The American Red Cross: Impact on Business

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Table of Contents

Introduction
Impacts on ARC’s Business Ethics
The Role of ARC’s Stakeholder Orientation
ARC’s Failure to Provide Formalized Responsibility to Their Stakeholders
Recommendations
Conclusion
References

Introduction

The American Red Cross was established in 1881 to offer emergency relief services, first aid and disaster management courses. This organization has its headquarters in Washington, D.C. (U.S.A.) even though it has branches and affiliate organizations in many other countries all over the world.

Clara Barton established this society after her experience with the International Red Cross in Europe. She was an emergency service volunteer during the Franco-Prussian war and decided to use her experience and knowledge to establish a similar organization in America (Irwin 2013).

Even though, the initial society was comprised of 15 members it has expanded its operations and employed more than 30,000 permanent workers. In addition, it has more than one million volunteers located in various parts of the world. This paper presents an analysis on the role of management, leadership and employees regarding stakeholder perspective.

Impacts on ARC’s Business Ethics

This essay will refer to the American Red Cross as ARC for purposes of analyzing various issues in the case study. This organization was established to offer relief services to people affected by disasters. Its codes of conduct stipulate that it must maintain high levels of accountability, transparency, impartiality, humanity, service, independence and universality among others (Ferrell and Fraedrich 2011). This mean that it must ensure its sponsors get the value for their donations by offering quality services to victims.

However, the activities exposed by the case study reveal major malpractice that does not reflect the need to sponsor this society in terms of money or volunteer activities. Business ethics must guide an organization to continue getting support from volunteers and well wishers. However, the high rate of leadership turnover is a worrying trend that will discourage other potential donors from funding this organization (Irwin 2013).

Even though, donors do not state what their money should do to help victims of disasters it is necessary to ensure that all donations are used properly.

However, this society has shown that it does not care about how donors feel about their money. This has been shown in the hefty retirement packs and a poor financial auditing system. These activities lead to losses of huge amounts of money; therefore, lowering the confidence of donors in sponsoring other programs.

The Role of ARC’s Stakeholder Orientation

Even though, the state donates some money to fund this organization majority of its resources is obtained from well wishers. This means that donors are the greatest shareholders in this company in terms of supporting its activities (Irwin 2013). Therefore, it is important to state that they play significant roles in determining the future of this company.

They must position themselves in a manner that will ensure they monitor the activities of this organization. They are very important stakeholders that monitor, evaluate and determine the future of this company (Ferrell and Fraedrich 2011). There are various avenues where they are allowed to raise alarm when they detect any malpractice. However, this has always been swept under the carpet since there are no transparent ways of auditing the expenses of this organization.

The stakeholders of this organization must ensure they compel it to account for its financial expenses. In addition, it must demand that this organization evaluates its leadership policies and if possible reduce the powers of the management board in change of appointing presidents and their deputies.

Donors must ensure that this company develops an effective communication strategy that will ensure it works together with other similar organizations to alleviate poverty and manage disasters. This will be possible if they demand to be given positions within its managerial structure (Zietlow 2012).

There is no way they will play active roles while at the periphery of this organization. In case, their voices are not heard they should threaten to quit sponsoring this society since this may be a good way of showing that they are serious about their demands.

ARC’s Failure to Provide Formalized Responsibility to Their Stakeholders

This organization has become a big disappointment to its sponsors since it has failed to provide quality services during emergencies. There is no doubt that it has failed in various sections and this has led to its poor performance in various occasions. It seems that ARC has failed to use its past weaknesses to develop plans to prevent future disappointments.

However, there seems to be a deliberate effort to ensure that this company continues to be on the spotlight regarding malpractice (Irwin 2013). First, it has a lot of boardroom wrangles that lead to frequent firing of its presidents. In fact, there have been more than three presidents managing its activities within the last decade. This shows that this department has placed a lot of emphasis on this position and forgotten that it is supposed to provide services to victims of disasters.

Secondly, it has failed to provide quality services to victims as shown in its response to emergencies. The September 2001 terrorist attack on the World Trade Center (New York) became a good avenue to expose the shortcomings associated with this organization. First, there was a slow response to offer help to the victims.

This situation required urgent relief services to ensure very few people suffer injuries. However, there is evidence that this organization was unable to offer flight services three days after the disaster had occurred. In addition, there was mismanagement of the funds donated towards helping the victims of this disaster. This was a major let down that affected the operations of this organization and discouraged well wishers from donating additional funds to this organization.

In addition, the effects of hurricane Katrina and Rita offered another chance to evaluate the commitments of this organization to solving emergency challenges. The Federal Emergency Management Agency (FEMA) was supposed to coordinate with ARC to assist the victims of these tragedies.

However, they were not able to agree on various issues including identifying their points of contact and roles in managing these situations. In addition, ARC failed to follow its recruitment guidelines and this led to an influx of volunteers with questionable characters. The result was an uncontrolled work force since there was no clear guideline about the roles they should play in managing the disaster. Some important information was accessed by unauthorized volunteers and this compromised the financial security of this organization.

Recommendations

Stakeholders are very important in any humanitarian organization since they finance almost all programs aimed at helping the needy in the society. This case study shows that ARC has failed to fulfill the expectations of its sponsors and this is a serious risk that may affect its future.

However, the following approaches can improve the perspectives of its shareholders. First, it should develop policies that define the roles of senior managers to avoid repeated cases of conflicts in terms of duties of employees. Secondly, it should make sure that there are strict laws governing how presidents are hired and fired to avoid wastage of money used in rewarding retired presidents.

Thirdly, there must be strict auditing policies that will ensure this organization has correct figures regarding its finance and employees. This will reduce cases of fraud and corruption and at the same time ensures that all employees are responsible for their actions. Lastly, there must be strict penalties for employees who fail to meet the standards set by the organization.

Conclusion

The American Red Cross has played significant roles in helping people during tragedies. In addition, it has promoted community health awareness programs in many nations. However, it should start focusing on upholding high professional discipline among its employees to ensure they respect their work and donations received from well wishers. It is never too late to win the trust of stakeholders if this company decides to work on its weaknesses.

References

Ferrell, O.C.and Fraedrich, J. (2011). Business Ethics: Ethical Decision Making and Cases. Connecticut: South-Western Cengage Learning.

Irwin, J. F. (2013). Making the World Safe: The American Red Cross and a Nation’s Humanitarian Awakening. New York: Oxford University Press.

Zietlow, J. (2012). Financial Management for Nonprofit Organizations: Policies and Practices. New York: Wiley.

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