American Red Cross Ethical Dilemmas

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The American Red Cross Ethics and Advocacy for Human Resource Professionals- HRM 522 April 22, 2012 Determine the impact of this event on ARC’s “benefits of business ethics” (employee commitment, investor loyalty, customer satisfaction, and bottom line). Business ethics is essential to the success of an organization. In fact, according to Ferrell, Ferrell, & Fraedrich (2010), more and more companies are becoming cognizant about business ethics by trying to improve their decision making process so that their financial portfolios will not be affected. Stakeholders play a sufficient role in ensuring that organizations like the American Red Cross (ARC) are ethical because they know that the judgment a company makes can affect how…show more content…
It was during this time that the American Red Cross could have showed the country that they were an ethical company. However, many began to question their ethical practices because of how they responded to the crisis. As a result of this, their “benefits of business ethics” was destroyed. ARC failed to properly manage and monitor employees and volunteers which lead to the occurrence of fraudulent activities. There was also a lack of communication amongst FEMA and ARC, which contributed to slow response times in both instances (347). ARC has a policy in place on screening volunteers; however, they failed to follow their own procedures during Hurricane Katrina, which ultimately resulted in mismanagement of donated funds to the organization. This caused investors to question if they should remain loyal to such an unethical organization. Customer satisfaction was low and citizens started to wonder whether or not they should continue to donate to cause. The organization relies heavily on donations from both the public and private sectors, therefore the actions of the organization that occurred after these disasters could result in a decline in their bottom line. As a result of the unethical behaviors that were revealed during this time, the reputation of the American Red Cross was…show more content…
al, 2012 pg. 41). ARC’s corporate governance failed their stakeholders in all three areas. Accountability is when the decisions of the organization are aligned with its strategic goals. During both of these disasters, there was no accountability on ARC’s behalf. Specifically with Hurricane Katrina, the bylaws were ignored when individuals were permitted to volunteer without having a background check completed, thus putting them at risk. Oversight refers to the “check and balances” that are in place to make certain that unethical activities are not occurring. Clearly, there were no “checks and balances” in place. If there were, policies and procedures would have been followed and deceitful acts would not have occurred. According to Ferrell et al. (2010), when checks and balances are not in place, it makes the organization vulnerable and affords top management the opportunity of putting their interest before those of the stakeholders (42). Control refers to the auditing process in order to improve organizational decisions and actions (42). It appears that during these natural disasters, ARC had less control than with past situations due to an overwhelming response of people willing to help and

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