City Square Financial: Daniel Majors Case

Introduction

Daniel Majors is facing major challenges at City Square Financial: the death of a CEO, an untimely promotion, low employee morale, bad press, poor financial performance, and strained relationships between him and senior executives. The situation is dire because, without prompt mitigation, it could cause financial doom. The most difficult challenges that Majors faces include motivating employees and enhancing their morale, uniting senior executives around a common mission and vision, and proving to the company’s board that he is the right person for the top job. I would advise the new CEO to change his leadership style, develop a strong vision, and treat all employees fairly in accordance with the company’s ethics. Upholding organizational ethics in the implementation of the aforementioned changes should be his priority.

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Organizational Ethics

Organizational ethics refers to the principles and standards that guide business operations and employee behavior. In companies, these principles are demonstrated through the practice of values such as responsibility, fairness, honor, integrity, and compassion (Valentine 36). It is important for business executives and employees to comprehend and practice the business ethics that govern their organization’s activities. In that regard, Majors should uphold ethics in dealing with the employee who leaked the company’s information and addressing the conflicts with Richard and Rena. He should embrace transformational leadership, develop a common vision, and enhance the fair treatment of employees.

Transformational Leadership

The first piece of advice that I would give the new CEO is that the qualities and competencies that made him good at his old job will not necessarily guarantee excellence at his new job. Majors became a top executive by being great at what he did: embracing creativity, facing challenges fearlessly, and overcoming the obstacles he encountered in his work. However, as the CEO, he needs more flexibility, intelligence, skills, and adaptability. The company is undergoing a rough financial period and every employee and investor is looking up to Majors to mitigate the situation. He needs to embrace a leadership style that unites employees, motivates them, and promotes a vision that will correct the company’s financial situation. In that regard, he should embrace transformational leadership. Transformational leadership is effective because leaders work together with employees to identify changes that need to be implemented, develop a vision to propel the changes, and execute them in a manner that addresses the needs of employees and the company (Valentine 53). One of the strengths of transformational leadership is that it enhances the motivation and performance of employees by allowing them to connect their identities to that of the organization. Majors should strive to understand the strengths and weaknesses of their employees and ensure that everyone is assigned tasks that match their skills in order to enhance their productivity and performance.

A Common Vision

Majors should aim to unite employees around a common vision and avoid victimization, which could lead to high rates of turnover. Finding the employee who leaked the financial information to the media is right for the company’s privacy and the upholding of organizational ethics. However, identifying the suspect should not be the main objective of his leadership. He should not fire or harass employees because victimization will lower their morale. He should also hold regular meetings with his management team and outline his plan for improving the financial situation of the company. Confidence is a key leadership ingredient, especially during tough times. Majors should make sure that he exudes confidence in making tough decisions that affect the company and employee welfare. He needs to understand that in order to work harmoniously with senior executives, he must involve them in the decision-making process. He should consider delegating certain duties to other executives and create more time to handle more demanding responsibilities. For instance, he should delegate the tasks of improving employee morale and meeting quarterly budget numbers of senior employees. The motivation to bring change should come from the support he expects to receive from the company’s board. The main objective of his leadership should be the creation of a vision that unites employees and provides hope for a better financial future (Krosinsky 74). An important ingredient of the vision should be the strict observance of organizational ethics. Employees should understand that a violation of the company’s ethics will be disciplined.

Fair Treatment of Employees

One of the most important aspects of organizational ethics is the fair treatment of all employees. The new CEO should treat all employees with respect and refrain from pointing fingers without adequate evidence. On the other hand, he should work together with senior executives and prove to them that he is the right person for the CEO’s job. According to business ethics, employees who take a vow of confidentiality must maintain the privacy of company information entrusted to them and should only release it when disclosure is authorized by the management (Johnson 66). Majors should realize that someone in the company violated business ethics and disclosed the company’s sensitive information. In order to address this issue effectively, I would advise Majors to create an investigative team of three to five senior executives to look into the matter. The culprit should be disciplined in accordance with the company’s corrective action procedures. He should conduct investigations in a way that does not make feel employees victimized. It is unethical for an employee to leak a company’s sensitive information because it violates business ethics (Johnson 69).

If Majors fails to enforce the company’s confidentiality policy by disciplining the culprit, future occurrences of ethics violation could happen. Rena and Richard are part of the company’s management team and he should consider taking a conciliatory approach in dealing with their grievances. It is unethical for a company’s leader to mistreat or fire employees who disagree with their leadership style (Johnson 75). Majors should hold discussions with Richard and Rena to find out why they are opposed to his leadership. He should avoid acting with fear in their presence because they might disrespect him. The company’s board believes in the new CEO’s ability to run the company successfully, and so, he should not allow his juniors to belittle him. In that regard, he should work with them to turn around the company and ensure that all its divisions are profitable. It is also important for Majors to improve the morale of employees by guaranteeing them that their jobs are safe. Unless the employees feel safe and valued by the company, their productivity is going to dwindle and the company will suffer more financial losses.

What is your view are the costs and benefits to the client of supporting or encouraging their interest in socially responsible or ethical investing?

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Ethical investing has several benefits and costs that determine whether organizations adopt it or not. The benefits of ethical investing to clients include the joy of improving society and the positive compound effect of daily decisions. Clients who support ethical investing experience the positive feeling of observing the companies that they support receive positive reviews for the fair treatment of employees and environmental conservation. The emotional benefits of ethical investing are numerous and they increase the integrity of clients. Clients who encourage ethical investing are viewed as responsible and honest. The major cost of this benefit is the potential for disappointment when a company violates one of the principles of ethical investing (Paranque and Perez 54). In certain cases, a company might violate some principles in order to disguise its poor financial performance or make huge profits. On the other hand, a client might suffer high losses for supporting ethical investing that fails to bring good financial returns. Financial losses make socially responsible for investing a liability.

Another benefit of ethical investing is the compounding effect of ethical decisions on client investments. As a company makes more responsible investment decisions, its reputation grows and so does the value of clients’ investments. For example, it is highly unlikely that a company that pollutes the environment will experience an increase in the price of its shares in the future. On the contrary, the shares of a company that implements policies to lower its carbon footprint are likely to rise and generate higher earnings to shareholders (Paranque and Perez 60). Maintaining honesty and integrity is a long-term investment that increases the value and reputation of an organization. Companies that adhere to high standards of ethical investing attract many customers because of the positive reputation that their brands accrue over time. Ethical companies enjoy higher levels of customer loyalty because of their mode of investing influence people’s purchasing decisions by appealing to their morality (Krosinsky 84). In that regard, ethical investing is an indirect form of advertising that attracts more customers and promotes a company’s brand.

One of the costs of supporting ethical investing is the risk of foregoing high returns on investments in favor of social responsibility. Companies that engage in socially responsible investing develop certain criteria for screening investments to determine which are viable and which are not. In many cases, companies screen out investments that have high returns because of their adverse social implications. It is possible to get high returns through ethical investing. However, the process of finding the right investments is long and arduous. In such cases, clients get low returns on investments as a large portion of their resources are used in the screening process. Another cost of ethical investing is a large amount of time and money expended. Ethical investing is an active strategy that requires the allocation of time and money (Paranque and Perez 67). The extensive research conducted to collect information on viable investments takes a lot of time that could be used for other functions. Companies that focus on financial performance only spend little time on research. After finding viable investments, companies are required to monitor them closely to ensure that all their decisions are ethical. In many cases, clients are forced to sell investments that do not perform according to projections. The replacement of these investments takes more time and money. The huge amounts of time and resources allocated to ethical investing are major reasons why most companies ditch corporate social responsibility in favor of the maximization of profits.

Works Cited

Johnson, Craig E. Organization Ethics: A Practical Approach. SAGE Publications, 2015.

Krosinsky, Cary. Sustainable Investing: The Art of Long-Term Performance. Earthscan, 2012.

Paranque, Bernard, and Roland Perez. Finance Reconsidered: New Perspectives for a Responsible and Sustainable Finance. Emerald Group Publishing, 2016.

Valentine, Sean. Organizational Ethics and Stakeholder Wellbeing in the Business Environment. IAP, 2014.

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