LEA301 Advanced Leadership And Decision Making

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LEA301 Advanced Leadership And Decision Making

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LEA301 Advanced Leadership And Decision Making

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Course Code: LEA301
University: Alphacrucis College

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Country: Australia

Question:
Use an organisation that is or has been in the news during the past two years (work-related learning) and identify an ethical dilemma faced by that organisation as an example.
 
Apply at least two theoretical concepts from managerial ethics to examine this dilemma critically.
 
Go on to examine and critically evaluate how these theoretical concepts influence managerial practices in the chosen organisation. In conclusion, reflect critically on how leaders may ensure organisational decisions are made ethically. 
Answer:

Various ethical variants are attached to the business decisions undertaken by major companies. This is due to the sole reason that the impacts and outcomes of those decisions are likely to affect the stakeholders in various ways and will articulate different ethical values of the company (Ford & Richardson, 2013).  Volkswagen is facing several issues regarding its unethical behaviours. Volkswagen developed a software named defeat device was installed in 11 million vehicles under the brand of the company, and were sold globally. Consequently it leads to immense vehicle recall and thus company accepted their mistake and held guilty of conduct which astonished several stakeholders.
ethical dilemma faced by volkswagen
emission-cheating of volkswagen
Issue
During September 2015, Volkswagen was held to be making use of fraud software in order to mislead American regulator, EPA (Environmental Protection Agency) on the release test of diesel cars. Further, the software enables the cars to execute well on those test comparatively they usually perform on the road. Later than, the company accepted that the installation of the software was done in about 11 million vehicles globally.
Theoretical Concepts From Managerial Ethics For Assessing The Dilemma Critically
Tucker’s five-question model
This model is conceptually different from other models of ethical decision making; however, it is a powerful tool for determination of the outcome that is most ethical in a given situation (Frederickson & Ghere, 2013). It might be possible that not all of criteria prescribed by the model seem relevant to every ethical decision of an organization. If the scenario is assessed using another model like the AAA model, the indications and outcomes may differ. As per the views of Ferrell & Fraedrich, (2015) in addition, this model is more constructive to examine situations which are corporate instead of professional or individual situations. It requires a little more thought to apply the Tucker’s model s compared to other such models like the AAA models. This is because the majority of the questions associated with the model require considering other related things as well (Crane & Matten, 2016). The questions related to profitability, reasonability, and comparison often require considering other options as well.  The application of same on the present case of VW has been explained below:

Will it result in profitability
 
 
 
 
Is it legally approved
 
Is it fair
 
 
 
 
 
Right or wrong
 
Does it sounds sustainable and environmentally friendly

Yes, it will increase sales and revenue in terms of the vehicles sold by the company, the software will reduce research spending and activity development while driving the diesel vehicle markets of United States.
No, because it a breach towards Clean Air Act of United States
No, as it will provide false information to the owners in their transactions, along with parody. The production team claimed that cars were developed with eco-friendly engines but actual emission was excessive in comparison to the claim made by the company
It is wrong, as they are cheating on production tests and parody to the owners of vehicles.
No, actual emission was excessive in comparison to the claim made by the company.
 

The above evaluation of the company’s decision through the Tucker’s Model does not reflect ethical behaviour. The company chose a fraud software regarding the environment; this decision although increased their revenue but at the same time violated all other rules and expectations (Thompson, 2015). The company breached the laws on one side and on the other put the environment at stake by causing pollution. The company also in a way cheated on their customers. This decision may bring some short-run benefit, however, in the long run, may be detrimental to the image of the company.
Dr Simon Longstaff stated that considerable losses take places when technical mastery is separated from ethical control. Human Resource has a significant role to play in filling up the gaps in an organization which operate on the basis of standard norms and regulations and organizations run by practical implementation of principles and values. This gap can be massive for the organization to fall through (Franklin, 2015). What is right and what is wrong decisions can be complex, but a clear ethical statement of ethical theory can assist the leaders of the organization to make better decisions. It is significant to realize theories, their use and their applicability. An example would be taken into account if or if not leader of Volkswagen used a similar structure to justify. Rules and codes are considered as hardware in authority; however, software’s quality is crucial (Herlihy & Corey, 2014). The key is to consider the applicability of rules in order to create a healthy environment where individuals can face the systems without any threat and compromise. Just the rules will keep the organization or individual’s safe (Herlihy & Corey, 2014).
Weiner’s attribution theory
This theoretical framework was developed to ascertain the reason behind the behaviour of people or to ascertain the cause of an event or behaviour. Presently, it is very influential in social psychology (Bonnefon, Shariff & Rahwan, 2016). The three main variant  which is assessed as attribution is:

Observance of behaviour.
It must be ascertained that behaviour is intentional.
Behaviour attributed as internal or external causes.

In the present case of VW, the theory will assist in understanding the crisis management strategies applied by the manager of VW for reducing the impact of emission relating to the scandal regarding customer response and legal liability. Volkswagen has a clear and descriptive policy of business ethics but in the recent years company had faced significant scandals regarding contradiction of ethical behaviour, irrespective of a clear statement of ethical behaviour in their management literature, in accordance with the industry standards complied by all companies operating in the sector, Volkswagen went through a really bad situation. In spite of having clear public clear codes, why there is need to contravene personal codes and conducts by the leaders.  Attributed theory assisted in understanding the reason behind the happening of an event in the company (Johnson, 2017 ). It was assessed that as distinctiveness was low and consistency was high; the same resulted into internal disposition. However, the theory does not assess the implication of casual attribution (Iphofen, 2016 ).
Internal and external attribution along with action plan
Mainly, two kinds of attribution have been established i.e. external attribution and internal attribution (Mikesell, Bromley & Khodyakov, 2013). External attribution assesses the behaviour is interpreted in accordance with situational factors. In accordance with Pollock (2014), on the contrary, internal attribution where behaviour is assessed in accordance with internal characteristics. Through the application of this theory in VW case; it has been assessed that manager should pay more attention to understand the cause of behaviour of employees. As after assessing the reason they will be attained more appropriate information relating to the manner in which business works and manner of taking a future decision.
Managers will be also able to resolve the arsing future contradictions as well as existing issue through emphasizing on internal and external attributes of organization (Parrott, (2014 ). The theories can also be applied in information management for assessing the manner in which organization operate (Pardo & Siemens, 2014). Thus, manager of VW will be able to ascertain the areas which require being a focus for resolving the existing issues. Firstly the behaviour should be assessed; then the person should be made believe that he behaved intentionally and eventually the person requires to whether the behaviour was due to coercion (Shapiro & Stefkovich, 2016). Preventive and punishment measures are available for preventing the reoccurrence of the event (Shapiro & Gross, 2013). Thus, it is necessary to ascertain which should be applied.  In corporative case, due to punitive actions; an individual might behave with regression and boycott the policies and principals of organization (Morris  & McDonald, 2013). It can be concluded that this action plan will provide assistance in creating a positive environment and resolving existing issues in more appropriate manner.
Consequence of misconduct
The share price of the company collapsed by 1/3rd ever since from September 2015 and management have to pay billions of fines and penalties to United States regulators regarding claims made by car owners. Further;  company declared a US$7.3bn terms to cover costs of the dishonour, however, analyst tends to believe that actual amount can be much better and lacked loyalty. At last; on 23 September 2015, Martin Winterkorn (Chief executive) resigned

Figure 1: Weiner’s Attribution Theory
(Source: Slade & Prinsloo, 2013).)
The response of media on the issue and its impact on the image of the company:
IEEE Spectrum announced the following:
Yotam Lurie, an old business ethics lecturer at Ben-Gurion University said that this is scandalous, as the Volkswagen’s engineers of software ignored and overlooked their responsibility regarding fiduciary being as professionals. Professionals have a responsibility to guarantee safety and security to their stakeholders, but in this event safety towards the environment is non-effective.  
The recent issues paper by Lurie on Professional Ethics meant for Software Engineers was heartwarming in this case. Lurie says that the company selected software is not shocking as the software provide itself to exceptional implementations and is more complex to explore after it the hardware was altered. He further makes a comparison of the engineers to the Enron case’s accountants who worked together with the company in order to b8uild an accounting ambiguity but failed to the safe public by not offering systematic auditing.
BBC News reported that-
What began in the United States has started spreading in all over the countries. The United Kingdom, Canada, Italy Germany and South Korea are implementing investigations. ‘It is situation monitoring’ says Australia. All around the world, policy-makers, regulators and groups are putting queries regarding the legitimacy of Volkswagen test of emissions (Shaw & Barry, 2015 ). Finance minister of France Michel Sapin says that, the requirement of Europe-wide is there to assure the public again.
Not only Volkswagen has faced these serious claims in regards to their choices but also Toyota, Ford had a competitive advantage while talking about their choices in regards to their automobiles.

Figure 2: Types of Unethical Behaviours in Workplace
(Source: Wachs, 2017)
Critical analysis of the manner in which it influence managerial practices of the company
Ethical values are the standards of our environment and society that have been accepted by the society on the whole. As per the views of Zadek, Evans & Pruzan, (2013), ethical standards generally referred to as mores, which refers to what the society accepts as good and how a company behaves without imposed rules and regulations. Within our social structure, rules are often imposed on those who do not follow the accepted ethical standards. The laws dictate penalty for those are found guilty of unethical behaviours. Ethical thinking on the part of the management involves a complicated process to be considered for evaluating the impact of the company’s actions on the individuals or any group which the company serves (Weiss, 2014). ).  While most of the decisions of the management are routine, they can face an ethical dilemma all of a sudden when abnormal situations occur, which require an immediate response. A choice and balance are required for forming the groundwork of ethical decision-making; it is a steer to abandon unethical choice in favour of ethical ones.

Figure 3: Major Reasons for Unethical Behaviours displayed by the company
(Source: Vidya, 2013)
VGA (Volkswagen Group of Australia) published a statement showing potential towards the up gradation of critical software for 77,000 vehicles. The company also mentioned that they will contact to customers when their vehicles need to get updated, but that car owners need not a concern for safety, effectiveness or performance of their vehicles in the meantime. As per views of Christine  (2014), this process will not create any materialistic effect on the performance of the vehicle, its characteristics, fuel saving and operated in accordance with the emissions standards. Customers have to consider this significant thing that now vehicles are safe and sound and will stay like this only after their updating. At present, the company released that will recall Amarok ute’ owners to contact suppliers, so as updating can be performed. The existing action plan of the company says that VW will not put any comment regarding owner’s compensation; however, Bartsch stated that Australia’s situation must not be compared to the United States. The prominent variation of US with Australian regulations went considerably unreported. United States regulation is different in its own way and is very considerably low that the standards of Europe on the basis of NOx levels.

Figure 4: the legal and Ethical perspective of the Volkswagen Scandal
(Source: Chris, 2015)
Critical analysis of Justification of Ethics Evaluation of Volkswagen
The action of Volkswagen in the whole case is combatively low than justifiable. The entire scandal can be prevented if the company would have spent more efforts, money and time on developing an environmental and cleaner diesel engine; however, the priorities of the company were based on the sales instead providing quality diesel engines.  Volkswagen compromised its integrity and reputation for something that can be effortlessly addressed. Not only they sacrificed their customer but also lost the trust from investors and government.  From the start, VW and its regulators must be moral enough to step into high paths, even though the same was against their personal beliefs. Ultimately, the company must have ambitions and behaviour similarity in itself, employees, regulators and board members.
Company Action Plan
The management and the owners have to look at their decision through a perspective that considers a growing understanding of how ethical decision making is distorted through cognitive biases. The scandals of Volkswagen gone public since May 2014, and from that period they started taking actions so as to correct the situation as best as possible.  $15 billion has been kept aside by Volkswagen in order to resolve claims in the US. In addition to, the company has several action sources for the customer base, brand name and year of concerned car, also the ownership type. One choice is the $10 billion (strategies related to buyback) been accepted by the District Court Judge of United States. This can conceal approx 475,000 vehicles that contain 2liter inbuilt engine and buyers can obtain among $12,500 and $44,000, and leasers can obtain about $4,900. The second choice is to just keep their vehicles if customers choose to comply with this approach; they will get up to $5,000 and $10,000 so as to compensate for the reduced current value of the depreciated vehicle.  Further, they can also take their vehicles to Volkswagen dealers to obtain emanations and that too without any payments. Further, a multifaceted system that will provide payment to the owners of 2-liter and 3-liter diesel engines. consumers owning a 2-liter vehicle can get $500 on the (prepaid VISA card), and a cash card of $500 legitimate at dealerships of Volkswagen, also a free of charge 24-hour roadside help for 3 years. 
For the purpose of earning the trust of investors, stakeholders, government and customers, Volkswagen is required to get more truthful and clear regarding the details of their existing and future vehicles. This can include issuing of thorough reports in regards to their emission test of cars and their party information so as to ensure data legitimacy. Yearly Check-ins by the government can also work as justifiable. It is very complicated to earn the trust of stakeholders once it gets affected by unethical behaviour. However, if the company adopts the strategy of commitment and dedication towards the stakeholders as well as the environment it may be able to fix the unethical behaviours it followed in the past.
Volkswagen can take a step ahead in the positive way of wiping out the majority of the top level executives. This will enable the organization to get a new start with a clear management face. At present, the goal of Volkswagen is to provide eye-catching, harmless and environmentally friendly vehicles with a great competitive edge and set of class standards. Thus, the company has given its full and has done a good job regarding their creation of various customer programs and if they maintain this in the same way then as they are now, then they can move on from their past scandal to start a great future.

Figure 5: Decreased Share Price of Volkswagen due to unethical behaviour
( Source:
Unethical behaviours by a company can be a curse for any workplace (Allen Fitzhugh, 2015). Such behaviours displayed by a company can damage the credibility of the company in the long term, which may ultimately lead to losing customers and may result in shut down of the company. However, the owners and the management teams can work together with other employees for the purpose of rectifying and preventing unethical behaviours. Defining what encompasses of ethics is a matter that creates significant differences in thought and debate. Business ethics are not only defined by any law or religion and its not even about a person’s beliefs. The concept of business ethics is all about how a person who behaves ethically follows the standard of right and wrong when the matter is concerning the society’s fairness and rights.
 Thus, it can be concluded that VW has displayed unjustified behaviours in the past which is needed to be rectified through various actions which take the company on high paths and also improve the brand image. This can be achieved by winning the trust of consumers and taking steps to minimize the impact of their activities on the environment. To deliver real services for the purpose of reflecting ethical behaviour the company and its management must add something like sincerity and integrity which cannot be bought or measured with money. Ethical behaviour stands far above the financial benefits. The company has to face the consequences of unethical behaviour which they have to deal with all the aspects.
References
Bonnefon, J. F., Shariff, A., & Rahwan, I. (2016). The social dilemma of autonomous vehicles. Science, 352(6293). 1573-1576.
Crane, A. & Matten, D. (2016). Business ethics: Managing corporate citizenship and sustainability in the age of globalization. Oxford University Press.
Ferrell, O. C. & Fraedrich, J. (2015). Business ethics: Ethical decision making & cases. Nelson Education.
Ford, R. C. & Richardson, W. D. (2013). Ethical decision making: A review of the empirical literature. In Citation classics from the Journal of Business Ethics. (Pp. 19-44). Springer Netherlands.
Frederickson, H. G. & Ghere, R. K. (2013). Ethics in public management. ME Sharpe.
Herlihy, B. & Corey, G. (2014). ACA ethical standards casebook. John Wiley & Sons.
Iphofen, R. (2016). Ethical decision making in social research: A practical guide. Springer.
Johnson, C. E. (2017). Meeting the ethical challenges of leadership: Casting light or shadow. Sage Publications.
Mikesell, L., Bromley, E. & Khodyakov, D. (2013). Ethical community-engaged research: a literature review. American journal of public health. 103(12), e7-e14.
Morris, S. A. & McDonald, R. A. (2013). The role of moral intensity in moral judgments: An empirical investigation. In Citation Classics from the Journal of Business Ethics. (Pp. 463-479). Springer Netherlands.
Pardo, A. & Siemens, G. (2014). Ethical and privacy principles for learning analytics. British Journal of Educational Technology. 45(3). 438-450.
Parrott, L. (2014). Values and ethics in social work practice. Learning Matters.
Pollock, J. M. (2014). Ethical dilemmas and decisions in criminal justice. Nelson Education.
Shapiro, J. P. & Gross, S. J. (2013). Ethical educational leadership in turbulent times:(Re) solving moral dilemmas. Routledge.
Shapiro, J. P. & Stefkovich, J. A. (2016). Ethical leadership and decision making in education: Applying theoretical perspectives to complex dilemmas. Routledge.
Shaw, W. H. & Barry, V. (2015). Moral issues in business. Cengage Learning.
Slade, S., & Prinsloo, P. (2013). Learning analytics: Ethical issues and dilemmas. American Behavioral Scientist. 57(10). 1510-1529.
Wachs, M. (Ed.). (2017). Ethics in planning. Routledge.
Weiss, J. W. (2014). Business ethics: A stakeholder and issues management approach. Berrett-Koehler Publishers.
Zadek, S., Evans, R. & Pruzan, P. (2013). Building corporate accountability: Emerging practice in social and ethical accounting and auditing. Routledge.
Online
7-Eleven, Volkswagen cases show why we should push back on ‘corporate ethics’,  (2015). [Online]. Available through < https://theconversation.com/7-eleven-volkswagen-cases-show-why-we-should-push-back-on-corporate-ethics-48739>. [Accessed on 6th October 2017].
Chmielewski, C., (2014). Values and culture in ethical decision making. Nacada. [Online]. Available through < https://www.nacada.ksu.edu/Resources/Clearinghouse/View-Articles/Values-and-culture-in-ethical-decision-making.aspx>.  [Accessed on 6th October 2017].
Doxey. C., (2015). 5 steps one CFO took to fix a broken culture and build strong ethics among employees. Business Insider. [Online]. Available through < https://www.businessinsider.com/5-steps-one-cfo-took-to-fix-a-broken-culture-and-build-strong-ethics-2015-11?IR=T >. [Accessed on 6th October 2017].
Fitzhugh, A.,  (2015). Management Style: Dealing With Unethical Behavior in the Workplace. [Online]. Available through < https://www.linkedin.com/pulse/management-style-dealing-unethical-behavior-workplace-allen-fitzhugh>. [Accessed on 6th October 2017].
Franklin, C., (2015).  Volkswagen scandal: software developers need a code of ethics. [Online]. Available through < https://www.smh.com.au/comment/volkswagen-scandal-software-developers-need-a-code-of-ethics-20151007-gk3w6m.html>. [Accessed on 6th October 2017].
Thompson, J., (2015).  Despite the recent scandals, ‘business ethics’ isn’t a contradiction in terms. [Online]. Available through < https://www.abc.net.au/news/2015-10-05/thompson-business-ethics-isnt-a-contradiction-in-terms/6827488>. [Accessed on 6th October 2017].
Vidya N. A., (2013). Managerial Decision-Making on Moral Issues and the Effects of Teaching Ethics. Journal of Business Ethics. [Online]. Available through < https://link.springer.com/article/10.1007/s10551-006-9328-6>. [Accessed on 6th October 2017].

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