The 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.
Barclays neglect of Social Responsibility.
By 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.
The 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 and commitment.
The 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.
Major 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).
Bob 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.
The 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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