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THE AMERICAN RED CROSS

The American Red Cross

Both the Hurricane Katrina and the September 11 terrorist attacks incidents had negative implications on ARC’s benefits of business ethics. There lacked commitment on the part of employees and volunteers to the policies and regulations institutionalized to govern the running of the organization. This was as a result of American Red Cross failing to incorporate any ethical guidelines for its employees and volunteers in its Ethics Rules and Policies. These rules and policies not only turned a blind eye to personnel ethics training, but also failed in demanding for compliance to the stipulated doctrines. In the absence of the above, it is apparent that employees will lack commitment to the organization’s activities. In terms of investor loyalty, the investors were impacted on negatively as they lost confidence in ARC and it commitment to service delivery in times of crisis. As a result, the investors will opt to finance other non-profit organizations that carry out similar activities but offer accountability and transparency. These events also resulted in poor customer satisfaction as a result of poor communication and coordination leading to inadequate and delayed responses. All in all, the benefits of business ethics of the ARC were impacted on negatively by the events of Hurricane Katrina and the 9/11 attacks. Stakeholder orientation was important because it facilitated for the mobilization of funds and other forms of donations which would go a long way in assisting the disaster stricken. Also, the stakeholder orientation enabled for the availability of the much needed man power in terms of personnel both employed and volunteer. The corporate governance of the ARC fell short of their provision of formalized responsibilities to the interested parties in a number of ways. First and foremost, they engaged in mismanagement and embezzlement of donor funds. Secondly, they failed to coordinate the various lifesaving activities during the September 11th and Hurricane Katrina calamities resulting in prolonged suffering of the victims. Thirdly, the procedures for recruiting volunteers were not adhered to during the Hurricane Katrina relief efforts leading to criminal elements gaining access to the donations which were made away with. In order the ARC to improve the perspective of their stakeholders, it could put in place a two way communication channel between it and the other interested parties. This will not only enable effective communication between the organization and stakeholders, but also ensure a holistic participation by all parties involved. Another step that ARC should take is incorporating clauses in its Ethics Rules and Policies that stipulate for ethical training of its personnel along with the strict compliance of such guidelines. This will go a long way in instilling confidence in the stakeholders of the organization’s commitment in ethical practices there hence improving their participation. Business ethics has simply been defined as “…the study and determination of what is right and good in business settings”. This study evaluates moral matters encompassed in all forms of business activities and relationships. There are several theories that have been used to explain business ethics some of which include; Ethical fundamentalism which states that the ethical decision making of individuals in an organization is guided by one central authority, Ethical relativism asserts that individuals make decisions to act based on what they feel is right or wrong and Utilitarianism which states that actions which will result in the greatest pleasure of the whole population are the ones that are moral and vis-à-vis. The responsibility of the human resource professional in guiding ethical decision making is to train the personnel on ethical matters, ensuring fair treatment among themselves and liaise with the compliance office to ensure ethical guidelines are followed. The role of the stakeholders’ interest in any organization is to shape the organizations’ objectives and goals in such a way that their interests are met. The inter-relationship between ethics and social responsibility is that whereby business ethics refers to the decisions or actions of an individual or a work group which the community evaluates as wrong or right, social responsibility is an extension of this idea and looks at the impacts of the whole enterprise’s activities on the society in question. Corporate governance ensures that there is compliance to the organization’s codes of ethics by all level employees throughout the organization. It does this by overseeing all the ethics and compliance programs in addition to determining what actions constitute violations and the disciplinary actions to be taken in the event of a violation. Some of the decisions made by the ARC’s personnel were unethical and resulted in the loss of credibility on the part of the organization’s dedication to meet its objectives. For example, the case of Catalina Escoto who made away with Red Cross funds totaling to over a million U.S dollars. This amount was used in gambling and gift shopping and she awarded 75,000$ to herself as bonus.


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