Introduction to Business Ethics

Describe about the business ethics and sustainability? 

Business ethics refers to the moral philosophy that controls the behavior of every business. Therefore, businesses that act ethically are those that differentiate between the wrong and right actions by making ethical decisions (Rutherford et al. 2012, p.176). Companies that act ethically are those that do not utilize child labor, do not take part in bribery and corruption, and do not illegally use copyrighted processes and materials. Likewise, companies are expected to enhance their shareholder’s value, treat their staffs fairly, conserve the environment, and augment communities’ well-being in which they operate. Such issues are often accomplished by the development of an ethical code of behavior that outlines the core standards and values of an organization often referred to as Good Citizenship in the context of Anglo-Americans (Goodman & Arenas 2015, p.165).

A business that is ethical is expected to adhere to the codes of practice that defines its sector. However, some companies have taken the initiative of designing voluntary codes of ethics to standardize the operations in their sector. The initiatives are documented after thorough consultation with the local communities, employees, governments, and other stakeholders. Examples of these initiatives include the Global Reporting Initiative, the United Nations Global Compact, and the Extractive Industries Transparency Initiative (Martin & Parmar 2012, p.300). The Global Reporting Initiative is utilized by organizations to generate sustainability reports regarding their operations and activities. The United Nations Global Impact, on the other hand, is the platform through which businesses, across the globe, compliment the UN objectives. The initiative requires businesses to comply with ten primary principles covering anti-corruption, best environmental practices, labor rights, and human rights (Martin & Parmar 2012, p.296). The Extractive Industries Transparency Initiative makes sure that organizations make public how much they pay to acquire raw materials. It also requires the government to make public the revenues they accrue from businesses. 

Ethical theories refer to the principles and rules that determine the wrong and right of an action (Crane and Matten 2010, p.76). There are two major types of ethical theories: descriptive and normative ethical theories. The former aims to give a detailed description of how businesses make ethical decisions whereas the latter describes acts that are morally correct. However, ethical absolutism contends that there are moral principles that are applicable globally. The applicability is attributed to the fact that objective qualities, wrong, and right are rationally determined. Conversely, ethical relativism contends that no universal wrongs and rights can be logically determined. The argument is based on the fact that moral principles are determined by the culture of the person making the decision (Treviño & Nelson 2011, p.63). For instance, the United States accepts the individualistic perspective whereas Europe favors broader governing and economic institutions. Equally, United States advocates for a capitalist framework whereas Europe questions ethical validation of capitalism. Asians in contrast base their moral principles on religion, to be precise Buddhism and Islam (Treviño & Nelson 2011, p.65). As such, it is not necessary to have a universal Code of Ethics for global businesses.

Ethical Practices and Standards

Business ethics management according to Valentine et al. (2014, p.503) is an attempt to informally or formally address ethical problems or issues through certain programs, practices, and policies. Business ethics management is characterized by distinct elements including reporting, accounting, and auditing as well as partnership and dialogue programs. Other elements include value/mission statements, reporting channels, code of ethics, risk management and analysis, ethics training and education (Valentine et al. 2014, p.503). The main element applied by most is the designing of codes of ethics whose aim is to commit professionals, industries, and organizations to certain actions, values, and beliefs and outlines how employees should behave. Ethical codes are categorized into four: group or program codes of ethics, professional code of ethics, industry code of ethics, and corporate or organizational code of ethics (Jones & Chin-Yen Alice 2015, p.80). Codes of ethics are prevalent in the United States and the United Kingdom, but not in Europe.

 For ethical codes to be effective, stakeholders involvement is paramount. In an organization, for example, shareholders are often affected or affect the operation of businesses (Donaldson & Preston 1995, p.70). Conventional agency theory assumes that the aim of shareholders is to maximize their value in an organization. Through social shareholder engagement program, shareholders bring forth the concerns of the marginalized and voiceless shareholders including victims of environmental degradation and human rights abuse in the corporate decision-making process (McLaren. 2004; Lee & Lounsbury 2011). For this reason, Dhir (2012, p.102) contends that organization failure to take into consideration the ethics of social shareholder engagement might jeopardize their legitimacy. In this context, multinational corporations should be guided by key principles as they conduct their operations in international markets. The principles include respect for the traditions of the local communities and the core human values.  

Framing business ethics can be realized through corporate social responsibility programs. In addition to making profits, businesses must accomplish other responsibilities such as conserving the environment and enhancing the well-being of the local communities through various projects. Investing in the local community is considered a long-term improvement because it enhances a company’s competitiveness in the industry. However, Rutherford et al. (2012, p.175) contend that if an organization does things for the community to enhance their selfish interests, then those activities are not considered corporate social responsibility, but profit maximization under the disguise of being socially responsible. Being socially responsible is a must for corporations because their actions result in social problems including pollution and environmental degradation due to overexploitation of resources. Besides, corporate activities exhibit social impacts on the local community through services and products provision or employment of the area people. For this reason, whether their actions are neutral, negative, or positive, corporations have a responsibility to fulfill in the community.

Ethical Theories

To thrive in the current competitive business world, companies are mandated to make ethical decisions. For this reason, they are expected to analyze the moral implications of the actions they undertake to enhance their competitive advantage in their respective industries. From an ethical viewpoint, a decision that is morally right produces the greatest consequence or outcome such as enhancing a company’s performance and boosting employees’ morale (Neveling, Malan & Yortt 2014, p.50). Therefore, organization leaders and managers need to comprehend their moral and ethical beliefs so that they can often utilize them in case they are subjected to various challenges. Ethical beliefs are often applicable when managers and leaders are caught in a dilemma of choosing between two competing decisions. Additionally, ethical decisions entail making a choice between individuals who should take part in the decision-making process as well as how to arrive at a concrete solution. For example, if the decision being made will have a considerable impact on the community, it is the obligation of the organization leaders to consider a community representative in the decision-making process (Neveling, Malan & Yortt 2014, p.63).

 Likewise, an ethical decision is often reached by consensus rather than by a single person. Regardless, leaders and managers endeavor to make decisions that are ethical, but various situations or factors trigger them to act unethically. For instance, pressure to meet expectations and deadlines, as well as pressure from vendors, customers, bosses, and co-workers, might compel a person to take part in unethical activities (Dolgoff, Loewenberg & Harrington 2005, p.125). Unethical decisions are also made when managers or employees are not sure of what they should do. Other factors that influence ethical decision making in the organization include employees cultural and national characteristics, gender and age and psychological factors. For instance, individuals from distinct cultural backgrounds exhibit distinct beliefs regarding an action that is wrong or right. These factors will obviously affect ethical decision making because people have varied perceptions based on their cultures, religions, and nations (Neveling, Malan & Yortt 2014, p.49). However, organizations can address these challenges by adhering to various stages in their decision-making process. These stages include recognizing the moral issue, making a moral judgment, establishing moral intent, and engaging in the moral behavior. 

Managing Business Ethics

As the stakeholders of an organization, employees are entitled to certain rights and privileges including the right to privacy, freedom from discrimination, the right to association and participation (Ferrell, Fraedrich & Ferrell 2013, p.58). Additionally, they are entitled to safe and healthy working conditions, the right to freedom of speech and conscience as well as fair wages. Regardless these rights, problematic situations often emerge in the workplace environment due to various ethical violations. The ethical violations might be by employees against employers or employers against employees. In some instances, it is the employers and employees working together to frustrate other companies or clients. Ethical issues among employees might revolve around issues such as assault, abuse, fraud, or interpersonal dynamics. For all these reasons, a majority of organizations exhibits documented regulations whose aim is to regulate employees and employer interaction and prevent abuse. Some of the major ethical issues in the organization are as detailed below: 

For employees, workplace conditions are a major challenge and a key factor in strikes and labor regulations. Unethical employers intentionally or through negligence fail to offer employees with safe and healthy working conditions. As a consequence, employees suffer from various injuries and illness (Ferrell, Fraedrich & Ferrell 2013, p.96). Another conflict cause among employers and employees is regarding payments. Despite the fact that employees are in pursuit of higher wages, organizations are often willing to pay less for their services. However, some employers are unethical because they overwork and exploit their employees to the point that the government or other non-governmental organizations have to intervene. In fact, some employers do not adhere to the minimum wage laws. Therefore, this practice is not only illegal but unethical.

According to Dolgoff, Loewenberg & Harrington (2005, p.135), American companies incur a loss of about $ 40billion due to employee theft. Employee theft is triggered by a wide range of factors including low pay, addictive behavior, vengeance due to exploitation and mistreatment by the organization. To address theft factors, organizations often apply strategies that enhance employees’ morale and take legal action because fraud is illegal and unethical before the law.

Stakeholder Involvement

Organizations that are involved in innovation often have structures that bar employees from exposing the company secrets to their competitors. However, staffs having access to this information might be tempted to share it with employees from other firms, either for personal reasons or monetary reward (Neveling, Malan & Yortt 2014, p.50). Given the fact that organization staffs are subjected to confidentiality clauses as stipulated in their employment contracts, disclosing company information is considered illegal and unethical thus warranting criminal prosecution. It is also unethical to work against company interests.

Abuse of power by business owners, employers, and managers entails various irritations including sexual harassment, blackmail or offering services to an arrogant employer. Besides, uneconomic inequality between employees and employers often result in unhealthy relationships. Unhealthy relationships are evident when those in authority use their power to mistreat others, especially those in junior positions.

Q.1. The Main Ethical issue in the Case

The major ethical issue in the case is the infringement of the candidate’s privacy rights. For instance, the recruitment manager peruses through the finalist candidates social networking sites without their consent. He even goes a step further to ask an intern about the second candidate background information such as whether she is involved in illegal drugs.

Q.2. The Main Ethical Arguments for and Against the use of Social Network Sites for Potential Employers in this Situation

The use of social networking sites such as face book provides employers with detailed information regarding the character of the candidate they wish to hire. Before the internet, getting information about the candidate private life was not easy. As such, a majority of employers came to realize late that they hired individuals who were not fit for the company the business because of their reputation. Therefore, it is important for employers to make use of Facebook to unmask candidates who misrepresent themselves during the interview process.  Through Facebook, employers can access background information of the candidate as well as the activities he/she is involved to ensure that the candidate they hire has good reputation and can represent the organization better. However, access to person information without their consent is considered an infringement on their privacy rights because details provided on social networking sites are considered personal. In fact, the information is often directed to acquaintances and friends and future employees might misinterpret it.  

Framing Business Ethics

Q.3. Whether the Case Influences the way I might use these Sites in Future

The case has really influenced the way use my social networking sites. I am now very sensitive not to post information and upload photos that might jeopardize my future my future employment.

Q.4. How I would finally decide as the Human Resource Manager in the Case Situation

As a human resources manager, I comprehend that not all information provided on the internet is correct. Instead of judging the candidate based on what is on her Facebook profile, I will make use of the drug and health testing procedures to rule out the possibility of the candidate involving herself in illegal drugs. 

Conclusion

Conclusively, ethics play an essential role in the operations of the company. For instance, business ethics ensures that companies make ethical decisions, treat their employees fairly, and take legal action against those who engage in unethical behaviors such as bribery and corruption and fraud. Likewise, employees can sue their employers for various issues such as discrimination, sexual harassment, and exploitation. However, it is difficult to have a universal Code of Ethics for global businesses because of the distinct perspectives held by various countries regarding moral principles. For instance, the United States advocates for a capitalist framework whereas Europe questions ethical validation of capitalism. Asians, in contrast, base their moral principles on religion, to be precise Buddhism and Islam.  

References

Crane, A., & Matten, D., 2010. Business Ethics: Managing Corporate Citizenship and Sustainability in the Age of Globalization. Oxford, Oxford University Press.

Dhir, A.A., 2012. Shareholder Engagement in the Embedded Business Corporation: Investment Activism, Human Rights, and TWAIL Discourse. Business Ethics Quarterly, 22 (1): 99 – 111.

Dolgoff, R., Loewenberg, F. M., & Harrington, D., 2005. Ethical Decisions for Social Work Practice. Belmont, CA, Brooks/Cole–Thomson Learning.

Donaldson, T. & Preston, L. E., 1995. The Stakeholder Theory of the Corporation: Concepts, Evidence, and Implications. Academy of Management Review, 20 (1): 65-105.

Ferrell, O. C., Fraedrich, J., & Ferrell, L., 2013. Business Ethics: Ethical Decision-Making and Cases. Mason, OH, South-Western/Cengage Learning.

Goodman, J, & Arenas, D., 2015. Engaging Ethically: A Discourse Ethics Perspective on Social Shareholder Engagement. Business Ethics Quarterly, 25(2), pp. 163-189.

Jones, K, & Chin-Yen Alice, L., 2015. Ethical Decision Making: A Model Demonstrating Collectivism and Individualism Decision Influences. Academy of Business Research Journal, 3, pp. 75-83.

Lee, M.-D. P, & Lounsbury, M., 2011. Domesticating Radical Rant and Range: An Exploration Corporate Governance. An International Review, 12 (2): 191 –201.

Martin, K, & Parmar, B., 2012. Assumptions in Decision-Making Scholarship: Implications for Business Ethics Research. Journal of Business Ethics, 105, 3, pp. 289-306.

McLaren, D., 2004. Global Stakeholders: Corporate Accountability and Investor Engagement of the Consequences of Environmental Shareholder Resolutions on Corporate Environmental Performance. Business and Society, 50 (1): 155 – 188.

Neveling, A, Malan, D, & Yortt, A., 2014. Globalization and its Influence on Ethical Decision-Making in Business: China and Intellectual Property. African Journal of Business Ethics, 8, 1, pp. 45-67.

Rutherford, M, Parks, L, Cavazos, D, & White, C., 2012. Business Ethics as a Required Course: Investigating the Factors Impacting the Decision to Require Ethics in the Undergraduate Business Core Curriculum. Academy of Management Learning & Education, 11, 2, pp. 174-186.

Treviño, L. K., & Nelson, K. A., 2011. Managing Business Ethics: Straight Talk about How to do it Right. New York, John Wiley.

Valentine, S, Nam, S, Hollingworth, D, & Hall, C., 2014. Ethical Context and Ethical Decision Making: Examination of an Alternative Statistical Approach for Identifying Variable Relationships. Journal of Business Ethics, 124, 3, pp. 509-526.