Ethics and Social Responsibility Ethical Climate and Purchasing

Question: Describe about the Ethics and Social Responsibility for Ethical Climate and Purchasing. Answer: Introduction The significance of ethics and responsibility According to Nica (2013), a business without ethics is bound to become ineffective ultimately. Business ethics helps to keep moral and principled rights, duties and business authorities between an organization and its stakeholders such as personnel, clients, administration and suppliers. Ethics are connected with all the disciplines of an organization that includes information related to accounting human resource organization, global business information, sales and marketing, manufacture and rational possessions information. The rationale for the topic Business ethics including social responsibility is known to bring noteworthy benefits to a business. As per theories of Rupp et al. (2015), business ethics can help to attract customers to the organizations products that would boost sales and profits. It also helps to motivate the employees to perform better that can reduce labor turnover and improve productivity. However, most of the organizations fail to implement proper ethics in their business that is why it was important to conduct this study that will focus on such an organization that have successfully implemented ethical responsibilities in their workplace. The structure of the report Figure 1: Structure of the report (Source: Author) Literature review Organization theories Organizational theories in the 1980s and 1990s: During the period, quite a few managerial theories received important notice. Theory Z was a popular theory among them, which was a mix of American and Japanese administration practices. This theory played an important part in Japans documented productivity improvement and resolved Americas manufacturing difficulties. Classical theories: This theory is known as the systematic study of an organization. This theory handles the anatomy of traditional companies including job-unit or authority and accountability or responsibility. According to Zheng et al. (2014), classical theory considered organizations as a machine where workers were known as cogs. This theory stated that efficiency and productivity of an organization could be improved by improving competence of the personnel. Bureaucratic theory: This theory states that organizations are calculated to achieve large-scale managerial responsibilities by methodically coordinating the job of many persons. According to this theory, one human being is said to have power or influence. Weber who introduced theory also believed that an organization is a secretarial body of chosen officials governed by organized system. Systems theory: According to Swanson and Frederick (2016), an organization is a complex set of animatedly tangled and unified rudiments that includes processes, feedback loops, inputs and outputs. If any change occurs in one element, it will change other elements too. Features of this organizational theory say that it will be an open system, which will consider organizational environmental interface. It also claims that an organization must be dynamic and adaptive including a multilevel and multi-dimensional approach. Besides, it is also said that organizations should follow both micro and macro level aspects. Contingency theory: This organizational hypothesis is also known as situational theory that has no exacting design and executive act. Therefore, it can go with any types of situation. It primarily focuses on exterior determinants of an association and its performance (Blome and Paulraj 2013). Main motto of contingency theory is to develop a relationship between organization and its environment. Based on this theory, various factors were introduced that can determine efficiency of an organizational formation which are environment, expertise, people, size and strategy. Some different kind of formations that can be used for dissimilar conditions are, Mechanistic structure- In this structure the management and higher authority is placed at the top and puts prominence on regulation and order (Ismaeel and Blaim 2012). Workers within this type of organizational structure are monitored and managed closely. Organic structure- In this type of organizational structure influence is decentralized and separate departments are motivated to take functional perspective. This structure works best in unstable and regularly changing environment. Basic concepts and theories about responsibilities Three approaches of corporate responsibility exist primarily to make profits which are corporate social responsibility, The triple bottom line and Stakeholder theory. Corporate social responsibility: This theory focuses to create profit and develop the accountability to cooperate morally with the adjacent society (Jorge and Pea 2014). It also serves to develop responsibilities while playing role in broader question of society wellbeing. Four different responsibilities under this theory are described below, Economic responsibilities- This only puts focus to make money as companies that do not make profits doomed to perish. However, exceptions are there in the form of non-profit organization that gains profit only through assistance and grants but pour back to their work (Lakshman et al. 2014). In addition, some public or private hybrid companies function without gaining profits. Legal responsibilities- These responsibilities serve to monitor and maintain rules and regulation. Mostly, organizations that operate worldwide are asked to follow rules and regulations in each country. Ethical responsibility- This responsibility asks to do the right thing always even when the spirit of law does not require it (Kolk 2016). For example, if a person is driving a BMW along a country road on freezing winters night and sees a person is standing on the road with a flat, then he should help that person. This is a social responsibility, not a legal one. The triple bottom line: This type of accountability dictates that business leaders tabularize bottom-line results not only in financial conditions but also in terms of company effects in the communal realm. Two key ideas of this method are divided in two parts. First, three columns of responsibility must be kept divided and second, in all those three areas an organization should gather sustainable results. Stakeholder theory: Edward Freeman describes this theory, which is a mirror image of corporal social responsibility. It does not start with business and look out into the world to figure out moral obligations; however, it starts in the world. It lists and describes those groups and individual who will be exaggerated by the events of an organization. basic concept and theories about ethics Business leaders take ethically significant decisions regularly and those decisions are taken according to some theory of ethical behavior (Blome and Paulraj 2013). Some basic ethical theories and concepts are, Self-interest: Followers of laissez-faire capitalism believe that business decisions must be taken based on self-interest to the extent allowed by law. It is also true that this type of behavior is considered as unethical. However, winners of free market economic stated that self-interest behavior produces wealth and created jobs. Sympathy and consequences- According to Bondy et al. (2012), an organization cannot become successful if it solely relies on compassion. However, that does not mean compassion should never be a factor in ethical decision-making. Fundamental preamble of the organization The background of the organization Commonwealth Bank of Australia is one of the leading multinational banks that do their business in New Zealand, Fiji, UK and USA. However, it is commonly referred to as Commonwealth Bank and this provides services in different fields like retail sector, business and institutional banking. As of August, 2015, this bank is the prevalent Australian scheduled corporation on the Australian Securities Exchange with some popular brands like Bankwest, ASB Bank, Commonwealth Securities Limited and some others. From the company profile, it can be seen that this bank is there to provide services in banking, life insurance, related services for the individuals. The premeditated strengths of the Commonwealth Bank are its brand value, scale and the expanded business mix. The groups dividend policy seeks to deliver cash shares at strong and sustainable levels along with the maximum use of franking by paying completely franked payments. Apart from that, it focuses on a full year payout ratio of betw een 70% and 80%. In order to keep this policy, the responsible board has determined a final dividend of $2.22 per share for the second half of the year. The bank provides commercial and all-purpose banking, intercontinental financing, institutional banking and stock broking and funds administration like superannuation merchandise (commbank.com.au 2016). Mission and vision statement The vision of Commonwealth Bank of Australia is to excel at securing as well as enhancing the financial well-being of the people, communities and the businesses. Their shareholder base totals more than 800,000 and they have the target to increase this number. 78.5% of their staffs in Australia are their shareholders and they are planning to expand this number. From the annual reports of this organization, it has been seen that the group of Commonwealth Bank of Australia has $933,078 million in assets, as per 30th June, 2016 (commbank.com.au 2016). Investigation of the exterior business situation The cultural factors that leave impact on the Commonwealth Bank of Australia From the news, it has been seen that Commonwealth Bank of Australia has recently shifted to the activity based work culture. It has been seen that in line with the banks move into its new workplaces in Sydneys CBD, the corporation has started transitioning employees to an activity-based-work form. It can be opined that the activity based working identifies there is a spectrum of the work styles as well as demands and that every day; people would have different activities in order to complete involving changeable levels of concentration or partnership. Apart from that, it is required to mention that the demonstrating their progress and commitment towards corporate responsibility is increasingly important not only for their own group people and the community partners, but also for the customers. The company believes in empowering and engaging the staffs and thus activity-based working is the most appropriate one (Alvesson 2012). The importance of the cultural factor Alvesson (2012) has stated that the impact of social as well as cultural factors on the adoption of the technology is still demands thorough research work. There are several factors that affect the organizational culture and these have been mentioned here in details. It can be stated that the first and the foremost important cultural factor that affect the culture is the individual working with the organization. Apart from that, the sex of the employees and the nature of the business are other two major cultural factors. Goetsch and Davis (2014) have stated that the culture of the organization is also affected by its objectives and goals and the clients and the external parties are also major contributing factors in this part. However, it is required to mention that the management and the style of handling the employees are also important factor at this particular point (markets.ft.com 2016). Evaluation of the corporate social responsibility The corporate social responsibility issues of the Commonwealth Bank of Australia From the company profile, it can be seen that corporate social responsibility takes several structures at the Commonwealth Bank of Australia, as they continually look to make a positive impact through the procedure they do trade in the public. If focus is shed on the company profile, it can be found that being guided by the vision, the company actively takes into account the environmental, social and economic impacts and tends to influence the business likewise. Apart from that, they look for several ways to use their unique potentialities as well as resources in order to make a positive contribution beyond the core business (cio.com.au 2016). Apart from that, it can be stated that reviewing the already existing policies, procedures as well as practices under the light of environmental, economic and social impact is one of the prominent corporate social responsibilities of Commonwealth Bank of Australia. However, some recent issues related to the net banking have raised some question s in their corporate social responsibilities presently. The potential problems and challenges of the organization Recent news has stated that Commonwealth Bank of Australia has been experiencing issues with the Net Banking along with CommBank applications, with the customers unable to complete their transactions. Apart from that, it can be opined that this issue might also be affecting POS terminals with some consumers reporting they cannot withdraw cash. This is one of the recent challenges that the company has been facing and to make the entire procedure smooth is the biggest challenge to the operations team of Commonwealth Bank of Australia (Moran et al. 2014). Most of the customers have logged complaints against Commonwealth Bank of Australia that they expect far better services and thus it is clear that the company has been facing some severe operations issues (commbank.com.au 2016). Possible methods to deal with the issue In order to deal with the addressed issues, the management team and the operations team is required to have string technical support from the experts. The team is required to hire potential technologists who would solve any issues related to net banking of Commonwealth Bank of Australia. This would help the organization to get more customers, both the new and existing. However, reports have been stating that it is not the first time that the company has faced this issue and thus it demands a thorough investigation of this system. Therefore, it can be suggested that the company is required to hire top technicians who would look after this matter carefully, so that no further customers face this. Apart from that, the responsible technicians must upgrade the official app of Commonwealth Bank of Australia, so that the transaction becomes easy to all. Evaluation of fitness of the organization culture and my career plan Business Process management culture model is one of the significant models that contribute a better understanding of the notion of culture in Business Process Management. The below mentioned figure would demonstrate the situation carefully. Here cultural fir refers to the basic congruence between Business Process Management culture and cultural context, which is required for a Business Process Management approach to be highly successful. Figure 2: Business Process Management Cultural Model (Source: Moran et al. 2014) In order to understand the entire concept, I have developed an assessment tool for measuring the cultural fitness of the organizations for Business Process Management. This tool is the outcome of the mutual research program of my study and practical knowledge. I have gradually developed this model and this has helped me to understand the situation more clearly. Figure 3: Excerpt of an individual results report from the culture assessment tool (Source: Moran et al. 2014) Conclusion At the end it can concluded that business ethics and social responsibility is an important aspect that each organization should follow in order to gain success in todays competitive market place. Commonwealth Bank of Australia, in its initial states strictly maintained code of ethics and served the society with proper responsibility. However, recently, due to some irresponsible behavior the organization is losing their grip over ethics and responsibility. Their net banking issue is not only developing frustration among the customers, but also taking away their brand image and profitability. Therefore, it can be said that, an immediate change management is required which will bring new methods, rules and regulations to deal with this issue. References Alvesson, M., 2012.Understanding organizational culture. London: Sage. Blome, C. and Paulraj, A., 2013. Ethical climate and purchasing social responsibility: A benevolence focus.Journal of Business Ethics,116(3), pp.567-585. Bondy, K., Moon, J. and Matten, D., 2012. An institution of corporate social responsibility (CSR) in multi-national corporations (MNCs): Form and implications.Journal of Business Ethics,111(2), pp.281-299. cio.com.au, 2016.Commonwealth Bank shifts to activity-based work culture, swanky new head office. [online] CIO. Available at: https://www.cio.com.au/article/401530/commonwealth_bank_shifts_activity-based_work_culture_swanky_new_head_office/ [Accessed 21 Aug. 2016]. commbank.com.au, 2016.Annual reports - Commonwealth Bank Group. [online] Commbank.com.au. Available at: https://www.commbank.com.au/about-us/shareholders/financial-information/annual-reports.html [Accessed 21 Aug. 2016]. commbank.com.au, 2016.CommBank's Sustainability Report 2015. [online] Commbank.com.au. Available at: https://www.commbank.com.au/sustainability2015/approach-corporate-responsibility.html [Accessed 21 Aug. 2016]. commbank.com.au, 2016.Community - Partnerships - Social and environmental support - Commonwealth Bank Group. [online] Commbank.com.au. Available at: https://www.commbank.com.au/about-us/sustainability-and-community/community/partnerships/social-environmental-support.html [Accessed 21 Aug. 2016]. commsec.com.au, 2016.CommSec - Online Share Trading Investing. Start trading today with Australia's leading online broker.. [online] Commsec.com.au. Available at: https://www.commsec.com.au/ [Accessed 21 Aug. 2016]. Garca-Morales, V.J., Jimnez-Barrionuevo, M.M. and Gutirrez-Gutirrez, L., 2012. Transformational leadership influence on organizational performance through organizational learning and innovation.Journal of Business Research,65(7), pp.1040-1050. Goetsch, D.L. and Davis, S.B., 2014.Quality management for organizational excellence. pearson. Ismaeel, M. and Blaim, K., 2012. Toward applied Islamic business ethics: responsible halal business.Journal of Management Development,31(10), pp.1090-1100. Jorge, M.L. and Pea, F.J.A., 2014. Determinants of corporate social responsibility and business ethics education in Spanish universities.Business Ethics: A European Review,23(2), pp.139-153. 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), pp.23-34. Lakshman, C., Ramaswami, A., Alas, R., Kabongo, J.F. and Pandian, J.R., 2014. Ethics trumps culture? A cross-national study of business leader responsibility for downsizing and CSR perceptions.Journal of Business Ethics,125(1), pp.101-119. markets.ft.com, 2016.Commonwealth Bank of Australia, CBA:ASX summary - FT.com. [online] Markets.ft.com. Available at: https://markets.ft.com/data/equities/tearsheet/summary?s=CBA:ASX [Accessed 21 Aug. 2016]. Moran, R.T., Abramson, N.R. and Moran, S.V., 2014.Managing cultural differences. Routledge. Nica, E., 2013. Social Responsibility, Corporate Welfare, and Business Ethics.Psychosociological Issues in Human Resource Management,1(1), pp.9-14. Rupp, D.E., Wright, P.M., Aryee, S. and Luo, Y., 2015. Organizational justice, behavioral ethics, and corporate social responsibility: Finally the three shall merge.Management and Organization Review,11(01), pp.15-24. Scott, W.R. and Davis, G.F., 2015.Organizations and organizing: Rational, natural and open systems perspectives. Routledge. Swanson, D.L. and Frederick, W.C., 2016. Denial and leadership in business ethics education.Business ethics: New challenges for business schools and corporate leaders, pp.222-240. Zheng, Q., Luo, Y. and Wang, S.L., 2014. Moral degradation, business ethics, and corporate social responsibility in a transitional economy.Journal of business ethics,120(3), pp.405-421.