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Companies Approaches to Business Ethics Management
Occidental Petroleum Corporation is a global company that operates in the gas and oil industry. Moreover, it has been operational since 1920 after its foundation in the United States. The company has branches in the United States, South America, and the Middle East. In the Middle East, it has been executing extensive operations in the Sultanate of Oman for more than three decades. Occidental has over 33, 000 employees globally and values corporate social responsibility as well as the conservation of the environment. In the oil and gas segment of the given business, it uses the latest technology to boost oil production in mature fields, which maximizes the potential of natural resources. Apart from the oil and gas segment, Occidental operates midstream and marketing segment, in which it accumulates, processes and transports hydrocarbons and other related commodities. Since the organization undertakes activities in various geographic regions, it has a diverse workforce that provides it with both competitive advantage and challenges. The competitive advantage arises from the employees diverse knowledge and cultural competences. Moreover, they lie in the management of the different cultures, whose approaches to life and problem solving are different. The companys large size can lead to unethical business conduct, especially in the countries with weak legislation relating to corporate governance. Therefore, the management of diversity and establishment of policies that safeguard the organization from the consequences of unethical conduct are essential. The objectives of this assignment are to explore business ethics management approaches and diversity management programs at Occidental Petroleum Corporation.
Ethical considerations in management have become an essential issue considering the numerous scandals that have led to the fall of organizations in the world due to managers unethical behaviors. Consequently, corporations attempt to promote ethical behavior using different approaches to avoid negative outcomes. According to Said, Crowther, and Amran (2014, p. 43), the firms approach ethics management by focusing on culture and instituting ethical codes of conduct. Bo?a-Avram (2013, p. 14) asserts that ethics affect both individual and organizational behavior. Consequently, management of ethics must focus on influencing the attitude of individuals within an organizational context. Culture determines the values that guide behavior in every corporation, whereas the company executives exert significant influence on it. Consequently, top managers set the ethical tone, to which other employees in the company adopt. Therefore, leadership plays a vital role in shaping both culture and ethical management practices. According to Akbari (2017, p. 950), many corporations exemplify ethical leadership at the corporate level to ensure that employees understand the values they need to have to function ethically. Therefore, having ethical leadership as part of an organizational culture is a way of promoting ethics in a firm because it sets the standards that all should follow.
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Having ethical codes is another approach that helps the companies to manage ethical issues. Garegnani, Merlotti, and Russo (2015, p. 609) argue that written codes of ethics communicate the specific behaviors and actions required in different scenarios. When employees understand these rules, they internalize them and use them to solve ethical dilemmas in their daily activities. Additionally, the managers refer to these codes to resolve ethical problems that may arise. Apart from providing guidance on ethical behavior, the codes act as the basis for training new employees on the ethical behaviors, to which they should adopt. Therefore, culture, ethical leadership and the establishment of ethical codes of conduct are some of the strategies that firms use to manage ethics in business.
Occidental Petroleum Corporation uses its leadership and organizational culture to manage ethics. Integrity, innovation, and investment are the core values that guide the conduct of employees in the company. Since integrity is critical to ethical behavior, following it as a guiding principle illustrates the companys commitment to ethics management. The establishment of ethical code of ethics has become essential in the era of globalization, which has created opportunities for unethical business practices. Moreover, the organization employs ethical codes at the highest level. The companys board of directors sets the ethical standards that all the employees should follow. In addition, they have adopted a code of business conduct and assigned it to the audit committee to ensure its implementation as well as creation of relevant policies and practices. The board has created the position of chief compliance officer to enforce the code in addition to mandating the audit committee to ensure its implementation. Occidental has several officers whose duty is to ensure that ethical behaviors are part of the organizational culture. For example, the director of corporate compliance ensures that all the departments adhere to both ethical codes and other regulations, which govern the operations of the company. Furthermore, Occidental has segment compliance officers who ensure that business units and regions are compliant with the code of business ethics (Oxy 2017). Occidentals code of business ethics focuses on human rights, bribery, and corruption. In addition to creating positions for people to ensure compliance, Occidental mandates all new employees to learn and acknowledge their understanding of the ethical code. Consequently, the company has established various training programs to ensure that the ethical code is part of the organizational culture on a permanent basis. The training encompasses information explaining how the code allows employees to safely report suspected unethical behaviors. For example, the code of business ethics allows employees to send anonymous reports through the web or phone. An independent third-party vendor handles the web and phone reports to eliminate complacency and cover-ups.
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Occidentals internal audit committee evaluates and assesses compliance with the code. The audit committee uses computer data analysis to assess internal controls at every department and to determine whether each of them has met the compliance requirements. The audit committee further evaluates the fraud prevention approaches that each department has established to ensure adherence to the code of business ethics. The assessment also investigates whether employees are aware of non-compliance at the end of every year. Consequently, each worker must certify his awareness or its lack respectively. Such a certification was evident when more than 12000 employees submitted a compliance statement. Therefore, the assessment involves both the audit committee and the employee engagement at the end of every year.
The leadership of the company and the culture support stakeholder relations. The company conducts cultural and environmental impact analyses of its operations at the beginning of every new venture. During the assessment, the leadership of the company requires from the managers to identify the stakeholders affected, their interests, and the best ways to engage and support them. The companys leadership also establishes a stakeholder relations plan that provides guidance showing how to involve every stakeholder for mutual benefits. The leadership of the organization also invites employees as internal stakeholders to contribute their ideas. Their opinions shape the companys strategies and improve employee engagement. Moreover, the firm searches investments that maximize value for the shareholders according to the requirements of its core values. Therefore, leadership establishes the mechanisms to engage the stakeholders while the organizational culture preserves and perpetuates the mechanisms.
Companies Approaches to Diversity Management Programs
Diversity management has become critical to the competitive advantage of many corporations. Globalization has created opportunities for the companies to venture into countries with different cultures. The understanding of such cultures is essential to the success of any firm because it will empower managers to learn the effective approaches that can appeal to the target customers. The movement of people prompted by globalization is both an opportunity and a challenge to the companies. Firms can benefit from a diverse workforce because people from various cultural backgrounds have different problem-solving skills and approaches. Consequently, having a diverse workforce ensures that a corporation has a rich pool of employees that can improve its understanding of clients and communities, in which it operates. Mateescu (2015, p. 84) argues that the workers come from communities that support operations of the firms as customers. Consequently, understanding their behaviors is crucial to creating marketing messages that appeal to them effectively. Therefore, having a diverse workforce can help a company understand its customers because the workers are part of societies that form the client base. Diversity programs are effective tools that help management to plan inclusivity and ensure that diversity supports organizational strategic objectives. Different organizations use various approaches to diversity management. However, the various diversity management programs bear similarities both in their design and in the process of their formation.
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Having a diversity program in a workplace that had none is a form of change that may elicit resistance from the employees. Consequently, gaining the support of the executives and workers is vital. According to Kim, Lee and Kim (2015, p. 265), most corporations create diversity management programs by first establishing a business case, which demonstrates why diversity is essential. The corporate managers are ideal for pitching to other employees about the need to have a diversity program. The first step in the creation of most diversity programs is convincing managers at all levels to accept and support it. Their support is essential because the managers become ambassadors of diversity programs. Establishing a diversity committee with employees from diverse backgrounds and groups is another crucial step that the companies use to ensure that their employees accept these programs. The members of the committee are the champions with informal influence on their peers and can convince them to support the diversity programs. Once these programs become operational, many firms employ them as a part of organizational cultures by including them in hiring practices that balances the demographics of already existing ones. The diversity committee continues communicating progress to the organization and the benefits realized through diversity to validate the program. The final aspect of many diversity programs entails rewards and recognition for those employees who show the best efforts in promoting diversity. These rewards reinforce the adoption of practices that promote diversity and motivate workers to increase their effort to earn recognition in the future.
Critical Examination of Issues
Occidental promotes diversity because it understands the benefits of a varied workforce. The company ensures that the work environment does not discriminate or promote the violation of human rights. The composition of the employees at Occidental is a testimony to its efforts to promote diversity. The company employed 18% of women globally in 2015. Minorities represented 28% of the companys global workforce in 2015 (Oxy 2017). The diverse workforce at Occidental has numerous benefits to the organization. For example, it helps the company to gain effectiveness when working in the environments with multiple cultures.
Globalization has enabled Occidental to work in the countries, such as Oman. The cultures of people in Oman and the United States are extremely diverse, and misunderstandings are inevitable. According to Sarkar (2015, p. 35), cultural misunderstandings can lead to the collapse of organizations operating in the international markets. The companies from western cultures have a tendency to ignore the impact of cultural differences when entering the Asian and Middle Eastern countries. The people in the Middle East and Asia may have preconceived beliefs that the entry of international companies from western countries in their nations may represent an opportunity for the propagation of cultural imperialism. Therefore, it is critical to recognize the role of diversity in such multinational contexts.
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Occidental faces numerous challenges when managing diversity in the Sultanate of Oman. To understand the challenges that the company faces, it is imperative to comprehend the cultural differences between Oman and the United States. The Hofstedes cultural framework assigns scores in several cultural dimensions of each country. Regarding the power distance dimension, the score for the United States is 40, while that of Oman is 60 (Nguyen, Favia & Mujtaba 2015, p. 37). The power distance dimension determines the extent, to which the members of the culture accept disparity in power distribution between the leaders and followers. A high score indicates that the culture is tolerant to power disparity while a low score shows low tolerance to power disparity. In compliance with the comparison between the two cultures, the Sultanate of Oman has a culture that accepts leaders to have disproportionate power compared to followers. However, the American culture from where the Occidental corporation originates has a low score and shows that the culture does not tolerate such a disparity. According to Oxy (2017), about 70% of the companys top managers in Oman are natives. Such managers may wish to accumulate more power than the American subordinates. Since the Americans cannot tolerate the power disparity, they may reject the Omani managers approaches to the management, which may precipitate a crisis that may negatively affect Occidentals operations. In such a situation, Occidental in Oman may find it tedious to manage the diversity because it will require reconciling the two conflicting parties. The masculinity dimension determines the values that a culture promotes. A high score on masculinity shows that a culture accepts competition, success, and achievement. However, the low score demonstrates that a culture values care for others and quality of life. According to the masculinity dimension, America has a score of 62 while that of Oman is 12. The American employees at Occidental in Oman are aggressive and seek individual achievement and success, which makes them special. The Omani employees consider that caring for others is ideal, which contradicts with the American culture. Failure to manage the cultural differences may create conflicts that interfere with the operations of the company. Consequently, the managers of the company have a daunting task of dealing with the cultural diversity to maximize its benefits and minimize its demerits.
Corporations manage business ethics differently. However, most of them have similar strategies that aim to shape individual behaviors in the organizational settings. Firms establish ethical leadership to help deal with business ethics because ethical leaders act as role models for other employees. Moreover, the companies create codes of ethical behaviors that each employee must accept. At Occidental, both the organizational culture and leadership help the company manage business ethics. The board of directors plays the leadership role by facilitating the creation of codes of conduct and the establishment of relevant offices to facilitate their implementation. Consequently, the leaders set the standards of ethical behavior. The companys internal audit committee assesses Occidentals ethical performance using computerized data and evaluation of internal control systems. The company leaders establish and maintain stakeholder relations through various actions, such as impact analysis, stakeholder identification, creation of stakeholder relations plan, and investing to promote the welfare of the shareholders. Corporations deal with diversity management by ensuring the creation of diversity programs and their subsequent implementation. The firms use several processes, such as program justification, solicitation of management support, creation of diversity committees, constant communication, rewards, and recognition to promote diversity programs success. Lack of cultural compatibility and the emergence of conflicts from the incompatibility are the issues and challenges that organizations face when managing diversity. The solutions to the conflicts include training expatriates on cultural competences and ensuring that the locals comprise the main bulk of the workforce.