Tag Archives: Richard Branson

Does ethics exist in business?

selfridges-katherine-hamnett-t-shirts

Since several years, the term “business ethics” has been used and discussed daily in the media, mission statements, political speeches and in the business and academic world (Mullins 2013, De George 2014).

Several unethical business events happened the latest years. For example, Enron’s fraud scandal where accountancy rules were manipulated and enormous losses were hidden, Tesco’s horsemeat scandal, the Libor scandal in the financial services sector and the collapse of the apparel factory in Bangladesh where Primark produced their clothes and 1,100 people were killed (Forbes 2013, Burke 2013, Uzel 2013). Dominique Strauss-Kahn, the French former chief of IMF sexually attacked a hotel maid in 2011 when she tried to clean his room (Williams 2012).

As a result of the increasing scandals in the business world, there’s a rising awareness of ethics and social conscience. Customers demand higher ethical standards. Furthermore, they want products that don’t destroy the planet or clothes that don’t come from a sweatshop (Mullins 2013, Uzel 2013). Additionally, in many universities the subject Business Ethics has been implemented as an academic discipline to impose values (Berinde and Andreescu 2013). Furthermore, governments imply legislations concerning ethics such as anti-bullying and equal treatment laws (Perryer and Scott-Ladd 2013).

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What does business ethics mean?

Business ethics focuses on the set of individual and collectively rules, actions and moral standards achieving the economic goals of a company (De George 2014, Berinde and Andreescu 2013).

 An ethical company has shareholder and as well stakeholder view. A company should not only have the goal of making high profit and remuneration for staff but it has as well a social responsibility (Mullins 2013). The implication of ethics can promote the sustainable development and strategy of a company and consequently give the business a competitive advantage (Berinde and Andreescu 2013). A company obtains a positive corporate image by using renewable resources, not employing child labour in its factories and providing good training and development for staff (Mullins 2013). As a consequence, this positive brand image will be good for sales.

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An ethical company represents reliability, honesty and trustworthy and serves stakeholders inside and outside the company (Mullins 2013). Business ethics also has to do with accepting diversity, respecting human rights, labour standards, the environment and no corruption (Mullins 2013). Moreover, Corporate Social Responsibility means as well transparency and openness, contribution to the communities, safety of products, unambiguous information and providing excellent products and services to your customers (Mullins 2013).

The good examples

Ethisphere ranked the World’s Most Ethical Companies of 2014. For example, in the apparel industry Gap Inc, Hennes & Mauritz AB and Levi and Strauss & Co are recognized as companies doing business ethically (Ethisphere 2014).

In 2003, the Co-operative group launched a new ethical strategy for 5 years in order to become “The Most Socially Responsible Business In UK” (Bertini 2013). The number of women on their board will be increased, higher animal standards required and local communities will be helped (Bertini 2013).

In the video, entrepreneur Sir Richard Branson states that businesses need profit to survive but also have to give back to society and solve the world’s problems.

Ethical leadership

In order to further improve ethical business, managers can adopt ethical leadership by setting out an ethical mission statement and code of conduct. Furthermore,the ethical leader can change the value and beliefs of a company to more ethical ones (Mullins 2013). When hiring employees, managers should attract candidates with ethical views in line with the organisations values (Mc Ferran, Aquino and Duffy 2010). He can ask a candidate during the interview which actions he or she would take to improve ethics in the company. Additionally, managers have to identify aspects of the organisation that need further ethical improvement and set ethics as a corporate value (Mullins 2013).

The bad examples

Liberia-Business-Link-Inc.-Promoting-Business-Ethics-and-Etiquette

An example of an unethical company is the Belgian company Lernout and Hauspie founded in 1987. The company developed speech-recognition technology and had promising future perspectives to become global leader in its market. In 1995 it was noted on the Nasdaq stock exchange and thousands of technology investors and Belgian share buyers put their money in the company (Forelle and Maremont 2010). Until in 2000, the first doubts came ahead when a Wall Street Journal investigation found that the company’s profit numbers were far to positive (Forelle and Maremont 2010). In 2001 the company was declared bankrupt because of wrong revenue records in the financial statements and fraudulent bookings of South Korean customers (Forelle and Maremont 2010). Founders were given sentences of 5 years and shareholders lost all their invested money (Forelle and Maremont 2010). US company ScanSoft Inc acquired Lernout and Hauspie’s scan software (Forelle and Maremont 2010).

 Lernout and Hauspie clearly didn’t have an ethical organisational culture and didn’t treat their stakeholders and shareholders with the highest moral principles, integrity and neither with dignity (Perryer and Scott-Ladd 2013).

 A solution to avoid those situations in the future could be for businesses to set out codes, rules and conducts. These rules could be about fair dealing with customers, employees, suppliers and protection and proper use of the company assets (Hopkins 2013). These can give a clear guidance and direction to employees about what is expected from them and it sends a message to the outside world about the company’s standards (Mullins 2013). However I argue whether the set code of conduct will be used in the daily work routine and if it’s not only about theory. For example, in the 3 hotels where I worked, the first day I had to quickly read and sign a code of conduct but afterwards I never took a look back at it again. Employees may hear a companies’ mission statement about ethics but when the “communication fanfare” is over, what is left and what will be implied in the organisation (Mullins 2013)?

 Lance Armstrong is an example of an unethical public figure. Finally in 2013, after years of denials, he told via Oprah that he doped. The cyclist who survived cancer denied for 13 years and called people who accused him “liars” (Fry 2013). After that, he lost all his major sponsors and stopped the activities of his Livestrong foundation (Fry 2013). Because of his unethical behaviour, Lance lost respect from his fans and sponsors, he got a bad image and lost profitability.

Personal conclusion

From my point of view, a company should not only measure financial indicators against the competition but as well the broader performance with the Corporate Social Responsibility View (Mullins 2013). Businesses should imply ethics in order to adapt a positive brand image because everyone has quick access to a wealth of information about your company and it can affect the company’s brand image. Businesses should combine their strategy with business ethics.

Governments play a large role in promoting business ethics by implying legislation and interventions. They should fight against corruption, make laws on child labour and restraint from trading. For example, in 2012 the US banned BP because of the 2010 Gulf of Mexico Oil Spill (Financial Executive 2013).

 A challenge could be that companies write an ethical statement but don’t take the Corporate Social Responsibility (CSR) serious. And what about a company in recession, should they spend money on CSR and worry about it? Is an ethically attractive company too idealistic? Will such a company survive in the current competitive global market? Moreover, employees can see ethical behaviour through different norms and standards (Perryer and Scott-Ladd 2013). For example, one person could think that frequent use of office supplies for personal use is not an abuse while others could think it is unethical and intolerable.

I can only support ethical and organic brands and hope one day every mission statement about ethics and code of conduct will be applied not only in theory but as well in practise.

What-is-ethical-fashion

Sources

Berinde, M. and Andreescu, A. (2013) ‘Business Ethics Implementation In The Organizational Culture Of Companies.’ Annals of the University of Oradea Economic Science Series [Online]22 (1), 44-53. Available from<http://web.a.ebscohost.com/bsi/pdfviewer/pdfviewer?sid=f7f99992-0f34-4fb3-beba-cd112cffda72%40sessionmgr4001&vid=7&hid=4207&gt; [05/06/2014]

Bertini, I. (2013) ‘Co-operative launches new ethical plan’ [Online] Available from <http://blueandgreentomorrow.com/2013/03/14/co-operative-launches-new-ethical-plan/> [05/06/2014]

Burke, J. (2014) ‘Rana Plaza: one year on from the Bangladesh factory disaster’ [Online] Available from <http://www.theguardian.com/world/2014/apr/19/rana-plaza-bangladesh-one-year-on&gt; [05/06/2014]

De George, R. T. (2014) A History of Business Ethics [Online] Available from <http://www.scu.edu/ethics/practicing/focusareas/business/conference/presentations/business-ethics-history.html&gt; [05/06/2014]

De Standaard (2011) ‘Lernout & Hauspie: from hero to zero’ [Online] Available from <http://www.standaard.be/cnt/dmf20110724_109&gt; [05/06/2014]

Ethisphere (2014) World’s Most Ethical Companies – Honorees [Online] Available from <http://ethisphere.com/worlds-most-ethical/wme-honorees/&gt; [05/06/2014]

Forbes (2013) ‘5 Most Publicized Ethic Violations By CEOs’ [Online] Available from <http://www.forbes.com/sites/investopedia/2013/02/05/5-most-publicized-ethics-violations-by-ceos/&gt; [05/06/2014]

Forelle, C. and Maremont, M. (2010) ‘Lernout & Hauspie Founders Guilty in Fraud’ [Online]Available from <http://online.wsj.com/news/articles/SB10001424052748703989304575503500899087566&gt; [05/06/2014]

Fry, E. (2013) 11 most scandalous business events of 2013 [Online] Available from <http://fortune.com/2013/12/27/11-most-scandalous-business-events-of-2013/&gt; [05/06/2014]

Hopkins, S. (2013) ‘How Effective Are Ethics Codes and Programs?’ Financial Executive [Online] 29 (2), 42-45. Available from <http://web.a.ebscohost.com/bsi/pdfviewer/pdfviewer?vid=8&sid=f7f99992-0f34-4fb3-beba-cd112cffda72%40sessionmgr4001&hid=4207&gt; [05/06/2014]

McFerran, B., Aquino, K. and Duffy, M. (2010) ‘How Personality and Moral Identity Relate to Individual’s Ethical Ideology.’ Business Ethics Quarterly [Online] 20(1), 35-65. Available from <http://web.a.ebscohost.com/bsi/pdfviewer/pdfviewer?sid=f7f99992-0f34-4fb3-beba-cd112cffda72%40sessionmgr4001&vid=8&hid=4207&gt; [05/06/2014]

Murray-West,R. (2013) Co-op Bank is losing its ethical edge [Online] Available from <http://www.telegraph.co.uk/finance/personalfinance/consumertips/banking/10135338/Co-op-Bank-is-losing-its-ethical-edge.html&gt; [05/06/2014]

Perryer, C. and Scott-Ladd, B. (2013) ‘Deceit, Misuse and Favours: Understanding and Measuring Attitudes to Ethics.’ Journal of Business Ethics [Online] 121 (1), 123-134. Available from <http://web.a.ebscohost.com/bsi/pdfviewer/pdfviewer?sid=f7f99992-0f34-4fb3-beba-cd112cffda72%40sessionmgr4001&vid=8&hid=4207&gt; [05/06/2014]

Uzel, S. (2013) ‘Scandals put ethics on agenda for global business’ [Online] Available from <http://www.yorkshirepost.co.uk/business/business-news/scandals-put-ethics-on-agenda-for-global-business-1-6169337&gt; [05/06/2014]

Williams, M. (2012) ‘Dominique Strauss-Kahn settles sexual assault case with hotel maid’ [Online]Available from <http://www.theguardian.com/world/2012/dec/10/dominique-strauss-kahn-case-settled&gt; [05/06/2014]

 

 

 

 

 

 

 

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Don’t hold on to the good old days, embrace innovation

Why change management?

Why is it necessary to change in business instead of holding on to the past? Because of the globalisation, constant change of supply and demand, changing business environments, market maturation, increasing costs and competition, the desire to improve and grow as a company, development of new services, keeping your business move forward, developments in technology, … (Halkos 2012, Raynor and Mumtaz 2013, De Smet, Lavoie and Hioe 2012, Riwo-Abudho, Njanja and Ochieng 2012, Quiros 2014). Fully convinced now? We can conclude that change is inevitable and necessary to succeed in the current business environment (Quiros 2014).

The master of change: Richard Branson

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The Virgin Group is an example of change management within an organisation. Entrepreneur and founder Richard Branson, innovated, diversified and acquired many businesses (Australian Business Solutions 2012). He took many risks to bring out new and better products. Branson states that when circumstances and opportunities have changed, it is time to renew and give a new direction to the company (Branson 2011). Due to his change management, Virgin has a large business portfolio. For example, the group has taken over the Northern Rock bank to create Virgin Money (Australian Business Solutions 2012). Moreover, Virgin is active in the entertainment, health & wellness, travel, leisure and telecom industry.

Human preference to the comfort zone

Change in business has an effect on the company’s strategy, organisational structure and as well on the employee’s wellbeing (Halkos 2012, Quiros 2014). The psychological aspect of change shouldn’t be ignored because humans’ natural reaction to change is resistance. When your manager communicates the change of your whole working schedule, you will feel fear and a feeling of loss of control (Bryson, Barth and Dale-Olson 2013). Moreover, you will prefer the routine and predictability of your past work schedule (Ruiz 2014). People like their routines, habits and tend to repeat their actions because of the familiarity and the constant and predictable outcome (Ruiz 2014).

Employees are a challenge in change management because of their perception of change as a threat (Halkos 2012). They will feel psychological stress, uncertainty, resistance and frustration due to the perceived loss of control, job-related anxiety and fear of not being able to meet the new demands  (Halkos 2012, Bryson, Barth and Dale-Olson 2013, Ruiz 2014).

On the other hand, this fear of change depends on the personality, education and responsibility of the employee and the nature and size of change (Armean 2013, Halkos 2012). For example, changes in working hours will have a higher impact on the individual than product innovation (Halkos 2012). Furthermore, the intensity of employee’s opposition depends as well from the organisational climate, period of change, country and culture (Prediscan, Bradutanu and Roiban Roxana 2013). Hofstede stated Uncertainty Avoidance as a cultural dimension, which affects the embrace or opposition to change depending from culture to culture (The Hofstede Centre 2014). My country Belgium scores very high on the Uncertainty Avoidance chart with 94%, consequently, we can assume that Belgians are highly opposite to change (The Hofstede Centre 2014).

Role of managers

As stated above, organisations need change and people are a key factor to make significant change in the way they act. Consequently, managers should moderate and manage the impact of change on the employee’s wellbeing with a well-defined human resources management programme (Mullins 2013).

Workers have to keep inspired when they feel overwhelmed during change which requires change programmes focused on communication and dialogue (De Smet, Lavoie and Hioe 2012, Halkos 2012, Ruiz 2014). Leaders have to navigate their teams during the transition phase by motivating and discuss openly about the following items in order to overcome the resistance to change among employees (Quiros 2014):

  • Current assessment results
  • Purpose for change and the advantages
  • Impact to the organisation and management
  • Necessary process adjustments
  • Necessary retraining
  • Risks and opportunities
  • Timetable for the utilisation and evaluation
  • Rewards (Ruiz 2014).

In conclusion, the manager’s and leaders most important role in change management is communication with the employees during the whole process. This can reduce the barriers to change of fear, frustration, resistance, intolerance and anxiety among employees.

Personal experience

Because of human’s natural psychological reaction of resistance to change, I like the security in the past and my habits. But for my past work and educational experiences, I choose to go for the unknown and to change. Every time before starting a new challenge, I felt fear to change. Once my experience was successful I felt much more confident and continued embracing the unknown. For example, I lived for 21 years in Belgium and my dream was to stay in my favourite city Antwerp for the rest of my life. However, one day I decided to go to the South of France to improve my French in a language school during 8 weeks. The days before my departure, I had to resist several times not to cancel the lessons. Anxiety and fear of unknown came up. But since my first day in the language school, I haven’t stopped travelling for almost 3 years now and discovering other cities by living there, learning about other cultures, people and languages. And I love it.

 So… let’s change!

 Ships-In-Harbour-Are-Safe

References:

Australian Business Solutions (2012) ‘Lessons from Richard Branson’ [online]Available from < http://absmagazine.com.au/2012/07/27/lessons-from-sir-richard-branson/&gt; [16/05/2014]

Branson, R. (2011) ‘Richard Branson on managing change’ [online] Available from <http://www.entrepreneur.com/article/217944&gt; [16/05/2014]

Bryson, A., Barth, E. and Dale-Olsen, H. (2013) ‘The effects of organizational change on worker well-being and the moderating role of trade unions.’ Industrial & Labor Relations Review [online] 66 (4), 989-1011. Available from <http://web.b.ebscohost.com/bsi/pdfviewer/pdfviewer?sid=d30d6ded-5f35-4683-adf6-1882db64e989%40sessionmgr112&vid=15&hid=103&gt; [16/05/2014]

De Smet, A., Lavoie, J. and Hioe, E. S. (2012) ‘Developing better change leaders.’ McKinsey Quarterly [online] (2), 98-104. Available from <http://web.b.ebscohost.com/bsi/detail?sid=d30d6ded-5f35-4683-adf6-1882db64e989%40sessionmgr112&vid=9&hid=103&bdata=JnNpdGU9YnNpLWxpdmU%3d#db=bth&AN=74756221&gt; [16/05/2014]

Halkos, G. (2012) ‘The importance and influence of organizational changes on companies and their employees.’ Journal of Advanced Research in Management [online] 3 (2), 90-103. Available from <http://web.b.ebscohost.com/bsi/pdfviewer/pdfviewer?sid=d30d6ded-5f35-4683-adf6-1882db64e989%40sessionmgr112&vid=16&hid=103&gt; [16/05/2014]

Prediscan, M., Bradutanu, D. and Roiban Roxana, N. (2013) ‘Forces that enhance or reduce employee resistance to change.’ Annals of the University of Oradea, Economic Science Series [online] 22 (1), 1606-1612. Available from <http://web.b.ebscohost.com/bsi/detail?vid=8&sid=d30d6ded-5f35-4683-adf6-1882db64e989%40sessionmgr112&hid=103&bdata=JnNpdGU9YnNpLWxpdmU%3d#db=bth&AN=90545859&gt; [16/05/2014]

Quiros, E. (2014) ‘Leading People Many People Have A difficult Through Change.’ Strategic Finance [online] 96 (5), 15-16. Available from <http://web.b.ebscohost.com/bsi/detail?vid=3&sid=d30d6ded-5f35-4683-adf6-1882db64e989%40sessionmgr112&hid=103&bdata=JnNpdGU9YnNpLWxpdmU%3d#db=bth&AN=95875444&gt; [16/05/2014]

Raynor, M. and Mumtaz, A. (2013) ‘Change management needs to change.’ Harvard Business Review [online] 91 (6), 18-19. Available from < http://web.b.ebscohost.com/bsi/pdfviewer/pdfviewer?sid=d30d6ded-5f35-4683-adf6-1882db64e989%40sessionmgr112&vid=7&hid=103&gt; [16/05/2014]

Riwo-Abudho, M., Njanja, L. and Ochieng, I. (2012) ‘The Role of Strategic Leadership during Change.’ KCA Journal of Business Management [online]4 (1), 48-61. Available from <http://web.b.ebscohost.com/bsi/pdfviewer/pdfviewer?sid=d30d6ded-5f35-4683-adf6-1882db64e989%40sessionmgr112&vid=12&hid=103&gt; [16/05/2014]

Ruiz, E. (2014) ‘Difficult Change Management.’ Leadership excellence [online] 31(4), 63-63. Available from < http://web.b.ebscohost.com/bsi/pdfviewer/pdfviewer?sid=d30d6ded-5f35-4683-adf6-1882db64e989%40sessionmgr112&vid=8&hid=103&gt; [16/05/2014]

The Hofstede Centre (2014) National cultural dimensions [online]Available from < http://geert-hofstede.com/national-culture.html&gt; [02/05/2014]