When joining the board of the medium-sized charitable organization, I am expected to advance the interests of the organization and protect the stakeholders’ interests. It is critical to analyze the whole organization structure and its planned operations and the tasks you are expected to accomplish. Fundamental principle questions I would ask, and the expected responses include the following:
What is the organization’s perspective/response towards trust-compliance by the board member(s)?
The organization has laid down an incentive package for the board member(s) remunerated based on his/her performance of the organizational tasks. These are meant to motivate and build trust within the organization and the board member(s).
- Are there any decision guide systems for the organization that would help in the running of the organization?
Yes, there are. The organization upholds integrity and justice and the board member(s) is ethically obliged to implement the organization’s tasks/preferences and in case of conflict with personal interest, the organization’s preferences overrule.
A large corporation would present a greater scope of challenges in its management system. The principle issues to consider when enjoined in the Corporation’s board and the expected answers include:
- What legal system or measures are incorporated to maintain professional ethics?
The corporation has a set of standard rules, which must be followed in the daily management of the corporation. The board member is expected to adhere strictly to these rules.
- What policies/practices are instituted to maintain this strict observance of the corporation’s rules?
The corporation reviews from time to time the board member(s) code of conduct and the decisions made by the member. These decisions and practices should be as per the corporation’s policies and the state laws.
The board of directors should be inclusive of not only the stockholders but also the employees, members of the professional body and even community members depending on the type of industry. This would encourage input from the different members that would support informed decisions involving that industry.
The implementation of Sarbanes-Oxley Act is necessary for the general management of the organization. Some of the benefits of compliance with the Act include:
- Ensure financial integrity within the company.
- Has encouraged informed decision-making considering the inclusion of accountant in the board
- Has improved the internal control system for the company
The Winds of Change
To evaluate Professor Newton’s conclusion, you would need to know the context of the public sphere, its structure, and effectiveness. These will help you gauge if the general public is in a position to change the business field.
The ethical issues involved in the challenges addressed by Professor Newton include:
- Integrity (especially regarding the stakeholders’ ability to uphold the regulations instituted for better business management)
- Culture (Habitual practices by a person is his/her culture that depicts the organization’s culture; it is usually created)
The stakeholders involved in the business sphere and its perceived change for better running include:
- The government
- The general public
- The corporations or business
The evaluation of the previous alternatives by the professor is satisfactory and a depiction of the real concept of business management and the perceived moral deviations. These arise from the weak democracy system supposed to complement capitalism.
Considering the alternatives, changes in corporate culture would have a greater impact than the business courses as it would help in changing some policies and the organization’s actions. An introduction of more regulations would throttle some degree of the unethical practices, but it is less effective as the laws have loopholes. A Greater impact will be experienced through a combination of two or more of these alternatives. The alternatives affect the stakeholders to some degree as it checks on the decisions reached by the stakeholders and how they were met.
Opinion on Readings 10-2 and 10-3
The Libor Scandal is a depiction of the moral decay in society and the weak democratic system. In a democratic system, inclusion of the public and the stakeholders’ views is recommended in any critical decision(s) made, for example, the senior executives at Walmart defrauded the instituted organizational system by trying to hide bribery reports in the organization. This would give a wrong picture of the organization as the public, and other stakeholders will continue to believe in the authenticity of the Walmart organization system that is unfair democratically to other competitors in the same sector. In a democratic capitalist system, the stakeholders involved in the business should accrue benefits depending on the companies’ policies and the legal structure, but the opposite happens. The legal system and other policies are just manipulated for the benefit of a few, which when realized, the compensation given is just a tip of the profits gained. For example, the Libor scandal where Barclays manipulated the interest rate to earn more profits and later agreed to pay the fine discharged to American and British authorities; the Libor benchmark is used worldwide, which depicts the greater profits acquired by Barclays (an international bank).
Capitalism presents itself a win-win context in many instances. It is an expression of human nature, which usually advance self-interest over the public’s interest. Even the Libor scandal is a depiction of the capitalist nature as Barclays manipulated the interest rates with a view of acquiring massive profits for itself. In the end, after the publication of the scandal, it was fined $453 million by American and British authorities. Considering this situation, the American and British authorities gained from the scandal while also Barclays kept a share of the profits earned.