Ford Motor Company

Ford Motor Company

In 1903 when Henry Ford along with eleven other associates established the Ford Motor Company and began producing and selling Model Ts in 1908 (Company Profile 7). From its humble beginnings Ford Motor Company has grown to become one of the largest automotive manufactures in the world and distributes automobiles across six continents. It has manufacturing facilities worldwide and includes the Ford, Lincoln, Mercury and Volvo brands (Company profile 6).

"With respect to its stakeholders, Ford Motor Company acts in an ethical and socially responsible manner. Company stakeholders include stockholders, consumers, communities and employees."

According to "Business and Society Stakeholders Ethics and Public Policy" business ethics is defined as "the application of general ethical ideas to business behavior (Lawrence)." It is not different from ethics in any other circumstance or situation but the same view of ethical behavior that can be applied to any other aspect of life, knowing what is right from wrong and choosing to do what is right. Ethics in business are the written and sometimes unwritten principles and values used in managing a business in its decision making practices as well as it day to day operations and dealings.

Throughout history societies changing expectations has challenged the economic interest of business. Business ethics have been influenced by the prevailing ideologies of the time from religious based practice to a legalistic basis to an international emphasis.

According to Stephen Knouse, Professor of Management, at the University Of Louisiana BI Moody III College Of Business Administration in the 1800s as companies began to expand from family run businesses to large business conglomerates they transitioned from business ethics practices that were based on the family religion and the role modeling behavior of the patriarch to more formalized codes (Krouse 95). The initial codes still held some of the same paternal values as employers established codes for appropriate dress, church attendance, and other morally related issues that not necessarily related to ethics of the business but more associated to personal practices.

In the early days of Ford Motor Company Henry Ford used a religious paternalistic approach with his employees. To increase employee's ability to buy Ford cars and to attract more workers to meet growing demand Henry Ford doubled the daily wage to $5 a day. However for employees to be eligible for the increased wage they had to be cleared by Ford's Department of Sociology. Employees were investigated to ensure that they complied with Ford's code of conduct that were based on his personal beliefs of regular church attendance, no alcohol, no late hours and no frivolous spending (Knouse 95). The prevailing ethical guideline of the time was the golden rule; "do unto others as you would have them do unto you" (Knouse 95).

As businesses grew so did unethical behavior in businesses. Businesses began putting profit over responsibility and ethical values. To correct the unethical practices of business governments, spurred on impart by groups and individuals, got involved by creating legislation and establishing oversight to ensure that businesses work within an ethical framework.

The emergence of new ethical practices of business has arisen from businesses growing understanding that they have a moral and ethical obligation to all of their stakeholders and that there is a positive correlation between ethical business practices and profit. Businesses such as Cummins Inc, who has consistently received recognition for its business ethics by being ranked in the top 100 and on several occasion top 10 by various magazines and organizations such as Business Ethics magazine (Cummins), have established a top down approach to business ethics. Cummins 2007 Sustainment Report specifically states in its' mission "to create wealth for all of our stakeholders (Cummins Inc. 6)." It goes on further to state "the company actively engages all stakeholders, seeking feedback and doing its best to keep them informed of Cummins' actions and performance. The Company's policies reflect a commitment to financial excellence, environmental stewardship, workplace equity, corporate responsibility and fair competition (Cummins Inc. 12)."

Authors Anubha Dadhich a HRM researcher for Indian Institute of Technology (IIT) in New Delhi, India and Professor Kanika T. Bhal for the IIT in New Delhi established that ethical behavior of the leader has far-reaching effects not only on normative/moral outcomes but also on pragmatic on-the job behaviors of the subordinates (Dadhich). Cummins has embraced the concept by creating a Code of Business Conduct and made it easier to find, read, and understand. In order to influence ethical behavior at Cummins the code of Business Conduct was built around "Statement of Ten Ethical Principles:"

* We will follow the law everywhere.

* We will embrace diverse perspectives and backgrounds, and treat all people with dignity and respect.

* We will compete fairly and honestly.

* We will avoid conflicts of interest.

* We will demand that everything we do leads to a cleaner, healthier and safer environment.

* We will protect our technology, our information and our intellectual property.

* We will demand that our financial records and processes are accurate and that our reporting processes are clear and understandable.

* We will strive to improve our communities.

* We will communicate with honesty and integrity.

* We will create a culture where all employees take responsibility for ethical behavior.

The "principles are backed by Corporate Policies and other key documents that provide specific guidance on topics and issues addressed by the statements" (Cummins Inc.). To further validate the top down commitment to ethical behavior the code was approved by the senior leadership of the company.

Corporate social responsibility (CSR) can be defined as the "economic, legal, ethical, and discretionary expectations that society has of organizations at a given point in time" (Carroll 36). CSR can be further defined as corporations acting in a way that enhances society and its inhabitants as well as holding themselves accountable for their actions that affect its stakeholders (Lawrence 50). The CSR impact on managers and business is