Ethical Governance and Organizational Stability

Ethical Governance, Transparency, and Organizational Stability
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Ethical Governance, Transparency, and Organizational Stability
Introduction
Corporate governance is increasingly directing the global attention, primarily not because people in the modern days live together in societies that demand proper governance, but by virtue that the world has been transmuted into a global village (Khalid, 2014). Over the last decades, the issue of corporate governance has continued to attract a great deal of business and the public interest because of its apparent significance in the economic health of organizations and society in general (Arjoon, 2005). This paper discusses ethical governance and transparency from the perspective of its benefits to organizational stability. The characteristics of ethical governance and its manifestations in the operations of an organization will be discussed. The paper will also explore the components of organization stability and their presentation in modern organizations. In understanding ethical governance, it is also important to understand how much a business should be ethically responsible to be transparent in its daily operations. Lastly, the paper will conclude with an examination of the relationship between ethical governance transparency and organizational stability to appreciate the role of ethical responsibility in organizational success.
Characteristics of Ethical Governance
Corporate governance is commonly associated with leadership, and the power of leadership and the governance of a corporation is determined by its morality, competence, transparency, obligation, and accountability (Othman & Rahman, 2014). In their study, while exploring the concept of ethical leadership and its relationship with corporate governance, Othman and Rahman (2014) found that the issue of ethics or morality was a critical component that every organization should be subject. The authors noted that ethical governance portrays six main attributes including, responsiveness, integrity, fairness, transparency, responsibility, and accountability. Results also indicated that ethical leadership is a critical element, which spurs good governance practices, and that ethical leadership implies that organizations leaders do not compromise on ethics, but portray a strong moral code or standards (Othman & Rahman, 2014). While these were the responses from study participants, these characteristics merge with the commonly accepted attributes of good governance. The United Nations Economic and Social Commission for Asia and the Pacific (n.d) identify good governance to be associated with the rule of law, participation, transparency, accountability, responsiveness, effectiveness, and efficiency, consensus-oriented, and equity and inclusivity.
Organizations with strong leadership that displays the stated ethical governance characteristics will tend to be stable as these are the pillars of success. For instance, historical records indicate failures in different business due to failures to conduct ethically in their business dealings. An example of business failures due to unethical conducts include Enron where top officials abused their power and instead chose to put their selfish interests above the employees and the public. The company failed in operations and had to file for bankruptcy in November 2001 (Johnson, 2003). Although good governance is of utmost importance to the success of any organization or business, the practice of good governance might not have a universal definition when it comes to identifying the characteristics. Every organization might have different practices of good governance although the identified practices such as transparency, discipline, empathy, self-evaluation, social responsibility, risk management, and having clear strategies might appear to be common among strong organizations. Therefore, organizations that portray such attributes are more likely to succeed compared to those that lack these features.
Evidence for Ethical Governance in the Operations of an Organization
Overall, ethical governance in an organization is evidenced by strong leadership that established moral codes for the entire organization to practice clear communication and guidance as well as systems that recognize discipline and punishes malpractices. This requirement combines all the characteristics of good governance, which include rule of law, participation, transparency, accountability, responsiveness, effectiveness, and efficiency, consensus-oriented, and equity and inclusivity. Leadership has consistently been seen as having a strong connection in fostering ethical behaviors in organizations. Down, Cowell and Morgan (2016) have shown how the actions of leaders in an organization do intersect with the formal ethics regulations in molding moral behaviors. The authors have studied this connection from the perspective of local governments as it provides an opportunity to probe how managerial and personal factors merge to influence ethical behaviors and to analyses different ways in which ethical practices are conducted through multiple individuals in a leadership role. Conclusions from the study indicate that organization which portrays consistently good ethical behaviors have leaders demonstrating good conduct, but also pre-empt the escalation of issues to minimize explicit use of ethical regulations (Down, Cowell, & Morgan, 2016). Another core evidence of ethical governance that can be seen in business operations is transparency and accountability.
One of the most important aspects of ethical governance in organizations is the disclosure of financial data. Since accounting has remained to be the language of business operations, the need for a fair and clear representation of a business standing becomes mandatory (ElGammal, El-Kassar & Messarra, 2018). Following Enron’s case and many other fraud and scand...