ETHICS & BUSINESS OPERATIONS

Tehzeeb Sakina AmirBusiness Ethics – session 6

Operations management

Operations management is one of the three major functions of any organization along with marketing and finance. The operations function is comprised of a significant percentage of all employees and physical assets in most organizations (Thomas, 2005). Operations management determines what should go into an operating system such as equipment, labor, tools, facilities, materials, energy, and information and how these inputs can be used best to obtain and satisfy the requirements of the market place.

Operations Management

The design, operation, and improvement of the production system that creates the firm's primary products and services

Chase, Jacobs & Aquilano (2006) state "operations management is about getting the day-to-day work done quickly, efficiently, without errors, and at low cost".

Operations Managers

• Operations managers facilitate the necessary change to an organization by setting the strategic direction, deciding what technologies to use, and where facilities should be located. Operations managers are experts ensuring the daily work is being done quickly, efficiently, without errors and at a low cost (Chase, Jacobs, and Aquilano, 2006).

Activities of OM

1. Managing purchases2. Inventory control3. Storage4. Logistics5. Scheduling6. Evaluation7. Quality8. Effectiveness and efficiency of internal processes

Significance of OM

• Foreign competition• Shorter product and service life-cycles• Better-educated and quality-conscious

consumers• New technology

Strategies - OM

• Organizations implement strategies to better manage their operations, by:– Focusing on improving quality– Managing capacity– Driving down costs– Improving efficiency– Reducing waste– Motivating employees to perform at a higher standard

These strategies all correlate to one primary objective - making more money.

AND Whenever money is involved, the ethics and integrity of the people involved will be tested.

• Ethical concerns in operations:• Earnings, Transparency and

Management• Workplace Safety and Environmental

Issues• Plant Closure & Downsizing• Purchasing: conflicts and bribery

Operations management Dilemmas

Waste dumping“On a midnight shift, a botched solution of sodium cyanide, a reactant in an

organic synthesis, is temporarily stored in drums for reprocessing. Two weeks later, the day shift foreman cannot find the drums. Roy, the plant manager, finds out that the batch had been illegally dumped into the sanitary sewer. He severely disciplines the night shift foreman. Upon making discrete inquiries, he finds out that no apparent harm has resulted from the dumping.” (Martin and Schinzinger, pg 32)

Should Roy inform government authorities, as is required by law in this kind of situation?

Being Ethical in Operations Management

11

Efficiency.Transparency. Honesty.Integrity.Commitment.Accountability.Loyalty.

12

• EFFICIENCY Employees need to be sure of what is expected of them. [Familiarize

themselves with and abide by all statutory and other (lawful) instructions applicable to their duties.

Full cooperation with one another to advance the public interest. Execute all official instructions.

• TRANSPARENCY• In carrying out official duties, make fair decisions and clear with their co

workers and carrying out the orders.

• HONESTY Honest in carrying out their duties and processes.

Being Ethical in Operations Management

• INTEGRITY No improper use or disclosure of official information. Refrain from favoritism and abuse of authority. Rescue him/herself from decision-making processes that are likely to

result in or be construed as improper personal gain and this should be properly declared

Not to request, negotiate for or accept any interests, gifts or employment in violation of the framework.

• COMMITMENT Should show courtesy in the execution of duties (politeness, helpfulness

and reasonably accessible). Treat members as customers who deserve quality services. Take initiative in doing the work. Show dedication. No engagement in any transaction or action that is in conflict with or

infringes on the execution of his her official duties

Being Ethical in Operations Management

14

Being Ethical in Operations Management

• ACCOUNTABILITY Strives to achieve the objectives of the institution in a cost effective and

efficient manner. Be honest and accountable in dealing with funds. Be punctual in the execution of duties (strive to meet deadlines). Be professional.

• LOYALTY Employees are expected to execute government policies in a dedicated,

skillful and faithful manner.

Exhibit 4.1: Areas of Ethical and Social Responsibility Concerns for the Multinational Company

Exhibit 4.1: Areas of Ethical and Social Responsibility Concerns for the Multinational Company