Effectiveness of Ethics Process - Assignment Example

Effectiveness of Ethics Process The issue between the insurance company and Rudy Baylor is a clear indication that unethical practices with corporate is not only within the corporate affairs but also extends to external stakeholders such as customers. It is unfortunate that companies, especially insurance companies are happy when they declare high profits at the expense of the interest of the customers, which they were established to serve. Life insurance companies are always set up to protect the life of policyholders from covered illnesses and it sounds very cruel when an insurance firm refuses to cater for healthcare bills in order to make profits. The first ethical review process in cases where the management has demonstrated a sign of selfishness by failing to execute its primary duty will involve identifying shortcomings in the existing ethical policy. This will step will highlight the underlying reasons behind the company’s unethical conduct. The next important ethical review process will involve identifying the possible alternatives to the existing shortcomings in the ethical policy. The reason behind this move is to ensure that there are no loopholes in the current ethical policy that may be exploited by the management to perpetrate fraud. A fraudulent act will remain to be crime whether it is contributing to significant increase in the company revenue or not. The management of the Insurance Company was defrauding the policyholders to improving the company’s earnings. For instance, it was revealed that the insurance company made additional profits close to $40 million annually by concealing insurance payments. Fixing shortcomings in the existing ethical policy will ensure that management does not have loophole to exploit the policyholders and above all the customers gets their right to insurance payment. Possible improvements and changes to undertake on the ethical corporate evaluation process involve To undertake retrospective and continuous policy review taking into consideration that it is through reviews that shortcomings in the ethical policy that may be exploited by the management can be identified. Regular review on the corporate protocol and procedures contained in the corporate ethical policy to ensure that standard for ethical conducts are up to date. Support opportunities for transparency on the operations of the committee. This is only aimed at preventing cases of double standards in the affairs of the committee, as human beings are prone to temptations. Enhance the independence of the committee and mitigate conflict of interest in order to ensure that the committee performs their roles and responsibilities without fear of intimidation and also to avoid instances of teaming and collusion to breach corporate ethical codes. Set-up the minimum requirements for the information to be availed in case of ethical conflict in order to promote fair decision making with respect to disciplinary action. Specify the type and nature of records to be kept and for how long in order to enhance faster review of the outcomes of the advice and informing consequent decisions. Guidelines on the disclosure of information and safeguards of confidentiality in order to balance the need for transparency and the risk exposure on the safety and confidentiality of individuals, property and institution based on the openness. Ethical problems reported in the Wall Street Journal 1. Price fixing: Price fixing is common in highly competitive industries offering substitute products and services and companies may decide to fix prices order to minimize unfavourable competition. It was unethical for the executives of Panasonic Corp. and Tecumseh Products Co. and Whirlpool Corp. subsidiaries to fix prices on generators (Kendall). 2. Bribes and payoffs: Bribes and payoffs are common during awarding of tenders and contracts in various organization. Accepting bribes and kickbacks is an ethical conduct on the part of the corporate employees. It was unethical for to take payoff in order to allow a company overbill cleanup exercise and other projects at the world trade centre. (Peltz) 3. Intellectual property theft: This involves using another individual’s or corporate intellectual property without his or her express authority. This is unethical, it is tantamount to fraud and as such individuals, and corporate should seek for authority before using another person’s intellectual property. Pfizer Inc filed a legal suit against Merck claiming patent-infringement and as such, they wanted the court to block Merck from introducing generic version of Lipitor in the market (Loftus). 4. Conflict of interest: This aspect involves situations where an employee or a relative of the employee engages in an activity that would jeopardise the objectivity of the employee in the verge of delivering his employment tasks and responsibilities. Conflict of interest may involve a company management executive incorporating another company that supplies his/her employer with goods or act as the financier. The aspect of conflict of interest is unethical corporate issue affecting a number of organizations not only locally but also in the global arena. It is unethical for AOL to put itself in a conflicting situation with respect to publication of news (Crovitz). 5. Insider trading: This involves trading in securities of a company after access to material non-public information. Insider trading is one of the most common unethical practice by organization employees especially those in the money market. For instance, former attorney of Ropes & Gray Brien Santarlas was caught in insider trading scandal an act that is unethical (Bray). 6. Environmental pollution: In the past organizations, especially manufacturing companies could dispose wastes everywhere without concern for the environment. However, strong concern over sustainable production to prevent damage to the environment is making it unethical for companies to manufacture and dispose hazardous wastes in to the environment. It is unethical for Oil and Gas mining companies in Texas to be irresponsible when dealing with smog-producing compounds emitted while drilling as they cause environmental hazard to the locals (Campoy & Gold). 7. Breaching company Act, Security exchange rules and regulation: Most organizations have always showed little concern for important laws, regulations, guidelines and rules guiding the operations of businesses. It was unethical for Enron Corp. staff to breach the Security exchange rules and regulation relating to publication of company financial statements (Ackerman). 8. Creative accounting: This involves breaching the General Accepted Accounting Principles (GAAP) when preparing accounting data and other related financial statement to report high profits, reduce tax burden and influence stock prices. It was unethical for Jeffrey Skilling and other employees of Enron Corp to engage in creative accounting in order to lure investors into company stocks (Lipschutz). 9. Conspiracy: conspiracy by company executives to commit is one of the most common unethical acts. It was unethical for the former assistant treasurer at Enron- MrTimothy DeSpain to conspire with other management team to defraud the public (Ordonez). 10. Rogue Trading: It is unethical for the business executives to engage in unauthorised business transactions, which can cost the company its hard-earned revenue in terms of loses. It was unethical for the top Swiss bank’s global equities business to engage in rogue trading considering that, it cost UBS over $2 billion (Ovide). 11. Works cited Ackerman, Andrew. SEC Discipline Over Madoff : Agency's Action Follows Report Questioning Staff Conduct Over Ponzi Scheme. Wall Street Journal, November 12, 2011, Bray, Chad. Ex-Lawyer Gets 6 Month Prison Term In Insider Case. Wall Street Journal, November 30, 2011 Campoy, Ana & Gold, Russell. Hearing Focuses on Air Quality at Wells. Wall Street Journal, September 30, 2011. Crovitz , Gordon. A Business Model Based on Conflict of Interest: On TechCrunch it's hard to tell where news ends and investing begin. Wall Street Journal, September 12, 2011 Kendall , Brent. Trio Charged in Price Fixing: U.S. Indicts Executives of Compressor Makers Following Long-Running Probe . Wall Street Journal, September 28, 2011 Lipschutz, Neal. Ten Years Later, Enron Pales in Comparison. Wall Street Journal, November 30 2011. Loftus, Peter. Pfizer Tries to Block Merck Lipitor-Zetia Pill. Wall Street Journal, October 11, 2011 Ordonez, Isabel. Ex-Enron Executive Returns to Energy Sector. Wall Street Journal, November 8, 2011. Ovide, Shira. UBS on Rogue Trading: ‘We Have to Be Straight with Ourselves’. Wall Street Journal, October 5, 2011. Peltz, Jennifer. One-time 9/11 hero gets prison in NYC bribe case. Wall Street Journal, September 16, 2011. Read More