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Generally, all organizations have a code of ethics that spells out how they should carry out transactions within the business environment. However, some of these well-written documents are just but public relations efforts put by the management to present themselves positively to the public.
This can be attested by the many times leaders in those organizations act contrary to the ethical standards as spelled out in their code of ethics.
Although egocentrism may be the main reason for almost all unethical behaviors, power possessed by the leaders and expectations is the fuel that facilitates the unethical behavior. Such misuse of power contributes significantly to loss of trust on the leader by his followers.
Description of the Organization
Riverbank Credit is a microfinance institution found in the capital city of Kenya – Nairobi, a country in East Africa. It began as a self-help group in 2002 with only seven members.
At that time, it gave out loans to its members without tangible security but based on the borrower’s character and cash flow of the business that is to be funded. However, as members increased it was no longer effective to use such terms in giving out loans.
Therefore the institution was registered into a SACCO in 2009 and it has grown to have a membership of over 6000. The SACCO currently targets the low and middle-income families with a promise to empower them economically as spelled out in its vision and mission.
Ethical challenge of the organization
The management is mainly faced by dishonesty whereby it has in many occasions failed to keep the promises it gave to either its workers or clients.
- Dishonesty to clients
When the SACCO is marketing its loan products, it makes its clients to believe that no tangible security is attached to the loan they secure. However when the client defaults, even for a short period, the company will be quick to seize some of the client’s property.
- Dishonesty to employees
The employees have been short-changed in many occasions in their remuneration whereby some deductions are done based on unfounded claims of penalties. Therefore, employees end up with less pay than was initially agreed. Secondly, the management uses deceptive information to attract employees to the organization. For instance, advertising some posts yet when the employees apply they are posted to very different posts with a promise to give them their preferred post after some time, a promise that will never be fulfilled.
- Effects of the management’s unethical behavior
Strategy recommendations of overcoming the challenge
- Train their marketers to be able to present the benefits of their loan products so that the issue of security will not discourage clients. This will help them to explain truly the penalties that face the client incase he/she defaults.
- Carry out a market research to find out the priority needs of the loan customers, therefore they will be able to serve those priority needs profitably.
- Cary out an internal research to determine the priority needs of the organization in terms of human resources. As a result, the organization will be able to advertise specific vacancies for the most needed personnel hence reducing remuneration expenses. This is because the company will have the minimum number of employees it needs and be able to pay them adequately.
- The company can develop a human resources plan through which it will attract college graduates and develop them to fit into the organization’s strategy. Such employees demand a relatively low starting salary and can grow in to the company’s system as they have not worked anywhere else.