Ethical Organizational Culture Critical Thinking Sample
ETHICAL ORGANIZATIONAL CUTLURE
The elements of a zero-policy ethics policy must include compliance with the law, defining the meaning of unethical behavior, the company’s integrity statement, corporate accounting, confidentiality, and reporting mechanisms. These are the most basic elements to have a good policy operating within any organization, companies or firms. These are the most basic elements that every company should possess. In the case of Siemens scandal, there was lack of a strong ethical culture within the organization, which is vital to ensure effective corporate governance. It is not enough that the company believes in maintaining integrity (Verschoor, 2007, p.11). However, by merely publicizing the company’s need for integrity will not ensure that the company gives importance to integrity. In the case of Siemens, it had been acclaimed for its publicly stated emphasis on good governance, strong corporate responsibility, and ethical behavior (Verschoor, 2007, p.11). However, the facts will show that effective governance and a strong ethical corporate culture was not the practiced by Siemens officials after they engaged in bribery, corruption, conflicts of interest, circumventing the law, and even tax evasion (Shubert, 2008).
In the case of Siemens, it was revealed that there were some senior executives were not informed of the events that transpired within the organization. Siemens’ also failed to practice strong internal control to decentralize the company. It bears to stress that “making the numbers” shall not guarantee that the business will survive (Verschoor, 2007, p.11). It is also imperative for every company to define “unethical behavior” which may include terms such as fraud, bribery, theft, discrimination, retaliation and harassment. These instances should be explained to give a clearer understanding for the employees. The mission, vision and objectives o the company will contain its integrity statement to ensure that each employee’s behavior and conduct is ethical and complied with the policy.
The employees and officers of the company should be educated on the issue of bribery, gifts and other forms of entertainment. Although the gift may be given voluntarily by some of the people who benefit for the company, the employees must know the company stand on the issue of bribery and gifts (Verschoor, 2007, p.11). The reporting mechanisms of the company should also be in place in order for the employees to voice-out any unethical practices inside the workplace. Educating the employees on the procedure will enable them to know how to report misconduct. These are only some of the elements that are missing at Siemens Global which resulted to fraud and corruption of its officers.
The reports show that the senior executives and agents of Siemens were charged and convicted for violating the Foreign Corrupt Practices Act (FCPA) after they bribed the Argentine government officials to enter the $1 Billion contract for the production of national identity cards. The alleged violation of the graft and corrupt practices law involved the government of Argentina in 1994 after it released the offer or bids that allowed the change of the current system of manual generation of national identity booklets and later known as the DNI project. It was shown that the Argentine government manipulated the bidding process by awarding the DNI project sometime in 1998 to Siemens’ subsidiary that was created for the project.
Siemens Argentina was reported to give at least $40 million cash to cover the bribes and seal the deal amounting to $1 billion for the production of identity cards (Shubert, 2008). Siemens Israel gave out $20 million bribe money to senior government officials for the construction of power plants. Another $16 million was given to urban rail lines in Venezuela, and $14 million was allocated for China to purchase medical equipment, and $1.7 million went to Saddam Hussein and his cronies in Iraq (Shubert, 2008).
The efforts of Siemens’ to fight corruption within the organization were unsatisfactory. The report showed that during the bidding and implementation of the project, the defendants and their conspirators, encouraged Siemens give bribe money of $100 million to government officials in Argentina. The defendants and their conspirators turned out to be officers of Siemens, who even executed the wire transfer of seven ($7) million of bribe money to bank accounts in New York that was connected to the DNI project (Cassin, 2008).
In order for Siemens to move beyond compliance to develop a healthy ethical climate it should create policies against bribery and corruption, giving of gifts and entertainment. The company should give a firm stand on the issue of graft and corruption by informing the employees that it was prohibited in the organization and it result to suspension and termination. At the same time, providing reporting mechanisms will allow the employees to inform the company of the unethical practices within the workplace. The company must have an open-door policy and must allow the employees to use such reporting mechanisms and even anonymous reporting. Another important thing to consider is utmost confidentiality to be upheld at all times in conducting internal investigations after acting on complaints. It is best to maintain accurate accounting by ensuring that all transactions should be reflected in company books and records (Verschoor, 2007, p.11). The company should remain true to its business conduct guidelines in ensuring that the strategic planning and daily business practices should observe high ethical and legal standards for all their employees. Some of the values that were highlighted in its mission and vision are mutual respect, honesty and integrity as the basis for the employee’s conduct (Schaffer, Agusti and Earle, 2008). However, based on the reports, it was shown that even Siemens top executive engaged in graft and corruption to seal the billion-dollar deal to promote self-interest. Some of the lessons to be learned in this scandal are: strong ethical culture for corporations to ensure effective corporate governance; the senior executives must know all the transactions throughout the organization; and strong internal control is important to prevent crime and corruption within the organization (Burnett and Bath, 2009).
Burnett, R. and Bath, V. (2009). Law of International Business Australia. Anandale, NSW: The
Cassin, R.L. (2008). Bribery Abroad: Lessons from the Foreign Corrupt Practices Act. USA:
Schaffer, R., Agusti, F. and Earle, B. (2008). International Business Law and its Environment.
Shubert, S. (2008). “At Siemens, Bribery Was Just a Line Item”. Web. Retrieved on 3 Feb. 2015,
Verschoor, C. C. (2007). Siemens AG Is the Latest Fallen Ethics Idol. Strategic Finance, 89(5),
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