Sunday, October 23, 2011

The Importance Of Business Ethics In Ireland

The Importance of Business Ethics in Ireland

Sonia Lorena Richards

Cross cultural Human Relations and Negotiations

April 27, 2010

Globalization has created opportunities for countries like Ireland to flourish. “Ireland is now classed as a high income economy by the World Bank on the basis of gross national income (Chhokar 365).” The importance of business ethics is fairly new in Ireland. Explanations for this might be sought in the country’s colonial history and late economic development, its size, the homogeneity of Irish society, and religion (Keating 9). These things need to be considered while doing business in Ireland. There are many opportunities for other countries to do business with Ireland because it is dependent on trade (Chhokar 365). The United States and Ireland’s business ethics are very similar, but do have some differences. The culture of each country determines how business ethics are understood. Due to past corporate and political scandals in the 1990s, Irish corporations emphasize the importance of ethical standards in the place of business (Keating 9). Irish ethical standards start with leadership and its components, as well as the attitudes towards ethics in business.

It wasn’t until the 1990s that people realized the importance of business ethics because it caused them a great of social and economic costs.

“The spate of unethical practices which unfolded in Irish businesses in the summer of 1991 aroused widespread public criticism and anger with senior government and business people. I firmly believe that the revelations and investigations into these events will have restraining effects (Regional Manager, Utility) (Alderson 434).”

While the rest of the world for some years has been addressing issues such as business ethics, Ireland for the most part was focused on its own economic and political problems (Wiley 135). Since the events occurred in the 1990s, Irish attitudes towards business ethics had to change to decrease the social and economic costs. It got to a point that it was affecting the whole country. There have been studies conducted on the new Irish attitudes toward ethics in business which needs to be known by managers of other countries who want to do business with Irish companies.

According to Siobhan Alderson there are four keys that changed: attitudes towards implementing ethics in business, influences of top management, attitudes towards ethical issues in business, and the perceptions of responsibility towards key stakeholders in business. Some of the implementations that Alderson discovered were that Irish managers believe that business schools need to include more ethics training to make sure what occurred in the 1990s does not occur again (APPENDIX A). A management consultant was interviewed by Alderson on the matter and believes strongly on education in the schools systems. “Although business ethics is given its best start in the home, some enhancement could be effected through training at school, college, and business school. (Management Consultant) (Alderson 435).” Most managers believe this as well. I interviewed Ann Hinds who works at the law firm Matheson Ormsby Prentice in Dublin, Ireland. Since the 1990s, business ethics have been incorporated in the school systems. She explained to me at her firm it is an absolute essential to have learned or taken a business ethics course before working in the firm. She not only explained about the importance of her firm, but for all businesses in Ireland. “Corporations are more focused on business ethics due to the financial crisis we are going through right now (Ann Hinds).” With this said, It will be important for foreign managers who want to work in Ireland to be educated in their code of ethics before arriving to work because of how they believe their top management’s behaviors influence their peers. It will give them a better advantage over the competition. The Irish believe that the behavior of management or leaders influence ethical and unethical behaviors within an organization (Alderson435) (Appendix B). There has been a comparative study done on the effects of ethical leadership in Ireland and the United states. Even though they are very similar and from the same cluster, they differ in some aspects (Keating 10). Keating explains that “ethical leadership focuses on how leaders use their social power in the decision they make, actions they engage in and ways they influence others (Keating 7).” According to Keating, there are 6 attributes of ethical leadership: character/integrity, ethical awareness, community/people orientation, motivational, encouraging/empowering and ethical accountability. It is important for managers to know that leadership varies from country to country because of different cultural norms and values. History can also tie in differences of leadership. The only difference between the United States and Ireland was the character/integrity attribute.

“In Ireland, leadership is characterized by a strong charismatic, team-oriented approach coupled with a participative and human orientation. In Irish society, character and integrity are rooted more strongly in relationships within one’s social network than in a set of obligations to outsiders (Keating 17).”

The United States is the opposite where it is more individualistic and focuses on individuals then the society. They are required to just know the code of ethics and circulate it to all the employees and stressed upon induction (Alderson 435). Alderson’s study pointed out that Irish managers believe that top management’s behaviors influence the peer’s ethical and unethical behavior. It has to come from the leaders to make a difference with the followers.

“While legislation provides a framework, it is largely up to senior management to effect ethics, based on reasoned judgment and situational feedback. A senior manager, (ideally the CEO), should be custodian of ethical standards for the company. (Senior Manager, Financial Institution)(Alderson 435).”

The Government in Ireland did have to make changes because of the scandals, but if it wasn’t for the businesses that were not corrupt during the 1990s, the country would still be considered behind in the study and practice of good business ethics. They had to take the good with the bad. Some companies saw this from the start and took action. Wiley pointed out some examples of some companies during that time that did something to change the ethical standards in Ireland were Bord na Mona (the TurflPeat Board) which operated an audit committee which reports any conflicts directly to the Chairman and by-passes the board.

“Radio Telefis Eireann (RTE) and the Electricity Supply Board (ESB) had sections in their establishing statutes requiring directors to disclose any conflicts. Telecom Eireann, the semi-state company responsible for the telephone system, is considered to be exceptional among semi-state companies in having a written code of conduct dating from 1987. Activities which constitute an actual or potential conflict of interest, and activities which hinder or may hinder an employee’s ability to discharge his/her obligations to the company may be precluded by the code. An employee who breaches the requirements could be faced with dismissal (Wiley 137).”

Going through those scandals actually helped Ireland in the long run. They became aware of business ethics. The government and businesses in Ireland responded in time before the social and economic costs were devastating.

The Irish strongly believe in motivation and encouragement. Due to the economic and social growth that followed after the scandals of the 1990s and with the rising competition from globalization, performance management type systems introduced by the United States have contributed to the growth of a performance ethic (Keating 21). Ireland is characterized by team orientation. They work together because they want to use everyone’s skills to their full potential to achieve their goal. They are effective because of how they trust each other and how honest the group members are (Keating 17). Although Keating describes that relying on honesty characterizes the Irish society to have strong relationships within one’s social network instead of outsiders. With this said, it will be hard to earn a way into one’s network in Ireland. It is important to build a relationship first so the deal can go smoothly. Many countries vary when dealing with relationships with business partners. When people do business in other countries, they need to know this type of information in order to succeed. In Ireland, teams succeed because everyone is looked upon equally. According to GLOBE data, power distance is revealed to be high (Chhokar 370). “Power distance is the degree to which members of a society expect power to be distributed equally (Keating 11).” The Irish can be considered an informal society because they treat everyone equal and do not have title, but they do know their place. (Chhokar 370). With all the honest, trust, and encouragement comes a high humane orientation. “Humane orientation refers to how much a society rewards its members for being fair, altruistic and caring to others (Keating 20).” They believe in rewards to motivate their employees. Everything ties in together and that is why their power distance works in their culture. Even though they view everyone equally, that is completely not the case when it comes to gender.

A study on masculinity done by Hofstede in the workforce in 1980 revealed that woman just did not work in the labor force and it didn’t change for years. Although education did try to reinforce gender equality, but it wasn’t until 1991-2000 that women in the labor force increased from 35.9% to 47% and keeps on rising (Chhokar 371).

It is important for foreign managers to know that Ireland looks at gender slightly different, but it is changing slowly. Even though there is evidence of a breakthrough in females in the workforce, few will reach the top floor (Chhokar 378). During my interview with Ann Hinds I asked how women are viewed in the workforce. Ann Hinds pointed out that women are not excluded from top managerial positions, but there is still less than 50 % in those positions. Although, she said there are a few companies like her firm that have a 50/50 male to female ratio in top managerial positions. Matheson Ormsby Prentice is one of the # 1 practices in Dublin. With all this said by Ann Hinds, if foreign companies what to send women into top managerial positions in Ireland, they would have to find a company that has a good amount of women in the board room. Research is vital when doing business in other countries because each country is different in many aspects. Companies sending people to work in other countries need to know this information. Women are not looked down upon in Ireland, but it is unusual to see a female in top management.

There are many opportunities in Ireland. It is important to know their code of ethics and how they view ethical behavior when doing business within the country. It is vital to do Business ethics training before working in Ireland. They strongly believe in business ethics since the scandals in the 1990s cost them a great deal of money and issues. Once they concentrated on the study of business ethics and changed their ways of running companies, the issues declined greatly. In Ireland, employees rely on top management to set the bar for the code of ethics within a company. Since their attitude toward business ethics changed, Ireland has thrived and became a high income economy (Chhokar 365). Their business ethics is very similar to the United States which has thrived in the past for many years.

Appendix

Appendix A

Table 2 Cross-cultural Differences in Attitudes to the Implementation of Ethics in Business
Mean scores *
Attitude UK Irish US Sig T
Every company should have a code of ethics 5.0787 5.5758 5.7266 0.0001
Every industry should have a code of ethics 4.3244 5.0990 5.2400 0.0000
Business schools should include more ethics training for their students 4.9828 5.6500 6.3549 0.0011
Business school education has raised manager’s ethical standards 3.3078 3.6200 3.8007 0.0409
Outside intervention or consultancy would help managers in dealing with
Ethical issues 4.2792 4.2673 4.7216 0.0124
Ethical beliefs and standpoints should be a consideration in the selection
of managers 5.4751 5.9192 5.6724 0.0169
A major influence on business persons to behave ethically is increasing
public concern about ethical standards in business 4.5723 5.0808 5.1111 0.0010
λ 1 = strongly disagree
7 = strongly agree
434 EUROPEAN MANAGEMENT JOURNAL Vol 12 No 4 December 1994 (ALDERSON 434)

Appendix B

Table 3 Percentage of largish Managers Identifying
People-related Influences on Ethical and Unethical
Behavior in Organizations as Important
-
Attitude %
A culture of ethical behavior must come from
Top management in an organization 96
An implant contribution to ethical behavior
among business persons is ethical behavior
among top management 95
An important contribution to ethical behavior
among business persons is ethical behavior
among their peers 91
An important contribution to unethical behavior
among business persons is unethical behavior
among top management 88
An important contribution to unethical behavior
among business persons is unethical behavior
among their peers 84

435 EUROPEAN MANAGEMENT JOURNAL Vol 12 No 4 December 1994 (ALDERSON 435)

Work Cited

ALDERSON, S, & KAKABADSE, A. (1994). Business ethics and Irish management: a cross-cultural study. European Management Journal vol 12; 4 pg 432-441, 1994. Retrieved from

http://www.sciencedirect.com/science?_ob=MImg&_imagekey=B6V9T-45MGSG7-B-1&_cdi=5907&_user=2139755&_pii=0263237394900299&_orig=search&_coverDate=12%2F31%2F1994&_sk=999879995&view=c&wchp=dGLzVzb-zSkzk&_valck=1&md5=17d452acba62bbe690ede80acbfc9a5e&ie=/sdarticle.pdf

Ann Hinds
Matheson Ormsby Prentice
70 Sir John Rogerson's Quay
Dublin 2
Ireland
T: +353 1 232 2000
F: +353 1 232 3333
E: ann.hinds@mop.ie

Chhokar, J. S., Brodbeck, F. C., & House, R. J. (2007). Culture and leadership across the world The GLOBE

Book of in-depth studies of 25 societies. Lea's organization and management series. Mahwah, N.J.: Lawrence Erlbaum Associates. http://www.netlibrary.com/urlapi.asp?action=summary&v=1&bookid=212077.

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European Review 1.2 (1992): 134-138. Web. 11 Apr 2010. < http://www3.interscience.wiley.com/journal/119335003/abstract

Keating, M., Martin, G., Resick, C., & Dickson, M. (2007). A Comparative Study of the Endorsement of

Endorsement of Ethical Leadership in Ireland and the United States. Irish Journal of Management, 28(1), 5-30. Retrieved April 6, 2010, from ABI/INFORM Global. (Document ID: 1429543051). http://proquest.umi.com/pqdweb?index=0&did=1429543051&SrchMode=1&sid=1&Fmt=6&VInst=PROD&VType=PQD&RQT=309&VName=PQD&TS=1272311814&clientId=3326

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