Ethical problems in business: a critical analysis

Ethical Problems in Business

PRINCIPLE:

Ethics may be termed as the inner guiding moral principles, values and beliefs people use to indicate and identify what is acceptable and appropriate behavior whilst straying away from the opposite (Jones, 2007).

However each individual may perceive different behaviors as acceptable and appropriate depending on the individual's own self-interests, attitudes, beliefs and values.

To dig further into the aspects of business ethics, it is primarily a notion for businesses to act with socially responsible. This is what we may call the amalgamation of ethical behavior with corporate responsibility to ensure any 'wrong-doing' may be called for regulatory action (Fountain, 2012).

It may be considered as the fundamental distinction between right and wrong; morality and immorality applied towards business behavior (Lawrence, Weber, Post, 2004).

PRACTICE:

As established that ethics applied towards business differentiate from an individual perspective as well as on the corporate front.

In 2000, a survey, within selected U.S. industries, stated that observations of unethical business behavior was highly evident in different aspect of the business environment,

Unsafe working conditions and deceptive sales were around 56%

50% of the survey's select industries, mishandled proprietary or confidential information

Approximately 38% violated privacy rights

Roughly 37% of the industries shipped low-quality or unsafe products

Employment discrimination was found to be at 36%

Instances of sexual harassment were estimated to be 34%

32% participated in product quality or safety test results modifications

Antitrust violations or unfair practices were identified as 32%

While environmental breaches were found to be at 31% (Lawrence, Weber, Post, 2004).

Ethical issues that arise in business may be termed as a form of business corruption.

Many of the features that define corruption (i.e. Violation of rules, omission of a task, gain for one's self-interest, done in secret etc.) form the basis of what we term as unethical behavior. (Ogrean, 2007)

More often, ethical dilemma leads to a decision which may be perceived as unethical. Here at times it is up to the employee to do what he/she perceives as the correct action or even chooses between two negatively impacting decisions (Jones, 2007).

PARTICULARS:

Many employees render that ethical issues arise due to indifference, cynicism, workload and deadline pressures, idealistic monetary achievement aims, impractical career goals and ignorance of company policies. (The Conference Board, 2003).

Ethical issues from a small firm's perspective can be deemed as the setting of an image in the customer's mind. Such as purchasing furniture prior to a customer's visit with the intent of returning it upon the customer's departure.

Each decision made impacts the companies ethical stance in the future

At times, many such ethical issues may arise due to situational circumstances (Forbes, 2013).

Some employers believe that the sense of morality is instilled in each being meaning that they are bound to act in a righteous manner. Hence their lack of a set ethical policy or code of conduct proves to be an excuse for the employees who wander off in the opposite direction (Webley, 2001).

Self-interest and other personal reasons are thought to be the steering people in making decisions. If the element of self-interest is high more often the chosen route is of unethical conduct in all environments and against business practices. Such people are termed to be as 'ethical egoist'.

This self-interest and the eagerness to advance one's career regardless of the consequences is one of the key causes for business to have ethical issues.

A competitive business environment often causes moral issues.

Low profit yielding companies tend to make poor and illegal decisions just to remain in competitive environment.

Larger corporations participate in price-fixing to be able to skim off extra from the customer

Cross Cultural contradictions are another cause of the ethical predicament, for what may be acceptable in another country can very well be against the law in another. (Yahoo! Voice, 2008)

Abusive and intimidating behavior is another cause of rising ethical issues

Bullying and/or creating a hostile environment often leads to serious legal implications as well.

According to The Workplace Bullying institute's survey, 37% of U.S. employees have been through a bullying incidence

Conflict of interest is thought to be another factor that brings upon the ethical dilemma,

An example maybe a family member of a HR manager applies for a position for which the manager is interviewing other applicants.

Acceptance of gifts, special favors or bribery that allows only the individual's personal gain at the expense of the business'

Here the employee must weigh his obligation towards his goals vs. his ethical obligations towards the firm (Ferrell, Ferrell, Hirt, 2010).

Federal Sentencing Guidelines for Organizations (FSGO) Details (Lawrence, Weber, Post, 2004):

In 1991, U.S. Sentencing Commission circulated FSGO to impose punishment upon those corporations or organizations whose employees or other agents have committed federal crimes.

The guidelines promote the use of effective programs to prevent these ethical issues from arising by prescribing seven measures that need to be taken care of.

Implementation and compliance of standard to reduce criminal conduct

Assignment of high level personnel for ensuring compliance

Avoid giving assignment to individuals who t have a risky past

Ensure all standards and procedures are properly communicated and the required training is provided

Establish compliance monitoring and audit systems along with proper reporting systems where employees may be able to report any misconduct

Use disciplinary measures for enforcing standards

Upon detection of offence, develop appropriate responses whilst preventing a reoccurrence of those offences.

Sarbanes-Oxley Act of 2002

As a method of prevention for the rising ethical problems in businesses, this Act was brought forward.

Named after U.S. Senator Paul Sarbanes of Maryland, and U.S. Representative Michael G. Oxley from Ohio, whereby required the top management of organizations to verify the accuracy of the audited information

Following numerous scandals where major firms breached of ethical standards, this bill was set to assign responsibility to the board along with dictating where criminal penalties applied

Internal controls and financial reporting procedures would be set as defined by Securities and Exchange Commission (SEC).

PERSONS:

Aristotle (384 BC -322 BC)

In his book, Politics he discusses trade and commerce whilst highlighting ethical issues such as greed, or using other means (albeit not legal or correct ones) in pursuit of wealth.

He also condemned usury as it involved incurring extra money that was not properly earned or was gained from a process that was other than a normal transaction

Thomas Aquinas (1225-1274)

According to charging a higher price for an article, beyond meeting the seller's needs and a reasonable fee for his work is considered as unethical. This fits in with the modern day ethical issue of prices being charged above the optimum price level.

Karl Marx (1818-1883)

He believed capitalism could be morally condemned because of exploitation hence breaching on the very principles of ethics

Antonio Argandona Ramiz (1943- )

Simple rules apply to these ethical situations such as a manager or employee should not solicit an extortion and/or force the other party in becoming it's accomplice;