Siemens Ethical - Case Study Example

Siemens Ethical Case Study The Scandal Long before the year 1999 giving of bribes to foreign overseas officials was not considered a crime in Germany. In that aspect, most of the German based organizations resulted in bribery in order to be awarded contracts. With such a conducive environment to do business abroad, Siemens came up with a strategy of bribing government officials in various countries in order to get lucrative contracts. Within the Siemens organization bribes were referred to as “NA,” A German abbreviation for the word “nützliche Aufwendungen” which meant useful money in English. Siemens bribed any government official in various countries, so as to get the lucrative tenders. The bribery by Siemens was practiced in countries known all over the world for corruption such as Nigeria and unfortunately even countries renowned for transparency such as Norway and Greece were caught in the scandal. However, in February 1999, after significant pressure from countries such as the United States, Germany finally outlawed giving of bribes to foreign officials. However, instead of stopping the habit of giving bribes to the foreign officials, Siemens continued doing so discretely. Instead of abiding by the law, the firm came up with what was referred to as a “paper program.” This was an internal program that was supposed to punish the wrong doers or the people who participated in bribery. Unfortunately, the program did not punish the wrong doers. The company made millions through fraudulent deals to the expense of other firms. Soon after legalizing giving of bribery to foreign officials in the year 2000, authorities in Austria as well as Switzerland started becoming suspicious of some payments worth millions of dollars that Siemens was making to some offshore accounts. After lengthy investigations, some of the top managers at Siemens were arrested and some even prosecuted. Analysis Bribery and other related corrupt practices are unethical and unacceptable in any business circle. This is because it undermines the ethical corporate culture. To a larger extent bribery is known for mutilating fundamental corporate values of honesty and integrity. The Siemens scandal in our case which involved key employee bribing top officials of the business in foreign countries in order to win contracts was a serious unethical practice. In always vital for all companies to compete for tenders and contracts on fair ground, but unfortunately bribes are often used to distort the market place in order to favor a particular company over others. For instances, top executives in Siemens used to bribe senior government officials in Europe, Asia, South America and Africa in order to gain undue advantage over its competitors during floatation of government tenders and contracts. The greed to make more profits and help the company maintain competitiveness in both domestic and international market was the key motivator behind overstretched bribery and corrupt practices perpetrated by the top executives of Siemens. It is unfortunate that in certain society’s especially in the developing world bribery and corruption is an acceptable culture in business practice and always considered as a cost of doing business. However, ethical corporate culture calls for fair business practice as this is the only way through which we can maintain a balanced market place. As an administrative officer, there are various respopnsib8ilities that the firm will expect to be addressed. The issues that will need to be addressed include; ensuring that such a scandal does not arise ever again in the future. All the employees who are responsible for the bribery scandal are known and appropriate action taken. The organization will also expect that measures are put in place to avert such an occurrence in the future. As an administrative officer, there are other responsibilities that one will have to undertake even though the organization will not expect an administrative officer to undertake. Some of the unexpected tasks include; holding of seminars so as to enlighten the employees on the importance of avoiding corrupt deals. Promotion of good virtues among the employees through rewarding the most outstanding employees by giving them prizes. Organizing of meetings among the major stakeholders as well as the public where all present can air their views. Setting up of the ethics office where both the workers of the firm as well as the public can report cases of bribery. The scandal at Siemens can be dealt with using about three ethical approaches; virtue based, principle based and result oriented. Virtue based In any organization, virtues play a very significant role in making certain the even running of a firm. Without virtues, problems are bound to arise consistently. In the Siemens scandal, most of the employees who took part in the scandal did not possess the virtue of honesty. Even though the majority of the employees who were deeply involved in the scandal admitted that they discerned that they were carrying out an illegal action, they did it for the firm. The investigations also established that most of the employees were aware of the bribery within the firm even if they did not participate in perpetrating the vice. In that aspect sacking of employees who took part in the scandal may not be an appropriate solution. From a virtue based perspective all the employees should be well-informed on the magnitude of encompassing certain ethical values such as honesty. Administrative officer cannot be able to follow and monitor each and every employee to ensure that they practice honesty in every aspect that is work related. In this particular case a good person or the administrative officer can result to retaining the employees who were aware of the bribery schemes but did not perpetrate the vice. After which the employees will be given a chance to give details on how the bribery schemes were carried out, the information gathered will assist in sealing all the loop holes. Principle based In order to succeed whether as an individual or an organization principles plat a very vital role. In the Siemens scandal if the firm had laid down some very strong principles that all the employees were to follow the scandal might not have taken place. In the Siemens case transparency should have been the leading principle. the majority of the employees who participated in the bribery scandal did not have any principle to guide them. Most of them who were arrested argued that they took part in the bribery scandal for the better good of the employees and the firm at large. Their actions were guided by one principle which was to ensure the success of the firm through any means possible. Results oriented Most firms especially in the telecommunication and construction are mostly results oriented. In that aspect, most of the employees in such firms are always under pressure to perform. As a result, most of the employees end up participating in both legal and illegal activities to make certain that they attain the most wanted results. Ensuring that all the employees perform to their level best is very vital in ensuring the success of the company; however the firm should put emphasis in getting the desired results through legal means. This can be accomplished in a variety of ways, like holding of annual prize or appreciation days where all the employees who have displayed good character are rewarded. Options various options that can be used to ensure that another bribery scandal does not take place ever at the Siemens organization are: Ensuring that all the employees who took part in the scandal are prosecuted Sacking of all departmental heads who took part in the bribery scandal Revoking of all the contracts got through fraudulent means Closing of all accounts that were set aside to facilitate the bribery scandal Sacking of all employees who were aware of the bribery scams but did not report to the relevant authorities Coming up with strong company principles to guide the employees Promotion of good moral virtues among the employees Setting up of an ethics office where all cases of corrupt deals can be reported and acted upon Decision Of all the available options, the best alternative is educating of all the employees on the importance of virtues. This option can be perceived to be the best the best alternative due to various reasons; sacking of all the employees who took part in the scandal will not bring the desired changes. This is in contemplation of the verity that the issue of corruption or bribery has been in the firm for a very long time. Thus, sacking of the ones who took part in the scandal may not solve the problem as the remaining employees might continue to do so. Sacking of the departmental head who took part in the scam may not deal with the problem efficiently. According to the investigations most of the departmental head especially the sales were awarded some cash to use in bribing officials, in that aspect the departmental head had to work with some junior employees from their departments to carry out the bribery. Closing of all the accounts that were set aside to fund the bribery scams is a viable option, but it may not help in eradicating the vice fully. This is because some other accounts may be still be used to continue funding the bribery schemes. Coming up with strong company principles may help in eradicating the vice, however ensuring that the employees follow the rules or the principles to the latter may not be easy if the employees are not willing. The other viable option that may help in eradicating of bribery at Siemens is coming up with an ethics office where all the employees can be able to report all cases of bribery without their identity’s being revealed. Even though this option may help to eradicate bribery significantly most employees mat still not report cases of bribery due to fear of being identified. With consideration of all the available options, promotion of good virtues among the employees remains the best option. If all the employees can be able to embrace and promote some virtues such as honesty then the firm will have eradicated the vise of corruption in the firm for good. For a very long time bribing at Siemens, was not considered as a vice bur rather as a necessity. In that aspect, it is very essential that all the employees are made aware that giving of bribes in not a virtue but a vice that should not continue to be practiced. Such awareness will ensure that all the employees who earlier were of the opinion that bribery was “good” are able to change their mind about bribery. In that aspect all the employees who have been tasked with soliciting or looking for tenders on behalf of the firm are able to do so without giving bribes. This will ensure that the firm gains the public confidence that may have been lost. Monitoring Monitoring of whether bribery has been eliminated at Siemens will take about three years; this will be done through a variety of ways. The public, stakeholders and even the employees will take part in the monitoring. Each and every month all employees will be required to submit opinions stating whether they think bribery is still practiced at Siemens or not. All departmental heads will have to present a report every four weeks stating the steps they are taking to ensure that bribery is not practiced within their dockets. After every four weeks employees will take place in choosing the most corrupt free departments in the organization. In doing so the top management will be able to know which department is still practicing bribery. To ensure that the whole monitoring process is credible, Members of the public who will consist of clients will be requested to send their opinion every two months about the status of corruption or bribery at the firm. The information in turn will be submitted to the ethics office which will investigate of look into some of the opinions so as to establish if they are true. The employees as well ads the public will also be required to give their opinions on what should be done to ensure that issue of bribery is totally eradicated from the firm. Should any of the opinions or views expressed by the staff, departmental managers or the clients be found out to be true, and then the appropriate action will be taken. If it is proved that a department is indeed corrupt free, then all the employees from that department will be awarded. However if it is found that the department is still corrupt then some disciplinary actions will have to follow. The head of the corrupt department will have to be sacked and if it is found that there are other employees who are still corrupt then they will also be sacked and prosecuted. The ethics office will also evaluate if the some of the opinions on how to eradicate bribery can be implemented. If it is ascertained that the ideas can be implemented, the ethics office can forward the recommendations to the management for execution. Adjustments In case it is found out the strategy of promoting good virtues among the employees is not as competent as it is believed to be, then some adjustments will have to be made. Minor adjustments will be made by the departmental head in collaboration with the general manager. The major adjustments will be made by the top management officers only. Some of the minor adjustments that may have to take place are shifting of the departmental heads, sacking of corrupt junior employees. Some of the major adjustments that may have to be implemented may include the sacking of corrupt departmental heads and recruiting of new employees. Adoption of new strategies will also have to be decoded by the top management. Conclusion At one time or the other scandals are bound to arise in most organizations, the way that the organizations react to the scandal may help the firm in its profit making ways or lead to the closure of the firm. The Siemens bribery scandal was orchestrated by the top management to endure that the firm won lucrative tenders. Even though most knew that it was illegal, they still participated in it. The repercussions of the scandal were immense as it leads to a massive leadership restructuring, the firm also had to pay millions of dollars in terms of fines. The employees who took part in the bribery scandals were arrested and prosecuted while others still have cases pending in courts. Read More