Ethical Governance and Organizational Stability

Ethical Governance and Organizational Stability



There has been ease to identify and communicate about any form of corrupt business activities through electronic media. As a result, business ethics and the duty of business leaders to conduct business in an ethical way have become a serious issue. In the current business world, nothing stays hidden, the ethics environment and the decision-making process are readily visible to the public; such issues have a direct impact on the stability of an organization (Sun, 2016). In order to ensure that an organization is successful, the leaders should take charge of their preferences and the overall performance of the organization. Leaders ought to have a strategic plan and follow a set code of ethics that would assist in the management and support all the characteristics of ethical governance and organizational stability. Accordingly, this paper explores the relationship between ethical governance, transparency as well as organizational stability.




The Characteristics Of Ethical Governance



Ethical governance involves the obsession with fairness by grounding rules that put an emphasis on the interests of other people (Sun, 2016). Such governance ensures that there is ease in the interaction with the various stakeholder categories both internal as well as external. The foundation rules of organizations with ethical governance are usually with an aim of making good of all the stakeholders involved. The ground rules of organizations that have ethical governance mandate the accountability of individuals at personal levels for their actions within the organization. There are various characteristics of ethical governance. One of the characteristics is to have clear strategies for the organization. A good example is a situation where the management team of a particular organization moves into potential markets to seek a lucrative niche. What follows is the creation of a product line that matches with the requirements of the target market and then the advertisement of its products with a marketing campaign strategy that reaches clients in a direct way. With a clear strategy, the workers of an organization are able to remain focused on the mission and leaders will be able to meet the needs of consumers more easily (Biswas, 2015).


The other characteristic of ethical governance is effective risk management. This is because risks are unavoidable hence there is need to implement successful strategic risk management in an organization. Discipline is another feature of ethical governance. Ethical governance calls for discipline and dedication especially in the implementation of plans, solutions as well as strategies of an organization. Another characteristic of ethical governance is fairness. Fairness should be among the first priorities of any organization. Leaders should know that fairness is key to avoid long-term consequences for example high turnover and low morale. Fair leaders act as role models for their employees to become aware that they should treat clients with fairness to avoid hurting the long-term projections of an organization. Transparency is the other characteristic of ethical governance. This helps greatly in the creation of unity within an organization by enabling the workforce to understand their roles in the organization. Transparency in an organization is necessary for the public (Biswas, 2015).




The Components Of Organizational Stability



Organizational stability/sustainability is important for an organization to achieve maximum excellence. For an organization to acquire sustainability, it needs continuous effort and collaboration among workers as a strategy to remain focused on attaining goals. Organizational stability is the capability of an organization to display its significance through a meaningful resolution that has a quantifiable impact (Wales, 2013). The main importance of organizational sustainability is to attain self-reliance, allegiance to the mission of an organization and allow engagement in constant planning.  For an organization to be sustainable, it is not necessary for them to be self-financing. This is because most organizations do not undertake their organizations with their own revenue. Nevertheless, sustainable organizations are financially self-reliant. Independent organizations require resources other than its own to become effective in its mission but no organization compromises its mission with an aim to align with the priorities of the potential funder (Carroll, & Buchholtz, 2014).


Sustainable organizations are not wholly dependent on resources outside the organization. They first make sure that they maximize their available resources before they proceed to evaluate the extent to which they have to seek funding from outside. Sustainable organizations normally seek for diverse sources of funding. An organization needs to be aware that to achieve organizational stability is a process that needs planning for both short-term and long-term. In addition, it requires proficient and adequate management as well as personnel, idealistic leadership and a continuous strategic planning procedure. The planning process ensures that the organization knows the required resources, the available ones and the ones lacking. In order for an organization to attain sustainability, it should follow a gradual process with much dedication and diligence. Organizations might use the Resource Development Sustainability Pyramid to be able to know the manageable action steps to meet the ideal objectives of organizational stability (Carroll, & Buchholtz, 2014).




Ethical Governance, Transparency, And Organizational Stability



Ethical responsibility in a business is the obligation to follow a morally right path (Ferrell & Fraedrich, 2015). An individual may have a sense of ethical responsibility but in a business, the ethical responsibility usually remains owed to the clients and other people who look upon them to do right. An accountable owner of a business should asses the interests of all the people within an organization. These include customers, investors, business partners, suppliers as well as fellow business leaders who are the potential stakeholders of a business. The undertakings of an organization affect the stakeholders hence the owner of a business should always make decisions that are ethical. These decisions include hiring and contracting to display the social responsibility of an organization (Ferrell & Fraedrich, 2015).


The ethical responsibility to employees involves the administration of employee behavior in a way that suits the law and whose foundation is on social responsibility. Through the establishment and application of relevant policies in a fair manner among all employees, the proprietors of a business should establish a surrounding with equity and fairness. On the other hand, offering gains to some employees or showing favoritism is against the ethical responsibility of a business towards its employees. A business should find an equilibrium between profit-based employment preferences and morality-based employment preferences (Ferrell & Fraedrich, 2015). With morality-based decisions, a business will be able to gain huge profits easily.  The ethical responsibility to customers by a business is very important. This is because clients are the individuals who ensure that an organization becomes successful. Customers use the goods or services of a business hence ensuring the smooth running of an organization, which is necessary for the success of a business. Customers have a right to receive services in a way that satisfies them to a reasonable extent by the business. As a result, the owners of a business should perform an evaluation and determine whether a product is worth the consumer in terms of quality, safety, price and usefulness. When the owner of a business is able to identify the problems with a good, they are able to take the necessary steps to protect their customer base.


The ethical responsibility to the supply chain is vital for a business to become successful. A business may belong to a supply chain especially in cases where a manufacturer receives raw materials from suppliers and then use them to manufacture final products. The business has a close relation with both distributors and retailers since they supply the finished goods to customers. In the supply chain, a business has an ethical responsibility to be honest in every transaction that they make. The owner of the business should be fair about pricing to the suppliers by assessing their costs in order to determine the best prices. At the end of a supply chain, the client will be able to purchase goods at a reasonable cost. The owner of a business might have an impact on prices by recommending the retail price and identifying the retailers to sell their products (Carroll & Buchholtz, 2014).


The existence of a business is not in a vacuum since it maintains an open system of relationships with both internal and external stakeholders. Since a business is open, it is susceptible to adjustment in the surrounding. The owners of a particular business should make decisions that correspond to the adjustments, for example, adjusting to the terms of work and the terms of carrying out transactions with both suppliers and customers. A business needs to be lucrative as a strategy to survive. The proprietors of a business should consider the influence of the decisions made by a business on other factors in the environment. As a result, business owners should be ethically responsible about the environment that they carry out their operations (Downe, Cowell, & Morgan, 2016). They should ensure the proper disposal of waste and consider the impact of job creation or retrenchment on the economy of a particular surrounding.







Ethical governance, transparency and organizational stability have a relationship. Transparency is all about information. It revolves around the capability of the receiver to access all the information he or she requires instead of accessing only the information that a sender is willing to provide. Transparency is an expression of honesty and communication that is open since it involves the will to share all the necessary information. Transparency allows governance that aligns with the ethical codes of practice. This is because transparency allows the alignment of standards together with values. Transparency within a business is necessary to allow accountability and effective management of potential risk factors. Transparency ensures that ethical governance, as well as organizational stability, is achievable (Downe, Cowell, & Morgan, 2016). An organization, which is transparent, enhances the preservation of organizational integrity and accessibility of information, which is a good element of ethical governance. For an organization to become sustainable, the general leadership should be ethical.







Biswas, W. (2015). Ethical Governance and Ethical Consciousness-A Strategic Tool for Organizational Sustainability and Development. Asian Journal of Research in Business Economics and Management, 5(12), 67-73.


Carroll, A., & Buchholtz, A. (2014). Business and society: Ethics, sustainability, and stakeholder management. Nelson Education.


Downe, J., Cowell, R., & Morgan, K. (2016). What Determines Ethical Behavior in Public Organizations: Is It Rules or Leadership? Public Administration Review, 76 (6), 898-909. Doi: 10.1111/puar.12562


Ferrell, O. C., & Fraedrich, J. (2015). Business ethics: Ethical decision-making & cases. Nelson Education.


Sun, W. X. (2016). The Nature of the Corporation: Implications for Ethical Governance. BAM2016 Proceeding.  Retrieved from


Wales, T. (2013). Organizational sustainability: what is it, and why does it matter? Review of Enterprise and Management Studies, 1(1), 38-49. Retrieved from


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