ETH/321 Ethical and legal topics in business week 2
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Running head: ETHICAL & LEGAL TOPICS IN BUSINESS |
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ETHICAL & LEGAL TOPICS IN BUSINESS |
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ETHICAL AND LEGAL TOPICS IN BUSINESS
By
[Name of Student]
Moses Sandoval
ETH/321
October 9, 2019
Mr. Mc Killop
Directors are basically the captain of the ship, organizations make progress when directors play their significant role, perform duties and fulfill their responsibilities properly. They are required to perform all legal duties in terms of their work associated with the organization. Being a counsellor with the legal team of Fitzgerald, it is essential to explain the legal duties of directors and their responsibilities.
Legal Duties of Directors and Officers
Directors are officers of the organization and are responsible to drive the future of the business. To make legal, ethical and sound policies that must reflect ethics and follow laws and regulations. They have a duty to organize and utilize the available resources in such a way that the organization would have a sustainable future (Adam, 2016). Despite this, they are responsible for performing certain duties i.e. attend board meetings regularly, development of strategic planning which helps in risk mitigation, to take reasonable steps in order to ensure that the organization follows all applicable rules and regulations. Specifically, legal duties including making decisions which favour the organization but they must comply with all legal elements imposed by the judiciary at corporate level. For instance, Business Judgement Rule is basically reflecting pure business decision making in which directors or the organization take steps based on authentic information, possessing a good faith along with honesty. They believe that whatever action has been taken is in the best interest of the organization. As far as Fitzgerald is concerned, directors were asked to leave their designation because they did not follow rules and regulations and made decisions which were not in favour of the organization and most importantly, they had not fulfilled their legal duties and responsibilities very well. In this way, directors are considered as the captain of the organization, if they fail to implement, the whole organization will suffer.
Benefits of Compliance
Directors make a decision and their implementation is ensured. If their decisions comply with organizational policies, law or standards then it would be beneficial for the organization in terms of its future (Kendall, 2018). There are certain benefits of compliance i.e. minimize risk by maintaining business process workflow, Security System is ensured, assessment of risk becomes possible in multiple fields, creation of competitive advantage and many more.
As far as Fitzgerald is concerned, two directors were doing their duties at the designated level. As we mentioned above that directors are liable to make strategies by following rules and regulations. Those directors of Fitzgerald did not follow the duty integrity and made decisions that were not in the interest of Fitzgerald. Most importantly, they made certain decisions without consent of their legality, due to which the organization suffered loss and because of the breach of the legal limitations, directors were asked to leave their designations immediately. They did not understand the strength and sensitivity of their position which is the reason they were fired. The CEO’s decision was right because their reflection of dishonesty might have transferred to the employees of the organization and Fitzgerald would have to bear that loss of dishonesty among their employees.
Consequences of Non-Compliance
As mentioned above that directors and officers of the company must comply with all rules and regulations. If they do not comply with these legal limitations then they would face serious consequences i.e. organizations may fine the directors or officers for non-compliance, take them to prison, reputation at stake, downtime or loss of productivity happens, etc. As we take example of Fitzgerald, directors did not follow legal instructions and faced the consequences.
Likewise, unethical activity may lead the directors out of the organization. They could lose their reputation and job. Overall, the organization reflects negative image before the corporate world in terms of lost credibility, declined productivity, etc. Moreover, it would lead to huge fines and financial loss as well. Despite this, in order to apply a strategic move, they must comply with all legally imposed rules and regulations.
Example
Michael John, appointed as a director of Capital Travels Private Limited who was entitled to make productive decisions for the organization. In February 2018 he made a decision regarding an increase in job hours worked with no increase in salary. It was an unethical decision made by him which did not possess any legality. For this purpose, he was fired for making a wrong decision due to which the employee union had formed against that decision. Apart from that example, it is extremely important for directors and officers to comply with organizational rules and regulations in terms of making policies, strategies to enhance overall performance effectively and efficiently.
References Adam. (2016). The Role of Directors and Officers in Corporation. Business Strategies.] Kendall, M. (2018). Legal Duties of Directors and Officers. Legal Obligations in Business.