different levels of ethical development according to psychologist Lawrence
Kohlberg are preconvention morality, conventional morality and post
conventional morality (Griseri and Seppala, 2010)... Preconvention morality is the crudest form of ethical
development and it is compared to the behaviour of a child. The child is
normally unconcerned with the surroundings and is very self-centred. Just like
that the officials of Barclays during the LIBOR scandal were very self-centred
and looked only into their personal motives. No consideration was given to the
fact as to how changing the interest rates would impact the economy or the
reputation of the company itself. It was a very premature step that the
authorities at Barclays followed which led to all the implications and problems
that they had to undergo at a later stage.
neglect of Social Responsibility.
definition, Corporate Social responsibility could be defined as a Corporate
Companies resourcefulness and obligation in maintaining the stakeholders’
environmental, commercial and civil welfare (Velasquez and Velazquez, 2002). Adhering to a
corporate social responsibility makes a company mindful of its activities which
may affect the community in general, especially the shareholders and the
surroundings. The neglect of Social responsibility and their own statements are
very clear from the misdemeanours of Barclays. By manipulating the interest
rates, Barclays convinced the customers and business concerns to buy their insurances
which were not really required. These grave offences show that the Organization
did not abide by any of the ethical standards or give heed to the interests of
their stakeholders (Epstein, 1993). The Companies leadership clearly violated
their Corporate Social Responsibility Report which seemed to be just a farce to
exaggerate the trustworthiness of the company amongst the stakeholders and
customers. Everything from the social auditing done by E&Y to the data,
reports and information produced by the authorities were manipulated to a large
degree. Instead of personal gains, if they had stayed true to their Social
Responsibility Report and a general code of ethics for Corporate, they could
have avoided the scandal and build on their reputation which would have proved
to be more fruitful in the long run.
Citizenship Report of Barclays had a feedback form which had a few queries for
the stakeholders. These queries were intended to redeem the Companies goodwill
and credibility. The feedback asked the stakeholders the ways to improve the company’s
reputation. It also enquired about the changes to be made in the policies to
improve it. The Company laid emphasis on the commitment to citizenship on the
questionnaire. It asked specifically for methods to improve the level of
commitment and responsibility with the citizens. They asked for suggestions
from the stakeholders themselves to involve in exhibiting development, growth
company could have avoided the scandal itself, if they had looked into all
these problems themselves and had an introspection of the problems they had in
their hand (Rauch et. al. 2013). An indispensable and basic change has to be
carried out to shift the company’s motives from personal growth and benefits
towards an essential binding towards the society. A self-realization would be
better that not only the company’s reputation and worth that is being
questioned, but also the credibility of its employees as well.
reforms in the company’s policies have to be made by the management and a
mechanism to ensure that whatever has been written or promised has to be
delivered. The commitment and integrity should be deeply ingrained within the company’s
policies and should be considered as important as its actions and motives
towards profit (Hou and Skeie, 2014).
Diamond, the former chief executive of Barclays was one of the prime accused of
the LIBOR scams. It is said to be that Diamond manipulated at least hundred
million pounds from the bank during the period. E&Y which were one of the
social auditors of Barclays Corporate Responsibility Report at that time did
not take any proper steps to counter the loopholes in the report. It was clear
that the report had major flaws and drew a wrong picture, giving the public and
the stakeholders of the economic standing of the bank and its corporate social
responsibilities. This again raises questions about the credibility of social
reporting and the extent to which it can be influenced (Miller, 1993). It was
later revealed by E & Y the majority of its auditing were influenced by the
reports and information provided by Barclays and that acceptance of their
auditing were to be done at the own risk of any person or agency.
impact of the LIBOR scandals could not be predicted exactly, but it was sure
that the scam would have a long lasting impact on the economy. The main
intention of the scam was to prove that Barclays was entitled to more credit
than they worth, by inflating or deflating their interest rates. If the higher
authority which had people like Bob Diamond had stuck on to the ethics of
business and asked him whether it was the right thing to do, the whole scam
could have been avoided. Ethics and social responsibility in business is
relevant, influential and paramount in any business (Goodpaster, 1993). The
only way that the scam could have been avoided was by sticking on to a code of
conduct and having a strong sense of right and wrong. This should be ingrained
more into the corporate culture and should be considered as essential as
profits. While profits would be vital in the growth of an organization
initially, ethics and principles would be enduring in the long run.
When an organization gives importance to the general public, environment
and has a social commitment at the same time, while conducting its business
operations is when we call it ethical or socially responsible. Marketing, which is mostly done to promote sales
and boost profits of the company, is mostly motivated by profit making for big
organizations (Green, 1989). When marketing is carried out not just for profits
but to be beneficial for all the stakeholders like the labourers, society,
customer and shareholder then it is called as ethical marketing. Ethical
Marketing mostly revolves around the concepts of frankness, responsibility and
trustworthiness. It is better to follow certain rules and regulations while
marketing to maintain the integrity of the organization.
Maintaining clarity and accuracy while
endorsing should be encouraged as this not only improves the goodwill of the
company, but ensures a bond of trust between the consumer and the company(Fouquau and Spieser 2015). Respecting the privacy of the customer is always important as business
relations now should not breach the security of the consumer. Apart from these
adhering strictly to the Government policies and procedures would improve a
company’s impression on the public and would secure its direction and purpose.
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