeholder approach to ISO 26000 development
Burnes, B., &Oswick, C. (2012). Change management: Leadership, values and ethics. Journal of Change Management, 12(1), 1-5. doi:10.1080/14697017.2011.652371
Q5. There are two groups of stakeholders: insiders and outsiders. According to the level of investment (Jones, 2012), stakeholders have varied interests. The in-group consists of shareholders, leaders, and followers. The out-group is made up of customers, suppliers, and unions. Shareholders invest capital with the intent of great financial return. Leaders and followers dedicate expertise and time into organizations with hopes of recognition, monetary or conventional, and reward of promotion.
The greater the identity connection between the organization and the stakeholder, the greater the depth of dedication to the organization's operational management. Being the ‘posterchild' for the organization means the professional identity of the leader and reputation of the organization are congruent (Franco, 2015). Though profit gained through supply and demand is expected, one of the greatest rewards is profit via reputation of service. The public image of an organization can affect its reputation, positively or negatively (Sauter and Frohlich, 2015). This may be affected by how consumers use the products. Nonetheless, reputation is more important, as well as profitable than financial gain.
References
Franco, A. (2015, September 9). Building a leadership identity starts with a personal brand. Retrieved from https://www.td.org/Publications/Blogs/Human-Capital-Blog/2015/09/Building-a-Leadership-Identity-Starts-with-a-Personal-Brand
Jones, G.R. (2012). Organizational theory, design, and change. 7th edition. New Jersey: Pearson Prentice Hall.
Sauter, M., Frohlich, T. (2015, May 6). Companies with the best (and worst) reputations. Retrieved from https://247wallst.com/special-report/2015/05/06/companies-with-the-best-and-worst-reputations-3/
Q6. The heart of the righteous ponders how to answer, But the mouth of the wicked pours out evil things (Prov 15:28)
Based on the discussion and readings this week, prepare three questions that belong on an exam of this material. You write the test!