Understanding Corporate Ethical Scandals and Leadership for Ethical Organization

This report analyzes two recent business ethics scandals and explores the potential risks and measures to ensure transparency, accountability, and ethical conduct at the PA. It also discusses the type of leadership that would suit an ethical organization and provides recommendations for enhancing ethical work standards.

Running head: BUSINESS ETHICS
Business Ethics
Name of the Student
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Author Note

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Table of Contents
Introduction................................................................................................................................2
1. Understanding How Corporate Ethical Scandals in the UK can Impact the
Implementation of Ethical Standards for the PA.......................................................................3
2. Understanding the Type of Leadership that would Suit an Ethical Organization..............4
3. Change Initiatives needed to Establish Ethical Standards at the PA..................................5
4. Recommendations for Enhancing Ethical Work Standards at the PA................................5
Conclusion..................................................................................................................................6
References..................................................................................................................................8
Introduction
Ethics deals with a person’s moral judgment regarding right and wrong. The decisions
that are undertaken by business organizations can be made by groups or by individuals, but
the decisions taken are likely to be influenced by the work culture of the company as a whole.
Any decision to behave in an ethical is a moral decision and employees need to decide what
the right course of action to take for them would be, while doing their work, even if it implies
rejecting routes that could lead them to high levels of short term profit (Barry 2016). Ethical
behavior can be significantly beneficial for any business enterprise. Business ethics can boost
profits and sales, it can increase productivity among employees and it could reduce
recruitment costs considerably, by getting a company to attract only the most gifted of
employees and will also attract investors while keeping the share price of the company quite
high (Bowie 2017). This report analyses two recent business ethics scandals with special

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attention being paid to the potential risks that are likely to affect the new PA in terms of
accountability, transparency of operation and employee ethical conduct. The report also
develops an options assessment of how suitable ethical standards related to transparency,
employee conduct and accountability can be achieved by the PA and monitored in practice,
while critically evaluating and justifying the type of leadership model that would suit a
sustainable ethical organization, illustrating the leadership change initiatives that need to be
taken to demonstrate the element of ethics in the operations of the organization. The report
concludes with a number of important recommendations for the PA organization.
1. Understanding How Corporate Ethical Scandals in the UK can Impact the
Implementation of Ethical Standards for the PA
The Enron Scandal and the Volkswagen Emission Scandal are two well known corporate
scandals that have rocked the United Kingdom in recent times. Fake accounts and irregular
procedures made it difficult for CA’s to arrive at an understanding of how it was that the
Enron Company was making its company. It was seen that Enron was hiding billions of
dollars in terms of liabilities, with the value of shares at the company eventually falling from
as high as ninety dollars a share to under a dollar a share (Hail et al. 2018). When it comes to
Volkswagen, it was discovered that the company was cheating in the area of emission tests.
Defeat devices were being used by the company administration to give investors the
impression that nitrogen emission was being reduced by a considerable extent at the time of
laboratory testing. It was suggested in the final analysis that the Volkswagen emission
scandal affected as many as 11 million cars (Hail et al. 2018). Given how terrible such
scandals proved to be for the reputation and operations for both the Enron Company and the
Volkswagen Company, the procurement agency or PA can learn some valuable lessons from
such scandals and implement measures by which transparency, accountability and good

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ethical conduct on the part of employees can always be ensured. An ethical policy needs to be
put in place by the PA authorities that will lay down all ethical rules and regulations that the
employees of the PA and even the managers and directors are expected to abide by.
Employees are to be transparent about their operations or manner of working with their
immediate and senior managers and a regular report of employee activities and operations
including the work done by the top level management is to be sent to the directors of the
company for regular evaluation (Crane and Matten 2016). Employees are to be made
accountable for the work that they do for the PA by being penalized in the event of delay,
inefficiency or in the event that they are not being entirely truthful about the manner in which
they are doing their work. The PA should be in a position to take punitive action against the
employees in the event that company goals and objectives are not achieved in a timely
manner, making employees accountable for the work that they do. All employees are to be
made to sign the ethical code of conduct that is drawn up by the administration at the PA so
that they are legally liable for violating any of the rules and regulations that are contained in
this code of ethics (Ferrell and Fraedrich 2015).
2. Understanding the Type of Leadership that would Suit an Ethical Organization
When it comes to understanding the type of leadership that would suit an ethical
organization, it can be said that it is a transformational leadership style that would be well
suited for the organization for this purpose. The PA administration ought to be comprised of
transformational leaders who believe in communicating with their employees on a regular
basis in order to know how they feel like when working for the organization and if there are
issues that they would like to express or get resolved. The transformational leaders are the
type of leaders who are likely to be transparent and honest in their communication with both
employees as well as the directors or owners of the organization and will make sure that

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corruption does not sink into the company culture (Mcloskey 2017). The transformational
leaders will play an active role in ensuring that the goals, aspirations and objectives of the PA
are being met without any fraudulent activities taking place for this purpose.
Transformational leaders are capable of keeping a strict eye on the running of the PA by
regularly talking to employees and investors, taking regular updates regarding the progress of
operations and providing the directors or top level management with frequent reports on
everything that needs to be noted regarding the progress of business activities (Pearson 2017).
Such leaders are also likely to take strict action against employees who demonstrate signs of
dishonesty when they do their work in the form of either suspension or financial
compensation and will entrust only the honest and ethical employees of the organization with
important administrative duties and responsibilities (Pearson 2017).
3. Change Initiatives needed to Establish Ethical Standards at the PA
Some of the change initiatives that can be taken by the PA in order to establish ethical
standards at the PA are to revise the remuneration of employees working for the PA, making
sure that they are paid more than the industry standard for the jobs that they do so that they
do not feel inclined to be corrupt. A personal and diverse network of management
professionals need to be put in place for the supervision of activities that are being
undertaken at the PA. Such professionals are those who will be made answerable to the top
levels of the management only, and who will keep a firm eye on the various operations that
are being performed at the PA and detect any fishy activity that might take place in the
process of this (Trevino et al. 2016). A major change initiative that can take place and which
is only possible through the implementation of transformational leadership is for the members
of the management to engage in a one on one with those who are working with the PA. This
will enable them to get know the people working at the PA from close quarters, making it

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easier on the part of the management to detect unethical tendencies among the employees at
the organization (Barry 2016).
4. Recommendations for Enhancing Ethical Work Standards at the PA
 Regular sessions need to be held with the workforce at the PA where the importance
of being ethical and just at the workplace is stressed upon. It has to be pressed upon
the employees at the PA that ethics and morality is imperative and those who are
found to be ethical in their mode of operation at the organization will have strict
punitive action taken against them (Bowie 2017).
 Business targets should not be kept unusually high at the PA if ethical standards to be
established at the organization. If the employees are to work for the acquisition of too
much profit, it is more than likely that they will become corrupt in their mode of
working. The business targets should be kept reasonable, that is targets which are not
too difficult to achieve and which do not make the people working at the PA too
greedy at the same time. By keeping the targets simply and easy to achieve, the
practice of corruption in the PA is something that can be well avoided (Chell et al.
2016).
 Surveillance mechanisms need to be put in place at the PA in order to make sure that
all the people working at the organization are ethical and just in their work. CCTV
cameras need to be placed in all the different rooms and common areas of the PA
office that will allow the activities of employees as well as the activities of the top
level management to be monitored. The management should also be made to provide
the directors with regular financial statements regarding business progress and
statements concerning the use of funds and other resources of the organization for the
achievement of business goals (Werhane 2019).

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Conclusion
Thus, there are a number of measures that can be put in place in order to ensure that
ethical standards are well established at the PA and that it does not run into a corruption
scandal any day along the lines of the Volkswagen Emission test scandal or the Enron
Company Scandal. By monitoring the activities of employees and the management
regularly through surveillance mechanisms, asking for regular financial updates, proof of
transparency through the provision of financial statements and by implementing the
transformational leadership style, the PA can go a long way in ensuring good ethics at its
workplace.

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References
Barry, N., 2016. Business ethics. Springer.
Bowie, N.E., 2017. Business ethics: A Kantian perspective. Cambridge University Press.
Chell, E., Spence, L.J., Perrini, F. and Harris, J.D., 2016. Social entrepreneurship and
business ethics: Does social equal ethical?. Journal of business ethics, 133(4), pp.619-625.
Crane, A. and Matten, D., 2016. Business ethics: Managing corporate citizenship and
sustainability in the age of globalization. Oxford University Press.
Ferrell, O.C. and Fraedrich, J., 2015. Business ethics: Ethical decision making & cases.
Nelson Education.
Hail, L., Tahoun, A. and Wang, C., 2018. Corporate scandals and regulation. Journal of
Accounting Research, 56(2), pp.617-671.
McCloskey, D.N., 2017. Wealth, Commerce, and Philosophy: Foundational Thinkers and
Business Ethics. University of Chicago Press.
Pearson, R., 2017. Business ethics as communication ethics: Public relations practice and the
idea of dialogue. In Public relations theory (pp. 111-131). Routledge.
Trevino, L.K. and Nelson, K.A., 2016. Managing business ethics: Straight talk about how to
do it right. John Wiley & Sons.
Werhane, P.H., 2019. The normative/descriptive distinction in methodologies of business
ethics. In Systems Thinking and Moral Imagination (pp. 21-25). Springer, Cham.