Introduction
Paradigm Toys is a public company specializing in the manufacturing and distribution of children’s toys. Its target audience is children, while their parents and caretakers are customers. The company’s economic activities have a direct impact on society. Not only do children with different living conditions receive toys, but these products are also made with a substantial presence of toxic materials, such as plastic. Many of the organizations’ employees are not aware of the consequences of their work. Conducting an ethics audit will ascertain how committed Paradigm Toys is to corporate social responsibility and what should be accentuated in the subsequent ethics training program.
Purpose of Corporate Social Responsibility in an Organization
The concept of corporate social responsibility (CSR) entails imagining an organization, which takes societal welfare into account. Whereas the usual understanding of business functioning presupposes adherence to law and conscious taxpayer behavior, the idea of CSR suggests broader responsibility of corporations (Trevino & Nelson, 2017). The fundamental aspect of this viewpoint is that advancing social goals is not covered by laws but is determined by corporate morality.
Following this line of reasoning, it should be evident that business entities ought to be aware of problematic issues in society and be willing to help resolve them. For instance, if an organization relies on natural resources to function, it should make an effort to preserve the environment. Otherwise, the pursuit of higher profit will negatively impact the well-being of people and the state of nature. Therefore, the purpose of CSR is cultivating a collective sense of responsibility for the welfare of society in a particular entity.
Primary and Secondary Stakeholders Influencing Paradigm Toys
Stakeholders are people who have a vested interest in the business success of a company. Primary stakeholders are the ones immediately involved in economic activities with a particular corporation. The main sphere of Paradigm Toys is the manufacturing of children’s toys. Subsequently, primary stakeholders include employees and customers. The former are essential because they are at the frontline of the organization’s activities. Customers, specifically parents, are vital since they are the target audience of the business. Primary stakeholder are important, but they are not the only group influencing the company.
Secondary stakeholders are people who do not participate in the business dealings of the organization yet are affected by it. In Paradigm Toys’ case, the secondary stakeholders include children, who receive toys, and environmentally aware communities. Children themselves do not buy any products, however, their desires are the primary drivers of the company’s manufacturing and marketing decisions. However, many toys require using toxic materials, which subsequently contribute to the degradation of the environment. As a result, environmentalist activists lobby for the reduction of plastic in the manufacturing process, thus, influencing Paradigm Toys.
Ways for Paradigm Toys to Meet CSR for the Primary and Secondary Stakeholders
In summary, Paradigm Toys is caught between four groups of stakeholders, which want their goals achieved. Employees seek higher wages, parents want higher quality, environmentalists argue for the exclusion of hazardous materials, and children desire more toys. The first way for Paradigm Toys to meet their CSR for these groups is structuring the employees’ wages on the basis of the quality of the finished product. The more positive reviews customers return, the higher the salary. The second way is advertising plastic-free toys, thus, shifting the interests of children and satisfying the activists’ demands.
Importance of Ethical Leadership
Adhering to social responsibility on a corporate level requires effective, ethical leadership. Çelik, Dedeoğlu, and İnanir (2015) define this term as “the demonstration of normatively appropriate conduct through personal actions and the promotion of such conduct to followers through two-way communication, reinforcement, and decision-making” (p. 54). Subsequently, there are two key components of ethical leadership, where the first one can be characterized as leading by example. The second one is conveying the ethical principles to subordinates, which, in practice, means fostering an ethical culture. Before turning to Paradigm Toys, it is necessary to ascertain why a company needs an ethical culture in the first place.
Importance of Developing an Ethical Culture in an Organization
Any fixed group of people is defined by the set of adopted beliefs and behaviors. Their entirety constitutes an organizational culture, which permeates every sphere of an entity’s activities. For an organization to be socially responsible, its culture has to be driven by ethical principles (Çelik et al., 2015). In practice, it means respecting the employees’ efforts, paying attention to public affairs, prioritizing customers, and other initiatives that show the corporation’s willingness to be socially responsible. Overall, achieving CSR is impossible without a strong ethical culture, which highlights the importance of its development.
Role of Paradigm Toys’ Leadership in Fostering an Ethical Culture
To begin with, there is both external and internal influence on Paradigm Toys’ organizational conduct. Internal pressure is manifested by the interests of the company’s employees. They want a better financial appreciation of their personal input. Paying an employee a wage for a period of time they have worked is a business regulation. Recognizing the workers’ efforts by appropriately financially compensating them is an ethical policy. Management can inspire their subordinates to behave more productively and consciously by issuing paycheques based on the accomplished work, thus, promoting an honest and hardworking attitude.
Purpose of an Ethics Audit
An ethics audit is required to ascertain the prevalence of ethical standards in an organization. It is difficult to evaluate the social consciousness of the employees and the leadership of a company from an outside perspective. Whereas a classic audit entails evaluation of financial statements, the ethics audit reviews how compliant an organization is with its mission, whether the corporate promises are kept, and other moral criteria (Ojasoo, 2016). The ultimate goal of conducting such an audit is to disclose ethical blind spots, which prevent the company from fulfilling its CSR.
In Paradigm Toys’ case, an ethics audit would make the company more transparent and increase the environmentalists’ support of their manufacturing methods. The key detail is the company’s readiness to show the outsiders how their products are being made and how the employees are treated. In general, the value of a successful ethnic audit manifests itself in the increased trustworthiness and credibility of the company.
Developing the Ethical Framework for Facing Dilemmas
Ambiguity which surrounds some decisions is a constant prerequisite of ethical controversies. All people face these dilemmas at some point in their lives. Organizations also handle difficult decisions with various alternatives, all of which seem to be morally right. Deciding which alternative is best for furthering the common good requires an ethical framework (Figar & Đorđević, 2016). It sets the guidelines for resolving dilemmas in a socially acceptable manner within an organization.
Ethical Dilemma in a Business Setting
Paradigm Toys faces two primary interest groups, managing which is critical in showcasing what sort of a culture the company possesses. The first group is the environmental activists, who argue for the removal of plastic from the manufacturing process. The second is organizations caring for children with disabilities. These entities are one of the primary customers of Paradigm Toys. They advocate the use of plastic because toys made of this material are cheap and abundant. Moreover, plastic toys help keep physically challenged children content because they like them. Therefore, Paradigm Toys is at the juncture of two alternatives, both of which are ethical.
Potential Solutions to the Identified Ethical Dilemma
The first way of approaching this conflict of interests is by applying the rule of hierarchy. Figar and Đorđević (2016) argue that it is important to consider priorities when managing ethical dilemmas. In the case of Paradigm Toys, the rule of hierarchy would imply comparing the two sides from the perspective of importance to society. In the short term, it is more ethical to help children with disabilities, while in the long term preserving the environment for future generations is more important. The subsequent solution is that Paradigm Toys should follow the long term perspective as it stands higher in the hierarchy of social ethics, which means leaving the children without plastic toys.
Another potential solution lies in adopting a broader mindset on this issue. Instead of surrendering to the mutually exclusive choice, Paradigm Toys could manufacture the same toys with plastic substitutes. Children are drawn to physical sensations; thus, they can also derive pleasure from wooden toys, which look similar to plastic. It is not a cost-effective solution, but it satisfies both environmentalists and organizations caring for children with disabilities.
Solution Recommendation
Both of the aforementioned approaches are ethical, yet the second one is more flexible. Therefore, using plastic substitutes is the recommended solution for two reasons. First, it is ethically beneficial both in the long term and in the short term. Second, it sets a precedent for managing mutually exclusive alternatives by looking broader and finding the third option. Ultimately, this solution helps build the overall ethical framework, which would guide the organization through difficult choices in the future.
Proposal for Implementing an Ethics Training Program at Paradigm Toys
Adopting an ethical framework requires commitment on all levels in an organization. All employees of Paradigm Toys have to follow a common set of ethical rules voluntarily. In order to achieve a sense of organizational morality, it is necessary to implement an ethics training program. Such a program would outlay the principles of conduct and behavior, which the employees will rely on to make decisions.
Key Topics in the Ethics Training Program
Paradigm Toys is a company that seeks to improve children’s mood by producing toys. This mission predetermines three key topics, which ought to be addressed in the ethics training program. The first is the principle of customers’ interest, which means prioritizing the quality of products. The second topic is the transmission of the company’s ideals to the new employees, which is expressed via new recruit orientation. The third topic is cultivating an environmentally friendly worldview, which manifests in the prohibition of toxic materials and proper disposal of waste.
All topics in the training program represent the purpose of the company. Assuring quality is vital to the reputation of the company. Achieving qualitative result demands honest and hardworking attitude from the workers. New employee orientation helps the newcomers adapt and fuse with the corporate culture. Advancing an environmentally favorable worldview will build a habit of appropriate disposal of waste among employees, which will also contribute to the company’s publicity.
Training Program Delivery Method
The primary method for cultivating the ethical attitude among the employees is personal exposure. Management can show their subordinates the direct consequences of ethical conduct on a regular basis (Steele et al., 2016). For instance, all employees will be required to observe the defective toys, which were returned by dissatisfied customers every month. New employees can also require to make periodic visits to the places where physically challenged children are cared for. Finally, obligatory excursions into areas devastated due to excessive plastic disposal can also be frequently arranged.
The reason for choosing exposure as a delivery method lies in the resulting sense of personal accountability (Steele et al., 2016). When people operate within an organization, they do not see the outcomes of their work. As a result, they have no other motivation other than to receive a wage. In contrast, once employees have first-hand experience of encountering disabled children or seeing defective toys and devastations caused by plastic, they start associating their actions with social consequences. Therefore, using personal exposure as a delivery method of an ethics training program is the most effective way of cultivating an atmosphere of social responsibility and ethical conduct in Paradigm Toys.
Conclusion
Altogether, it should be evident that Paradigm Toys faces distinct ethical dilemmas, managing which requires an ethical framework. The company is caught between numerous social groups with a vested interest, which include children, parents and caretakers, environmental activists, and its employees. Implementing an ethics training program with an emphasis on personal exposure to the consequences of inconsiderate business conduct will improve Paradigm Toys’ CSR and ethical standpoint.
References
Çelik, S., Dedeoğlu, B. B., & İnanir, A. (2015). Relationship between ethical leadership, organizational commitment and job satisfaction at hotel organizations. Ege Academic Review, 15(1), 53-63.
Figar, N., & Đorđević, B. (2016). Managing an ethical dilemma. Economic Themes, 54(3), 345-362.
Ojasoo, M. (2016). CSR reporting, stakeholder engagement and preventing hypocrisy through ethics audit. Journal of Global Entrepreneurship Research, 6(1), 1-14.
Steele, L. M., Mulhearn, T. J., Medeiros, K. E., Watts, L. L., Connelly, S., & Mumford, M. D. (2016). How do we know what works? A review and critique of current practices in ethics training evaluation. Accountability in Research, 23(6), 319-350.
Trevino, L. K, & Nelson, K. A. (2017). Managing business ethics: Straight talk about how to do it right (7th ed.). Hoboken, NJ: Wiley.