Ethics and Governance

Introduction

In the stakeholder/responsibility matrix (Carroll & Buchholtz 1999, p. 84), there are employees, owners, customers, communities, public at large, social activist groups and others in the stakeholder group. Carroll & Buchholtz (1999, p. 84) have stated the four types of responsibilities as Philanthropic, Economic, Ethical and Legal.

Carroll & Buchholtz (1999, p. 37-38) describe a socially responsible firm would need to make a profit [Economic], obey the law [Legal], be ethical [Ethical] and be a good corporate citizen [Philanthropic]. Based on the figure 2-2 (Carroll & Buchholtz 1999, p. 36), it shows that economic, legal are required, whereas the ethical and philanthropic are expected and desired respectively.

Different groups of stakeholders will expect different things in these four responsibilities. This report will be touching on employees, who are the primary stakeholders whose association is necessary and very important for a firm to survive in the economy as they are the ones who influence the firm’s business day-to-day (Ferrell, Fraedrich & Ferrell 2005, p. 26-27).

Economic Responsibilities

Economic responsibilities have the largest impact on the employees. If the business is not doing well due to poor decisions or economic downturns, employees will be deeply affected as they will be laid off by the firm. Not only will the employees lose their jobs, they will lose the retirement pensions which are usually heavily invested in the firm’s stocks. This might result in losing lots of money. During this period of time, most employees will be too stressed up facing the firm’s demand to cut down expenses, therefore affecting �product quality, customer service, employee rights and the natural environment’ resulting in lose of business (Ferrell, Fraedrich & Ferrell 2005, p. 50).

During recession, unemployment rate will increase and the economic growth will be stagnant. Like what Ferrell, Fraedrich & Ferrell (2005, p. 51) said, �Unemployment, low wages and continued recession can harm the welfare of the citizens.’ Therefore the firm’s sense of economic responsibilities is very important for employees as they raise issues like �equal job opportunities, workplace diversity, job safety, health and employee privacy’ (Ferrell, Fraedrich & Ferrell 2005, p. 51).

Legal Responsibilities

It is the firm’s responsibility towards the employees to comply those ground rules or laws laid by the government. This can be defined as �Legal responsibilities reflect a view of “codified ethics” in the sense that they embody basic notions of fairness as established by our lawmakers’ (Carroll & Buchholtz 1999, p. 33). In 1960s and 1970s, there were laws promoting equity in the workplace and one of the most important one were “Title VII of the Civil Rights”. Title VII of the Civil Rights prohibits any discrimination in employment based on race, sex, religion, color or national origin. At the same time, the Title VII of the Civil Rights created this Equal Employment Opportunities Commission (EEOC) to help enforce the Title VII. EEOC came out with programs to increase job opportunities for women and minorities that are under-represented. They also came up with specific hiring and promotional goals within the target dates (Ferrell, Fraedrich & Ferrell 2005, p. 57).

In 1963, there was this legislation - the Equal Pay Act to helps women to receive equal pay when they do the same amount of work as men. The wages can only be different based on seniority, performance or qualifications which in turn make the firm pay the salary that the employees deserved. There were another legislation that was important as well which is the Occupational Safety and Health Act which was passed in Congress in 1970. This law mandates the firm to create a safe and healthy environment for employees to work in as there are experts who suspects that the working conditions for them were not up to standard (Ferrell, Fraedrich & Ferrell 2005, p. 58). The Occupational Safety and Health Administration (OSHA) enforces the Occupational Safety and Health Act by springing surprise visits to do an inspection on the site to make sure it is safe for the employees (Ferrell, Fraedrich & Ferrell 2005, p. 58).

Another legislation that did justice to this group of people is people with disabilities. In 1990, Congress came out with this �Americans with Disabilities Act of 1990’ to prohibits firms who discriminate towards people with disabilities